<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------ -------
Commission file number 0-7449
------
PEOPLE'S BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3272233
- - ------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
- - -------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 991-2601
--------------
------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
The number of shares of Registrant's Common Stock, $0.10 par value, outstanding
as of March 31, 1996 was 3,340,493.
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<PAGE> 2
PEOPLE'S BANCSHARES, INC.
FORM 10-Q
QUARTERLY REPORT
--------------------
<TABLE>
TABLE OF CONTENTS
<S> <C>
Facing Page 1
Table of Contents 2
PART I. FINANCIAL INFORMATION (*)
Item 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Changes in Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION 14
SIGNATURES 16
EXHIBITS 17
<FN>
(*) The financial information at December 31, 1995 has been derived from
the audited financial statements at that date and should be read in
conjunction therewith. All other financial statements are unaudited.
</TABLE>
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<PAGE> 3
PEOPLE'S BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
------
Cash and due from banks $ 19,182 $ 11,277
Short-term investments 26 26
-------- --------
Total cash and cash equivalents 19,208 11,303
-------- --------
Investment securities, available for sale 223,458 166,709
Loans held for sale 16,549 5,272
Loans 251,160 133,591
Less allowance for loan losses (5,166) (3,813)
-------- --------
Loans, net 245,994 129,778
Other real estate owned, net 340 571
Banking premises and equipment, net 8,633 3,578
Accrued interest receivable 3,530 2,104
Deferred income taxes 1,909 1,826
Intangible assets 1,419 1,508
Due from broker 10,213 938
Other assets 1,881 853
-------- --------
Total assets $533,134 $324,440
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $322,261 $174,583
Borrowed funds 153,337 126,245
Due to broker 25,346 --
Mortgagors' escrow accounts 1,278 494
Accrued interest payable 1,099 843
Accrued expenses 1,520 1,653
Other liabilities 911 945
-------- --------
Total liabilities 505,752 304,763
-------- --------
Stockholders' equity:
Serial preferred stock - par value $0.10 per share; authorized
10,000,000 shares, none issued -- --
Common stock - par value $0.10 per share; 20,000,000 shares authorized;
issued and outstanding 3,340,493 and 2,324,007 shares 334 232
Additional paid-in capital 21,699 14,015
Retained earnings 6,441 5,870
-------- --------
28,474 20,117
Net unrealized loss on securities available
for sale, after tax effects (1,092) (440)
-------- --------
Total stockholders' equity 27,382 19,677
-------- --------
Total liabilities and stockholders' equity $533,134 $324,440
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 4
PEOPLE'S BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
------------------
March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Interest and dividend income:
Interest and fees on loans $3,675 $2,536
Interest on short-term investments 32 16
Interest and dividends on investment securities 2,902 1,580
------ ------
Total interest and dividend income 6,609 4,132
------ ------
Interest expense:
Interest on deposits 1,752 1,066
Interest on borrowed funds 1,903 1,148
------ ------
Total interest expense 3,655 2,214
------ ------
Net interest income 2,954 1,918
Provision for loan losses 75 150
------ ------
Net interest income, after provision for loan losses 2,879 1,768
------ ------
Other income:
Customer service fees 277 211
Losses on sales of securities, net (24) (5)
Gains on sales of loans, net 459 2
Miscellaneous 183 35
------ ------
Total other income 895 243
------ ------
Operating expenses:
Salaries and employee benefits 1,515 678
Occupancy and equipment 306 144
Data processing 139 64
Professional fees 52 85
Other real estate owned, net 18 (33)
Other general and administrative 650 501
------ ------
Total operating expenses 2,680 1,439
------ ------
Income before income taxes 1,094 572
Provision for income taxes 407 148
------ ------
Net income $ 687 $ 424
====== ======
Income per share (primary and fully diluted) $ 0.25 $ 0.18
====== ======
Weighted average shares outstanding
(primary and fully diluted) 2,744 2,369
====== ======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 5
PEOPLE'S BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Three Months Ended March 31, 1996 and 1995
(Dollars in thousands)
(Unaudited)
<CAPTION>
Net Unrealized
Gain (Loss) on
Additional Securities
Common Paid-in Retained Available
Stock Capital Earnings for Sale Total
------ ---------- -------- -------------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $232 $14,015 $ 5,870 $ (440) $ 19,677
Net income -- -- 687 -- 687
Cash dividends paid -- -- (116) -- (116)
Exercise of stock warrants 5 236 -- -- 241
Issuance of common stock 97 7,448 -- -- 7,545
Change in net unrealized gain (loss) on
securities available for sale, after tax effects -- -- -- (652) (652)
---- ------- ------- ------- --------
Balance at March 31, 1996 $334 $21,699 $ 6,441 $(1,092) $ 27,382
==== ======= ======= ======= ========
Balance at December 31, 1994 $230 $13,904 $ 3,769 $ (928) $ 16,975
Net income -- -- 424 -- 424
Exercise of stock warrants 1 25 -- -- 26
Exercise of stock options -- 12 -- -- 12
Change in net unrealized gain (loss) on securities
available for sale, after tax effects -- -- -- 477 477
---- ------- ------- ------- --------
Balance at March 31, 1995 $231 $13,941 $ 4,193 $ (451) $ 17,914
==== ======= ======= ======= ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 6
PEOPLE'S BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
-------------------
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 687 $ 424
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Provision for loan losses 75 150
Depreciation and amortization 312 82
Gain on sale of banking premises and equipment (62) --
Losses on sales of securities, net 24 5
Gains on sales of loans, net (459) (2)
Loans originated for sale (54,306) (172)
Principal balance of loans sold 43,029 172
Write-downs, provisions, and gain or loss on sales of other real
estate owned (23) (123)
Deferred tax expense 300 94
Increase in other assets, net of other liabilities (1,204) (358)
-------- --------
Net cash provided (used) by operating activities (11,627) 272
-------- --------
Cash flows from investing activities:
Cash and cash equivalents received through acquisition 20,664 --
Proceeds from sales of investment securities available for sale -- 8,514
Proceeds from amortization of mortgage-backed securities
available for sale 10,232 1,178
Proceeds from amortization of mortgage-backed securities held to maturity -- 1,673
Purchase of securities available for sale (53,136) (9,307)
Purchase of securities held to maturity -- (9,053)
Loan (originations and purchases) amortization and payoffs, net 3,904 (318)
Proceeds from sales of other real estate owned 254 267
Disbursements for other real estate owned -- (6)
Additions to banking premises and equipment, net (458) (81)
-------- --------
Net cash used in investing activities (18,540) (7,133)
-------- --------
Cash flows from financing activities:
Net increase in deposits 2,975 4,000
Net decrease in borrowings with maturities of 3 months or less (27,828) (3,197)
Proceeds from issuance of borrowings with maturities in excess of 3 months 54,920 18,000
Repayment of borrowings with maturities in excess of 3 months -- (8,000)
Increase in mortgagors' escrow accounts 335 30
Proceeds from exercise of stock warrants 241 26
Proceeds from issuance of common stock 7,545 --
Proceeds from exercise of stock options -- 12
Cash dividends (116) --
-------- --------
Net cash provided by financing activities 38,072 10,871
-------- --------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 7
<TABLE>
<S> <C> <C>
Net increase in cash and cash equivalents 7,905 4,010
Cash and cash equivalents at beginning of period 11,303 7,552
------- -------
Cash and cash equivalents at end of period $19,208 $11,562
======= =======
Supplementary information:
Interest paid on deposit accounts $ 1,712 $ 1,030
Interest paid on borrowed funds 1,687 1,076
Transfer from loans to other real estate owned, net -- 746
Transfers from other real estate owned to bank premises and equipment -- 150
Increase in due to brokers, net 15,133 --
Assets acquired in acquisition of branches 124,845 --
Liabilities assumed in acquisition of branches 145,509 --
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE> 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(1) The Consolidated Balance Sheet as of March 31, 1996, and the
Consolidated Statements of Income, Consolidated Statements of Changes
in Stockholders' Equity, and Consolidated Statements of Cash Flows for
the periods ended March 31, 1996 and 1995 of People's Bancshares, Inc.
and Subsidiary (the "Company") furnished in this report are unaudited;
however, these interim consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary for a
fair statement of the results for the interim periods presented.
Interim results are not necessarily indicative of results to be
expected for the year.
People's Bancshares, Inc. (the "Company") is a Massachusetts business
corporation formed at the direction of People's Savings Bank of
Brockton (the "Bank") to serve as the holding company for the Bank. On
February 8, 1996, the Company and the Bank completed a reorganization
(the "Reorganization") in which the Bank became a wholly owned
subsidiary of the Company, and each issued and outstanding share of
common stock of the Bank was converted into and exchanged for one
share of common stock of the Company. As a result of the
Reorganization, the Bank became a wholly owned subsidiary of the
Company. The Company is a unitary bank holding company subject to the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), the
principal business of which consists of the business of the Bank. The
only significant asset of the Company is the common stock of the
Bank. Although the Company is a legal entity separate from the Bank,
the Company itself is not engaged in any business activities.
The unaudited consolidated interim financial statements furnished in
this report are intended to be read in conjunction with the
consolidated financial statements of the Company presented in its
Annual Report for the year ended December 31, 1995.
(2) EARNINGS PER SHARE
------------------
Earnings per share is computed using the weighted average number of
shares and common stock equivalents outstanding during each period.
Earnings per share computations include common stock equivalents
attributable to outstanding stock options and warrants. Average shares
outstanding for the quarters ended March 31, 1996 and 1995 were
approximately 2,744,000 and 2,369,000, respectively.
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<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
unaudited consolidated financial statements and related notes included in this
report.
Assets
- - ------
The Company's total assets at March 31, 1996 were $533.1 million, an increase of
$208.7 million from December 31, 1995. The increase in assets, liabilities, and
stockholders' equity primarily reflects the consummation on March 8, 1996 of the
acquisition of five branches from subsidiaries of Fleet Financial Group, Inc.
with approximately $145.5 million in assets (the "Branch Acquisition"), the
issuance of common stock in a public offering completed in March 1996 (the
"Offering") and an increase of $56.7 million in investment securities consisting
primarily of mortgage-backed securities.
Loans
- - -----
<TABLE>
Total loans and loans held for sale increased $128.8 million primarily as a
result of the purchase of $113.7 in loans from the Branch Acquisition. Of the
$113.7 million in acquired loans, $82.4 million represented 1-4 family
residential mortgages, $20.8 million represented commercial and commercial real
estate and $10.5 represented consumer loans. All acquired loans were performing
loans at the time of the acquisition. At March 31, 1996, the Company's loans and
loans held for sale were as folows:
<CAPTION>
(in millions)
<S> <C>
Residential mortgage loans $158.1
Commercial, commercial real estate
and construction loans 87.5
Consumer loans 22.1
------
Total $267.7
======
</TABLE>
Deposits
- - --------
Total deposits increased $147.7 million to $322.3 million at March 31, 1996 from
$174.6 million at December 31, 1995 primarily as a result of the Branch
Acquisition. This deposit growth includes a $53.7 million increase in IRAs and
time certificates of deposit and a $94.0 million increase in core deposits.
Non-performing Assets and Allowance for Loan Losses
- - ---------------------------------------------------
The allowance for loan losses has been established to absorb foreseeable losses
inherent in the loan portfolio. The provision for loan losses and the level of
the allowance are evaluated periodically by management and the Board of
Directors. These provisions are the results of the Company's internal loan
review, historical loan loss experience, trends in delinquent and non-accrual
loans, known and inherent risks in the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, collateral
values, an estimate of potential loss exposure on significant credits,
concentrations of credit, and present and prospective economic conditions based
on facts then known.
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<PAGE> 10
Periodically, management reviews the portfolio, classifying each loan into
categories by assessing the degree of risk involved. Considering this review,
the Company establishes the adequacy of its allowance and necessary additions
are charged to operations through the provision for loan losses. Loan losses are
charged against the allowance when management believes the collectibility of the
loan balance is unlikely.
The allowance is an estimate. Ultimate losses may vary from current estimates
and future additions to the allowance may become necessary. In addition,
regulatory agencies, as an integral part of their examination process, review
the Company's allowance and may require the Company to provide additions to the
allowance based on their assessment, which may differ from management's.
At March 31, 1996, the Company's allowance for loan losses totaled $5.2 million
or 1.93% of total loans and loans held for sale and 94.1% of non-performing
loans compared to $3.8 million or 2.75% of total loans and loans held for sale
and 79.8% of non-performing loans at December 31, 1995, and compared to $2.9
million or 2.53% of total loans and loans held for sale and 69.1% of
non-performing loans at March 31, 1995. Management recorded a provision for loan
losses of $75,000 for the three month period ended March 31, 1996, compared to
$150,000 for the same period in 1995. The Company recorded a $1.7 million loan
loss allowance in connection with the Branch Acquisition. Net charge-offs were
$374,000 for the three month period ended March 31, 1996 compared to net
charge-offs of $406,000 for the same period in 1995.
Non-performing assets increased to $5.8 million or 1.09% of total assets at
March 31, 1996 from $5.3 million or 1.65% of total assets at December 31, 1995
and $5.5 million or 2.26% of total assets at March 31, 1995.
Equity
- - ------
The Company completed the Offering of approximately 968,000 shares of its common
stock in March 1996 in which it raised $7.5 million of net proceeds. At March
31, 1996, the Company had approximately 3,340,000 shares of common stock
outstanding and approximately 144,000 common stock equivalents.
RESULTS OF OPERATIONS
- - ---------------------
Overview
- - --------
Comparisons of year to year operating results have been significantly affected
by four purchase transactions during the 12 months prior to March 31, 1996 that
have resulted in the Company increasing its asset size from $243.3 million at
March 31, 1995 to $533.1 million at March 31, 1996. Operating results have also
been significantly affected by the formation of People's Mortgage Corporation in
the spring of 1995 which is reflected in gains on sales of loans of $459,000 in
the first quarter of 1996 compared to $2,000 in the corresponding quarter of
1995. Quarterly comparisons have also been significantly affected by the Company
increasing its investment portfolio (primarily mortgage-backed securities) by
$112.1 million since March 31, 1995 funded by an increase of $69.0 million in
borrowed funds with the remainder funded by cash received from the Branch
Acquisition and the Offering. Finally, results have also been significantly
affected by an increase in the Company's effective tax rate to 37% in the first
quarter of 1996 compared to 26% in the first quarter of 1995 as a result of the
Company utilizing all remaining tax carryforward benefits in 1995. Net income
amounted to $687,000 or $0.25 per
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<PAGE> 11
share (primary and fully diluted) for the three months ended March 31, 1996
compared to net income of $424,000 or $0.18 per share (primary and fully
diluted) for the same period in 1995.
Net Interest Income
- - -------------------
Net interest income increased $1.0 million for the three months ended March 31,
1996 compared to the same period in 1995. These changes resulted mostly from
increased average earning assets. For the first three months of 1996, average
earning assets increased 59% compared to the same period in 1995.
Interest and dividend income increased to $6.6 million for the three months
ended March 31, 1996 from $4.1 million for the same period in 1995. Interest
income was positively affected by an increase in yield on average earning assets
to 7.56% for the three months ended March 31, 1996 from 7.50% for the same
period in 1995. Yields on loans decreased to 8.63% for the three months ended
March 31, 1996 compared to 8.89% for the same period in 1995. Yields on
investments increased to 6.53% for the three months ended March 31, 1996
compared to 6.00% for the same period in 1995.
Interest expense increased to $3.7 million for the three months ended March 31,
1996 from $2.2 million for the same period in 1995. This increase was due to a
$755,000 increase in interest expense on borrowed funds and a $686,000 increase
in interest expense on deposits for the three months ended in March 31, 1996
compared to the same period in 1995.
During the first three months of 1996, average borrowed funds amounted to $134.6
million compared to $81.0 million during the first three months of 1995. The
Company has increased its use of borrowed funds, primarily advances from the
Federal Home Loan Bank of Boston ("FHLB"), to fund purchases of mortgage-backed
securities. Rates paid on average borrowed funds were 5.66%, for the three
months ended March 31, 1996 compared to 5.67% for the same period in 1995.
The increase in deposit interest expense was due to an increase in the average
cost of deposits to 3.73% for the three month period ended March 31, 1996 from
3.45% for the same period in 1995. Deposit expense also increased due to an
increase of average deposits to $188.0 million for the three months ended March
31, 1996 compared to $123.5 million for the same period in 1995.
Provision for Loan Losses
- - -------------------------
The provision for loan losses amounted to $75,000 for the three months ended
March 31, 1996 compared to $150,000 for the same period in 1995. The provisions
for loan losses were deemed necessary due to the continued weakness of the local
economy and real estate market. If the local economy and real estate market
deteriorate, it may be necessary for the Company to make additional provisions
for loan losses.
Other Income
- - ------------
Other income was $895,000 for the three months ended March 31, 1996 compared to
$243,000 for the same period in 1995. The quarterly increase is primarily
attributable to a $457,000 increase in gains from sales of loans, a $66,000
increase in customer service fees, and a $62,000 gain on sale of land included
in miscellaneous other income. The increase in loan sale gains reflects the
formation and growth of People's Mortgage Corporation since March 31, 1995 while
the increase in customer service fees reflects the Company's increased depositor
base.
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<PAGE> 12
Operating Expenses
- - ------------------
Total operating expenses amounted to $2.7 million for the three months ended
March 31, 1996 compared to $1.4 million for the same period in 1995. Operating
expenses include an estimated $223,000 in non-recurring expenses related to the
Branch Acquisition.
Salaries and benefits expense increased $837,000 for the three months ended
March 31, 1996 compared to the same period in 1995. The increase in salaries and
benefits reflects general salary increases, added lending and mortgage banking
staffing, the acquisition or opening of four branches in 1995, operations of the
five branches acquired in the Branch Acquisition in 1996, and non-recurring
expenses associated with the Branch Acquisition.
Occupancy and equipment expense increased $162,000 for the three months ended
March 31, 1996 compared to the same period in 1995 primarily due to additional
costs associated with acquired branches and People's Mortgage Corporation. Data
processing expense increased $75,000 for the three months ended March 31, 1996
compared to the same period in 1995 due to the growth in the number of accounts
serviced since March 31, 1995. Professional fees expense decreased $33,000 for
the three months ended March 31, 1996 compared to the same period in 1995. Other
real estate owned expenses increased $51,000 for the three months ended March
31, 1996 compared to the same period in 1995. This increase reflects gains on
sales of other real estate owned in the first quarter of 1995 that reduced net
OREO expenses in that quarter. Other general and administrative expenses
increased $149,000 for the three months ended March 31, 1996 compared to the
same period in 1995 due to varied non-recurring expenses associated with the
Branch Acquisition.
Provision for Income Taxes
- - --------------------------
The Company recognized income tax expense of $407,000 in the three months ended
March 31, 1996 compared to income tax expense of $148,000 for the same period in
1995. In 1995, the remainder of tax carryforward benefits were utilized to
reduce the Company's income tax expense.
Liquidity and Capital Resources
- - -------------------------------
The Company's liquidity management focuses upon the Company's ability to provide
the cash reserves and cash equivalents necessary to honor contractual
liabilities and commitments, meet depositors' withdrawal demands, fund
operations and provide customers with adequate available credit. The Company's
primary sources of liquidity are customer deposits, principal and interest
payments on loans, interest and dividends on investments and proceeds from the
maturity or sale of investments. The Company also has the ability to borrow from
the Federal Home Loan Bank of Boston on a collateralized basis. The Company
believes that it has adequate liquidity to meet its needs.
At March 31, 1996, the Company's capital exceeded all regulatory requirements.
The Company's Tier 1 leverage capital ratio at March 31, 1996 was 7.34%,
compared to 6.04% at December 31, 1995. The Company's book value per share was
$8.20 at March 31, 1996, $8.47 at December 31, 1995, and $7.76 at March 31,
1995. The decrease in book value per share from December 31, 1995 was primarily
attributable to the decrease in the equity valuation account for net unrealized
losses on the Company's investment securities available for sale resulting from
recent increases in market interest rates.
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<PAGE> 13
Other Information
- - -----------------
On May 10, 1995, the Company acquired the Bank of Taunton, a Co-operative Bank
("Taunton"). The acquisition was effected pursuant to an agreement with Taunton
dated January 24, 1995 in which Taunton converted from a mutual to stock form
bank in a supervisory conversion under regulations of the Massachusetts
Commissioner of Banks, the Company acquired all of the capital stock of Taunton
in the conversion, and Taunton was then merged with and into the Company.
Taunton's assets amounted to approximately $17.8 million at acquisition.
On November 29, 1994, the Company announced that it had entered into an
agreement with Haymarket Cooperative Bank to acquire the deposits from
Haymarket's Brockton branch. The Company completed the acquisition of $9.7
million in deposits from Haymarket on July 22, 1995.
On May 22, 1995, the Company announced that it had entered into an agreement
with the Bank of Boston to acquire the Bank of Boston's Mansfield, Massachusetts
branch. The Company completed the branch acquisition from the Bank of Boston on
September 23, 1995 receiving $13.0 million in deposits.
On September 30, 1995, the Company entered into an agreement with Fleet Bank of
Massachusetts, N.A. and Shawmut Bank of Massachusetts, N.A. to acquire certain
assets and liabilities of five branches that were required to be divested in
connection with the merger of Shawmut National Corporation with and into Fleet
Financial Group, Inc.
On March 8, 1996 the Company completed an offering of its common stock in order
to maintain its status as a "well-capitalized" institution as defined by the
FDIC upon the completion of the branch acquisition. The Company raised net
proceeds of $7.5 million upon completion of the offering.
On April 30, 1996 the Company declared a $0.07 dividend to be paid on May 31,
1996 to shareholders of record on May 14, 1996.
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<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit Description
- - ------- -----------
2.1 Plan of Reorganization and Acquisition by and between the
Company and the Bank dated as of March 31, 1996. (Incorporated
by reference to the Company's Current Report on Form 8-K
filed with the Commission on February 8, 1996 (the "Form 8-K"))
3.1 Restated Articles of Organization of the Company (Incorporated
by reference to the Company's Annual Report on Form 10-K filed
with the Commission on March 28, 1996, (the "Form 10-K"))
3.2 By-laws of the Company, as amended and restated (Incorporated
by reference to the Form 8-K)
4.1 Specimen certificate for shares of Common Stock of the Company
(Incorporated by reference to the Form 8-K).
4.2 Articles IV and VI(I)-(K) of Restated Articles of Organization
of the Company (see Exhibit 3.1)
4.3 Articles I and IV of By-laws of the Company (see Exhibit 3.2)
10.1 (Intentionally omitted)
10.2 (Intentionally omitted)
10.3 (Intentionally omitted)
10.4 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and John A. Williams, dated as of February
7, 1996. (Incorporated by reference to the Form 10-K)
10.5 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Colin C. Blair, dated as of February
7, 1996. (Incorporated by reference to the Form 10-K)
10.6 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Donna L. Boulanger, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the "Form S-1"))
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<PAGE> 15
10.7 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Charles R. Leyton, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1))
10.8 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Lorraine P. Healy, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1))
10.9 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Robert Cully, dated as of February 7,
1996. (Incorporated by reference to the Registration Statement
Form S-1 filed with the commission on November 24, 1995, (the
Form S-1))
10.10 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Maureen A. Gregory, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1).)
10.17 Amended and Restated Directors' Stock Option Plan.
(Incorporated by reference to the Form 10-K).
10.18 Amended and Restated Incentive and Nonqualified Stock Option
Plan. (Incorporated by reference to the Form 10-K).
10.19 Form of Nonemployee Nonqualified Stock Option Agreement.
(Incorporated by reference to the Form S-1)
10.20 Form of Employee Nonqualified Stock Option Agreement.
(Incorporated by reference to the Form S-1).
10.21 Form of Incentive Stock Option Agreement. (Incorporated by
reference to the Form S-1.)
10.29 Purchase and Assumption Agreement by and between People's
Savings Bank of Brockton and Fleet Bank N.A. dated as of
September 30, 1995. (Incorporated by reference to the Form
S-1.)
10.30 Purchase and Assumption Agreement by and between People's
Savings Bank of Brockton and Shawmut Bank of Massachusetts,
N.A. dated as of September 30, 1995. (Incorporated by reference
to the Form S-1.)
10.31 Amendment No. 1 to Purchase and Assumption Agreement, dated as
of March 8, 1996, by and between People's Savings Bank of
Brockton, Fleet Bank of Massachusetts N.A. and certain
other parties dated as of September 30, 1995. (Incorporated by
reference to the Form 10-K.)
10.32 Amendment No. 1 to Purchase and Assumption Agreement, dated as
of March 8, 1996, by and between People's Savings Bank of
Brockton, Fleet National Bank of Massachusetts (formerly Shawmut
Bank, N.A.) and certain other parties dated as of September 30,
1995. (Incorporated by reference to the Form 10-K.)
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. On February 8, 1996, the Company filed a report on
Form 8-K with the Securities and Exchange Commission with respect to the
completion of the Reorganization. On such date, the Bank filed a report on Form
F-3 with the Federal Deposit Insurance Corporation with respect to the
completion of the Reorganization.
-15-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PEOPLE'S BANCSHARES, INC.
5/15/96 By: /s/ John A. Williams
- - -------------- --------------------------
Date John A. Williams
President, Chief Executive
Officer and Director
5/15/96 By: /s/ Colin C. Blair
- - -------------- -----------------------------------------------------
Date Colin C. Blair
Vice President, Treasurer and Chief Financial Officer
(principal financial and accounting officer)
-16-
<PAGE> 17
EXHIBIT INDEX
-------------
Exhibit Description
- - ------- -----------
2.1 Plan of Reorganization and Acquisition by and between the
Company and the Bank dated as of March 31, 1996. (Incoporated
by reference to the Company's Current Report on Form 8-K
filed with the Commission on February 8, 1996 (the "Form 8K"))
3.1 Restated Articles of Organization of the Company (Incoporated
by reference to the Company's Annual Report on Form 10-K
filed with the Commission on March 28, 1996, (the "Form
10-K"))
3.2 By-laws of the Company, as amended and restated (Incorporated
by reference to the Form 8-K).
4.1 Specimen certificate for shares of Common Stock of the Company
(Incorporated by reference to the Form 8-K).
4.2 Articles IV and VI(I)-(K) of Restated Articles of Organization
of the Company (see Exhibit 3.1)
4.3 Articles I and IV of By-laws of the Company (see Exhibit 3.2)
10.1 (Intentionally omitted)
10.2 (Intentionally omitted)
10.3 (Intentionally omitted)
10.4 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and John A. Williams, dated as of February
7, 1996. (Incorporated by reference to the Form 10-K)
10.5 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Colin C. Blair, dated as of February
7, 1996. (Incorporated by reference to the Form 10-K)
10.6 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Donna L. Boulanger, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the "Form S-1"))
10.7 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Charles R. Leyton, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1))
10.8 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Lorraine P. Healy, dated as of
February 7, 1996. (Incorporated by reference to the
-17-
<PAGE> 18
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1))
10.9 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Robert Cully, dated as of February 7,
1996. (Incorporated by reference to the Registration Statement
Form S-1 filed with the commission on November 24, 1995, (the
Form S-1))
10.10 Amended and Restated Special Termination Agreement by and among
the Company, the Bank and Maureen A. Gregory, dated as of
February 7, 1996. (Incorporated by reference to the
Registration Statement Form S-1 filed with the commission on
November 24, 1995, (the Form S-1))
10.17 Amended and Restated Directors' Stock Option Plan.
(Incorporated by reference to the Form 10-K).
10.18 Amended and Restated Incentive and Nonqualified Stock Option
Plan. (Incorporated by reference to the Form 10-K).
10.19 Form of Nonemployee Nonqualified Stock Option Agreement.
(Incorporated by reference to the Form S-1)
10.20 Form of Employee Nonqualified Stock Option Agreement.
(Incorporated by reference to the Form S-1)
10.21 Form of Incentive Stock Option Agreement. (Incoporated by
reference to the Form S-1.)
10.29 Purchase and Assumption Agreement by and between People's
Savings Bank of Brockton and Fleet Bank N.A. dated as of
September 30, 1995. (Incorporated by reference to the Form
S-1.)
10.30 Purchase and Assumption Agreement by and between People's
Savings Bank of Brockton and Shawmut Bank of Massachusetts,
N.A. dated as of September 30, 1995. (Incorporated by reference
to the Form S-1.)
10.31 Amendment No. 1 to Purchase and Assumption Agreement, dated as
of March 8, 1996, by and between People's Savings Bank of
Brockton, Fleet Bank of Massachusetts N.A. and certain
other parties dated as of September 30, 1995. (Incorporated by
reference to the Form 10-K.)
10.32 Amendment No. 1 to Purchase and Assumption Agreement, dated as
of March 8, 1996, by and between People's Savings Bank of
Brockton, Fleet National Bank of Massachusetts (formerly
Shawmut Bank, N.A.) and certain other parties dated as of
September 30, 1995. (Incorporated by reference to the Form
10-K.)
27 Financial Data Schedule (filed herewith).
-18-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PEOPLE'S
BANCSHARES, INC. AND SUBSIDIARY QUARTERLY FINANCIAL STATEMENTS FOR THE 3 MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS CONTAINED IN SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 19,182
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 26
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 223,458
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 251,160
<ALLOWANCE> 5,166
<TOTAL-ASSETS> 533,134
<DEPOSITS> 322,261
<SHORT-TERM> 37,367
<LIABILITIES-OTHER> 30,154
<LONG-TERM> 115,970
<COMMON> 334
0
0
<OTHER-SE> 27,048
<TOTAL-LIABILITIES-AND-EQUITY> 533,134
<INTEREST-LOAN> 3,674
<INTEREST-INVEST> 2,902
<INTEREST-OTHER> 32
<INTEREST-TOTAL> 6,609
<INTEREST-DEPOSIT> 1,752
<INTEREST-EXPENSE> 3,655
<INTEREST-INCOME-NET> 2,954
<LOAN-LOSSES> 75
<SECURITIES-GAINS> (24)
<EXPENSE-OTHER> 2,680
<INCOME-PRETAX> 1,094
<INCOME-PRE-EXTRAORDINARY> 1,094
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 687
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<YIELD-ACTUAL> 338
<LOANS-NON> 5,491
<LOANS-PAST> 0
<LOANS-TROUBLED> 603
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,813
<CHARGE-OFFS> 437
<RECOVERIES> 63
<ALLOWANCE-CLOSE> 5,166
<ALLOWANCE-DOMESTIC> 3,745
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,421
<FN>
The Company recorded $1.7 million in loan loss allowance from the acquisition of
five branches from subsidiaries of Fleet Financial Group, Inc. on March 8, 1996.
</TABLE>
