<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 JUNE 30, 1997
[ ] 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 June 30, 1997 was 3,595,070.
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PEOPLE'S BANCSHARES, INC.
FORM 10-Q
QUARTERLY REPORT
----------------
TABLE OF CONTENTS
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 9
PART II. OTHER INFORMATION 14
SIGNATURES 15
EXHIBITS 16
(*) The financial information at December 31, 1996 has been derived from the
audited financial statements at that date and should be read in conjunction
therewith. All other financial statements are unaudited.
2
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- -----------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 22,616 $ 12,478
Investment securities, available for sale 269,610 192,517
Loans held for sale 22,541 25,612
Loans 254,557 250,911
Less allowance for loan losses (4,355) (4,716)
-------- --------
Loans, net 250,202 246,195
Other real estate owned, net 588 493
Banking premises and equipment, net 12,996 13,034
Accrued interest receivable 3,702 2,888
Intangible assets 1,267 1,338
Other assets 2,156 1,578
-------- --------
Total assets $585,678 $496,133
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $335,568 $336,238
Borrowed funds 196,900 123,920
Mortgagors' escrow accounts 902 973
Accrued expenses and other liabilities 5,038 3,938
Subordinated debentures 13,800 --
-------- --------
Total liabilities 552,208 465,069
-------- --------
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;
authorized 20,000,000 shares, issued and
outstanding 3,595,070 and 3,562,970 shares 360 356
Additional paid-in capital 23,123 22,967
Retained earnings 10,430 8,562
-------- --------
33,913 31,885
Net unrealized loss on securities available
for sale, after tax effects (443) (821)
-------- --------
Total stockholders' equity 33,470 31,064
-------- --------
Total liabilities and stockholders' equity $585,678 $496,133
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars and shares in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------------
1997 1996 1997 1996
------- ------ -------- --------
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 5,551 $5,135 $ 11,150 $ 8,809
Interest and dividends on investment
securities 4,717 3,489 8,808 6,391
Interest on short-term investments 19 32 58 64
------- ------ -------- --------
Total interest and dividend income 10,287 8,656 20,016 15,264
------- ------ -------- --------
Interest expense:
Interest on deposits 2,873 2,779 5,709 4,531
Interest on borrowed funds 2,795 2,153 5,274 4,056
------- ------ -------- --------
Total interest expense 5,668 4,932 10,983 8,587
------- ------ -------- --------
Net interest income 4,619 3,724 9,033 6,677
Provision for loan losses -- -- -- 75
------- ------ -------- --------
Net interest income, after provision for
loan losses 4,619 3,724 9,033 6,602
------- ------ -------- --------
Other income:
Customer service fees 399 440 744 717
Gains (losses) on sales of investment
securities, net 8 -- (3) (24)
Gains on sales of loans, net 881 647 1,794 1,106
Gain on sale of banking premises
and equipment -- 99 -- 162
Miscellaneous 47 98 82 218
------- ------ -------- --------
Total other income 1,335 1,284 2,617 2,179
------- ------ -------- --------
Operating expenses:
Salaries and employee benefits 2,120 1,981 4,179 3,496
Occupancy and equipment 486 382 895 688
Data processing 284 176 589 315
Professional fees 215 170 356 222
Other real estate owned, net 38 9 91 27
Other general and administrative 797 759 1,477 1,409
------- ------ -------- --------
Total operating expenses 3,940 3,477 7,587 6,157
------- ------ -------- --------
Income before income taxes 2,014 1,531 4,063 2,624
Provision for income taxes 738 564 1,479 970
------- ------ -------- --------
Net income $ 1,276 $ 967 $ 2,584 $ 1,654
======= ====== ======== ========
Income per share (primary and
fully diluted) $ 0.35 $ 0.28 $ 0.71 $ 0.53
======= ====== ======== ========
Weighted average shares outstanding
(primary and fully diluted) 3,663 3,498 3,657 3,119
======= ====== ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------
Six Months Ended June 30, 1997 and 1996
---------------------------------------
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Net Unrealized
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, 1996 $356 $22,967 $ 8,562 $ (821) $31,064
Net income -- -- 2,584 -- 2,584
Cash dividends paid -- -- (716) -- (716)
Exercise of stock options 4 156 -- -- 160
Change in net unrealized loss on securities
available for sale, after tax effects -- -- -- 378 378
---- ------- ------- ------- -------
Balance at June 30, 1997 $360 $23,123 $10,430 $ (443) $33,470
==== ======= ======= ======= =======
Balance at December 31, 1995 $232 $14,015 $ 5,870 $ (440) $19,677
Net income -- -- 1,654 -- 1,654
Cash dividends paid -- -- (349) -- (349)
Exercise of stock warrants 7 353 -- -- 360
Exercise of stock options 1 12 -- -- 13
Issuance of common stock 97 7,488 -- -- 7,585
Change in net unrealized loss on securities
available for sale, after tax effects -- -- -- (1,168) (1,168)
---- ------- ------- ------- -------
Balance at June 30, 1996 $337 $21,868 $ 7,175 $(1,608) $27,772
==== ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,584 $ 1,654
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Provision for loan losses -- 75
Depreciation and amortization 852 597
Gain on sale of banking premises and equipment -- (162)
Losses on sales of investment securities, net 3 24
Loans originated for sale (110,228) (110,166)
Principal balance of loans sold 113,299 103,899
Write-downs, provisions, and gain or loss on
sales of other real estate owned (19) (73)
Change in other assets, net of other liabilities 444 (651)
--------- ---------
Net cash provided (used) by operating activities 6,935 (4,803)
--------- ---------
Cash flows from investing activities:
Cash and cash equivalents received through
acquisition -- 20,664
Proceeds from sales of investment securities
available for sale 71,266 11,102
Proceeds from maturities of investment securities
available for sale -- 2,000
Proceeds from amortization of mortgage-backed
securities available for sale 10,550 23,167
Purchase of investment securities available for sale (158,485) (94,739)
Loan (originations and purchases) amortization
and payoffs, net (4,830) 3,940
Proceeds from sales of other real estate owned 507 479
Proceeds from sale of banking premises and equipment -- 424
Additions to banking premises and equipment, net (369) (1,146)
--------- ---------
Net cash used in investing activities (81,361) (34,109)
--------- ---------
Cash flows from financing activities:
Net (decrease) increase in deposits (670) 11,113
Net increase (decrease) in borrowings with maturities
of three months or less 50,300 (23,995)
Proceeds from issuance of borrowings with maturities
in excess of three months 93,200 68,920
Repayment of borrowings with maturities in excess
of three months (70,520)
Increase (decrease) in mortgagors' escrow accounts (71) 58
Proceeds from exercise of stock warrants and options 160 373
Proceeds from issuance of common stock -- 7,585
Proceeds from issuance of subordinated debentures 12,881 --
Cash dividends (716) (349)
--------- ---------
Net cash provided by financing activities 84,564 54,105
--------- ---------
Net increase in cash and cash equivalents 10,138 15,193
Cash and cash equivalents at beginning of period 12,478 11,303
--------- ---------
Cash and cash equivalents at end of period $ 22,616 $ 26,496
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
<TABLE>
<S> <C> <C>
Supplementary information:
Interest paid on deposit accounts $ 5,827 $ 4,369
Interest paid on borrowed funds 4,627 3,796
Transfer from loans to other real estate owned, net 583 170
Income taxes paid 622 11
Change in due from brokers, net 84 325
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.
7
<PAGE> 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
(1) The Consolidated Balance Sheet as of June 30, 1997, and the Consolidated
Statements of Income, Consolidated Statements of Changes in Stockholders'
Equity, and Consolidated Statements of Cash Flows for the periods ended
June 30, 1997 and 1996 of People's Bancshares, Inc. and Subsidiaries (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.
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, 1996.
(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. Weighted average equivalent shares
outstanding for the quarters ended June 30, 1997 and 1996 were
approximately 3,663,000 and 3,498,000, respectively.
(3) SUBORDINATED DEBENTURES
-----------------------
On June 26, 1997, the Company raised total proceeds of $13.8 million in a
sale of subordinated debentures to People's Bancshares Capital Trust, a
newly formed subsidiary of the Company. The Trust funded the purchase of
the subordinated debentures through a public offering of 1.38 million
trust preferred securities with a liquidation value of $10 each. Using
interest payments made by the Company on the debentures, the trust is
expected to pay quarterly dividends to preferred security holders. The
annual percentage rate of the interest payable on the subordinated
debentures and distributions payable on the preferred securities is 9.76%.
Dividends on the preferred securities will be cumulative and the trust may
defer the payments for up to five years. The preferred securities mature
in June 2027 unless the Company elects and obtains regulatory approval to
accelerate the maturity date to as early as June 2002. The Company's
interest in the Trust may be included in regulatory Tier 1 capital subject
to a limitation that such amounts not exceed 25% of Tier 1 capital. All
such interest may be included in total risk-based capital.
(4) SUBSEQUENT EVENTS
-----------------
On July 17, 1997, the Company repurchased 355,000 common shares or 9.9% of
its outstanding common stock as of June 30, 1997, at an average cost of
$17.50 in an open market transaction under a repurchase program announced
on July 15, 1997.
8
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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 June 30, 1997 were $585.7 million, an increase of
$89.5 million from December 31, 1996. The increase primarily reflects an
increase of $77.1 million in investment securities consisting primarily of
mortgage-backed securities funded with a $73.0 million increase in borrowed
funds. The Company also raised net proceeds of $12.9 million in a sale of
subordinated debentures to People's Bancshares Capital Trust on June 26, 1997.
Loans
- -----
Total loans and loans held for sale increased $575,000 primarily as a result of
increases in residential mortgage loans offset by a $3.1 million decrease in
loans held for sale. At June 30, 1997, the Company's loans and loans held for
sale were as follows:
<TABLE>
(in millions)
<S> <C>
Residential mortgage loans, including home equity loans $194,200
Commercial, commercial real estate and construction loans 75,959
Consumer loans 6,939
--------
Total $277,098
========
</TABLE>
Deposits
- --------
Total deposits decreased $670,000 to $335.6 million at June 30, 1997 from $336.2
million at December 31, 1996. The decrease in deposits reflects a $3.4 million
increase in IRAs, time certificates of deposit and municipal deposits offset by
a $4.0 million decrease 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.
9
<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 June 30, 1997, the Company's allowance for loan losses totaled $4.4 million
or 1.57% of total loans and loans held for sale and 109.1% of non-performing
loans compared to $4.7 million or 1.71% of total loans and loans held for sale
and 122.1% of non-performing loans at December 31, 1996, and compared to $4.9
million or 1.88% of total loans and loans held for sale and 102.3% of
non-performing loans at June 30, 1996. Management recorded no provision for loan
losses for the three and six month periods ended June 30, 1997, compared to no
provision and $75,000 for the same periods in 1996. The Company recorded a $1.7
million loan loss allowance in connection with the Branch Acquisition in March
1996. Net charge-offs were $23,000 and $361,000 for the three and six month
periods ended June 30, 1997 compared to net charge-offs of $244,000 and $618,000
for the same periods in 1996.
Non-performing assets were $4.6 million or 0.78% of total assets at June 30,
1997 compared to $4.4 million or 0.88% of total assets at December 31, 1996 and
$5.1 million or 0.98% of total assets at June 30, 1996.
Equity
- ------
The Company completed a rights offering on March 8, 1996 raising net proceeds of
$7.5 million through the sale of approximately 968,000 shares of its common
stock. At June 30, 1997, the Company had 3,595,070 common shares outstanding.
RESULTS OF OPERATIONS
- ---------------------
Overview
- --------
Comparisons of year to year operating results have been significantly affected
by the growth of the Bank and its mortgage banking subsidiary, People's Mortgage
Corporation ("PMC") that have resulted in the Company increasing its asset size
from $324.4 million at December 31, 1995 to $585.7 million at June 30, 1997. The
Bank grew by $145.5 million as a result of its purchase of five branches from
subsidiaries of Fleet Bank, N.A. and Shawmut Bank, N.A. (the "Branch
Acquisition") in March 1996. Secondly, operating results have been significantly
affected by the Company increasing its investment portfolio (primarily
mortgage-backed securities) by $102.9 million since December 31, 1995 funded by
an increase of $70.7 million in borrowed funds. Thirdly, operating results have
also been significantly affected by the growth of PMC which is reflected in
gains on sales of loans of $1.8 million, PMC operating expenses of $3.8 million,
and income before income taxes of $487,000 from PMC operations in the first half
of 1997 compared to $1.1 million, $2.3 million, and a net loss before income
taxes of $92,000, respectively, in the corresponding period of 1996. Net income
amounted to $1.3 million and $2.6 million or $0.35
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and $0.71 per share (primary and fully diluted) for the three and six months
ended June 30, 1997 compared to net income of $967,000 and $1.7 million or $0.28
and $0.53 per share (primary and fully diluted) for the same periods in 1996.
Net Interest Income
- -------------------
Net interest income increased $895,000 and $2.4 million for the three and six
months ended June 30, 1997 compared to the same periods in 1996. This change
resulted mostly from increased average earning assets. For the first six months
of 1997, average earning assets increased 25.4% compared to the same period in
1996.
Interest and dividend income increased to $10.3 million and $20.0 million for
the three and six months ended June 30, 1997 from $8.7 million and $15.3 million
for the same periods in 1996. The yield on average earning assets increased to
7.75% and 7.69% for the three and six months ended June 30, 1997 from 7.39% and
7.35% for the same periods in 1996. Yields on loans increased to 8.35% and 8.34%
for the three and six months ended June 30, 1997 compared to 8.19% and 8.25% for
the same periods in 1996. The increase in loan yields is primarily attributable
to the Company's growth in commercial and commercial real estate loans. Yields
on investments increased to 7.17% and 7.05% for the three and six months ended
June 30, 1997 compared to 6.50% and 6.39% for the same periods in 1996.
Interest expense increased to $5.7 million and $11.0 million for the three and
six months ended June 30, 1997 from $4.9 million and $8.6 million for the same
periods in 1996. This increase was due to a $642,000 and $1.2 million increase
in interest expense on borrowed funds and a $94,000 and $1.2 million increase in
interest expense on deposits for the three and six months ended June 30, 1997
compared to the same periods in 1996.
During the first half of 1997, average borrowed funds amounted to $184.8 million
compared to $146.1 million during the same period of 1996. The Company has
increased its use of borrowed funds to fund purchases of mortgage-backed
securities. Rates paid on average borrowed funds were 5.74% and 5.71% for the
three and six months ended June 30, 1997 compared to 5.59% and 5.55% for the
same periods in 1996.
The increase in deposit interest expense was due to an increase in the average
cost of deposits to 3.88% for the six month period ended June 30, 1997 from
3.82% for the same period in 1996. Deposit interest expense also increased due
to an increase in average deposits to $294.0 million for the six months ended
June 30, 1997 compared to $236.9 million for the same period in 1996.
Provision for Loan Losses
- -------------------------
There was no provision for loan losses necessary for the six months ended June
30, 1997. The provision for loan losses amounted to $75,000 for the six month
period in 1996. The prior period provision for loan losses was 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 $1.3 million and $2.6 million for the three and six months
ended June 30, 1997 compared to $1.3 million and $2.2 million for the same
periods in 1996. The year to date increase
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<PAGE> 12
is attributable to a $688,000 increase in gains from sales of loans. The
increase in loan sale gains reflects the growth of People's Mortgage Corporation
since June 30, 1995.
Operating Expenses
- ------------------
Total operating expenses amounted to $3.9 million and $7.6 million for the three
and six months ended June 30, 1997 compared to $3.5 million and $6.2 million for
the same periods in 1996. Operating expenses for the period ended June 30, 1996
include an estimated $293,000 in non-recurring expenses related to the Branch
Acquisition.
Salaries and benefits expense increased $139,000 and $683,000 for the three and
six months ended June 30, 1997 compared to the same periods in 1996. The
increase in salaries and benefits reflects general salary increases, added
lending and PMC staffing, and operations of the five branches acquired in the
Branch Acquisition in 1996.
Occupancy and equipment expense increased $104,000 and $207,000 for the three
and six months ended June 30, 1997 compared to the same periods in 1996. Data
processing expense increased $108,000 and $274,000 for the three and six months
ended June 30, 1997 compared to the same periods in 1996. Professional fees
expense increased $45,000 and $134,000 for the three and six months ended June
30, 1997, compared to the same periods in 1996. Other real estate owned expenses
increased $29,000 and $64,000 for the three and six months ended June 30, 1997
compared to the same periods in 1996. Other general and administrative expenses
increased $38,000 and $68,000 for the three and six months ended June 30, 1997
compared to the same periods in 1996. All increases in operating expense, other
than OREO related expenses, are primarily due to additional costs associated
with acquired branches and the growth of PMC.
Provision for Income Taxes
- --------------------------
The Company recognized income tax expense of $738,000 and $1.5 million in the
three and six months ended June 30, 1997 compared to income tax expense of
$564,000 and $970,000 for the same periods in 1996. The effective tax rate for
the three and six months ended June 30, 1997 was 36.6% and 36.4% compared to
36.8% and 37.0% for the same periods in 1996.
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 June 30, 1997, the Company's capital exceeded all regulatory requirements.
The Company's Tier 1 leverage capital ratio at June 30, 1997 was 7.79%, compared
to 6.01% at December 31, 1996. The increase in the Tier 1 leverage capital ratio
is primarily attributable to the inclusion of $10.9 million of the subordinated
debentures in Tier 1 capital. Federal Reserve guidelines for the calculation of
the Tier 1 leverage capital ratio limit the amount of the Company's interest in
the subordinated debt included in Tier 1 capital to 25% of total Tier 1
capital. All $13.8 million of the total proceeds of the
12
<PAGE> 13
subordinated debentures is included in total risk-based capital. At June 30,
1997, the Company's risk-based capital ratio was 16.7%. The Company's book value
per share was $9.31 at June 30, 1997, $8.72 at December 31, 1996, and $8.25 at
June 30, 1996.
Other Information
- -----------------
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. The branch acquisition was completed on March 8, 1996.
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 July 31, 1997, the Company declared an $0.11 dividend to be paid on August
29, 1997 to shareholders of record on August 15, 1997.
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<PAGE> 14
PART II - OTHER INFORMATION
ITEM 5 OTHER INFORMATION
- ------
On July 15, 1997, the Company announced that it was commencing a
program for the repurchase of up to 10% of its outstanding shares of
common stock in the open market or through block purchases. On July
12, 1997, the Company announced that it had repurchased 355,000
shares, or 9.906 of its outstanding shares of common stock as of June
30, 1997, at an average cost of $17.50 in an open market transaction.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
- -----
(a) Exhibits
Exhibit Description
- ------- -----------
3.1 Restated Articles of Organization of the Company (filed as Exhibit 3.1
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference)
3.2 By-laws of the Company, as amended and restated (filed as Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference)
4.1 Specimen certificate for shares of Common Stock of the Company (filed
as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference)
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)
27 Financial Data Schedule (Filed herewith).
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended June 30, 1997
14
<PAGE> 15
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.
8/14/97 By: /s/ Richard S. Straczynski
- ---------------- -------------------------------------
Date Richard S. Straczynski
President and Chief Executive Officer
8/14/97 By: /s/ Colin C. Blair
- ---------------- -------------------------------------
Date Colin C. Blair
Chief Financial Officer and Treasurer
15
<PAGE> 16
EXHIBIT INDEX
Exhibit Description
- ------- -----------
3.1 Restated Articles of Organization of the Company (filed as Exhibit 3.1
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference)
3.2 By-laws of the Company, as amended and restated (filed as Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference)
4.1 Specimen certificate for shares of Common Stock of the Company (filed
as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference)
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)
27 Financial Data Schedule (Filed herewith).
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PEOPLE'S
BANCSHARES, INC. AND SUBSIDIARIES QUARTERLY FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 13,598
<INT-BEARING-DEPOSITS> 9,018
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 269,610
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 254,557
<ALLOWANCE> 4,355
<TOTAL-ASSETS> 585,678
<DEPOSITS> 335,568
<SHORT-TERM> 63,200
<LIABILITIES-OTHER> 5,940
<LONG-TERM> 147,500
0
0
<COMMON> 360
<OTHER-SE> 33,110
<TOTAL-LIABILITIES-AND-EQUITY> 585,678
<INTEREST-LOAN> 11,150
<INTEREST-INVEST> 8,808
<INTEREST-OTHER> 58
<INTEREST-TOTAL> 20,016
<INTEREST-DEPOSIT> 5,709
<INTEREST-EXPENSE> 10,983
<INTEREST-INCOME-NET> 9,033
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 7,587
<INCOME-PRETAX> 4,063
<INCOME-PRE-EXTRAORDINARY> 4,063
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,584
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
<YIELD-ACTUAL> 3.47
<LOANS-NON> 3,991
<LOANS-PAST> 0
<LOANS-TROUBLED> 197
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,716
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<ALLOWANCE-UNALLOCATED> 892
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