<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 SEPTEMBER 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 September 30, 1997 was 3,283,086.
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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.
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 21,376 $ 12,478
Investment securities, available for sale 266,058 192,517
Investment securities, held to maturity 22,712 --
Loans held for sale 28,207 25,612
Loans 363,487 250,911
Less allowance for loan losses (4,235) (4,716)
-------- --------
Loans, net 359,252 246,195
Other real estate owned, net 125 493
Banking premises and equipment, net 12,929 13,034
Accrued interest receivable 4,038 2,888
Intangible assets 1,208 1,338
Other assets 1,546 1,578
-------- --------
Total assets $717,451 $496,133
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $348,706 $336,238
Borrowed funds 308,450 123,920
Mortgagors' escrow accounts 1,256 973
Accrued expenses and other liabilities 15,824 3,938
Subordinated debentures 13,800 --
-------- --------
Total liabilities 688,036 465,069
-------- --------
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 3,638,086
and 3,562,970 shares 364 356
Additional paid-in capital 23,376 22,967
Retained earnings 11,287 8,562
-------- --------
35,027 31,885
Treasury stock, at cost - 355,000 shares (6,213) --
Net unrealized gain (loss) on securities available
for sale, after tax effects 601 (821)
-------- --------
Total stockholders' equity 29,415 31,064
-------- --------
Total liabilities and stockholders' equity $717,451 $496,133
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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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 Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1997 1996 1997 1996
------- ------- ------- --------
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 6,538 $ 5,564 $17,688 $ 14,374
Interest and dividends on investment securities 4,706 3,651 13,514 10,041
Interest on short-term investments 150 59 208 123
------- ------- ------- --------
Total interest and dividend income 11,394 9,274 31,410 24,538
------- ------- ------- --------
Interest expense:
Interest on deposits 2,910 2,917 8,619 7,448
Interest on borrowed funds 3,854 2,180 9,128 6,236
------- ------- ------- --------
Total interest expense 6,764 5,097 17,747 13,684
------- ------- ------- --------
Net interest income 4,630 4,177 13,663 10,854
Provision for loan losses -- -- -- 75
------- ------- ------- --------
Net interest income, after provision for loan losses 4,630 4,177 13,663 10,779
------- ------- ------- --------
Other income:
Customer service fees 377 360 1,121 1,077
Gains (losses) on sales of investment securities, net 5 (4) 2 (28)
Gains on sales of loans, net 1,089 424 2,883 1,530
Gain on sale of banking premises and equipment -- -- -- 162
Miscellaneous 55 112 137 330
------- ------- ------- --------
Total other income 1,526 892 4,143 3,071
------- ------- ------- --------
Operating expenses:
Salaries and employee benefits 2,147 2,040 6,326 5,536
Occupancy and equipment 583 400 1,478 1,088
Data processing 322 319 911 634
Professional fees 228 152 584 374
Other real estate owned, net 140 19 231 46
Other general and administrative 820 689 2,297 2,098
------- ------- ------- --------
Total operating expenses 4,240 3,619 11,827 9,776
------- ------- ------- --------
Income before income taxes 1,916 1,450 5,979 4,074
Provision for income taxes 697 476 2,176 1,446
------- ------- ------- --------
Net income $ 1,219 $ 974 $ 3,803 $ 2,628
======= ======= ======= ========
Income per share (primary and fully diluted) $ 0.36 $ 0.28 $ 1.07 $ 0.81
======= ======= ======= ========
Weighted average shares outstanding
(primary and fully diluted) 3,377 3,519 3,552 3,242
======= ======= ======= ========
</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
Nine Months Ended September 30, 1997 and 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Net Unrealized
Gain (Loss) on
Additional Securities
Common Paid-in Retained Treasury Available
Stock Capital Earnings Stock for Sale Total
---- ------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $356 $22,967 $ 8,562 $ -- $ (821) $31,064
Net income -- -- 3,803 -- -- 3,803
Purchase of treasury stock -- -- -- (6,213) -- (6,213)
Cash dividends paid -- -- (1,078) -- -- (1,078)
Exercise of stock options 8 409 -- -- -- 417
Change in net unrealized gain (loss)
on securities available for sale,
after tax effects -- -- -- -- 1,422 1,422
---- ------- ------- ------- ------- -------
Balance at September 30, 1997 $364 $23,376 $11,287 $(6,213) $ 601 $29,415
=== ==== ==== ======= ======= ======= ======= =======
Balance at December 31, 1995 $232 $14,015 $ 5,870 $ -- $ (440) $19,677
Net income -- -- 2,628 -- -- 2,628
Cash dividends paid -- -- (586) -- -- (586)
Exercise of stock warrants 8 448 -- -- -- 456
Exercise of stock options 2 53 -- -- -- 55
Issuance of common stock 97 7,440 -- -- -- 7,537
Change in net unrealized gain (loss)
on securities available for sale,
after tax effects -- -- -- -- (943) (943)
---- ------- ------- ------- ------- -------
Balance at September 30, 1996 $339 $21,956 $ 7,912 $ -- $(1,383) $28,824
==== ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,803 $ 2,628
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Provision for loan losses -- 75
Depreciation and amortization 1,067 737
Gain on sale of banking premises and equipment -- (162)
(Gains) losses on sales of investment securities, net (2) 28
Loans originated for sale (185,313) (160,668)
Principal balance of loans sold 182,718 155,465
Provisions, and gain or loss on sales of other real
estate owned, net 65 (97)
Change in other assets, net of other liabilities (344) 138
--------- ---------
Net cash provided (used) by operating activities 1,994 (1,856)
--------- ---------
Cash flows from investing activities:
Cash and cash equivalents received through acquisition -- 20,664
Proceeds from sales of investment securities available
for sale 97,323 41,809
Proceeds from maturities of investment securities
available for sale 2,500 2,000
Proceeds from amortization of mortgage-backed securities
available for sale 92,045 30,917
Purchase of investment securities available for sale (255,604) (124,105)
Purchase of investment securities held to maturity (18,972) --
Loan (originations and purchases) amortization and
payoffs, net (114,146) (4,617)
Proceeds from sales of other real estate owned 1,126 594
Proceeds from sale of banking premises and equipment -- 424
Additions to banking premises and equipment, net (649) (1,617)
--------- ---------
Net cash used in investing activities (196,377) (33,931)
--------- ---------
Cash flows from financing activities:
Net increase in deposits 12,468 19,826
Net increase (decrease) in borrowings with maturities
of three months or less 31,350 (27,445)
Proceeds from issuance of borrowings with maturities
in excess of three months 227,200 68,920
Repayment of borrowings with maturities in excess
of three months (74,020) (26,950)
Increase in mortgagors' escrow accounts 283 284
Proceeds from exercise of stock warrants and options 417 511
Proceeds from issuance of common stock -- 7,537
Proceeds from issuance of subordinated debentures 12,874 --
Payments to acquire treasury stock (6,213) --
Cash dividends (1,078) (586)
--------- ---------
Net cash provided by financing activities 203,281 42,097
--------- ---------
Net increase in cash and cash equivalents 8,898 6,310
Cash and cash equivalents at beginning of period 12,478 11,303
--------- ---------
Cash and cash equivalents at end of period $ 21,376 $ 17,613
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
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<TABLE>
<S> <C> <C>
Supplementary information:
Interest paid on deposit accounts $ 8,729 $ 7,244
Interest paid on borrowed funds 8,231 6,075
Transfer from loans to other real estate owned, net 823 249
Income taxes paid 1,687 33
Change in due to/from brokers, net 11,160 685
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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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Balance Sheet as of September 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 September 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 September 30, 1997
and 1996 were approximately 3,377,000 and 3,519,000, 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
which funded the purchase in 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 pays 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. This subordinated debt may be included in
regulatory Tier 1 capital subject to a limitation that such amounts not
exceed 25% of Tier 1 capital. All such subordinated debt may be included
in total risk-based capital.
(4) TREASURY STOCK
On July 17, 1997, the Company repurchased 355,000 common shares or 9.9%
of its outstanding 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.
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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 September 30, 1997 were $717.5 million, an
increase of $221.3 million from December 31, 1996. This increase includes an
increase of $96.3 million in investment securities consisting primarily of
mortgage-backed securities and an increase of $112.6 million in loans as a
result of the purchase of $115.3 million in 1-4 family residential mortgage
loans. These transactions were funded with an $184.5 million increase in
borrowed funds and net proceeds of $12.9 million from the sale of subordinated
debentures to People's Bancshares Capital Trust on June 26, 1997.
LOANS
Total loans and loans held for sale increased $115.2 million primarily as a
result of the purchase of residential mortgage loans. At September 30, 1997, the
Company's loans and loans held for sale were as follows:
<TABLE>
<S> <C>
(in millions)
Residential mortgage loans, including
home equity loans $310,220
Commercial, commercial real estate
and construction loans 74,837
Consumer loans 6,637
--------
Total $391,694
========
</TABLE>
DEPOSITS
Total deposits increased $12.5 million to $348.7 million at September 30, 1997
from $336.2 million at December 31, 1996. The increase in deposits reflects a
$21.5 million increase in IRAs, time certificates of deposit, and municipal
deposits offset by a $9.1 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
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potential loss exposure on significant credits, concentrations of credit, and
present and prospective economic conditions based on facts then known.
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 September 30, 1997, the Company's allowance for loan losses totaled $4.2
million or 1.08% of total loans and loans held for sale and 120.3% 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 $4.7 million or 1.79% of total loans and loans held for sale and
93.2% of non-performing loans at September 30, 1996. Management recorded no
provision for loan losses for the three and nine month periods ended September
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
acquisition of five branches from Fleet Bank, N.A. and Shawmut Bank, N.A. (the
"Branch Acquisition") in March 1996. Net charge-offs were $120,000 and $481,000
for the three and nine month periods ended September 30, 1997 compared to net
charge-offs of $175,000 and $793,000 for the same periods in 1996.
Non-performing assets were $3.6 million or 0.51% of total assets at September
30, 1997 compared to $4.4 million or 0.88% of total assets at December 31, 1996
and $5.3 million or 1.04% of total assets at September 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. On July 17, 1997, the Company repurchased 355,000 common shares or 9.9%
of its outstanding 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.
At September 30, 1997, the Company had 3,283,086 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 $717.5 million at September 30,
1997. First, in March 1996, the Branch Acquisition resulted in growth of $145.5
million. Secondly, operating results have been significantly affected by the
Company increasing its investment portfolio (primarily mortgage-backed
securities) by $122.1 million and purchasing
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$128.7 million in residential mortgages since December 31, 1995. Increased
borrowings of $182.2 million and net proceeds of $12.9 from the sale of
subordinated debentures provided funding for these purchases. Thirdly, operating
results have also been significantly affected by the growth of PMC which is
reflected in gains on sales of loans of $2.9 million, interest and other income
of $1.6 million, PMC operating expenses of $3.7 million, and income before
income taxes of $808,000 from PMC operations in the first nine months of 1997
compared to $1.5 million, $545,000, $2.3 million, and a net loss before income
taxes of $12,000, respectively, in the corresponding period of 1996. Return on
average assets was 0.78% and 0.88% and return on average equity was 16.53% and
16.33% for the three and nine month periods ended September 30, 1997. Return on
average assets was 0.75% for the three and nine month periods ended September
30, 1996 and return on average equity was 12.33% and 13.24% for the same periods
in 1996. Net income amounted to $1.2 million and $3.8 million or $0.36 and $1.07
per share (primary and fully diluted) for the three and nine months ended
September 30, 1997 compared to net income of $974,000 and $2.6 million or $0.28
and $0.81 per share (primary and fully diluted) for the same periods in 1996.
NET INTEREST INCOME
Net interest income increased $453,000 and $2.8 million for the three and nine
months ended September 30, 1997 compared to the same periods in 1996. This
change resulted mostly from increased average earning assets. For the first nine
months of 1997, average earning assets increased 24% compared to the same period
in 1996.
Interest and dividend income increased to $11.4 million and $31.4 million for
the three and nine months ended September 30, 1997 from $9.3 million and $24.5
million for the same periods in 1996. The yield on average earning assets
increased to 7.54% and 7.63% for the three and nine months ended September 30,
1997 from 7.49% and 7.39% for the same periods in 1996. Yields on loans
decreased from 8.42% for the three months ended September 30, 1996 to 8.28% for
the same period in 1997 compared to an increase from 8.29% for the nine months
ended September 30, 1996 to 8.31% for the same period in 1997. Yields on
investments increased to 6.77% and 6.95% for the three and nine months ended
September 30, 1997 compared to 6.46% and 6.41% for the same periods in 1996.
Interest expense increased to $6.8 million and $17.7 million for the three and
nine months ended September 30, 1997 from $5.1 million and $13.7 million for the
same periods in 1996. This increase was due to a $1.7 million and $2.9 million
increase in interest expense on borrowed funds for the three and nine months
ended September 30, 1997. Interest expense on deposits decreased $7,000 for the
three months ended September 30, 1997 and increased $1.2 million for the nine
months ended September 30, 1997.
During the first nine months of 1997, average borrowed funds amounted to $207.1
million compared to $150.1 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 6.12% and 5.88% for the
three and nine months ended September 30, 1997 compared to 5.54% for the same
periods in 1996.
Deposit interest expense increased due to an increase in average deposits to
$297.4 million for the nine months ended September 30, 1997 compared to $254.2
million for the same period in 1996. The increase in deposit interest expense
due to the increase in average deposits was partially offset by a decrease in
the average cost of deposits to 3.82% and 3.86% for the three
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and nine month periods ended September 30, 1997 from 4.01% and 3.91% for the
same period in 1996.
PROVISION FOR LOAN LOSSES
There was no provision for loan losses necessary for the nine months ended
September 30, 1997. The provision for loan losses amounted to $75,000 for the
nine 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 a provision for loan losses.
OTHER INCOME
Other income was $1.5 million and $4.1 million for the three and nine months
ended September 30, 1997 compared to $892,000 and $3.1 million for the same
periods in 1996. The year to date increase is attributable to a $1.4 million
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 $4.2 million and $11.8 million for the
three and nine months ended September 30, 1997 compared to $3.6 million and $9.8
million for the same periods in 1996. Operating expenses for the period ended
September 30, 1996 include an estimated $343,000 in non-recurring expenses
related to the Branch Acquisition.
Salaries and benefits expense increased $107,000 and $790,000 for the three and
nine months ended September 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 $183,000 and $390,000 for the three
and nine months ended September 30, 1997 compared to the same periods in 1996.
Data processing expense increased $3,000 and $277,000 for the three and nine
months ended September 30, 1997 compared to the same periods in 1996.
Professional fees expense increased $76,000 and $210,000 for the three and nine
months ended September 30, 1997, compared to the same periods in 1996. Other
real estate owned expenses increased $121,000 and $185,000 for the three and
nine months ended September 30, 1997 compared to the same periods in 1996. Other
general and administrative expenses increased $131,000 and $199,000 for the
three and nine months ended September 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 $697,000 and $2.2 million in the
three and nine months ended September 30, 1997 compared to income tax expense of
$476,000 and $1.4 million for the same periods in 1996. The effective tax rate
for the three and nine months ended September 30, 1997 was 36.4% compared to
32.8% and 35.5% for the same periods in 1996.
LIQUIDITY AND CAPITAL RESOURCES
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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 current needs.
At September 30, 1997, the Company's capital exceeded all regulatory
requirements. The Company's Tier 1 leverage capital ratio at September 30, 1997
was 5.97%, compared to 6.01% at December 31, 1996. Federal Reserve guidelines
for the calculation of the Tier 1 leverage capital ratio limit the amount of
subordinated debt included in Tier 1 capital to 25% of total Tier 1 capital. All
$13.8 million of the total proceeds of the Company's subordinated debentures is
included in total risk-based capital. At September 30, 1997, the Company's
risk-based capital ratio was 11.57%. The Company's book value per share was
$8.96 at September 30, 1997, $8.72 at December 31, 1996, and $8.49 at September
30, 1996.
OTHER INFORMATION
On October 31, 1997, the Company declared an $0.11 dividend to be paid on
November 28, 1997 to shareholders of record on November 14, 1997.
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PART II - OTHER INFORMATION
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 September 30, 1997.
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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.
11/14/97 By: /s/ Richard S. Straczynski
- ----------------------- -------------------------------------
Date Richard S. Straczynski
President and Chief Executive Officer
11/14/97 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 NINE
MONTHS ENDED SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 10,868
<INT-BEARING-DEPOSITS> 10,508
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 266,058
<INVESTMENTS-CARRYING> 22,712
<INVESTMENTS-MARKET> 22,552
<LOANS> 391,694
<ALLOWANCE> 4,235
<TOTAL-ASSETS> 717,451
<DEPOSITS> 348,706
<SHORT-TERM> 44,250
<LIABILITIES-OTHER> 17,080
<LONG-TERM> 278,000
0
0
<COMMON> 364
<OTHER-SE> 29,051
<TOTAL-LIABILITIES-AND-EQUITY> 717,451
<INTEREST-LOAN> 17,688
<INTEREST-INVEST> 13,514
<INTEREST-OTHER> 208
<INTEREST-TOTAL> 31,410
<INTEREST-DEPOSIT> 8,619
<INTEREST-EXPENSE> 17,747
<INTEREST-INCOME-NET> 13,663
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 11,827
<INCOME-PRETAX> 5,979
<INCOME-PRE-EXTRAORDINARY> 5,979
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,803
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
<YIELD-ACTUAL> 3.32
<LOANS-NON> 3,519
<LOANS-PAST> 0
<LOANS-TROUBLED> 187
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,716
<CHARGE-OFFS> (638)
<RECOVERIES> 157
<ALLOWANCE-CLOSE> 4,235
<ALLOWANCE-DOMESTIC> 3,583
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 652
</TABLE>
