<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
EAGLE FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6712 06-1194047
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation)
Classification Code Number) Identification Number)
</TABLE>
------------------------
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
(203) 589-4600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
MARK J. BLUM
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
EAGLE FINANCIAL CORP.
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
(203) 589-4600
(Name, address, including zip code, and telephone number, including
area code, of registrant's agent for service)
------------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
CHARLES E. ALLEN, Esq. MITCHELL KLEINMAN, Esq.
STUART G. STEIN, Esq. Brown & Wood
Hogan & Hartson L.L.P. One World Trade Center
555 Thirteenth Street, N.W. New York, NY 10048
Washington, D.C. 20004 (212) 839-5300
(202) 637-5600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. / /
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
AGGREGATE MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED (1) SHARE (2) PRICE (2) FEE (2)
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share.................. 1,299,500 shares $22.125 $28,751,437.50 $9,914.29
<FN>
(1) Includes 169,500 shares subject to the exercise of the Underwriter's
over-allotment option.
(2) In accordance with Rule 457(c) (17 C.F.R. Section 230.457(c)), the offering
price per share of Common Stock is based upon the average of the high and
low prices of such stock on August 3, 1994, as reported on the American
Stock Exchange.
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EAGLE FINANCIAL CORP.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NUMBERS AND FORM S-2 CAPTION LOCATION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus............................ Forepart of Registration Statement and Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... The Company; Selected Financial and Other Data
4. Use of Proceeds...................................... Use of Proceeds
5. Determination of Offering Price...................... Underwriting
6. Dilution............................................. Not applicable
7. Selling Security Holders............................. Not applicable
8. Plan of Distribution................................. Underwriting
9. Description of Securities to be Registered........... Description of Capital Stock
10. Interests of Named Experts and Counsel............... Not applicable
11. Information With Respect to the Registrant........... The Company; Market Prices and Dividends;
Capitalization; Selected Financial and Other Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Description of
Capital Stock; Consolidated Financial Statements;
Available Information; Incorporation of Certain
Documents by Reference
12. Incorporation of Certain Documents by Reference...... Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 9, 1994
PROSPECTUS
1,130,000 SHARES
EAGLE FINANCIAL CORP.
COMMON STOCK
All 1,130,000 shares of common stock, par value $.01 per share ("Common
Stock") offered hereby (the "Offering") are being sold by Eagle Financial Corp.
("Eagle" or the "Company"), the holding company of Eagle Federal Savings Bank.
The Common Stock is traded on the American Stock Exchange ("AMEX") under the
symbol "EAG." On August 3, 1994, the closing price of the Common Stock on the
AMEX was $22.125 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION, AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE
FUND OR ANY OTHER GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)(3)
<S> <C> <C> <C>
Per Share......................... $ $ $
Total............................. $ $ $
</TABLE>
(1) The Company has agreed to indemnify Keefe, Bruyette & Woods, Inc. (the
"Underwriter") against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(2) Before deducting estimated expenses of $ relating to the Offering
payable by the Company. See "Use of Proceeds."
(3) The Company has granted the Underwriter a 30-day option to purchase up to an
additional 169,500 shares of Common Stock to cover over-allotments, if any.
If such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the Underwriter, subject to prior
sale, when, as and if issued to and accepted by the Underwriter, subject to
approval of certain legal matters by counsel for the Underwriter and subject to
certain other conditions. The Underwriter reserves the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of certificates for shares of Common Stock will be made in New
York, New York on or about , 1994.
------------------------
KEEFE, BRUYETTE & WOODS, INC.
---------------
The date of this Prospectus is , 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at Seven World Trade Center, New York, New York 10048 and Suite 1400,
Citicorp Center, 500 West Madison Avenue, Chicago, Illinois 60661. Copies of
such material also can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material also can be inspected at the AMEX, 86 Trinity Place, New York, New
York 10006.
The Company has filed with the Commission in Washington, D.C., a
registration statement on Form S-2 (together with all amendments thereto, the
"Registration Statement") under the Securities Act, with respect to the
securities covered by this Prospectus. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in or incorporated by reference as exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement, including the exhibits
filed or incorporated by reference as a part thereof. Statements contained
herein concerning the provisions of documents filed with, or incorporated by
reference in, the Registration Statement as exhibits are necessarily summaries
of such documents and each such statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission. All
of these documents may be inspected without charge at the offices of the
Commission as described above, and copies may be obtained therefrom at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated by reference herein: Annual Report on Form
10-K for the year ended September 30, 1993, and Amendment No. 1 to the Form 10-K
on Form 10-K/A, as filed on July 12, 1994; Quarterly Reports on Form 10-Q for
the quarters ended December 31, 1993, March 31, 1994 and [June 30, 1994]; and
Current Reports on Form 8-K, as filed on November 12, 1993 and June 24, 1994,
and [Amendment No. 1 to Form 8-K on Form 8-K/A, as filed on August , 1994].
All other reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, since the end of the
fiscal year covered by the Annual Report referred to above and prior to the date
of this Prospectus, shall be deemed to be incorporated by reference in this
Prospectus and to be a part thereof.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents referred to above which have been incorporated
herein by reference, other than exhibits to such documents. Written requests for
such copies should be addressed to Irene K. Hricko, Vice President and Corporate
Secretary, Eagle Financial Corp., 222 Main Street, Bristol, Connecticut, 06010.
Telephone requests may be directed to Ms. Hricko at (203) 489-0441.
2
<PAGE>
EAGLE FINANCIAL CORP.
[MAP]
3
<PAGE>
THE COMPANY
GENERAL -- Eagle is the holding company of Eagle Federal Savings Bank
("Eagle Federal" or the "Bank"). The Company was organized as the holding
company of First Federal Savings and Loan Association of Torrington, Connecticut
("Torrington") upon its conversion to a stock company in 1987. In 1988, BFS
Bancorp, Inc., the holding company of Bristol Federal Savings Bank, Bristol,
Connecticut ("Bristol"), merged into Eagle in a combination structured as a
merger of equals and accounted for as a pooling-of-interests. Bristol had
converted to a stock company in 1987. Torrington and Bristol have operated as
savings institutions since 1919 and 1924, respectively. In January 1993, Eagle
merged Bristol with Torrington under the new name Eagle Federal Savings Bank.
Unless otherwise stated, all references herein to Eagle or the Company include
Eagle Federal and other subsidiaries on a consolidated basis.
Eagle, at June 30, 1994, had total assets of $1.1 billion, net loans
receivable of $775.1 million, deposits of $982.7 million and shareholders'
equity of $64.6 million. Through Eagle Federal, the Company provides consumer
banking services through 23 banking offices in Connecticut, serving the
Torrington, Bristol, Danbury and Hartford market regions. In the Torrington
market region, Eagle Federal ranks first, along with one other institution, with
a deposit market share of 23% at September 30, 1993. In the Bristol market
region, Eagle Federal ranks second, with a deposit market share of 24% at the
same date. As a community oriented savings bank, Eagle Federal focuses on the
financial needs of its customers in these local markets, seeking to develop
long-term deposit and lending relationships. In its lending activities, the Bank
stresses asset quality through its emphasis on 1-4 family first mortgage lending
in its local markets and the use of conservative loan underwriting standards.
Deposit accounts at the Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC").
Eagle's net income has increased each of the previous five fiscal years from
$3.5 million, or $1.17 per share, in fiscal 1989 to $6.2 million, or $1.97 per
share, in fiscal 1993. Eagle's net income for the nine months ended June 30,
1994 was $5.6 million, compared to $4.7 million for the same nine month period
in fiscal 1993.
Eagle intends to continue to concentrate on increasing its earnings,
maintaining high asset quality, meeting customer needs in its existing local
markets, and expanding through selected future acquisitions.
Eagle's principal executive office is located at 222 Main Street, Bristol,
Connecticut 06010 and its telephone number is (203) 589-4600.
RECENT ACQUISITIONS -- In recent periods, Eagle has significantly expanded
its operations through three federally assisted acquisitions in which Eagle
Federal acquired certain assets and assumed deposit liabilities from the FDIC or
the Resolution Trust Corporation ("RTC"), as shown below. Substantially all of
the loans acquired in these acquisitions consisted of 1-4 family residential
first mortgage loans and home equity loans. In The Bank of Hartford, Inc. ("Bank
of Hartford") transaction, Eagle Federal also acquired $72.7 million of
investment securities, substantially all of which are U.S. Treasury and
government agency obligations, and loan servicing rights on $80.5 million of
loans with an average loan servicing fee of 0.375%. In addition to these
assisted
4
<PAGE>
acquisitions, Eagle Federal in July 1993 purchased from another savings
institution a banking office in Brookfield, Connecticut with $8.2 million in
deposits, and relocated its previously acquired Brookfield office to that
location.
<TABLE>
<CAPTION>
BANKING
DEPOSITS LOANS INTANGIBLE NET CASH OFFICES
ASSISTED ACQUISITION ASSUMED ACQUIRED ASSETS RECEIVED ACQUIRED ACQUISITION DATE
- ------------------------------------ --------- --------- ----------- --------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Danbury Federal Savings $113.7 $85.0 $1.2 $32.8 6 March 13, 1992
and Loan Association............... million million million million
("Danbury Federal")
Danbury, CT
Brookfield Bank..................... $66.5 -- $595,000 $66.0 1 May 8, 1992
Brookfield, CT million million
Bank of Hartford.................... $275.0 $80.6 $11.9 $112.4 6 June 10, 1994
Hartford, CT million million million million(a)
- --------
<FN>
(a) Includes $9.7 million cash receivable from the FDIC.
</TABLE>
Eagle has pursued acquisitions which complement its existing operations and
market area. Each of the assisted acquisitions made by the Bank has had an
immediate positive impact on the Company's net income and allowed it to maintain
asset quality. By primarily pursuing assisted acquisitions involving the FDIC or
the RTC, the Company believes that it has successfully expanded at a reasonable
cost and without dilution to shareholder value.
Eagle's expansion strategy is reflected in its recent acquisition of the
Bank of Hartford, which represents a natural extension of Eagle's existing
markets since many residents of Bristol and Torrington commute to the Hartford
area. The Hartford market area is contiguous to Eagle's current market areas,
and has a higher population density and is generally more affluent than the
Bristol and Torrington markets. The Company believes that its expansion into the
Hartford market area creates an additional opportunity for loan originations. In
addition, the combination of size, geographical proximity and cost of the
acquired banking offices is expected to have a positive impact on the Company's
efficiency ratio.
BUSINESS -- As a holding company, the business operations of Eagle are
conducted through the Bank. The Bank primarily is engaged in the business of
accepting deposits from the general public and using such funds in the
origination of first mortgage loans for the purchase, refinance or construction
of 1-4 family homes. At June 30, 1994, 99.3%, or $780.6 million, of the Bank's
$786.1 million total loans receivable was secured by real estate. The Bank's
real estate loans include $681.9 million of first mortgage loans secured by 1-4
family residential real estate (86.7% of total loans receivable), $62.0 million
of home equity loans, secured by second deeds of trust on residential real
estate (7.9% of total loans receivable), $36.2 million of multi-family,
commercial real estate, and land loans (4.7% of total loans receivable ). The
remaining $5.9 million of loans (0.7% of total loans receivable) are consumer
loans, primarily loans secured by deposits and personal loans.
Eagle has experienced increased loan originations (excluding purchased
loans), with $209.9 million of originations in fiscal 1993, compared to $163.5
million in fiscal 1992, and $164.1 million for the nine months ended June 30,
1994, compared to $147.8 million for the nine months ended June 30, 1993.
Increased loan origination activity during fiscal 1993 and the first nine months
of fiscal 1994 is due in substantial part to refinancings of mortgage loans in
reaction to generally low market interest rates. However, as a result of recent
increases in mortgage interest rates, Eagle anticipates a decline in 1-4 family
mortgage loan originations and, beginning in fiscal 1995, intends to implement
strategies which will put more emphasis on originating multi-family and other
commercial real estate loans and consumer loans within its primary market areas.
This will involve hiring personnel with proven experience in these types of
commercial real estate and consumer loan products. The marketing of these loans
will focus on Eagle's existing customer base, as well as new relationships
within Eagle's primary market areas.
5
<PAGE>
Based on its lending strategy, Eagle has been able to maintain relatively
stable asset quality. Total non-performing assets of Eagle were $10.4 million at
September 30, 1992, $12.0 million at September 30, 1993 and $12.0 million (or
$9.2 million excluding $2.8 million of non-performing assets acquired in the
Bank of Hartford transaction) at June 30, 1994. At those dates, non-performing
assets constituted 1.81%, 1.81% and 1.54%, respectively, of total loans
receivable and real estate owned. At June 30, 1994, Eagle's allowance for losses
totaled $8.4 million, or 104% of total non-performing loans.
Eagle Federal's funding strategy is focused primarily on developing core
deposits such as regular savings and checking accounts, and attracting long-term
certificates of deposit.
Eagle also makes available to its customers various investment products
through Liberty Securities Corporation, a registered broker-dealer not
affiliated with Eagle. These products include mutual funds, unit investment
trusts and fixed- and variable-rate annuity
contracts, as well as discount brokerage services.
REGULATION -- Eagle, as a unitary thrift holding company, and Eagle Federal,
as its wholly-owned subsidiary, are subject to comprehensive regulation,
supervision and examination by the Office of Thrift Supervision ("OTS"), as the
primary federal regulator of the Bank. The FDIC also has significant regulatory
authority over the Bank. The Board of Governors of the Federal Reserve System
("FRB") has regulatory authority as to certain matters concerning the Bank.
Eagle Federal is a member of the Federal Home Loan Bank ("FHLB") System. FHLB
advances are a source of funds for the Bank.
USE OF PROCEEDS
Net proceeds to Eagle from the sale of the shares of Common Stock offered
hereby are estimated to be $ million ($ million if the Underwriter's
over-allotment option is exercised in full), assuming a price to the public of
$ per share, and after deducting an estimated underwriting discount and other
offering expenses payable by Eagle.
Eagle intends to contribute all of the net proceeds of the Offering to the
Bank as additional capital. This will increase the Bank's core capital from
4.69% at June 30, 1994 to % on a pro forma basis (or % if the
over-allotment option is exercised in full). The additional capital will
effectively restore the Bank's core capital ratio to its position prior to the
June 10, 1994 Bank of Hartford transaction. The additional capital also may
facilitate further acquisitions in Connecticut or other generally adjacent
market areas. There are currently no pending negotiations or assisted bid
submissions as to any acquisition.
6
<PAGE>
MARKET PRICES AND DIVIDENDS
Eagle's Common Stock is traded on the AMEX under the symbol "EAG." The table
below sets forth, for the fiscal periods indicated, the reported high and low
sale prices of the Common Stock on the AMEX and the cash dividends paid per
share. Reported sales prices and cash dividends on the Common Stock have been
adjusted retroactively to give effect to a 10% stock dividend paid in September
1993.
<TABLE>
<CAPTION>
PRICE RANGE
----------------------------------
CASH
HIGH LOW DIVIDENDS
--------- --------- ------------
<S> <C> <C> <C>
Fiscal 1992
First quarter ended December 31, 1991.............................................. $ 11 7/8 $ 9 5/8 $ .15
Second quarter ended March 31, 1992................................................ 17 1/2 11 3/4 .15
Third quarter ended June 30, 1992.................................................. 16 3/8 14 .15
Fourth quarter ended September 30, 1992............................................ 16 3/8 15 .15
Fiscal 1993
First quarter ended December 31, 1992.............................................. 17 3/8 15 .17
Second quarter ended March 31, 1993................................................ 20 1/4 16 3/4 .17
Third quarter ended June 30, 1993.................................................. 19 1/4 16 1/4 .17
Fourth quarter ended September 30, 1993............................................ 19 5/8 16 5/8 .17
Fiscal 1994
First quarter ended December 31, 1993.............................................. 21 5/8 18 3/4 .19
Second quarter ended March 31, 1994................................................ 20 5/8 19 1/8 .19
Third quarter ended June 30, 1994.................................................. 23 5/8 19 1/8 .19
Fourth quarter (through August 3, 1994)............................................ 23 5/8 21 1/4 .19*
<FN>
- ------------------------
*Payable on September 1, 1994 to shareholders of record on August 15, 1994.
</TABLE>
On August 3, 1994, the closing sale price of the Common Stock, as reported
on the AMEX, was $22.125 per share. As of August 3, 1994, there were
approximately 1,850 holders of record of the 3,123,035 shares of Common Stock
then issued and outstanding.
The Board of Directors has declared quarterly cash dividends since shortly
after the Company's initial public offering in 1987. Eagle also established a
dividend reinvestment and stock purchase plan in 1993. Since Eagle has
traditionally invested substantially all of its liquid assets in the Bank as
capital, the payment of quarterly cash dividends by Eagle in the future will
continue to be dependent upon the Bank paying cash dividends to Eagle. The
payment of cash dividends by the Bank will depend upon its earnings, financial
condition (including capital needs), regulatory limitations and other factors
deemed relevant by the Board of Directors. See "Description of Capital Stock --
Dividend Limitations" and Note 13 to Consolidated Financial Statements as to
dividend limitations applicable to the Bank.
7
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Eagle and certain
capital ratios of the Bank at June 30, 1994, and as adjusted to give effect to
the issuance of 1,130,000 shares of Common Stock in the Offering and the receipt
of the estimated net proceeds therefrom based on the assumptions set forth in
"Use of Proceeds." The information set forth in the table should be read in
conjunction with the Consolidated Financial Statements of Eagle and the related
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, 1994
------------------------
ACTUAL AS ADJUSTED
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deposits................................................................................ $ 982,673 $ 982,673
----------- -----------
----------- -----------
Borrowings:
FHLB advances......................................................................... $ 23,750 $ 23,750
Other borrowed money.................................................................. 7,892 7,892
----------- -----------
Total borrowings.................................................................... $ 31,642 $ 31,642
----------- -----------
----------- -----------
Shareholders' equity:
Common stock, par value $.01 per share, 8,000,000 shares authorized; 3,118,785 shares
issued and outstanding (excluding treasury shares); as adjusted, 4,248,785 shares
issued and outstanding (excluding treasury shares)................................... $ 32 $ 43
Additional paid-in capital.......................................................... 34,415
Retained earnings..................................................................... 31,777 31,788
Net unrealized loss on securities available for sale.................................. (675) (675)
Cost of common stock in Treasury...................................................... (362) (362)
Employee stock ownership plan stock................................................... (542) (542)
----------- -----------
Total shareholders' equity (a)...................................................... $ 64,645 $
----------- -----------
----------- -----------
Bank capital ratios (a):
Tangible.............................................................................. 4.66% -- %
Core capital.......................................................................... 4.69 --
Risk-based capital.................................................................... 10.59 --
<FN>
- ------------------------
(a) If the Underwriter's over-allotment option is exercised in full,
shareholders' equity, as adjusted, would be increased to $ and the Bank
capital ratios, as adjusted, would be % tangible capital, % core
capital and % risk-based capital.
</TABLE>
8
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The selected consolidated financial information under the captions "Summary
of Operations" and "Balance Sheet Data" below as of September 30, 1993 and
1992 and for each of the three years in the period ended September 30, 1993
has been derived from the audited consolidated financial statements of
the Company, which financial statements have been audited by KPMG Peat
Marwick, independent auditors, as of and for the year ended September 30,
1993, and by Ernst & Young LLP, independent auditors, as of September 30,
1992 and for each of two years in the period ended September 30, 1992. The
selected consolidated financial data set forth below as of September 30, 1991,
1990 and 1989 and for each of the two years in the period ended September 30,
1990 has been derived from the audited consolidated financial statements of
Eagle not separately presented herein. The selected interim consolidated
financial information under such captions, for and at the nine month
periods ended June 30, 1994 and 1993, has been derived from the unaudited
financial statements of the Company included elsewhere herein, and which, in
the opinion of the management, reflect all adjustments, consisting of
normal recurring adjustments, considered necessary for a fair presentation. The
results of operations for such nine-month periods are not necessarily
indicative of the results which may be expected for any other interim period
or for the full year. This information and the information contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" should be read in conjunction with the Consolidated
Financial Statements and related Notes included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
YEARS ENDED SEPTEMBER 30,
--------------------------- ---------------------------------------------------------
1994(A) 1993 1993 1992(B) 1991 1990
------------ ------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income............... $ 42,075 $ 41,940 $ 55,754 $ 51,884 $ 47,271 $ 45,994
Interest expense.............. 20,209 21,567 28,469 29,698 30,639 31,181
------------ ------------ ------------ ------------ ------------ ------------
Net interest income........... 21,866 20,373 27,285 22,186 16,632 14,813
Provision for loan losses..... 900 1,179 1,708 1,646 1,652 281
Other income.................. 2,249 1,808 2,504 2,462 1,653 1,199
Other expenses................ 13,495 12,043 16,292 12,936 9,241 9,514
------------ ------------ ------------ ------------ ------------ ------------
Income before income taxes and
cumulative effect of
accounting changes........... 9,720 8,959 11,789 10,066 7,392 6,217
Income taxes.................. 4,078 4,235 5,637 4,900 3,381 2,684
Less cumulative effect of
accounting changes (c)....... 30 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net income.................... $ 5,612 $ 4,724 $ 6,152 $ 5,166 $ 4,011 $ 3,533
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
PER SHARE DATA (D):
Shareholders' equity (period
end)......................... $ 20.73 $ 19.54 $ 19.78 $ 18.57 $ 17.42 $ 16.67
Net income.................... 1.74 1.51 1.97 1.70 1.37 1.19
Dividends..................... 0.57 0.46 0.63 0.55 0.47 0.46
Dividend payout ratio......... 31.38% 29.49% 31.05% 32.09% 34.44% 38.93%
Weighted average shares
outstanding.................. 3,219,210 3,122,846 3,128,220 3,046,335 2,928,910 2,959,524
BALANCE SHEET DATA (PERIOD
END):
Total assets.................. $ 1,099,726 $ 778,015 $ 792,468 $ 751,171 $ 524,429 $ 480,553
Loans receivable, net......... 775,135 634,619 656,344 568,124 432,507 420,228
Mortgage-backed securities.... 72,712 28,650 25,953 31,652 5,248 6,154
Investment securities
available for sale........... 16,815 5,773 15,599 -- -- --
Investment securities......... 84,415 49,782 46,880 86,019 40,127 16,805
Deposits...................... 982,673 701,407 706,214 677,701 458,074 402,627
FHLB advances and other
borrowings................... 31,642 6,314 16,252 7,326 11,068 25,093
Shareholders' equity.......... 64,645 59,159 60,407 55,004 50,892 48,889
<CAPTION>
1989
------------
<S> <C>
SUMMARY OF OPERATIONS:
Interest income............... $ 43,289
Interest expense.............. 30,238
------------
Net interest income........... 13,051
Provision for loan losses..... 99
Other income.................. 1,350
Other expenses................ 8,611
------------
Income before income taxes and
cumulative effect of
accounting changes........... 5,691
Income taxes.................. 2,225
Less cumulative effect of
accounting changes (c)....... --
------------
Net income.................... $ 3,466
------------
------------
PER SHARE DATA (D):
Shareholders' equity (period
end)......................... $ 15.78
Net income.................... 1.17
Dividends..................... 0.45
Dividend payout ratio......... 38.76%
Weighted average shares
outstanding.................. 2,957,653
BALANCE SHEET DATA (PERIOD
END):
Total assets.................. $ 468,504
Loans receivable, net......... 405,725
Mortgage-backed securities.... 3,847
Investment securities
available for sale........... --
Investment securities......... 17,707
Deposits...................... 380,563
FHLB advances and other
borrowings................... 37,011
Shareholders' equity.......... 46,698
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
YEARS ENDED SEPTEMBER 30,
--------------------------- ---------------------------------------------------------
1994(A) 1993 1993 1992(B) 1991 1990
------------ ------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
PERFORMANCE RATIOS (E):
<S> <C> <C> <C> <C> <C> <C>
Return on average assets...... 0.90% 0.82% 0.79% 0.81% 0.80% 0.75%(i)
Return on average
shareholders' equity......... 12.01 11.08 10.69 9.80 8.05 7.39(i)
Net interest margin (f)....... 3.61 3.65 3.64 3.59 3.43 3.27
Average interest rate
spread (g)................... 3.39 3.42 3.40 3.26 2.88 2.64
Operating expenses to average
assets....................... 2.15 2.08 2.10 2.02 1.84 2.02(j)
Efficiency ratio (h).......... 56 54 55 52 51 59
ASSET QUALITY RATIOS:
Non-performing assets to loans
receivable, net, and real
estate owned (k)............. 1.54% 1.93% 1.81% 1.81% 2.18% 1.04%
Allowance for loan losses to
loans receivable (l)......... 1.07 0.70 0.76 0.70 0.36 0.12
Allowance for loan losses to
non-performing loans......... 104 71 77 100 27 13
Non-performing assets to total
assets....................... 1.09 1.58 1.51 1.38 1.81 0.91
Net charge-offs to average
loans receivable (for
the period).................. 0.15 0.12 0.11 0.19 0.14 --
CAPITAL RATIOS (PERIOD END):
Shareholders' equity to total
assets....................... 5.88% 7.60% 7.62% 7.32% 9.71% 10.17%
Tangible capital.............. 4.66 7.18 7.26 6.87 9.68 9.94
Core capital.................. 4.69 7.24 7.31 6.87 9.69 9.94
Risk-based capital............ 10.59 13.40 14.21 13.74 17.68 19.14
<CAPTION>
1989
------------
PERFORMANCE RATIOS (E):
<S> <C>
Return on average assets...... 0.76%
Return on average
shareholders' equity......... 7.60
Net interest margin (f)....... 2.96
Average interest rate
spread (g)................... 2.34
Operating expenses to average
assets....................... 1.89
Efficiency ratio (h).......... 60
ASSET QUALITY RATIOS:
Non-performing assets to loans
receivable, net, and real
estate owned (k)............. 0.50%
Allowance for loan losses to
loans receivable (l)......... 0.05
Allowance for loan losses to
non-performing loans......... 18
Non-performing assets to total
assets....................... 0.44
Net charge-offs to average
loans receivable (for
the period).................. --
CAPITAL RATIOS (PERIOD END):
Shareholders' equity to total
assets....................... 9.97%
Tangible capital.............. N/A
Core capital.................. N/A
Risk-based capital............ N/A
<FN>
- ------------------------------
(a) Includes assisted acquisition on June 10, 1994 from the FDIC of certain
assets and the assumption of all deposit liabilities of Bank of Hartford.
(b) Includes assisted acquisitions of certain assets and the assumption of
insured deposit liabilities of Danbury Federal on March 13, 1992 from the
RTC and of Brookfield Bank on May 8, 1992 from the FDIC.
(c) During the three months ended December 31, 1993, Eagle adopted two new
accounting standards, SFAS Nos. 106 and 109, and accounted for the
adoptions as cumulative effects of accounting changes. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- Comparison of Nine Months Ended June 30, 1994 and
1993 -- Cumulative Effect of Accounting Changes."
(d) All per share data and the weighted average shares outstanding at and for
all periods prior to September 30, 1993 have been adjusted to give effect
to a 10% stock dividend to shareholders paid in September 1993. All
computations are net of treasury shares.
(e) Ratios for nine months ended June 30, 1994 and 1993 are annualized, where
appropriate.
(f) Net interest income divided by average interest-earning assets.
(g) Yield on interest-earning assets less rate paid on interest-bearing
liabilities (including non-interest bearing demand deposits).
(h) Other expenses divided by total of net interest income and other income.
(i) Includes impact of non-recurring expenses related to a terminated merger
transaction.
(j) Includes non-recurring expenses related to a terminated merger transaction;
1.93% with such expenses excluded.
(k) Non-performing assets include non-accrual loans, and real estate acquired
in settlement of loans and in-substance repossessed real estate, net of
related reserves.
(l) Loans receivable are net of unearned discounts and premiums, loans in
process and deferred loan origination fees.
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
At June 30, 1994, Eagle had total assets of $1.1 billion, compared to $792.5
million and $751.2 million at September 30, 1993 and 1992, respectively. The
primary reason for the growth from fiscal year end 1993 to June 30, 1994 is the
recent Bank of Hartford transaction in which Eagle acquired $267.3 million of
assets. See "-- Financial Condition." The increase in assets during fiscal 1993
reflects $209.9 million of total loan originations during the year, which
resulted in growth of $88.2 million, or 15.5%, in the net loans receivable
portfolio from fiscal year end 1992 to 1993. Deposits grew to $982.7 million at
June 30, 1994 from $706.2 million at September 30, 1993 and $677.7 million at
September 30, 1992. The growth in deposits includes the impact of the May 1993
purchase of a branch banking office located in Brookfield, Connecticut with $8.2
million in deposits and the June 1994 assumption of $275.0 million of deposits
of the Bank of Hartford. As a result of its acquisitions and opening one new
branch in the Bristol region in January 1992, Eagle's banking offices increased
to 23 at June 30, 1994 from nine at September 30, 1991.
For the nine months ended June 30, 1994, Eagle had net income of $5.6
million, or $1.74 per share, compared to $4.7 million, or $1.51 per share, for
the same period in 1993. For the years ended September 30, 1993 and 1992,
Eagle's net income was $6.2 million, or $1.97 per share, and $5.2 million, or
$1.70 per share, respectively. Eagle's return on average shareholders' equity
for the nine months ended June 30, 1994 and the years ended September 30, 1993
and 1992 was 12.01% (annualized), 10.69% and 9.80%, respectively. For the same
periods, Eagle's return on average assets was 0.90%, 0.79% and 0.81%,
respectively.
Increases in net income since fiscal 1991 are principally attributable to
increases in the average balance, or volume, of interest-earning assets, as
interest rate margins remained relatively stable over such periods. Since the
second quarter of fiscal 1994, however, interest rates have risen. As a result,
those of Eagle's assets which are subject to repricing in the short-term have
begun to earn higher yields. In contrast, the prevailing market interest rates
paid on deposit liabilities, Eagle's primary source of funds and largest amount
of interest-bearing liabilities, have not significantly increased. Eagle
anticipates that if market interest rates continue to rise, the cost of
interest-bearing deposits will increase, thereby having a negative impact on
Eagle's average interest rate spread and net interest margin.
The operations of the Company and the entire thrift industry are
significantly affected by prevailing economic conditions, competition and the
monetary and fiscal policies of governmental agencies. Lending activities are
influenced by the demand for and supply of housing, competition among lenders,
the level of interest rates and the availability of funds. Deposit flow and
costs of funds are influenced by prevailing market rates of interest, primarily
on competing investments, account maturities, and the levels of personal income
and savings nationwide.
RESULTS OF OPERATIONS -- BANK OF HARTFORD ACQUISITION
The Bank of Hartford acquisition was completed on June 10, 1994 and,
although reflected in the financial condition of Eagle at June 30, 1994, did not
have a significant impact on Eagle's operating results for the nine months ended
June 30, 1994. As part of the acquisition, Eagle assumed deposits with a
weighted average interest cost of 3.82% at June 30, 1994. Eagle also acquired
$80.6 million of loans with a weighted average yield of 8.33% at June 30, 1994
and $72.7 million of investment securities priced at fair market value as of
June 10, 1994 (the date of acquisition). Eagle also received $112.4 million in
cash and cash receivables from the FDIC, substantially all of which was invested
initially in short-term securities
and interest-bearing accounts. Eagle intends to utilize such funds primarily for
origination of loans and, to a lesser extent, to purchase mortgage-backed and
investment securities. See "-- Financial Condition." In addition, Eagle
purchased the loan servicing rights on $80.5 million of loans with an average
loan servicng fee of 0.375%.
11
<PAGE>
The Bank of Hartford transaction is expected to have a positive impact on
the Company's efficiency ratio (other expenses to net interest income and other
income). As to other expenses, Eagle believes that the primary impact of the
transaction will be additional office occupancy and compensation related
expenses for the six new banking offices acquired. Eagle has retained
approximately 50 former branch personnel of the Bank of Hartford to operate the
new banking offices. Other expenses such as federal insurance premiums and data
processing expense also will increase as a result of the increase in deposit
accounts. As to the six new offices, as of June 30, 1994 the average amount of
deposits held in each office was $41.6 million, which approximates the average
amount of deposits held in the other banking offices of Eagle.
As part of the Bank of Hartford acquisition, Eagle intends to purchase for
$65,000 three former Bank of Hartford banking offices. Based on current
appraisals, Eagle believes that the fair value of the purchased offices will
exceed significantly the amount of the purchase price. The final determination
of fair value is subject to further review of current appraisals and
environmental issues related to the purchased offices. The amount of any excess
of fair value over the purchase price will result in a corresponding increase in
the carrying value of the purchased premises and a reduction in the amount of
the intangible asset that resulted from the Bank of Hartford transaction.
RESULTS OF OPERATIONS -- COMPARISON OF NINE MONTHS ENDED JUNE 30, 1994 AND 1993
NET INCOME -- Eagle had net income of $5.6 million, or $1.74 per share, for
the nine months ended June 30, 1994, an increase of $888,000, or 18.8%, from net
income of $4.7 million, or $1.51 per share, for the comparable period in 1993.
Net interest income increased $1.5 million, or 7.3%, from $20.4 million for the
nine months ended June 30, 1993 to $21.9 million for the comparable period in
1994. Other income increased $441,000, or 24.4%, to $2.2 million for the nine
months ended June 30, 1994 and other expenses increased $1.5 million, or 12.1%,
to $13.5 million.
NET INTEREST INCOME -- Net interest income increased $1.5 million, or 7.3%,
to $21.9 million for the nine months ended June 30, 1994, as compared to $20.4
million for the nine months ended June 30, 1993. The increased net interest
income is reflected in a $135,000 increase in interest income, coupled with a
$1.4 million decrease in interest expense. For the nine months ended June 30,
1994, Eagle's average interest rate spread was 3.40%, and its net interest
margin was 3.61%, compared to 3.42% and 3.65%, respectively, for the nine months
ended June 30, 1993.
Interest income during the nine months ended June 30, 1994 remained
relatively stable compared to the same period in 1993, increasing $135,000, or
0.3%, to $42.1 million. Average interest earning assets increased to $807.7
million for the nine months ended June 30, 1994, compared to $744.8 million for
the same period in 1993. This increase is reflected primarily in a $64.6 million
increase in average loans receivable which resulted from high levels of loan
originations during the nine months ended June 30, 1994. The growth in average
interest-earning assets was substantially offset by a 56 basis point decline in
the average yield of such assets.
Interest expense decreased $1.4 million, or 6.3%, to $20.2 million for the
nine months ended June 30, 1994 compared to $21.6 million for the same period in
1993. Notwithstanding a $39.1 million increase in average deposits to $736.3
million for the nine months ended June 30, 1994, the interest expense
attributable to such funds decreased $2.0 million, resulting in an average cost
of deposits of 3.49% for the 1994 period compared to 4.06% for the 1993 period.
Average total borrowings also increased to $22.1 million during the 1994 period
compared to $6.1 million during the 1993 period. However, the average cost of
such borrowings in the 1994 period was 5.62% compared to 7.44% in the 1993
period. The average cost of funds for Eagle was 3.55% for the nine months ended
June 30, 1994 compared to 4.09% for the same period in 1993.
12
<PAGE>
The following table sets forth certain information relating to the Company's
average interest-earning assets and interest-bearing liabilities and reflects
the average yield on assets and the average cost of liabilities for the periods
and at the dates indicated. During the periods indicated, non-accrual loans are
included in the loans receivable category.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
------------------------------------------------------------------------
1994 1993
----------------------------------- -----------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE COST BALANCE EXPENSE COST
----------- --------- ----------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans receivable (a).............................. $ 680,577 $ 36,834 7.22% $ 615,984 $ 36,383 7.88%
Mortgage-backed securities........................ 27,738 1,357 6.52 30,314 1,420 6.25
Investment securities............................. 80,438 3,229 5.35 86,651 3,758 5.78
Investment securities available for sale.......... 17,043 596 4.66 11,450 369 4.30
Federal funds sold................................ 1,870 59 4.18 428 10 3.12
----------- --------- ----- ----------- --------- -----
Total interest-earning assets................... 807,666 42,075 6.95 744,827 41,940 7.51
--------- ----- --------- -----
Non-interest-earning assets......................... 27,405 27,561
----------- -----------
Total assets.................................... $ 835,071 $ 772,388
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Deposits (b)...................................... $ 736,304 19,277 3.49 $ 697,175 21,228 4.06
FHLB advances..................................... 21,094 896 5.66 5,501 326 7.90
Other borrowings.................................. 1,001 36 4.80 557 13 3.11
----------- --------- ----- ----------- --------- -----
Total interest-bearing liabilities.............. 758,399 20,209 3.55 703,233 21,567 4.09
--------- ----- --------- -----
Non-interest-bearing liabilities.................... 14,358 12,314
----------- -----------
Total liabilities............................... 772,757 715,547
Shareholders' equity................................ 62,314 56,841
----------- -----------
Total liabilities and shareholders' equity...... $ 835,071 $ 772,388
----------- -----------
----------- -----------
Excess of interest-earning assets over
interest-bearing liabilities....................... $ 49,267 $ 41,594
----------- -----------
Ratio of interest-earning assets to interest-bearing
liabilities........................................ 106.5 % 105.9 %
Net interest income................................. $ 21,866 $ 20,373
--------- ---------
--------- ---------
Average interest rate spread........................ 3.40% 3.42%
Net interest margin (c)............................. 3.61 3.65
<FN>
- ------------------------
(a) Interest income includes loan origination fees of $764,000 and $400,000 for
the nine months ended June 30, 1994 and 1993, respectively.
(b) Includes non-interest-bearing demand deposits, which averaged $17.8 million
and $10.3 million for the nine months ended June 30, 1994 and 1993,
respectively.
(c) Net interest income divided by average interest-earning assets.
</TABLE>
13
<PAGE>
The following table allocates the period-to-period changes in the Company's
various categories of interest income and interest expense between changes due
to changes in volume (calculated by multiplying the change in average volume of
the related interest-earning asset or interest-bearing liability category by the
prior year's rate), changes due to changes in rate (change in rate multiplied by
prior year's volume) and changes due to changes in rate-volume (changes in rate
multiplied by changes in volume).
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, 1994 V. 1993
INCREASE (DECREASE) DUE TO
--------------------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
--------- --------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable..................................................... $ (3,048) $ 3,815 $ (316) $ 451
Mortgage-backed securities........................................... 63 (121) (5) (63)
Investment securities (a)............................................ (278) (269) 19 (527)
Investment securities available for sale............................. 31 180 15 226
Federal funds sold................................................... 3 34 11 48
--------- --------- ----------- ---------
Total interest-earning assets...................................... (3,229) 3,639 (276) 135
--------- --------- ----------- ---------
Interest-bearing liabilities:
Deposits............................................................. (2,975) 1,191 (167) (1,951)
FHLB advances........................................................ (92) 924 (262) 570
Other borrowings..................................................... 8 10 5 23
--------- --------- ----------- ---------
Total interest-bearing liabilities................................. (3,059) 2,125 (424) (1,358)
--------- --------- ----------- ---------
Net change in net interest income before provision for loan losses..... $ (170) $ 1,514 $ 148 $ 1,493
--------- --------- ----------- ---------
--------- --------- ----------- ---------
<FN>
- ------------------------
(a) Investment securities include interest-bearing deposits, investment
securities and FHLB stock.
</TABLE>
PROVISION FOR LOAN LOSSES -- Eagle added provisions of $900,000 to its
allowance for loan losses during the nine month period ended June 30, 1994. This
compares to $1.2 million in loan loss provisions for the nine months ended June
30, 1993. Net loan charge-offs for the nine months ended June 30, 1994 were $1.0
million (or 0.15% of average net loans receivable), compared to $958,000 (or
0.11% of average net loans receivables) for the same period in 1993. The
decreased provision in 1994 reflects management's analysis of the risk elements
of the loan portfolio, current delinquency and payment trends (including the
slightly increased level of loan charge-offs in the nine months ended June 30,
1994) and the adequacy of the allowance for loan losses. At June 30, 1994,
Eagle's allowance for loan losses was $8.4 million, or 1.07% of loans
receivable, compared with $4.5 million, or 0.70%, one year earlier. The
allowance for loan losses at June 30, 1994 includes $3.5 million added to the
allowance as part of the Bank of Hartford transaction. See "Financial Condition
Allowance for Loan Losses."
OTHER INCOME -- Other income increased $441,000, or 24.4%, to $2.2 million
for the nine months ended June 30, 1994 from $1.8 million for the same period in
1993. The increase is attributable primarily to a $120,000 net gain on sale of
mortgage loans and a $218,000 increase in customer service fee income.
OTHER EXPENSES -- Other expenses for the nine months ended June 30, 1994
increased $1.5 million, or 12.1%, to $13.5 million compared to $12.1 million for
the nine month period ended June 30, 1993. The largest contributing factors to
the increase included higher compensation related expenses of $6.4 million for
the nine months ended June 30, 1994, compared to $5.5 million for the same
period in 1993, and larger provisions for losses on real estate owned of
$435,000, compared to $199,000 for the same respective periods. The higher
compensation related expenses reflect ncreased pension expenses for the 1994
period compared to 1993 because the Company's pension plan was over-funded
14
<PAGE>
during part of 1993. Also, the Company's post-retirement benefits expenses
increased as a result of the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106 (see "Cumulative Effect of Accounting Change" below).
The increase in the provision for losses on real estate owned during the first
nine months of fiscal 1994 reflects Eagle's current strategy to sell properties
more aggressively than in the past. A total of 29 properties with a book value
of $2.2 million were sold in the nine months ended June 30, 1994.
INCOME TAXES -- Income tax expense was $4.1 million for the nine months
ended June 30, 1994, compared to $4.2 million for the same period in 1993.
Notwithstanding higher income during the 1994 period as compared to the 1993
period, income tax expense was $157,000, or 3.7%, less for the 1994 period. As a
result of the adoption of SFAS No. 109, "Accounting for Income Taxes," (see
"Cumulative Effect of Accounting Change" below), Eagle is permitted a tax
benefit for certain real estate owned and loan loss provisions that was not
allowed under prior accounting rules.
CUMULATIVE EFFECT OF ACCOUNTING CHANGES -- Eagle was required to adopt two
accounting pronouncements in the first quarter of fiscal 1994. The cumulative
effect of these accounting changes, net of related tax benefits, was to reduce
net income by approximately $30,000 during the nine months ended June 30, 1994.
The adoption of SFAS No. 109, "Accounting for Income Taxes", resulted in
recognition of a tax benefit of approximately $1.3 million during the nine
months ended June 30, 1994. The adoption of SFAS No. 106, "Accounting for
Postretirement Benefits Other than Pensions", resulted in a one-time cumulative
adjustment that, net of the related tax benefit, reduced net income by
approximately $1.3 million.
RESULTS OF OPERATIONS -- COMPARISON OF YEARS ENDED SEPTEMBER 30, 1993, 1992 AND
1991
NET INCOME -- Net income for the fiscal year ended September 30, 1993 was
$6.2 million, or $1.97 per share, compared to $5.2 million, or $1.70 per share,
for fiscal 1992 and $4.0 million or $1.37 per share, for fiscal 1991. The $1.0
million, or 19.1%, increase in net income from fiscal 1992 to fiscal 1993 is
primarily the result of a $5.1 million, or 23.0%, increase in net interest
income. The provision for loan losses and other income each remained relatively
stable during fiscal 1993, increasing $62,000 and $42,000, respectively, from
fiscal 1992 levels, while other expenses increased $3.4 million, or 25.9%,and
income taxes increased $737,000, or 15.0%. The $1.2 million, or 28.8%, increase
in net income from fiscal 1991 to 1992 is primarily the result of a $5.6
million, or 33.4%, increase in net interest income, and a $809,000, or 48.9%,
increase in other income. These increases were partially offset by a $3.7
million, or 40.0%, increase in other expenses and a $1.5 million, or 44.9%,
increase in income taxes.
NET INTEREST INCOME -- Net interest income increased $5.1 million, or 23.0%,
to $27.3 million for fiscal 1993, compared to $22.2 million for fiscal 1992. The
fiscal 1992 net interest income represents a $5.6 million, or 33.4%, increase
from net interest income of $16.6 million for fiscal 1991. The increase from
fiscal 1992 to fiscal 1993 is attributable to a $132.0 million increase in
average interest-earning assets and, to a lesser degree, to an increase in the
average interest rate spread from 3.26% in fiscal 1992 to 3.40% in fiscal 1993,
and an increase in the net interest margin from 3.59% to 3.64% for such periods.
The average interest rate spread was 2.88% and the net interest margin was 3.43%
in fiscal 1991.
Interest income increased $3.9 million, or 7.5%, during fiscal 1993, as a
result of a $132.0 million increase in average interest-earning assets, which
was somewhat offset by a decrease in the average yield on interest-earning
assets from 8.39% in fiscal 1992 to 7.43% in fiscal 1993. The increase in
average interest-earning assets includes a $120.7 million increase in average
loans receivable and a $17.8 million increase in average mortgage-backed
securities. The growth in the average loan portfolio during fiscal 1993 compared
to fiscal 1992 reflects strong loan origination activity of $209.9 million in
fiscal 1993, principally of 1-4 family loans, as well as the acquisition of
$85.0 million of loans of Danbury Federal in March 1992. The growth in the
average loan portfolio was significantly offset by a 122 basis point decline in
the average yield on such assets and a 66 basis point decrease in the average
yield on mortgage-backed securities.
15
<PAGE>
Interest income increased $4.6 million, or 9.8%, in fiscal 1992 compared to
fiscal 1991, primarily as a result of a $133.0 million increase in average
interest-earning assets, which was somewhat offset by a 135 basis point decline
in the average yield on such assets. The primary components of the increase in
average interest-earning assets from fiscal 1991 to fiscal 1992 were a $79.9
million increase in the average loans receivable portfolio and a $47.0 million
increase in the average investment securities portfolio, primarily attributable
to the Danbury Federal and Brookfield Bank acquisitions. In those acquisitions,
on a combined basis, Eagle acquired $85.0 million of loans and $98.8 million
of cash, substantially all of which cash was invested initially in investment
securities.
Interest expense was $28.5 million in fiscal 1993, a decrease of $1.2
million, or 4.1%, from $29.7 million in fiscal 1992. This decrease was due to a
decline in the average cost of deposits and borrowed money to 4.03% in fiscal
1993 from 5.13% in fiscal 1992, offset by an increase in the average balance of
these funds by $127.1 million, reflecting a $129.9 million increase in the
average balance of deposits.
Interest expense was $29.7 million in fiscal 1992, or $941,000 less than
fiscal 1991. While interest expense declined only slightly, there was a 173
basis point decline in the average cost of interest-bearing liabilities. This
substantial decrease in average cost, coupled with a $10.6 million decrease in
the average balance of borrowed funds, was largely offset by a $143.0 million
increase in average deposits, primarily as a result of the Danbury Federal and
Brookfield Bank acquisitions. As a result of declining market interest rates,
the average cost of such funds decreased to 5.09% in fiscal 1992 from 6.80% in
fiscal 1991.
16
<PAGE>
The following table sets forth certain information relating to the Company's
average interest-earning assets and interest-bearing liabilities and reflects
the average yield on assets and the average cost of liabilities for the periods
and at the dates indicated. During the periods indicated, non-accrual loans are
included in the loans receivable category.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------
1993 1992 1991
--------------------------------- --------------------------------- --------------------
INTEREST AVERAGE INTEREST AVERAGE INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/
BALANCE EXPENSE COST BALANCE EXPENSE COST BALANCE EXPENSE
--------- --------- ----------- --------- --------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans receivable (a)................. $ 625,446 $ 48,614 7.77% $ 504,789 $ 45,404 8.99% $ 424,852 $ 42,238
Mortgage-backed securities........... 29,668 1,859 6.27 11,841 820 6.93 5,797 507
Investment securities................ 94,919 5,271 5.55 100,605 5,616 5.58 54,732 4,526
Federal funds sold................... 320 10 3.13 1,140 44 3.86 -- --
--------- --------- ----- --------- --------- ----- --------- ---------
Total interest-earning assets...... 750,353 55,754 7.43 618,375 51,884 8.39 485,381 47,271
--------- --------- ----- --------- --------- ----- --------- ---------
Non-interest-earning assets............ 26,306 22,532 18,117
--------- --------- ---------
Total assets....................... $ 776,659 $ 640,907 $ 503,498
--------- --------- ---------
--------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Deposits (b)......................... $ 700,003 27,960 3.99 $ 570,103 29,026 5.09 $ 427,143 29,048
FHLB advances........................ 5,629 494 8.78 7,706 634 8.23 18,607 1,555
Other borrowings..................... 416 15 3.61 1,112 38 3.42 803 36
--------- --------- ----- --------- --------- ----- --------- ---------
Total interest-bearing
liabilities....................... 706,048 28,469 4.03 578,921 29,698 5.13 446,553 30,639
--------- --------- ----- --------- --------- ----- --------- ---------
Non-interest-bearing liabilities....... 13,078 9,274 7,124
--------- --------- ---------
Total liabilities.................. 719,126 588,195 453,677
Shareholders' equity................... 57,533 52,712 49,821
--------- --------- ---------
Total liabilities and shareholders'
equity............................ $ 776,659 $ 640,907 $ 503,498
--------- --------- ---------
--------- --------- ---------
Excess of interest-earning assets over
interest-bearing liabilities/net
interest income....................... $ 44,305 $ 27,285 $ 39,454 $ 22,186 $ 38,828 $ 16,632
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Ratio of interest-earning assets to
interest-bearing liabilities.......... 106.3% 106.8 %
Net interest income.................... $ 27,285 $ 22,186 $ 16,632
--------- --------- ---------
--------- --------- ---------
Average interest rate spread........... 3.40 % 3.26 %
Net interest margin (c)................ 3.64 3.59
<CAPTION>
AVERAGE
YIELD/
COST
-----------
<S> <C>
ASSETS:
Interest-earning assets:
Loans receivable, net (a)............ 9.94%
Mortgage-backed securities........... 8.75
Investment securities................ 8.27
Federal funds sold................... --
-----
Total interest-earning assets...... 9.74
-----
Non-interest-earning assets............
Total assets.......................
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Deposits (b)......................... 6.80
FHLB advances........................ 8.36
Other borrowings..................... 4.48
-----
Total interest-bearing
liabilities....................... 6.86
-----
Non-interest-bearing liabilities.......
Total liabilities..................
Shareholders' equity...................
Total liabilities and shareholders'
equity............................
Excess of interest-earning assets over
interest-bearing liabilities/net
interest income.......................
Ratio of interest-earning assets to
interest-bearing liabilities.......... 108.7 %
Net interest income....................
Average interest rate spread........... 2.88 %
Net interest margin (c)................ 3.43
<FN>
- ------------------------------
(a) Interest income includes loan origination fees of $574,000, $263,000 and
$394,000 in fiscal 1993, 1992 and 1991, respectively.
(b) Includes non-interest-bearing demand deposits of, which averaged $10.8
million, $7.0 million and $4.7 million for fiscal 1993, 1992 and 1991
respectively.
(c) Net interest income divided by average interest-earning assets.
</TABLE>
17
<PAGE>
The following table allocates the period-to-period changes in the Company's
various categories of interest income and interest expense between changes due
to changes in volume (calculated by multiplying the change in average volume of
the related interest-earning asset or interest-bearing liability category by the
prior year's rate), changes due to changes in rate (change in rate multiplied by
prior year's volume) and changes due to changes in rate-volume (changes in rate
multiplied by changes in volume).
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1993 V. 1992 SEPTEMBER 30, 1992 V. 1991
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
------------------------------------------ --------------------------------------------
RATE/ RATE/
RATE VOLUME VOLUME TOTAL RATE VOLUME VOLUME TOTAL
--------- --------- --------- --------- --------- ----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable................... $ (6,169) $ 10,853 $ (1,474) $ 3,210 $ (4,546) $ 8,042 $ (330) $ 3,166
Mortgage-backed securities......... (78) 1,234 (117) 1,039 (106) 529 (110) 313
Investment securities (a).......... (30) (317) 1 (346) (974) 3,451 (1,343) 1,134
Federal funds sold................. (9) (32) 8 (33) -- -- -- --
--------- --------- --------- --------- --------- ----------- --------- ---------
Total interest-earning assets.... (6,286) 11,738 (1,582) 3,870 (5,626) 12,022 (1,783) 4,613
--------- --------- --------- --------- --------- ----------- --------- ---------
Interest-bearing liabilities:
Deposits........................... (6,255) 6,614 (1,425) (1,066) (7,304) 9,721 (2,439) (22)
FHLB advances...................... 42 (171) (11) (140) (104) (883) 66 (921)
Other borrowings................... 2 (24) (1) (23) (9) 14 (3) 2
--------- --------- --------- --------- --------- ----------- --------- ---------
Total interest-bearing
liabilities..................... (6,211) 6,419 (1,437) (1,229) (7,417) 8,852 (2,376) (941)
--------- --------- --------- --------- --------- ----------- --------- ---------
Net change in net interest income
before provision for loan losses.... $ (75) $ 5,319 $ (145) $ 5,099 $ 1,791 $ 3,170 $ 593 $ 5,554
--------- --------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- --------- ----------- --------- ---------
<FN>
- ------------------------------
(a) Investment securities include interest-bearing deposits, investment
securities and FHLB stock.
</TABLE>
PROVISION FOR LOAN LOSSES -- The provision for loan losses totaled $1.7
million in fiscal 1993 compared to $1.6 million in fiscal 1992 and $1.7 million
in fiscal 1991. Net loan charge-offs for each of the fiscal years ended
September 30, 1993, 1992 and 1991 were $714,000 (or 0.11% of average net loans
receivable), $938,000 (or 0.19% of average net loans receivable) and $592,000
(or 0.14% of average net loans receivable). At September 30, 1993, Eagle's
allowance for loan losses was $5.0 million, or 0.76%, of loans receivable,
compared to $4.0 million, or 0.70%, and $1.5 million, or 0.36%, at September 30,
1992 and 1991, respectively. The level of provisions in each fiscal year
reflects management's determination as to the adequacy of the allowance for loan
loss reserves based on, among other things, an analysis of the risk elements of
the loans receivable portfolio, current trends related to loan payments and
general economic conditions as well as volume growth and composition of the loan
portfolio. For fiscal 1992, in addition to the $1.6 million provision, Eagle
increased the allowance for loan losses by $1.8 million in connection with the
acquisition of $85.0 million of loans of Danbury Federal transaction. See "--
Financial Condition -- Allowance for Loan Losses."
OTHER INCOME -- Other income was $2.5 million for both fiscal 1993 and
1992, compared to $1.7 million for fiscal 1991. Customer service fee income,
the largest component of other income, was $1.7 million, $1.3 million and
$887,000, in fiscal 1993, 1992 and 1991, respectively. These fee income
increases are attributable both to increased checking account activity, as well
as growth in Eagle's deposits, primarily as a result of the Danbury Federal and
Brookfield Bank acquisitions. Other non-interest income in fiscal 1992 was
$1.2 million, compared to $764,000 in each of fiscal years 1993 and 1991.
Included in other non-interest income for fiscal 1992 was $112,500 received in
settlement of a lawsuit regarding four real estate owned properties disposed of
in prior years, as well as a recovery of prior year's legal fees of $17,000
relating to such lawsuit, plus $120,000 of one-time loan servicing fees
resulting from a temporary loan servicing arrangement with the RTC as part of
the Danbury Federal acquisition.
OTHER EXPENSES -- Other expenses increased $3.4 million, or 25.9%, to $16.3
million in fiscal 1993 compared to $12.9 million in fiscal 1992. The largest
contributing factor to this increase is that
18
<PAGE>
fiscal 1993 results include a full year of operating expenses from the Danbury
Federal and Brookfield Bank acquisitions, which were completed in mid-fiscal
1992. Compensation, payroll taxes and benefits increased $1.4 million to $7.4
million for fiscal 1993 from $6.0 million for fiscal 1992, and occupancy
expenses increased $391,000 to $1.9 million for fiscal 1993 from $1.5 million
for fiscal 1992, due primarily to staffing and operating the seven acquired
banking offices. An increase of $125,000 in advertising relates to the promotion
of the acquired banking offices in the greater Danbury area, as well as
marketing of new product lines. An increase of $233,000 in federal insurance
premiums reflects an increase in insurable deposits acquired, as well as growth
in the deposit portfolio excluding the acquisitions. Data processing expenses
increased $194,000 to $1.1 million for fiscal 1993 from $882,000 for fiscal
1992. Approximately two-thirds of the increase is attributable to servicing the
loan and deposit products acquired in the Danbury Federal and Brookfield Bank
transactions. In general, most operating expenses, such as office supplies,
postage and telephone, increased due to operating an additional seven banking
offices. Expenses relating to the operation of real estate acquired in
settlement of loans increased $189,000 and includes both carrying and
acquisition/disposal costs while the provision for real estate owned losses
increased $48,000 between periods based on an ongoing assessment of the
properties owned.
Other expenses increased $3.7 million, or 40.0%, to $12.9 million in fiscal
1992 compared to $9.2 million in fiscal 1991. The largest contributing factor
was an increase of $1.4 million, or 24.2%, for compensation, payroll taxes and
benefits and relates primarily to the acquisition and staffing for the latter
part of fiscal 1992 of the seven banking offices acquired in the Danbury Federal
and Brookfield Bank transactions. Also contributing was an increase of $400,000
for office occupancy pertaining to the relocation of an existing banking office,
the opening of a new banking office and the seven banking offices acquired.
Increases of $335,000 for federal insurance premiums, and $208,000, or 30.9%,
for data processing expense both result from the larger deposit base. Marketing
expense, including costs for promotion of the new, relocated, and acquired
banking offices, increased $111,000, or 37.2%. The provision for real estate
owned losses increased $198,000 between periods and is based on an ongoing
assessment of the properties owned. Expenses relating to the operation of real
estate acquired in settlement of loans increased by $389,000 and include both
carrying and acquisition/disposal costs. Other expenses increased by $694,000,
reflecting the increased costs associated with the operation of seven additional
banking offices.
INCOME TAXES -- Income tax expense increased to $5.6 million in fiscal 1993
from $4.9 million in fiscal 1992 and $3.4 million in fiscal 1991. The increased
amount of income tax expense in each successive year reflects increased income
of Eagle. Eagle's effective tax rate for fiscal years 1993, 1992 and 1991 was
47.8%, 48.7% and 45.7%, respectively. Income tax expense is in excess of the
federal statutory corporate rate, primarily as a result of state income taxes,
limitations on the deductibility of Eagle's provisions for loan losses, and
losses on the sale of real estate owned. See Note 10 to Consolidated Financial
Statements
FINANCIAL CONDITION
Total assets of the Company increased to $1.1 billion at June 30, 1994 from
$792.5 million at September 30, 1993 and $751.2 million at September 30, 1992.
The growth in assets from fiscal year end 1992 to 1993 reflects $209.9 million
of total loan originations during the year, which resulted in an increase of
$88.2 million in the net loans receivable portfolio from fiscal year end 1992 to
1993. The growth from fiscal year end 1993 to June 30, 1994 reflects primarily
Eagle's acquisition of certain assets and assumption of certain liabilities of
the Bank of Hartford from the FDIC. In the Bank of Hartford transaction, which
was completed on June 10, 1994, Eagle acquired $267.3 million of assets,
including $80.6 million of loans (substantialy all of which were 1-4 family
first mortgage and home equity loans), $112.4 million of cash, other amounts
due from banks and cash receivables due from the FDIC, $72.7 million of
investment securities (substantially all of
which are U.S. Treasury and government agency securities) and $1.6 million of
other assets (primarily accrued interest receivable on the purchased loans).
Also as part of the Bank of Hartford acquisition, Eagle intends to purchase
three of the former Bank of Hartford banking offices. See "--Results of
Operations--Bank of Hartford Acquisition."
19
<PAGE>
LOANS RECEIVABLE, NET -- The Company's net loans receivable portfolio
increased to $775.1 million at June 30, 1994 from $656.3 million at September
30, 1993 and $568.1 million at September 30, 1992. As noted above, the growth in
the net loans receivable portfolio reflects strong total loan originations of
$209.9 million during fiscal 1993 and $164.1 million during the nine months
ended June 30, 1994. Increased loan origination activity during fiscal 1993 and
the first nine months of fiscal 1994 is due in substantial part to refinancings
of mortgage loans in reaction to generally low market interest rates. Also, in
March 1992 Eagle acquired $85.0 million of loans of Danbury Federal, and in June
1994 the Bank acquired $80.6 million of loans in the Bank of Hartford
transaction. Substantially all of the loans purchased in these transactions
consisted of 1-4 family first mortgage and home equity loans.
The following table sets forth the composition of the total loan portfolio
of Eagle, in dollar amounts and in percentages, at the dates shown, and a
reconciliation of loans receivable, net.
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------------------------------------------
JUNE 30, 1994 1993 1992 1991
------------------- ------------------- ------------------- -------------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT %
--------- ------- --------- ------- --------- ------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Conventional mortgage loans:
1-4 family units:
Permanent........................... $ 675,323 85.9% $ 573,165 86.3% $ 481,804 83.5% $ 365,159 83.5%
Construction........................ 6,611 0.8 5,739 0.9 13,225 2.3 8,380 1.9
Multi-family units.................... 17,731 2.3 18,629 2.8 16,709 2.9 15,453 3.5
Commercial real estate................ 12,495 1.6 11,268 1.6 11,455 2.0 7,260 1.7
Land (a).............................. 6,019 0.8 5,735 0.9 4,517 0.7 3,969 0.9
--------- ------- --------- ------- --------- ------- --------- -------
Total conventional loans.......... 718,179 91.4 614,536 92.5 527,710 91.4 400,221 91.5
--------- ------- --------- ------- --------- ------- --------- -------
FHA/VA mortgage loans................... 2 -- 3 -- 5 -- 8 --
--------- ------- --------- ------- --------- ------- --------- -------
Total mortgage loans.............. 718,181 91.4 614,539 92.5 527,715 91.4 400,229 91.5
--------- ------- --------- ------- --------- ------- --------- -------
Consumer loans:
Secured by deposits................... 3,219 0.4 3,490 0.5 3,485 0.6 2,878 0.7
Home improvement...................... 442 0.1 402 0.1 411 0.1 484 0.1
Home equity........................... 61,962 7.9 43,864 6.6 42,892 7.4 31,871 7.3
Education............................. 252 -- 250 0.1 555 0.1 486 0.1
Personal.............................. 1,906 0.2 1,488 0.2 1,693 0.3 1,064 0.2
Automobile............................ 133 -- 174 -- 379 0.1 489 0.1
--------- ------- --------- ------- --------- ------- --------- -------
Total consumer loans.............. 67,914 8.6 49,668 7.5 49,415 8.6 37,272 8.5
--------- ------- --------- ------- --------- ------- --------- -------
Total loans receivable (before net
items)........................... 786,095 100.0% 664,207 100.0% 577,130 100.0% 437,501 100.0%
--------- ------- --------- ------- --------- ------- --------- -------
------- ------- ------- -------
Add (deduct):
Unearned discounts and premiums....... 2 3 4 5
Loans in process...................... (114) (600) (3,518) (2,685)
Allowance for loan losses............. (8,370) (5,005) (4,011) (1,544)
Deferred loan origination fees........ (2,478) (2,261) (1,481) (770)
--------- --------- --------- ---------
Total loans receivable............ $ 775,135 $ 656,344 $ 568,124 $ 432,507
--------- --------- --------- ---------
--------- --------- --------- ---------
<FN>
- ------------------------------
(a) Loans for developed building lots, acquisition and development of land and
unimproved land.
</TABLE>
Eagle traditionally has concentrated its lending activities on the
origination and purchase of loans secured by first mortgage liens for the
purchase, refinancing or construction of residential real property. At June 30,
1994, mortgage loans, including those secured by 1-4 family residential units,
multi-family residential units, commercial real estate and land, aggregated
$718.2 million or 91.4% of
20
<PAGE>
Eagle's loans receivable portfolio. At September 30, 1993 and 1992, such
mortgage loans aggregated $614.5 million, or 92.5%, and $527.7 million, or
91.4%, respectively. The remaining loans in Eagle's portfolio consist of
consumer loans, primarily home equity loans. At June 30, 1994, over 97% of
Eagle's loans secured by real estate were secured by property located in
Connecticut. Substantially all of the remaining real estate secured loans were
originated prior to 1982.
At June 30, 1994, the Company's largest loan relationship aggregated $5.8
million. That relationship represents six loans, of which $3.0 million are
secured by multi-family properties and $2.8 million are secured by commercial
properties. At that date, the next largest lending relationship was $3.4
million, representing 12 loans secured by multi-family residential properties.
Each other lending relationship aggregated less than $3.0 million.
As a result of generally higher mortgage interest rates and a lower demand
for loan refinancing, Eagle anticipates a decline in demand for 1-4 family
residential mortgages and, beginning in fiscal 1995, intends to implement
strategies which will put more emphasis on originating multi-family and
commercial real estate loans and consumer loans. This will be accomplished by
hiring personnel with proven experience in commercial and consumer lending. The
marketing of such loans will focus on Eagle's existing customer base, as well as
new relationships within Eagle's primary market areas.
At June 30, 1994, 57.8% of Eagle's net loans receivable portfolio consisted
of adjustable-rate mortgage and home equity loans, compared to 58.3% and 64.5%
at September 30, 1993 and 1992, respectively.
ALLOWANCE FOR LOAN LOSSES -- At June 30, 1994, Eagle's allowance for loan
losses totaled $8.4 million, compared to $5.0 million at September 30, 1993, and
$4.0 million at September 30, 1992. Management monitors the adequacy of the
allowance for loan losses and periodically makes additions based upon an ongoing
assessment of the loan portfolio. During the nine months ended June 30, 1994, in
addition to a $900,000 provision for loan losses, Eagle increased the allowance
by $3.5 million in connection with the acquisition of $80.6 million of loans in
the Bank of Hartford transaction. During fiscal 1992, in addition to a $1.6
million provision for loan losses, Eagle increased the allowance by $1.8 million
in connection with the acquisition of $85.0 million of loans in the Danbury
Federal transaction.
The following table sets forth an analysis of the Banks allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED SEPTEMBER 30,
ENDED -----------------------------------------------------
JUNE 30, 1994 1993 1992 1991 1990 1989
------------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period..................... $ 5,005 $ 4,011 $ 1,544 $ 484 $ 196 $ 113
Loans charged-off.................................. (1,147) (958) (1,150) (621) (5) (38)
Recoveries......................................... 112 244 212 29 12 22
Provision for loan losses.......................... 900 1,708 1,646 1,652 281 99
Allowance acquired through purchase................ 3,500 -- 1,759 -- -- --
------------- --------- --------- --------- --------- ---------
Balance at end of period........................... $ 8,370 $ 5,005 $ 4,011 $ 1,544 $ 484 $ 196
------------- --------- --------- --------- --------- ---------
------------- --------- --------- --------- --------- ---------
Ratio of net charge-offs to average loans
outstanding during the period..................... 0.15% 0.11% 0.19% 0.14% -- --
Allowance for loan losses to loans receivable (at
period end)....................................... 1.07 0.76 0.70 0.36 0.12% 0.05%
Allowance for loan losses to non-performing loans
(at period end)................................... 104 77 100 27 13 18
</TABLE>
Management monitors the adequacy of the allowance for loan losses and
periodically makes additions in the form of provisions for loan losses based
upon an ongoing assessment of the loan portfolio. These provisions are based on
an evaluation of the loan portfolio, past loan loss experience,
21
<PAGE>
current market and economic conditions, volume, growth and composition of the
loan portfolio, and other relevant factors. The provisions are computed
quarterly based on a review of the loan portfolio. The additional $3.5 million
and $1.8 million of allowance for loan losses that were booked as part of the
Bank of Hartford and Danbury Federal transactions, respectively, were based on
management's evaluation of the loans acquired in these transactions. Such
evaluation included an analysis of the loss on all delinquent loans as well as
the risk of the remaining 1-4 family and consumer loans acquired. The additional
allowances were accounted for as an adjustment to the premium paid by Eagle in
the Bank of Hartford and Danbury Federal transactions.
The following table presents an allocation of Eagle's allowance for loan
losses by loan category and presents the percent of each loan category to the
total loan portfolio at the dates indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------------------------------------------
1994 1993 1992 1991 1990 1989
--------------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at end of period applicable to:
1-4 family mortgage loans.................. $ 7,559 $ 4,234 $ 3,438 $ 885 $ 379 $ 79
86.7% 87.2% 85.8% 85.4% 86.6% 88.6%
Multi-family, commercial real estate and
land loans................................ $ 725 $ 492 $ 319 $ 399 $ 23 $ 82
4.7% 5.3% 5.7% 6.1% 5.2% 4.8%
Consumer loans............................. $ 86 $ 279 $ 254 $ 260 $ 82 $ 35
8.6% 7.5% 8.6% 8.5% 8.2% 6.6%
------- --------- --------- --------- --------- ---------
Total allowance for loan losses.......... $ 8,370 $ 5,005 $ 4,011 $ 1,544 $ 484 $ 196
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
</TABLE>
The ratio of allowance for loan losses to non-performing loans was 104%, 77%
and 100% at June 30, 1994, September 30, 1993 and September 30, 1992,
respectively. This coverage ratio will vary from time to time based upon the
composition of, and management's analysis of the risk elements in the loan
portfolio, as well as the composition of problem loans. The allowance for loan
losses is not based on a percentage of non-performing loans, but on the total
portfolio classified by risk group plus estimated losses on individual problem
loans.
The following table sets forth the amount of accruing loans delinquent 60-89
days, the amount of non-accrual loans, the balance of the Company's allowance
for loan losses and the coverage ratio of such allowance to the total of loans
at the dates indicated. See "--Non-performing Assets" below for definition of
non-accrual loans.
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1992
------------ ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Accruing loans delinquent 60-89 days................................. $ 1,724(a) $ 2,412 $ 2,332
Non-accrual loans.................................................... 8,027(b) 6,492 3,996
------------ ------------- -------------
Total.............................................................. $ 9,751 $ 8,904 $ 6,328
------------ ------------- -------------
------------ ------------- -------------
Allowance for loan losses............................................ $ 8,370(c) $ 5,005 $ 4,011
Coverage ratio....................................................... 85.8% 56.2% 63.4%
<FN>
- ------------------------
(a) Includes $431,000 of loans delinquent 60-89 days or more acquired in the
Bank of Hartford transaction.
(b) Includes $2.5 million of non-performing loans acquired in the Bank of
Hartford transaction.
(c) Includes an additional $3.5 million of allowance for loan losses
established as part of the Bank of Hartford transaction.
</TABLE>
At June 30, 1994, loans delinquent 60 days or more (including non-performing
loans) totaled $6.8 million (before giving effect to $2.9 million of such loans
acquired in the Bank of Hartford transaction), compared to $8.9 million at
September 30, 1993 and $6.3 million at September 30, 1992. Eagle's
22
<PAGE>
progress in reducing loans delinquent 60 days or more during the nine months
ended June 30, 1994 is attributable to a stabilized Connecticut economy coupled
with the Bank's increased collection efforts earlier in the collection cycle.
Various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for losses on loans and real
estate owned. Such agencies may require the Bank to recognize additions to the
allowances based on their judgments of information available to them at the time
of their examination. The OTS completed a regularly scheduled examination of the
Bank during 1993 and no changes to the allowance for loan losses were required
at that time.
NON-PERFORMING ASSETS -- All mortgage and home equity loans generally are
placed on a non-accrual basis when a loan is contractually delinquent for more
than three complete calendar months, when collectability is doubtful or when
legal action has been instituted. Unsecured consumer loans are placed on a
non-accrual basis when a payment default has existed for more than 60 days or
when collectability is doubtful or when legal action has been instituted; such
loans are fully charged-off when a payment default has existed for 90 days.
At June 30, 1994, the Company's total non-performing assets, including
non-performing (or non-accrual) loans, real estate owned as a result of
foreclosure or deed in lieu thereof and in-substance foreclosures, was $12.0
million or 1.09% of total assets. Non-performing assets were $9.2 million or
1.10% of total assets (without giving effect to the $2.8 million of
non-performing assets acquired in the Bank of Hartford transaction). This
compares to non-performing assets of $12.0 million, or 1.51% of total assets, at
September 30, 1993 and $10.4 million, or 1.38% of total assets, at September 30,
1992. Exclusive of the non-performing assets acquired in the Bank of Hartford
transaction, the amount of non-performing assets has declined during the nine
months ended June 30, 1994. Management believes this trend reflects the
stabilization in the real estate market and economy in Connecticut over the past
12-18 months.
The following table sets forth information regarding Eagle's non-performing
assets at the dates indicated. At each date indicated, Eagle had no troubled
debt restructurings or accruing loans 90 days or more past due.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -------------------------------
1994 1993 1992 1991
----------- --------- --------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis:
Mortgage loans:
Residential.................................................... $ 6,619 $ 5,407 $ 2,801 $ 4,997
Multi-family and commercial.................................... 196 196 513 --
Consumer loans................................................... 22 18 49 20
Home equity loans................................................ 1,190 871 633 673
Real estate acquired through foreclosure and in-substance
foreclosures, net............................................... 3,932 5,471 6,403 3,811
----------- --------- --------- ---------
Total non-performing assets.................................. $ 11,959 $ 11,963 $ 10,399 $ 9,501
----------- --------- --------- ---------
----------- --------- --------- ---------
Non-performing assets to loans receivable, net and real estate
owned............................................................. 1.54% 1.81% 1.81% 2.18%
Non-performing assets to total assets.............................. 1.09 1.51 1.38 1.81
Net charge-offs to average loans receivable, net (for the
period)........................................................... 0.15 0.11 0.19 0.14
</TABLE>
At June 30, 1994, non-performing assets (including the $2.8 million acquired
in the Bank of Hartford transaction) included $8.0 million in non-performing
loans and $3.9 million in real estate owned and in-substance foreclosures. At
September 30, 1993, non-performing assets included $6.5
23
<PAGE>
million in non-performing loans and $5.5 million in real estate owned and
in-substance foreclosures. At September 30, 1992, non-performing assets included
$4.0 million in non-performing loans and $6.4 million in real estate owned and
in-substance foreclosures.
Although the level of non-performing loans has declined in the nine months
ended June 30, 1994 (before giving effect to the non-performing assets acquired
in the Bank of Hartford transaction), management expects a number of the
non-performing loans to become real estate owned. The overall level of real
estate owned will depend on the number of loans which can be resolved prior to
foreclosure and the ability of Eagle to sell properties which it owns. The
Company aggressively markets properties and has been able to decrease the level
of real estate owned during the nine months ended June 30, 1994. A more active
real estate market reduces the level of non-performing loans and real estate
owned as properties are sold. Demand for 1-4 family residential properties in
the Company's market areas has been strong in recent months.
MORTGAGE-BACKED AND INVESTMENT SECURITIES -- The Company's total holdings of
mortgage-backed and investment securities increased to $173.3 million at June
30, 1994 from $88.4 million at September 30, 1993, having previously decreased
from $117.7 million at September 30, 1992. The increase from fiscal year end
1993 to June 30, 1994 reflects the purchase of investment securities funded with
matching FHLB advances, as well as the acquisition of $72.7 million of
investment securities, substantially all of which are U.S. Treasury and agency
securities, in the Bank of Hartford transaction. The decrease from fiscal year
end 1992 to 1993 reflects the use of proceeds from maturities and amortization,
as well as the sale of $12.0 million of investment securities, to fund the
Bank's strong loan origination activity in 1993.
The Company's investment portfolio at June 30, 1994 was comprised primarily
of U. S. Treasury and government agency securities and other investment
securities rated in the top grade by at least one nationally recognized rating
agency. The collateralized mortgage obligation portion of the investment
portfolio contains no derivative investment securities such as interest only
tranches, principal only tranches or strips.
The following table sets forth the composition of Eagle's investment
portfolio at the dates indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------------------------------------------------------
AT JUNE 30, 1994 1993 1992 1991
---------------------- ---------------------- ---------------------- ----------------------
BOOK % OF BOOK % OF BOOK % OF BOOK % OF
VALUE PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO
--------- ---------- --------- ---------- --------- ---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities...... $ 2,913 2.8% $ 4,098 6.6% $ 6,003 7.0% $ 5,015 12.5%
U.S. government agencies and
corporations................. 16,404 16.1 8,993 14.4 13,344 15.5 5,358 13.3
Collateralized mortgage
obligations.................. 45,705 44.9 23,223 37.2 39,412 45.8 19,013 47.4
Other bonds and notes......... 19,268 18.9 10,465 16.7 13,907 16.2 8,720 21.7
Mutual fund and marketable
equity securities, net....... 17,615 17.3 15,700 25.1 13,353 15.5 2,021 5.1
--------- ----- --------- ----- --------- ----- --------- -----
Total book value of
portfolio.................. 101,905 100.0% 62,479 100.0% 86,019 100.0% 40,127 100.0%
----- ----- ----- -----
----- ----- ----- -----
Less net unrealized loss...... (675) -- -- --
--------- --------- --------- ---------
Total net book value of
portfolio.................. $ 101,230 $ 62,479 $ 86,019 $ 40,127
--------- --------- --------- ---------
--------- --------- --------- ---------
Total market value of
portfolio.................. $ 99,238 $ 63,555 $ 87,960 $ 40,476
</TABLE>
DEPOSITS -- Deposits increased to $982.7 million at June 30, 1994 from
$706.2 million at September 30, 1993 and $677.7 million at September 30, 1992.
The growth in deposits includes the July 1993 purchase of a banking office
located in Brookfield, Connecticut with $8.2 million in deposits and the
assumption of $275.0 million of deposits of the Bank of Hartford in June 1994.
Total borrowings increased to $31.6 million at June 30, 1994 from $16.3 million
at September 30, 1993 and $7.3 million
24
<PAGE>
at September 30, 1992. The increase in borrowed money for the first nine months
of fiscal 1994 and in fiscal 1993 reflects the use of FHLB advances to fund a
portion of loan originations and to purchase investment securities with matching
durations. Loan originations also were funded with loan repayments and deposits.
The decrease in borrowings from fiscal year-end 1991 to fiscal year-end 1992 is
attributable to the cash received by Eagle in connection with the Danbury
Federal and Brookfield Bank transactions, thereby reducing Eagle's need for
borrowed funds.
The following table sets forth the deposit accounts of Eagle in dollar
amounts and as percentages of total deposits at the dates indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------------------------------------------------
AT JUNE 30, 1994 1993 1992
------------------------------- ------------------------------- -------------------------------
WEIGHTED % OF WEIGHTED % OF WEIGHTED % OF
AVERAGE TOTAL AVERAGE TOTAL AVERAGE TOTAL
RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS
--------- -------- --------- --------- -------- --------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance by account type:
Non-interest bearing........ 0.00% $ 22,601 2.3 % 0.00% $ 12,999 1.8 % 0.00% $ 12,088 1.8 %
Regular savings............. 2.05 168,652 17.2 2.50 117,847 16.7 3.50 103,755 15.3
NOW accounts................ 0.99 78,468 8.0 1.25 52,768 7.5 2.70 43,672 6.4
Money market accounts....... 2.67 157,137 15.9 2.90 135,413 19.2 3.67 136,054 20.1
-------- --------- -------- --------- -------- ---------
426,858 43.4 319,027 45.2 295,569 43.6
-------- --------- -------- --------- -------- ---------
Certificate accounts with
original maturities of:
Six months or less.......... 3.46 122,028 12.4 3.50 82,890 11.7 4.13 91,218 13.5
Over six months to one
year....................... 3.56 106,380 10.8 3.62 79,396 11.2 4.76 124,112 18.3
Over one year to two
years...................... 4.37 124,318 12.7 4.75 78,086 11.1 5.72 61,050 9.0
Over two years.............. 5.31 203,089 20.7 6.22 146,815 20.8 6.91 105,752 15.6
-------- --------- -------- --------- -------- ---------
555,815 56.6 387,187 54.8 382,132 56.4
-------- --------- -------- --------- -------- ---------
$982,673 100.0 % $706,214 100.0 % $677,701 100.0 %
-------- --------- -------- --------- -------- ---------
-------- --------- -------- --------- -------- ---------
<CAPTION>
1991
-------------------------------
WEIGHTED % OF
AVERAGE TOTAL
RATE AMOUNT DEPOSITS
--------- -------- ---------
<S> <C> <C> <C>
Balance by account type:
Non-interest bearing........ 0.00% $ 5,379 1.2 %
Regular savings............. 5.03 69,842 15.2
NOW accounts................ 4.12 29,051 6.3
Money market accounts....... 5.39 66,314 14.5
-------- ---------
170,586 37.2
-------- ---------
Certificate accounts with
original maturities of:
Six months or less.......... 5.87 83,946 18.3
Over six months to one
year....................... 6.83 99,333 21.7
Over one year to two
years...................... 7.75 31,665 6.9
Over two years.............. 7.71 72,544 15.9
-------- ---------
287,488 62.8
-------- ---------
$458,074 100.0 %
-------- ---------
-------- ---------
</TABLE>
ASSET AND LIABILITY MANAGEMENT
Net interest income, the primary component of the Company's net income, is
derived from the difference or "spread" between the yield on interest-earning
assets and the cost of interest-bearing liabilities. The Company has sought to
reduce its exposure to changes in interest rates by matching more closely the
effective maturities and repricings of its interest-sensitive assets and
liabilities. At the same time, the Company's asset and liability management
strategies also must accommodate customer demands for particular types of
deposit and loan products.
While much of the Company's asset and liability management efforts involve
strategies which increase the rate sensitivity of its loans and investments,
such as originations of adjustable rate loans and purchases of adjustable rate
mortgage-backed securities and short term investments, it also uses certain
techniques to reduce the rate sensitivity of its deposits and borrowed money.
Those techniques include attracting longer term certificates of deposit when the
market will permit, emphasizing core deposits which are less sensitive to
changes in interest rates, and borrowing through long-term FHLB advances. At
June 30, 1994 and September 30, 1993, 57.8% and 58.3%, respectively, of Eagle's
net loans receivable portfolio consisted of adjustable-rate mortgage and other
loans. While Eagle has generally retained its local loan originations in
portfolio, it may from time to time sell loans to maintain an acceptable
interest rate sensitivity tolerance.
The Company measures its exposure to rate fluctuations on a quarterly basis
primarily by using a computer modeling system designed for savings institutions
such as Eagle Federal. The computer modeling system quantifies the approximate
impact that increases and decreases in interest rates would have on Eagle's net
interest income. Under the model, interest rates are assumed to move to
specified levels on an immediate or "shock" basis. The Board-approved tolerance
for decreases in net interest income is up to 20%, based upon the model's
prediction of the impact of an immediate 200 basis point increase in interest
rates. At June 30, 1994, according to the computer model and using
25
<PAGE>
asset and liability repricing assumptions based on Eagle's historical
experience, if interest rates were to immediately increase by 200 basis points
the negative impact on the Company's net interest income would be within the
Board-approved tolerance level.
The Company also monitors other indicators of interest rate risk. One
commonly used measure of interest rate risk exposure is reflected in the
Company's one-year cumulative gap, which is the difference between rate
sensitive assets and rate sensitive liabilities maturing or repricing within one
year. An asset or liability is said to be interest rate sensitive within a
specific period if it will mature or reprice within that period. The interest
rate sensitivity gap is defined as the difference between the amount of
interest-earning assets maturing or repricing within a specific time period and
the amount of interest-bearing liabilities maturing or repricing within that
time period. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities, and
is considered negative when the amount of interest rate sensitive liabilities
exceeds the amount of interest rate sensitive assets.
At June 30, 1994, the Company's one-year gap was positive 2.7%. The
Company's current asset liability management strategy is to maintain a one-year
gap within a tolerance of plus or minus 15%. However, the Company believes there
are certain shortcomings inherent in the gap analysis and, accordingly does not
rely solely on gap analysis as an accurate measure of interest rate risk.
Although certain assets and liabilities may have similar maturities or periods
of repricing, they may react in different degrees to changes in market interest
rates. The interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while interest rates
on other types of assets and liabilities may lag behind changes in market
interest rates. Certain assets, such as adjustable-rate mortgages, have features
which restrict changes in interest rates on a short-term basis and over the life
of the assets. In the event of a change in interest rates, prepayment and early
withdrawal levels would likely deviate significantly from those assumed in
calculating the table. The ability of many borrowers to service their debt may
decrease in the event of an interest rate increase.
26
<PAGE>
The following table sets forth the amount of interest-earning assets and
interest-bearing liabilities outstanding at June 30, 1994 which are expected to
mature or reprice in each of the time periods shown.
<TABLE>
<CAPTION>
REPRICING REPRICING REPRICING REPRICING
PERCENT WITHIN WITHIN WITHIN OVER
AMOUNT OF TOTAL 0-3 MONTHS 4-12 MONTHS 1-5 YEARS 5 YEARS
------------- ------------ ----------- ------------ ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable................. $ 778,068 75% $ 164,448 $ 270,415 $ 171,629 $ 171,576
Mortgage-backed securities....... 72,712 7 3,153 8,676 33,229 27,654
Investment securities............ 148,858 15 79,249 16,865 48,687 4,057
Investment securities available
for sale........................ 17,600 1 6,777 7,945 2,878 --
Federal funds sold............... 23,700 2 23,700 -- -- --
------------- --- ----------- ------------ ------------ -----------
Total interest-earning
assets........................ $ 1,040,938 100% 277,327 303,901 256,423 203,287
------------- --- ----------- ------------ ------------ -----------
------------- --- ----------- ------------ ------------ -----------
Interest-earning liabilities:
Passbook accounts................ $ 168,611 17% 8,797 20,994 71,341 67,479
Certificate accounts............. 548,337 54 134,803 207,760 204,759 1,015
Other deposits (a)............... 265,725 26 55,045 112,478 70,100 28,102
FHLB advances.................... 23,750 2 950 2,300 17,000 3,500
Other borrowings................. 7,892 1 7,892 -- -- --
------------- --- ----------- ------------ ------------ -----------
Total interest-earning
liabilities................... $ 1,014,315 100% 207,487 343,532 363,200 100,096
------------- --- ----------- ------------ ------------ -----------
------------- --- ----------- ------------ ------------ -----------
Periodic repricing difference
(periodic gap).................... $ 69,840 $ (39,631) $ (106,777) $ 103,191
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Cumulative repricing difference
(cumulative gap).................. $ 69,840 $ 30,209 $ (76,568) $ 26,623
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Cumulative gap to total assets..... 6.3% 2.7 % (7.0)% 2.4%
<FN>
- ------------------------
(a) Includes non-interest-bearing demand deposits.
</TABLE>
The following assumptions were determined by management in order to prepare
the gap table set forth above. Non-amortizing investment securities are shown in
the period in which they contractually mature. The table assumes a 15% annual
prepayment rate for adjustable-rate, residential mortgage loans based on the
Bank's historical prepayment experience. A 10% rate is assumed for 30 year
fixed-rate mortgages, based on the Bank's historical prepayment rates for such
loans. All other residential and non-residential mortgages are assigned an
annual prepayment rate based on the Bank's historical experience. Estimated
decay rates on all deposit accounts are based upon industry estimates published
by the OTS.
The interest rate sensitivity of the Company's assets and liabilities could
vary substantially if different assumptions were used or if actual experience
differs from the assumptions used. For example, if all passbook deposits were
assumed to reprice in one year or less, the Company's one-year cumulative gap
to total assets would be negative 9.9%.
Under OTS regulations to be effective as of September 30, 1994, an
institution's interest rate risk exposure is measured based upon a 200 basis
point change in market interest rates. A savings institution whose measured
interest rate risk exposure is greater than specified levels must deduct an
interest rate risk component when calculating total capital for purposes of
determining regulatory
27
<PAGE>
risk-based capital levels. As of June 30, 1994, the Company believes that it
would not have been required to deduct any interest rate risk component under
the OTS interest rate risk capital regulations.
LIQUIDITY AND CAPITAL RESOURCES
Total shareholders' equity increased to $64.6 million at June 30, 1994 from
$60.4 million at September 30, 1993 and $55.0 million at September 30, 1992. The
increase in shareholders' equity from fiscal year end 1992 to 1993 reflects
total net income of $6.2 million, offset by cash dividends to shareholders
aggregating $1.9 million. Also during fiscal 1993, shareholders' equity
increased $1.2 million as a result of reduction in debt related to the Company's
employee stock ownership plan, exercise of stock options, and purchases by
shareholders under the Company's dividend reinvestment and stock purchase plan.
The increase in shareholders' equity during the first nine months of fiscal 1994
reflects total net income of $5.6 million, offset by cash dividends to
shareholders aggregating $1.8 million. Also during the period, shareholders'
equity increased by $1.1 million as a result of a reduction in debt related to
the Company's employee stock ownership plan, exercise of stock options, and
purchases by shareholders under the Company's dividend reinvestment and stock
purchase plan. This increase was partly offset by a $675,000 reduction in
shareholders' equity at June 30, 1994 to reflect net unrealized losses on the
Company's mutual fund and marketable equity securities portfolio.
Management periodically reviews the unrealized losses on securities to
assess whether a security has an other than temporary decline in value. At June
30, 1994, management did not believe that any of Eagle's securities had an other
than temporary decline in value that should result in a write down of securities
and a corresponding decrease in the Company's income. Management continues to
monitor whether any portions of the $675,000 net unrealized losses on the
Company's mutual fund and marketable securities portfolio (on a pre-tax
basis at June 30, 1994) should be reflected through a write-down
of such securities during future periods.
As a member of the FHLB System, the Bank is required to maintain liquid
assets at 5% of its withdrawable deposits plus short-term borrowings. At June
30, 1994, the Bank was in compliance with the OTS liquidity requirements, having
a ratio of 11.7%.
The Company's principal sources of funds include deposits, loan payments
(including interest, amortization of principal and prepayments), earnings and
amortization on investments, maturing investments and FHLB advances. Principal
uses of funds include loan originations, investments, payments of interest on
deposits, and payments to meet operating expenses. At June 30, 1994, the Company
had approximately $75.4 million in loan commitments outstanding including $24.2
million in available home equity lines of credit and $7.5 million in amounts due
borrowers for construction loan advances. It is expected that these and future
loans will be funded primarily by deposits, loan repayments, investment
maturities and amortization and borrowings. The Bank has the aggregate capacity
to borrow up to $625.6 million in advances from the FHLB of Boston and will
continue to consider this source for lending. FHLB advances at June 30, 1994
were $23.7 million, compared to $15.5 million at September 30, 1993 and $5.5
million at September 30, 1992.
It is the Company's general policy to purchase debt securities (including
mortgage-backed securities) with the intent and ability to hold to maturity for
purposes of earning interest income and meeting regulatory liquidity
requirements. Events which may be reasonably anticipated are considered when
determining the Company's intent to hold investment securities to maturity. Such
securities are classified as investment securities and are stated at cost
adjusted for amortization of premiums and accretion of discounts. Equity
securities and mutual fund investments are accounted for, in the aggregate, at
the lower of cost or market value with any unrealized loss being recorded as a
reduction to shareholders' equity. When a security available for sale is sold,
the proceeds are used to fund loans when deposit flows are not adequate, the
rates offered on advances are not favorable, and liquidity ratios support such
sales. Management believes such an approach to be prudent since it provides
an opportunity to reinvest the proceeds from sales of this type into higher
yielding mortgage loans. The
28
<PAGE>
Company also occasionally sells securities available for sale to restructure an
asset/liability mismatch. During the nine months ended June 30, 1994, Eagle sold
$2.8 million of investment securities. During fiscal 1993, investment securities
sold totaled $12.0 million, producing net gains of $52,000, while maturing
investment securities totaled $6.4 million. There were no mortgage-backed
securities sold or maturing in fiscal 1993. During fiscal 1992, investment
securities and mortgage-backed securities sold totaled $13.3 million, producing
net gains of $37,000, while maturing investment securities totaled $22.7
million.
The Bank is required by the OTS to meet minimum capital requirements, which
include tangible capital, core capital and risk-based capital requirements. The
Bank's actual capital as reported to the OTS at June 30, 1994 exceeded all three
requirements. The following chart sets forth the actual and required minimum
levels of regulatory capital for the Bank under applicable OTS regulations as of
June 30, 1994:
<TABLE>
<CAPTION>
ACTUAL PERCENT REQUIRED PERCENT EXCESS
--------- ----------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Core...................................................... $ 50,898 4.69% $ 32,572 3.00% $ 18,326
Tangible.................................................. 50,564 4.66 16,286 1.50 34,278
Risk-based................................................ 53,930 10.59 40,726 8.00 13,204
</TABLE>
The OTS has proposed to increase the minimum required core capital ratio
from the current 3% level to a range of 4% to 5% for all but the most highly
rated financial institutions. While the OTS has not taken final action on such
proposal, it has adopted a prompt corrective action regulation that classifies
any savings institution that maintains a core capital ratio of less than 4% (3%
in the event the institution was assigned a composite 1 rating in its most
recent report of examination) as "undercapitalized." As of June 30, 1994, the
Bank had a core capital ratio of 4.66% and met the requirements for an
"adequately capitalized" institution. Prior to the Bank of Hartford transaction,
Eagle Federal's capital ratios met the requirements for a "well capitalized"
institution. Giving effect to completion of this Offering and the intended use
of the estimated $ of net proceeds (excluding exercise of the Underwriter's
15% over-allotment option), on a pro forma basis at June 30, 1994, the Bank
would have core, tangible and risk based capital ratios of %, % and
%, respectively, and would meet the requirements for a "well capitalized"
institution. See "Use of Proceeds."
RECENT ACCOUNTING DEVELOPMENTS
In May 1993, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN. SFAS No. 114 requires
that loans be impaired when it is probable that a creditor will be unable to
collect all amounts (i.e., principal and interest) contractually due, and that
the impairment be measured based on the present value of expected future cash
flows discounted at the loan's original effective interest rate. SFAS No. 114
also allows impairments to be measured based on the loan's market price or the
fair value of the collateral if the loan is collateral dependent. The effective
date for SFAS No. 114 is for fiscal years beginning after December 15, 1994.
Eagle has not yet determined the impact of adoption of this statement.
In May 1993, the FASB issued SFAS No. 115, ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES. SFAS No. 115 generally would require
that debt and equity securities that have readily determinable fair values be
carried at fair value unless they are classified as held to maturity. Securities
would be classified as held to maturity and carried at amortized cost only if
the reporting entity has a positive intent and ability to hold those securities
to maturity. If not classified as held to maturity, such securities would be
classified as trading securities or securities available for sale. Unrealized
holding gains or losses for securities available for sale would be excluded
from earnings and reported as a net amount in a separate component of
shareholders' equity. The effective date for the statement is for fiscal years
beginning after December 15, 1993. Based on the securities held by Eagle at
June 30, 1994 the Company does not believe that this statement will have a
material effect on the classification of its securities upon adoption. The
impact on Eagle's future financial position or results of operations will be
based on the future fair values of its securities.
29
<PAGE>
MANAGEMENT
DIRECTORS
In addition to Ralph T. Linsley and Robert J. Britton (whose backgrounds are
described below under "Executive Officers"), the directors of Eagle are as
follows:
RICHARD H. ALDEN became a director of Bristol in 1977. Upon the merger of
Bristol's holding company with Eagle in 1988, he also became a director of
Eagle. He has been engaged in the private practice of law in Bristol,
Connecticut since 1962.
GEORGE T. CARPENTER became a director of Bristol in 1972. Upon the merger of
Bristol's holding company with Eagle in 1988, he also became a director of
Eagle. Since 1977, Mr. Carpenter has been President of S. Carpenter Construction
Co., President and Treasurer of Carpenter Realty Co. and of Bristol Shopping
Plaza, which firms are headquartered in Bristol, Connecticut. Mr. Carpenter is a
director of Barnes Group, Inc., a manufacturer of springs and aircraft parts and
distributor of automobile parts, which is headquartered in Bristol, Connecticut.
THEODORE M. DONOVAN became a director of Bristol in 1982. Upon the merger of
Bristol's holding company with Eagle in 1988, he also became a director of
Eagle. Mr. Donovan has been in the private practice of law in Bristol,
Connecticut since 1959.
THOMAS V. LAPORTA became a director of Torrington in 1979 and of Eagle upon
its formation in 1986. Mr. LaPorta is the President and Chairman of the Board of
the LaPorta Funeral Home in Torrington, Connecticut.
STEVEN E. LASEWICZ, JR. became a director of Bristol in 1986 and of Eagle in
1990. He has been President of SELCO Controls, Inc. since 1977. The firm is
headquartered in West Hartford, Connecticut and installs and services
temperature control and building automation systems.
JOHN F. MCCARTHY became a director of Torrington in 1984 and of Eagle upon
its formation in 1986. He is the President of J&M Sales, Inc., a
Torrington-based beer distributorship, and the President of Thames River
Recycling Co. in Newington, Connecticut.
FRANK J. PASCALE, Chairman of the Board of Eagle, retired as its Chief
Executive Officer in August 1991 after 28 years of service with Eagle or
Torrington. After his retirement, Mr. Pascale served as a consultant to Eagle
until April 1993. Mr. Pascale will retire as Chairman of the Board effective at
the 1995 annual meeting.
ERNEST J. TORIZZO became a director of Torrington in 1984 and of Eagle upon
its formation in 1986. He is Executive Vice President of O&G Industries, Inc., a
construction company headquartered in Torrington, Connecticut. Mr. Torizzo is
also part owner and a director of Burlington Construction Company in Torrington,
Connecticut.
EXECUTIVE OFFICERS
The executive officers of Eagle Financial are as follows:
RALPH T. LINSLEY is Vice Chairman, President and Chief Executive Officer of
Eagle and Chairman and Chief Executive Officer of the Bank. He serves as a
director of both Eagle and the Bank. He joined Bristol in 1956 and became its
President in 1971. Upon the merger of Bristol's holding company with Eagle in
1988, Mr. Linsley became Vice Chairman and President of Eagle while continuing
to serve as Chairman, President and Chief Executive Officer of Bristol. He
became Chief Executive Officer of Eagle in August 1991 and Chairman and Chief
Executive Officer of the Bank upon the merger of Bristol with Torrington in
January 1993. Mr. Linsley has advised the Board of Directors that he will retire
on September 30, 1994 as President and Chief Executive Officer of Eagle and
Chief Executive Officer of the Bank. Mr. Linsley will thereafter continue to
serve as Vice Chairman and a director of Eagle and as Chairman of the Board and
a director of the Bank. Mr. Linsley will then also become a consultant to Eagle.
30
<PAGE>
ROBERT J. BRITTON is Executive Vice President of Eagle and President and
Chief Operating Officer of the Bank. He serves as a director of both Eagle and
the Bank. He joined Torrington in 1978 and became its Vice President and Chief
Lending Officer in 1983 and Executive Vice President in 1989. He has served as
an executive officer of Eagle since 1991 and as a director since 1992. Upon the
merger of Bristol with Torrington in January 1993, he also became the President,
Chief Operating Officer and a director of the Bank. Following Mr. Linsley's
retirement on September 30, 1994, Mr. Britton has been selected by the Board of
Directors to serve as President and Chief Executive Officer of both Eagle and
the Bank. The selection of Mr. Britton as the new Chief Executive Officer is
intended by the Board of Directors to provide continuity to Eagle's policies and
objectives with no significant changes expected from those followed while Mr.
Linsley served as Chief Executive Officer and Mr. Britton as Chief Operating
Officer.
MARK J. BLUM is Vice President and Chief Financial Officer of Eagle. He
joined Torrington in 1985 and became Treasurer in 1986. He has also held similar
positions with Eagle since its formation in 1987. Upon the merger of Bristol
with Torrington in January 1993, he also became Senior Vice President and Chief
Financial Officer of the Bank.
IRENE K. HRICKO is Vice President and Corporate Secretary of Eagle and the
Bank. She joined Torrington in 1949 and became its Vice President -- Marketing
in 1981 and its Vice President and Corporate Secretary in 1983. Upon the merger
of Bristol's holding company with Eagle in 1988, she also became Vice President
and Corporate Secretary of Bristol. Upon the merger of Bristol with Torrington
in January 1993, she also became Vice President and Corporate Secretary of the
Bank.
ERCOLE J. LABADIA is Vice President -- Administration of Eagle. He became
Bristol's Vice President and Treasurer in 1973, Senior Vice
President/Administration in 1982 and Executive Vice President in 1989. He has
also held executive positions with Eagle since its 1988 merger of equals with
Bristol's holding company. Upon the merger of Bristol with Torrington in January
1993, he became Executive Vice President Administration and Operations of the
Bank.
BARBARA S. MILLS is Vice President and Treasurer of Eagle and the Bank. She
became Bristol's Comptroller in 1980 and its Vice President, Chief Financial
Officer and Treasurer in 1982. Since the 1988 merger of equals with Bristol's
holding company, she has held her current positions with Eagle. Her current
positions with the Bank have been held since the merger of Bristol with
Torrington in January 1993.
STOCK OWNED BY MANAGEMENT
As of June 30, 1994, directors and executive officers of Eagle as a group
(14 persons) beneficially owned 409,365 shares of Common Stock, or 12.4% of the
outstanding Common Stock, as determined under Rule 13d-3 of the Exchange Act.
This amount includes 27,458 shares allocated to the accounts of executive
officers under the Company's employee stock ownership plan, 168,300 shares
subject to options which are exercisable within 60 days, and 64,587 shares owned
by certain family members or companies affiliated with directors or executive
officers of Eagle (some of which the director or executive officer may disclaim
beneficial ownership).
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Eagle consists of 8,000,000 shares of Common
Stock, par value $.01 per share, and 2,000,000 shares of serial preferred stock,
par value $.01 per share ("Preferred Stock"). At August 3, 1994, there were
3,123,035 shares of Common Stock issued and outstanding (excluding 43,066
treasury shares) and no shares of Preferred Stock issued and outstanding. Based
on such outstanding shares upon the completion of this Offering (excluding
43,066 treasury shares), there will be 4,253,035 shares of Common Stock issued
and outstanding, or 4,422,535 shares if the Underwriter's 15% over allotment
option is fully exercised. See "Capitalization."
31
<PAGE>
THE COMMON STOCK OF EAGLE REPRESENTS NON-WITHDRAWABLE CAPITAL AND IS NOT OF
AN INSURABLE TYPE OR INSURED BY THE FDIC.
Under Delaware law, the holders of the Common Stock are entitled to one vote
for each share held on all matters voted upon. If Eagle issues Preferred Stock
in the future, holders of the Preferred Stock may also possess voting powers.
In the unlikely event of any liquidation or dissolution of Eagle, the
holders of its Common Stock would be entitled to receive, after payment or
provision for payment of all its debts and liabilities, all assets of Eagle
available for distribution, in cash or in kind. If Preferred Stock has been
issued subsequently, the holders thereof may have a priority over the holders of
the Common Stock in the event of liquidation or dissolution.
Holders of the Common Stock will not be entitled to preemptive rights with
respect to any shares which may be issued. The Common Stock will not be subject
to any call for redemption and, upon receipt by Eagle of the full purchase price
therefor, each share of Common Stock will be duly authorized, fully paid and
nonassessable.
The Board of Directors of Eagle is authorized to issue preferred stock in
series and to fix and state the voting powers, designations, preferences and
relative, participating, optional or other special rights of the shares of each
such series and the qualifications, limitations and restrictions thereof.
Preferred Stock may rank prior to the Common Stock as to dividend rights,
liquidation preferences or both, and may have full or limited, multiple,
fractional or no voting rights. The holders of Preferred Stock will be entitled
to vote as a separate class or series under certain circumstances, regardless of
any other voting rights which such holders may have.
The registrar and transfer agent for the Common Stock is First National Bank
of Boston.
DIVIDEND LIMITATIONS
OTS regulations impose limitations on cash dividends and other capital
distributions by savings institutions, such as Eagle Federal. Within these
limitations, certain "safe harbor" capital distributions are permitted, subject
to providing OTS at least 30 days' advance notice. Savings institutions, which
have capital in excess of all fully phased-in capital requirements before and
after the proposed capital distribution and have not been notified that they are
in need of more than normal supervision ("Tier 1 Institutions"), may make
capital distributions during a calendar year up to the greater of (i) 100% of
net income to date during the calendar year, plus the amount that would reduce
by one-half its "surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar year, or (ii)
75% of its net income over the most recent four-quarter period.
The OTS may prohibit a proposed capital distribution by any savings
institution if the OTS determines that such distribution would constitute an
unsafe or unsound practice. In addition, the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") prohibits an insured depository
institution from declaring any dividend or making any other capital distribution
if, following the distribution or payment, the institution would be classified
as "undercapitalized" or lower. At June 30, 1994, Eagle Federal qualified as a
Tier I institution. There can be no assurance that the OTS will permit Eagle
Federal to pay dividends to the Company in the amount permitted by applicable
regulations.
Earnings appropriated for bad debt reserves and deducted for federal income
tax purposes cannot be used by Eagle Federal to pay cash dividends to the
Company without the payment of federal income taxes by Eagle Federal at the then
current income tax rate on the amount deemed distributed, which would include
the amount of any federal income taxes attributable to the distribution. Thus,
any dividends to the Company that would reduce amounts appropriated to Eagle
Federal's bad debt reserves and deducted for federal income tax purposes could
create a significant tax liability for Eagle Federal.
32
<PAGE>
Unlike Eagle Federal, the Company is not subject to regulatory restrictions
on the payment of dividends to its shareholders. However, the Company is subject
to the requirements of Delaware law, which generally limits dividends to the
amount of a corporation's net assets less paid-in capital.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The certificate of incorporation and by-laws of Eagle contain various
provisions which are designed to encourage potential acquirors to negotiate
directly with the Board of Directors and to discourage hostile takeover
attempts. Certain of these provisions may have the effect of discouraging a
future takeover attempt which is not approved by the Board of Directors, but
which the shareholders of Eagle might deem to be in their best interest or in
which shareholders might receive a substantial premium for their shares over
then-current market prices. These provisions include (i) a classified board of
directors, (ii) lack of authority for shareholders to call a special meeting,
(iii) authority for Board of Directors to issue up to 2,000,000 shares of
Preferred Stock without shareholder approval, (iv) certain restrictions on
acquisitions of or offers to acquire 10% or more of the outstanding voting stock
of Eagle, (v) supermajority vote requirements for amendments to certain
provisions of its certificate of incorporation and by-laws, and (vi) the
requirement that certain business combinations either be approved by at least
80% of Eagle's outstanding voting stock or be approved by a two-thirds vote of
the Board of Directors or satisfy certain minimum price requirements.
OTHER RESTRICTIONS ON THE ACQUISITION OF STOCK
For purposes of the restrictions described below, Eagle Federal would be
defined as a "savings association" and Eagle as a "savings and loan holding
company."
Federal law provides that no company, "directly or indirectly or acting in
concert with one or more persons, or through one or more subsidiaries, or
through one or more transactions," may acquire "control" of a savings
association or holding company thereof at any time without the prior approval of
the OTS. In addition, any company that acquires such control becomes a "savings
and loan holding company" subject to registration, examination and regulation as
a savings and loan holding company. "Control" in this context means ownership
of, control of, or holding proxies representing more than 25% of the voting
shares of a savings association or holding company thereof or the power to
control in any manner the election of a majority of the directors of such
savings association or holding company.
Federal law also provides that no "person," acting directly or indirectly or
through or in concert with one or more persons, may acquire "control" of a
savings association or holding company thereof, unless at least 60 days' prior
written notice has been given to the OTS and the OTS has not objected to the
proposed acquisition. "Control" is defined for this purpose as the power,
directly or indirectly, to direct the management or policies of a savings
association or holding company or to vote more than 25% of any class of voting
securities of a savings association or holding company.
Federal regulations require that, prior to obtaining control of an insured
institution (including a holding company thereof), a person, other than a
company, must give 60 days' notice to the OTS and have received no OTS objection
to such acquisition of control; a company must apply for and receive OTS
approval of the acquisition. Control, as defined under federal law, involves a
25% voting stock test, control in any manner of the election of a majority of
the institution's directors, or a determination by the OTS that the acquirer has
the power to direct, or directly or indirectly to exercise a controlling
influence over, the management or policies of the institution. Acquisition of
more than 10% of an institution's voting stock, if the acquirer also is subject
to any one of either "control factors," constitutes a rebuttable determination
of control under the regulations. The determination of control may be rebutted
by submission to the OTS, prior to the acquisition of stock or the occurrence of
any other circumstances giving rise to such determination, of a statement
setting forth facts and circumstances which would support a finding that no
control relationship will exist and containing certain undertakings. The
regulations provide that persons or companies which acquire beneficial ownership
exceeding 10% or more of any class of an insured institution's stock after the
33
<PAGE>
effective date of the regulations must file with the OTS a certification that
the holder is not in control of such institution, is not subject to a rebuttable
determination of control and will not take action which would result in a
determination or rebuttable determination of control without prior notice to or
approval of the OTS, as applicable.
Under Section 203 of the Delaware General Corporation Law ("Delaware Law"),
a resident domestic corporation may not engage in a business combination with an
interested stockholder for a period of three years after the date such person
became an interested stockholder, unless (i) prior to such date the Board of
Directors approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in such person becoming an
interested stockholder, the interested stockholder owned at least 85% of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding for determining the number of shares outstanding shares owned by (a)
persons who are directors and officers and (b) employee stock plans, in certain
instances), or (iii) on or subsequent to such date the business combination is
approved by the Board of Directors and authorized by the affirmative vote of at
least two-thirds of the outstanding voting stock which is not owned by the
interested stockholder. Section 203 of the Delaware Law defines the term
"business combination" to encompass a wide variety of transactions with or
caused by an interested stockholder in which the interested stockholder receives
or could receive a benefit on other than a pro rata basis with other
stockholders, including certain mergers, consolidations, asset sales, transfers
and other transactions resulting in financial benefit to the interested
stockholder. "Interested stockholder" means a person who owns (or within three
years prior, did own) 15% or more of the corporation's outstanding stock, and
the affiliates and associates of such person.
LIMITATION ON LIABILITY
As permitted under Delaware Law, certificate of incorporation provides of
Eagle that no director of Eagle will be liable for monetary damages for breach
of fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to Eagle or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for approval of certain unlawful dividends or stock purchases or
redemptions and (iv) for any transaction from which the director derived an
improper personal benefit. In appropriate circumstances, equitable remedies such
as an injunction or other forms of non-monetary relief would remain available
under Delaware Law.
UNDERWRITING
The Underwriter, Keefe, Bruyette & Woods, Inc., has agreed, subject to the
terms and conditions of the Underwriting Agreement, to purchase from Eagle all
of the shares of Common Stock offered hereby. The Underwriter is committed to
purchase all of such shares if any are purchased.
The Underwriter has advised Eagle that it proposes initially to offer such
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriter may allow, and
such dealers may reallow, a discount not in excess of $ per share on sales
to certain other dealers. After the initial offering of the Common Stock to the
public, the offering price, concession and reallowance may be changed.
The Company has granted the Underwriter an option for 30 days from the date
hereof to purchase up to an additional 169,500 shares of Common Stock to cover
over-allotments, if any, at the initial public offering price less the
underwriting discount.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments the Underwriter may be required to make in respect
thereof.
The Company has agreed with the Underwriter that, for a period of 90 days
after the date of this Prospectus, Eagle will not, without the Underwriter's
prior written consent, sell, offer to sell, grant
34
<PAGE>
any option for the sale of, or otherwise dispose of, directly or indirectly, any
shares of Common Stock and will not issue to the public any shares of Common
Stock or securities convertible into, or warrants to purchase, any shares of
Common Stock, except pursuant to Eagle's existing stock option plans or its
dividend reinvestment and stock purchase plan.
The Underwriter, dealers or agents may be customers of, engage in
transactions with, or perform services for, Eagle and its subsidiaries in the
ordinary course of business.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for Eagle by its counsel, Hogan & Hartson L.L.P., Washington, D.C. Certain
legal matters relating to this Offering will be passed upon for the Underwriter
by Brown & Wood, New York, New York.
EXPERTS
The consolidated financial statements of Eagle at September 30, 1993, and
for the year then ended, and the statement of assets acquired and liabilities
assumed at June 10, 1994, related to the acquisition of certain assets and
assumption of certain liabilities of the Bank of Hartford by Eagle Federal, have
been included herein and in the Registration Statement in reliance upon the
reports of KPMG Peat Marwick, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Eagle at September 30, 1992, and
for each of the two years in the period ended September 30, 1992, appearing
in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
35
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
(a) Independent Auditors' Report of KPMG Peat Marwick................................................... F-2
(b) Independent Auditors' Report of Ernst & Young LLP................................................... F-3
(c) Consolidated Balance Sheets -- September 30, 1993 and 1992.......................................... F-4
(d) Consolidated Statements of Income -- For the Years Ended September 30, 1993, 1992 and 1991.......... F-5
(e) Consolidated Statements of Shareholders' Equity -- For the Years Ended September 30, 1993, 1992 and
1991............................................................................................... F-6
(f) Consolidated Statements of Cash Flows -- For the Years Ended September 30, 1993, 1992 and 1991...... F-7
(g) Notes to Consolidated Financial Statements.......................................................... F-9
(h) Consolidated Balance Sheets -- June 30, 1994 (Unaudited) and September 30, 1993..................... F-26
(i) Consolidated Statements of Income -- For the Three and Nine Months Ended June 30, 1994 and 1993 (Unaudited)F-27
(j) Consolidated Statements of Shareholders' Equity -- For the Nine Months Ended June 30, 1994 and 1993
(Unaudited)........................................................................................ F-28
(k) Consolidated Statements of Cash Flows -- For the Nine Months Ended June 30, 1994 and 1993
(Unaudited)........................................................................................ F-29
(l) Notes to Consolidated Financial Statements -- June 30, 1994 (Unaudited)............................. F-30
(m) Independent Auditors' Report of KPMG Peat Marwick as to Statement of Assets Acquired and Liabilities
Assumed............................................................................................ F-33
(n) Statement of Assets Acquired and Liabilities Assumed -- June 10, 1994............................... F-34
(o) Notes to Statement of Assets Acquired and Liabilities Assumed....................................... F-35
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Eagle Financial Corp.:
We have audited the accompanying consolidated balance sheet of Eagle
Financial Corp. and subsidiaries as of September 30, 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for the
year then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eagle Financial
Corp. and subsidiaries as of September 30, 1993, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
KPMG Peat Marwick
Hartford, CT
October 22, 1993
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Eagle Financial Corp.:
We have audited the accompanying consolidated balance sheets of Eagle
Financial Corp. as of September 30, 1992, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the
two years in the period ended September 30, 1992. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Eagle Financial
Corp. at September 30, 1992, and the consolidated results of its operations
and its cash flows for each of the two years in the period ended September
30, 1992, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Hartford, CT
October 29, 1992
F-3
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1993 1992
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT FOR PER SHARE
DATA)
<S> <C> <C>
Assets
Cash and amounts due from depository institutions..................................... $ 12,462 $ 13,542
Interest-bearing deposits............................................................. 9,496 19,590
----------- -----------
Cash and cash equivalents........................................................... 21,958 33,132
Securities available for sale
(market value $15,601 at September 30, 1993)......................................... 15,599 --
Investment securities
(market value: $47,954 in 1993 and $87,960 in 1992).................................. 46,880 86,019
Mortgage-backed securities
(market value: $26,748 in 1993 and $32,413 in 1992).................................. 25,953 31,652
Loans receivable, net of allowance for loan losses of $5,005 in 1993 and $4,011 in
1992................................................................................. 656,344 568,124
Accrued interest receivable........................................................... 4,380 4,526
Real estate acquired in settlement of loans and in-substance repossessed real estate,
net.................................................................................. 5,471 6,403
Stock in Federal Home Loan Bank of Boston, at cost.................................... 5,949 4,339
Premises and equipment, net........................................................... 6,029 5,903
Prepaid expenses and other assets..................................................... 3,905 11,073
----------- -----------
Total assets........................................................................ $ 792,468 $ 751,171
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity Liabilities:
Deposits.............................................................................. $ 706,214 $ 677,701
Federal Home Loan Bank advances....................................................... 15,500 5,500
Borrowed money........................................................................ 752 1,826
Advance payments by borrowers for taxes and insurance................................. 3,577 3,836
Accrued expenses and other liabilities................................................ 6,018 7,304
----------- -----------
Total liabilities................................................................... 732,061 696,167
Shareholders' equity:
Serial preferred stock, $.01 par value, 2,000,000 shares authorized and unissued
Common stock, $.01 par value, 8,000,000 shares authorized; 3,097,547 and 3,004,602
shares issued at September 30, 1993 and 1992, respectively, including 43,066 shares
held in treasury..................................................................... 31 27
Additional paid-in capital............................................................ 33,562 27,640
Retained earnings..................................................................... 27,928 28,707
Cost of common stock in treasury...................................................... (362) (362)
Employee stock ownership plan stock................................................... (752) (1,008)
----------- -----------
Total shareholders' equity.......................................................... 60,407 55,004
----------- -----------
Commitments and contingencies
Total liabilities and shareholders' equity.......................................... $ 792,468 $ 751,171
----------- -----------
----------- -----------
</TABLE>
See notes to Consolidated Financial Statements
F-4
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE
DATA)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans...................................... $ 48,614 $ 45,404 $ 42,238
Interest on mortgage-backed securities.......................... 1,859 820 507
Interest on investment securities............................... 3,886 3,637 2,782
Dividends on investment securities.............................. 1,395 2,023 1,744
------------- ------------- -------------
Total interest income......................................... 55,754 51,884 47,271
Interest expense:
Interest on deposits............................................ 27,960 29,026 29,048
Interest on Federal Home Loan Bank advances..................... 494 634 1,555
Interest on borrowed money...................................... 15 38 36
------------- ------------- -------------
Total interest expense........................................ 28,469 29,698 30,639
------------- ------------- -------------
Net interest income........................................... 27,285 22,186 16,632
Provision for loan losses......................................... 1,708 1,646 1,652
------------- ------------- -------------
Net interest income after provision for loan losses........... 25,577 20,540 14,980
Other income:
Net gain on sale of investment securities....................... 52 37 2
Customer service fee income..................................... 1,688 1,268 887
Other........................................................... 764 1,157 764
------------- ------------- -------------
Total other income............................................ 2,504 2,462 1,653
------------- ------------- -------------
28,081 23,002 16,633
Other expenses:
Compensation, taxes and benefits................................ 7,398 5,956 4,596
Office occupancy................................................ 1,856 1,465 1,065
Advertising..................................................... 534 409 298
Provision for losses on real estate acquired in settlement of
loans.......................................................... 287 239 41
Operation of real estate acquired in settlement of loans........ 690 501 112
Federal insurance premium....................................... 1,459 1,226 891
Data processing expenses........................................ 1,076 882 674
Other........................................................... 2,992 2,258 1,564
------------- ------------- -------------
Total other expenses.......................................... 16,292 12,936 9,241
------------- ------------- -------------
Income before income taxes.................................... 11,789 10,066 7,392
Income taxes...................................................... 5,637 4,900 3,381
------------- ------------- -------------
Net income.................................................... $ 6,152 $ 5,166 $ 4,011
------------- ------------- -------------
------------- ------------- -------------
Net income per share.............................................. $ 1.97 $ 1.70 $ 1.37
Weighted-average shares outstanding............................... 3,128,220 3,046,335 2,928,910
</TABLE>
See notes to Consolidated Financial Statements
F-5
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
COST OF LOSS ON EMPLOYEE
COMMON STOCK ADDITIONAL COMMON MARKETABLE STOCK
------------------------ PAID-IN RETAINED STOCK IN EQUITY OWNERSHIP
SHARES AMOUNT CAPITAL EARNINGS TREASURY SECURITIES PLAN STOCK
----------- ----------- ----------- ----------- ----------- --------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1990........ 2,694 $ 27 $ 27,303 $ 22,517 $ (251) $ (96) $ (611)
Net income...................... 4,011
Cash dividends declared, $.47
per share...................... (1,385)
Reduction in debt related to
Employee Stock Ownership Plan.. 182
Employee Stock Ownership Plan
stock purchased with debt...... (759)
Payment for fractional shares... (5)
Purchase of treasury stock...... (90)
Decrease in net unrealized loss
on marketable equity
securities..................... 49
----- --- ----------- ----------- ----------- --- -----------
Balance at September 30, 1991..... 2,694 27 27,298 25,143 (341) (47) (1,188)
Net income...................... 5,166
Cash dividends declared, $.55
per share...................... (1,602)
Reduction in debt related to
Employee Stock Ownership Plan.. 180
Exercise of stock options and
other.......................... 37 348
Payment for fractional shares... (6)
Purchase of treasury stock...... (21)
Decrease in net unrealized loss
on marketable equity
securities..................... 47
----- --- ----------- ----------- ----------- --- -----------
Balance at September 30, 1992..... 2,731 27 27,640 28,707 (362) -- (1,008)
Net income...................... 6,152
Cash dividends declared, $.63
per share...................... (1,910)
Reduction in debt related to
Employee Stock Ownership Plan.. 256
Exercise of stock options and
other.......................... 79 1 694
Payment for fractional shares... (8)
Common stock dividend declared,
10%............................ 273 3 5,009 (5,021)
Dividend reinvestment plan...... 14 227
----- --- ----------- ----------- ----------- --- -----------
Balance at September 30, 1993..... 3,097 $ 31 $ 33,562 $ 27,928 $ (362) $ -- $ (752)
----- --- ----------- ----------- ----------- --- -----------
----- --- ----------- ----------- ----------- --- -----------
<CAPTION>
TOTAL
---------
<S> <C>
Balance at October 1, 1990........ $ 48,889
Net income...................... 4,011
Cash dividends declared, $.47
per share...................... (1,385)
Reduction in debt related to
Employee Stock Ownership Plan.. 182
Employee Stock Ownership Plan
stock purchased with debt...... (759)
Payment for fractional shares... (5)
Purchase of treasury stock...... (90)
Decrease in net unrealized loss
on marketable equity
securities..................... 49
---------
Balance at September 30, 1991..... 50,892
Net income...................... 5,166
Cash dividends declared, $.55
per share...................... (1,602)
Reduction in debt related to
Employee Stock Ownership Plan.. 180
Exercise of stock options and
other.......................... 348
Payment for fractional shares... (6)
Purchase of treasury stock...... (21)
Decrease in net unrealized loss
on marketable equity
securities..................... 47
---------
Balance at September 30, 1992..... 55,004
Net income...................... 6,152
Cash dividends declared, $.63
per share...................... (1,910)
Reduction in debt related to
Employee Stock Ownership Plan.. 256
Exercise of stock options and
other.......................... 695
Payment for fractional shares... (8)
Common stock dividend declared,
10%............................ (9)
Dividend reinvestment plan...... 227
---------
Balance at September 30, 1993..... $ 60,407
---------
---------
</TABLE>
See notes to Consolidated Financial Statements
F-6
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------
1993 1992 1991
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net income............................................................... $ 6,152 $ 5,166 $ 4,011
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses.............................................. 1,708 1,646 1,652
Provision for losses on real estate acquired in settlement of loans.... 287 239 41
Provision for depreciation and amortization............................ 603 496 404
Accretion of discounts and fees on loans............................... (574) (263) (216)
Amortization of premiums on loans...................................... 1 1 5
Amortization of premiums on mortgage-backed securities................. 8 8 8
Amortization of premiums (accretion of discounts) on investments....... 101 58 9
Amortization of core deposit intangibles............................... 375 128 --
Deferred income taxes.................................................. (223) (357) (142)
Realized mortgage-backed and investment security losses (gains), net... (52) (37) (2)
Changes in assets and liabilities, net of acquisitions:
Decrease (increase) in accrued interest receivable................... 146 (529) 211
Increase in accrued interest payable................................. 153 345 94
Loan origination fees................................................ 1,318 974 353
Other, net........................................................... 6,253 (4,857) (414)
------------ ------------ ----------
Net cash provided by operating activities.......................... 16,256 3,018 6,014
------------ ------------ ----------
Net cash provided by investing activities:
Proceeds from sales of securities available for sale..................... 7,998 -- --
Proceeds from sales of investment securities prior to maturity........... 4,032 8,161 501
Proceeds from maturities of investment securities........................ 6,350 22,685 5,000
Proceeds from amortization of investment securities...................... 19,526 15,956 3,730
Purchases of securities available for sale............................... (10,000) -- --
Purchases of investment securities....................................... (4,415) (92,706) (32,511)
Net decrease (increase) in Federal funds sold............................ -- 800 (800)
Principal payments on mortgage-backed securities......................... 5,691 1,323 898
Purchases of mortgage-backed securities.................................. -- (32,819) --
Proceeds from sales of mortgage-backed securities........................ -- 5,122 --
Principal payments on loans receivable................................... 115,111 102,045 59,915
Loan originations........................................................ (209,901) (163,478) (78,927)
Loan purchases........................................................... -- -- (240)
Proceeds from sales of loans............................................. 698 644 500
Proceeds from sales of real estate acquired in settlement of loans....... 3,636 2,899 1,425
Purchases of premises and equipment...................................... (729) (1,878) (460)
Increase in investment in Federal Home Loan Bank stock................... (1,610) (305) (184)
Acquisition of loans, investments and other assets....................... -- (87,093) --
------------ ------------ ----------
Net cash used by investing activities.............................. (63,613) (218,644) (41,153)
------------ ------------ ----------
</TABLE>
(CONTINUED)
See notes to Consolidated Financial Statements
F-7
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------
1993 1992 1991
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
Net cash provided by financing activities:
<S> <C> <C> <C>
Net increase in passbook, NOW and Money Market accounts.................. $ 18,761 $ 45,782 $ 32,993
Net (decrease) increase in certificates of deposit....................... 1,554 (7,361) 22,454
Assumption of deposits and liabilities of acquired banks................. 8,198 185,949 --
Borrowings under Federal Home Loan Bank advances......................... 10,000 -- 1,003
Principal payments under Federal Home Loan Bank advances................. -- (3,003) (16,500)
Net increase (decrease) in borrowed money................................ (1,074) (739) 1,472
Net increase (decrease) in advance payments by borrowers for taxes and
insurance............................................................... (259) 1,891 122
Proceeds from exercise of stock options and dividends reinvested......... 913 348 --
Acquisition of treasury stock............................................ -- (21) (90)
Cash dividends........................................................... (1,910) (1,602) (1,385)
------------ ------------ ----------
Net cash provided by financing activities................................ 36,183 221,244 40,069
------------ ------------ ----------
Increase (decrease) in cash and cash equivalents......................... (11,174) 5,618 4,930
Cash and cash equivalents at beginning of year........................... 33,132 27,514 22,584
------------ ------------ ----------
Cash and cash equivalents at end of year................................. $ 21,958 $ 33,132 $ 27,514
------------ ------------ ----------
------------ ------------ ----------
Non-cash investing activities:
Loans transferred to foreclosed real estate............................ $ 3,419 $ 6,048 $ 4,679
------------ ------------ ----------
------------ ------------ ----------
Supplemental cash flow information:
Interest paid.......................................................... $ 27,788 $ 29,140 $ 30,616
Income taxes paid...................................................... $ 5,520 $ 5,370 $ 2,900
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
See notes to Consolidated Financial Statements
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1993, 1992 AND 1991
1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
Eagle Financial Corp. (the "Company") is the savings bank holding company
for Eagle Federal Savings Bank (the "Bank"), a federally-chartered savings bank.
Prior to January 1, 1993, the Company had two bank subsidiaries, Bristol Federal
Savings Bank and First Federal Savings and Loan Association of Torrington.
Effective January 1, 1993, the two bank subsidiaries were combined into one
subsidiary, Eagle Federal Savings Bank. All significant intercompany balances
and transactions have been eliminated.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in accordance with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant change
in the near term relate to the determination of the allowance for loan losses
and the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for
loan losses and the valuation of foreclosed and in-substance repossessed real
estate, management obtains independent appraisals for significant properties.
While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowance or write-downs may be
necessary based on changes in economic conditions, particularly in Connecticut.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses
and value of foreclosed real estate. Such agencies may require the Bank to
recognize additions to the allowance or write-downs based on their judgment of
information available to them at the time of their examination.
INVESTMENT AND MORTGAGE-BACKED SECURITIES
The Bank determines its accounting for debt securities based upon its
projected liquidity needs. Securities that are to be sold before maturity are
classified as available for sale and are accounted for at the lower of cost or
market. Securities that will be held to maturity other than marketable equity
securities are stated at cost, adjusted for amortization of premiums and
accretion of discounts. Equity securities, including mutual fund investments,
are carried at the lower of aggregate cost or market value (see Note 3). A
valuation allowance is established and charged to shareholders' equity when the
aggregate market value of the equity securities portfolio is less than the book
value of the portfolio. Unrealized losses on equity securities that are
determined to be other than temporary are charged to operations. Gains or losses
on the sale of investment securities are computed by the specific identification
method.
REVENUE RECOGNITION
Interest on loans is accrued and credited to operations based upon the
principal amount outstanding. The accrual of interest income generally is
discontinued when a loan becomes 90 days past due as to principal or interest.
Management may elect to continue the accrual of interest when the estimated fair
value of collateral is sufficient to cover the principal balance and accrued
interest.
First mortgage loans held for sale in the secondary market are carried at
the lower of aggregate cost or market value. Management estimates the market
value of its portfolio held for sale based on outstanding investor commitments
or current investor yield requirements, whichever is more readily apparent.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
1. ACCOUNTING POLICIES (CONTINUED)
Loan origination fees and certain direct loan origination costs are deferred
and the net amount amortized as an adjustment to the related loan's yield. The
Company is generally amortizing these amounts over the contractual life of the
related loans.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level believed adequate by
management to absorb probable losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based on an evaluation of the
portfolio, past loan loss experience, current economic conditions, volume,
growth and composition of the loan portfolio, and other relevant factors. The
allowance is increased by provisions for loan losses charged against income.
PREMISES AND EQUIPMENT
Premises and equipment are carried at cost less accumulated depreciation
computed generally by the straight-line method at rates based on estimated
useful lives. Amortization of leasehold improvements is computed on a
straight-line basis over the terms of related leases.
REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS AND IN-SUBSTANCE REPOSSESSED
REAL ESTATE
Real estate acquired in settlement of loans and in-substance repossessed
real estate is composed of properties acquired through foreclosure proceedings,
acceptance of a deed in lieu of foreclosure, or loans for which foreclosure
proceedings are imminent. These properties are carried at the lower of cost or
fair value, less selling costs. At the time these properties are foreclosed or
are designated in-substance repossessed real estate, they are recorded at the
lower of cost or fair value through a direct charge against the allowance for
loan losses. Losses subsequent to foreclosure or in-substance repossession
classification are recorded as a provision (charge) against income.
INCOME TAXES
The Company files consolidated state and Federal income tax returns. Items
of income and expenses recognized in different time periods for financial
reporting purposes and for purposes of computing income taxes currently payable
give rise to deferred income taxes which are reflected in the consolidated
financial statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective December 31, 1992, the Company is required to provide supplemental
financial statement disclosures on the estimated fair value of its financial
instruments in accordance with Statement of Financial Accounting Standards No.
107, "Disclosures about Fair Value of Financial Instruments" ("SFAS No. 107").
Financial instruments as defined in SFAS No. 107 include cash and cash
equivalents, investments, mortgage-backed securities, loans, deposits,
borrowings and certain off-balance-sheet items. Other assets that are not
considered financial instruments under SFAS No. 107 and are excluded from fair
value disclosures include real estate owned and premises and equipment.
Fair value estimates are made at a specific point in time based on market
information, where available, or other more subjective information if a market
for the financial instrument does not exist. These estimates incorporate
assumptions and other matters of judgment and may not reflect the true financial
impact that could result from selling the entire portfolio of a financial
instrument on one date, including any income tax consequences.
CASH FLOWS
Cash and cash equivalents include cash and amounts due from depository
institutions and interest-bearing deposits.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
1. ACCOUNTING POLICIES (CONTINUED)
PER SHARE DATA
Net income per share is computed by dividing net income by the
weighted-average common shares outstanding during the year, increased by the
number of shares issuable on the exercise of stock options, if dilutive, based
on the treasury stock method. The dilutive effect of stock options was not
material for 1993, 1992 and 1991.
All per share data and the number of outstanding common shares for all
periods prior to September 30, 1993 have been adjusted retroactively to give
effect to a 10% stock dividend paid in September 1993.
RECLASSIFICATION
Certain 1992 and 1991 amounts have been reclassified to conform to the 1993
presentation for comparative purposes. Such reclassifications had no effect on
net income.
2. ACQUISITIONS
On March 13, 1992, Bristol Federal purchased certain assets and assumed all
insured deposits of Danbury Federal Savings and Loan Association ("Danbury"),
Danbury, Connecticut from the Resolution Trust Corporation ("RTC").
On May 8, 1992, Bristol Federal acquired certain assets and assumed all
insured deposits of Brookfield Bank ("Brookfield"), Brookfield, Connecticut,
from the Federal Deposit Insurance Corporation ("FDIC"). The acquisitions have
been accounted for by the purchase method of accounting and, accordingly, the
assets acquired and liabilities assumed were recorded based on estimated fair
values at the dates of acquisition. The estimated fair values of assets acquired
and liabilities assumed at the dates of acquisition are summarized as follows:
<TABLE>
<CAPTION>
DANBURY BROOKFIELD
---------------- ---------------
<S> <C> <C>
Cash and due from banks............................................. $ 18,960,000 $ 1,428,000
Loans, net.......................................................... 84,993,000 --
Other assets........................................................ 302,000 1,000
Core deposit intangibles............................................ 1,236,000 561,000
Deposits............................................................ (113,655,000) (66,485,000)
Other liabilities................................................... (5,687,000) (122,000)
---------------- ---------------
Cash received or receivable from FDIC/RTC........................... $ 13,851,000 $ 64,617,000
---------------- ---------------
---------------- ---------------
</TABLE>
In accordance with the Purchase and Assumption Agreement between the RTC and
Bristol Federal, Bristol Federal had the option, until October 7, 1993, to "put
back" or return to the RTC for cash, loans acquired in the Danbury transaction
if certain documentation deficiencies exist. As of September 30, 1993, $4
million of loans had been put back to the RTC.
The operating results of these acquisitions are included in the Company's
statement of income from the dates of acquisition.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
3. INVESTMENT AND MORTGAGE-BACKED SECURITIES
The aggregate carrying amounts and market values of investment securities
are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
CARRYING UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
--------- ----------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
September 30, 1993:
Debt securities:
U.S. Treasury securities...................................... $ 4,098 $ 67 $ -- $ 4,165
Obligations of other U.S. Government agencies................. 8,993 319 -- 9,312
Collateralized mortgage obligations........................... 23,223 351 35 23,539
Corporate securities.......................................... 10,465 270 -- 10,735
--------- ----------- --- ---------
Total debt securities....................................... 46,779 1,007 35 47,751
Equity securities............................................... 101 102 -- 203
--------- ----------- --- ---------
Total investment securities................................. 46,880 1,109 35 47,954
Securities available for sale:
Mutual fund investments....................................... 15,599 22 20 15,601
--------- ----------- --- ---------
Total investment securities and securities available for
sale....................................................... $ 62,479 $ 1,131 $55 $ 63,555
--------- ----------- --- ---------
--------- ----------- --- ---------
September 30, 1992:
Debt securities:
U.S. Treasury securities...................................... $ 6,003 $ 146 $ -- $ 6,149
Obligations of other U.S. Government agencies................. 13,344 711 -- 14,055
Collateralized mortgage obligations........................... 39,412 567 29 39,950
Corporate securities.......................................... 13,907 437 -- 14,344
--------- ----------- --- ---------
Total debt securities....................................... 72,666 1,861 29 74,498
Equity securities............................................... 13,353 109 -- 13,462
--------- ----------- --- ---------
Total investment securities................................. $ 86,019 $ 1,970 $29 $ 87,960
--------- ----------- --- ---------
--------- ----------- --- ---------
</TABLE>
Market values of investment securities and mortgage-backed securities are
based on quoted market prices or dealer quotes on similar instruments, and
approximate fair value disclosures required by SFAS No. 107.
The carrying value and estimated market value of debt securities at
September 30, 1993 by contractual maturity are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING MARKET
VALUE VALUE
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less.......................................................... $ 6,315 $ 6,415
Due after one year through five years............................................ 15,954 16,415
Due after five years through ten years........................................... 4,583 4,659
Due after ten years.............................................................. 19,927 20,262
--------- ---------
$ 46,779 $ 47,751
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
3. INVESTMENT AND MORTGAGE-BACKED SECURITIES (CONTINUED)
Proceeds from sale of investment in debt securities were $3,932,000,
$6,108,000 and $501,000 in 1993, 1992 and 1991, respectively. Gross gains of
$38,000 were realized on the 1993 sales. Gross gains of $2,000 were realized on
both the 1992 and 1991 sales. No losses were realized on the sales in 1993, 1992
and 1991.
Proceeds from sales of securities available for sale were $7,998,000 in
1993. Gross realized gains and losses on the sales of securities available for
sale were $14,000 and $1,000, respectively, in 1993.
Realized gains on sales of marketable equity securities included in income
in 1993 were $1,000. There were no realized gains or losses on marketable equity
securities in 1992 or 1991.
Mortgage-backed securities primarily includes participation certificates
issued by the Government National Mortgage Association, the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association.
The gross unrealized gains and gross unrealized losses on mortgage-backed
securities were $798,000 and $3,000, respectively, at September 30, 1993. The
gross unrealized gains and gross unrealized losses on mortgage-backed securities
were $767,000 and $4,000, respectively, at September 30, 1992.
Investment securities with a book value of $3,750,000 and $42,000 were
pledged as collateral to secure public deposits at September 30, 1993 and 1992,
respectively.
4. LOANS
Loans consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1993 1992
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Real estate mortgage loans:
Residential................................................................. $ 591,797 $ 498,518
Residential construction.................................................... 5,739 13,225
Commercial.................................................................. 11,268 11,455
Land........................................................................ 5,735 4,517
----------- -----------
614,539 527,715
----------- -----------
Consumer loans:
Home equity loans........................................................... 43,864 42,892
Other....................................................................... 5,804 6,523
----------- -----------
49,668 49,415
----------- -----------
Less:
Unearned discounts and premiums............................................. 3 4
Loans in process............................................................ (600) (3,518)
Deferred loan origination fees.............................................. (2,261) (1,481)
Allowance for loan losses................................................... (5,005) (4,011)
----------- -----------
$ 656,344 $ 568,124
----------- -----------
----------- -----------
</TABLE>
The above residential real estate loans include $10 million of thirty year
fixed rate loans sold to the Federal Home Loan Mortgage Corporation in October
1993. This transaction resulted in a gain of approximately $120,000.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
4. LOANS (CONTINUED)
At September 30, 1993, 1992 and 1991, loans serviced for the benefit of
others approximated $11,842,000, $13,157,000 and $23,079,000, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year............................................ $ 4,011 $ 1,544 $ 484
Charge-offs............................................................. (958) (1,150) (621)
Recoveries.............................................................. 244 212 29
Provision for loan losses............................................... 1,708 1,646 1,652
Allowance from acquired bank............................................ -- 1,759 --
--------- --------- ---------
Balance at end of year.................................................. $ 5,005 $ 4,011 $ 1,544
--------- --------- ---------
--------- --------- ---------
</TABLE>
Non-performing loans, which consist of loans delinquent greater than ninety
days, approximated $6,500,000 and $4,000,000 as of September 30, 1993 and 1992,
respectively. If these loans had been current, in accordance with their original
terms, additional interest income would have been recorded in the amounts of
$310,000 and $386,000 for 1993 and 1992, respectively.
The following table presents fair value information for the Bank's loan
portfolio at September 30, 1993:
<TABLE>
<CAPTION>
ALLOWANCE
PRINCIPAL AND OTHER CARRYING CALCULATED
VALUE ADJUSTMENTS AMOUNT FAIR VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Real estate mortgage loans......................... $ 614,539 $ 7,415 $ 607,124 $ 630,046
Consumer loans..................................... 49,668 448 49,220 50,824
----------- ----------- ----------- -----------
Total.......................................... $ 664,207 $ 7,863 $ 656,344 $ 680,870
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
In developing the estimates of fair value shown above, the Bank utilized the
Office of Thrift Supervision Interest Rate Risk Report including estimates of
net portfolio value. As part of this analysis, the Bank's loan portfolio was
segregated by type of loan, performing status and interest method (fixed or
variable). In general, fair value was estimated by discounting contractual cash
flows adjusted for prepayment estimates using discount rates developed in the
secondary market.
Assumptions have been made in developing these fair values based upon
historical experience and market conditions. Because there is no immediate
market for many of the above loans, there is no basis for determining whether
the fair value presented above would be indicative of the value negotiated in an
actual sale.
5. LOANS TO RELATED PARTIES
The Bank has granted loans to officers and directors of the Bank and to
their associates. Related party loans are made on substantially the same terms
as those prevailing at the time for comparable transactions with unrelated
persons, except that prior to fiscal year 1991 officers and directors were
granted a 1% discount on the interest rate for mortgage and property improvement
loans. Management believes that these loans do not involve more than normal risk
of collectibility.
The aggregate dollar amount of loans to officers and directors (exclusive of
loans to any such persons which in the aggregate did not exceed $60,000 during
the year) amounted to $2,936,000 and
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
5. LOANS TO RELATED PARTIES (CONTINUED)
$2,903,000 at September 30, 1993 and 1992, respectively. During 1993, $556,000
of new loans were made and repayments totaled $523,000. All loans to officers
and directors were current and performing at September 30, 1993.
6. REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS AND IN-SUBSTANCE REPOSSESSED
REAL ESTATE
Real estate acquired in settlement of loans and in-substance repossessed
real estate is stated net of a related allowance. Changes in the allowance were
as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year................................................ $ 40 $ 34 $ 204
Charge-offs, net of recoveries.............................................. (292) (233) (211)
Provisions for losses....................................................... 287 239 41
--------- --------- ---------
Balance at end of year...................................................... $ 35 $ 40 $ 34
--------- --------- ---------
--------- --------- ---------
</TABLE>
7. PREMISES AND EQUIPMENT
The following is a summary of the premises and equipment accounts:
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1993 1992
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Land............................................................................. $ 688 $ 688
Premises and leasehold improvements.............................................. 5,066 4,969
Furniture, fixtures and equipment................................................ 4,477 3,882
--------- ---------
10,231 9,539
Less accumulated depreciation and amortization................................... (4,202) (3,636)
--------- ---------
$ 6,029 $ 5,903
--------- ---------
--------- ---------
</TABLE>
The Company leases various office space for its branch office sites under
operating lease arrangements. Certain of the lease arrangements provide for
renewal options. Rental expense for leased branches included in operating
expenses was $352,000, $281,000 and $112,000 for 1993, 1992 and 1991,
respectively.
In 1992, Bristol Federal entered into two lease agreements for office space
and a branch site with a director-related corporation. The leases were for an
initial term of five years and seven years, respectively, and have renewal
options which extend for an additional five years. Total lease expense for the
office space and branch site was $65,040 for 1993 and $19,800 for 1992.
The future minimum rental commitments for the leased branches as of
September 30, 1993 were as follows:
<TABLE>
<S> <C>
1994................................................... $ 356,000
1995................................................... 310,000
1996................................................... 197,000
1997................................................... 152,000
1998................................................... 42,000
----------
$1,057,000
----------
----------
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
8. DEPOSITS
Deposit balances consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------------------
1993 1992
------------------------- -------------------------
WEIGHTED WEIGHTED
AMOUNT AVERAGE RATE AMOUNT AVERAGE RATE
----------- ------------ ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Non-interest bearing.................................... $ 12,999 --% $ 12,088 -- %
Passbook accounts....................................... 117,847 2.50 103,755 3.50
NOW accounts............................................ 52,768 1.25 43,672 2.70
Money market accounts................................... 135,413 2.90 136,054 3.67
----------- --- ----------- ---
319,027 295,569
----------- -----------
Certificate accounts:
Six months or less.................................... 82,890 3.50 91,218 4.13
Over six months to one year........................... 79,396 3.62 124,112 4.76
Over one year to two years............................ 78,086 4.75 61,050 5.72
Over two years........................................ 146,815 6.22 105,752 6.91
----------- --- ----------- ---
387,187 382,132
----------- -----------
$ 706,214 $ 677,701
----------- -----------
----------- -----------
</TABLE>
Interest on deposits is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Passbook accounts.................................................... $ 3,228 $ 3,428 $ 3,315
NOW accounts......................................................... 1,054 1,198 1,219
Money market accounts................................................ 4,337 4,548 3,430
Certificate accounts................................................. 19,341 19,852 21,084
--------- --------- ---------
$ 27,960 $ 29,026 $ 29,048
--------- --------- ---------
--------- --------- ---------
</TABLE>
Interest forfeitures resulting from early withdrawals from certificate
accounts are credited to interest on deposits. Interest forfeitures reducing the
cost of interest on deposits amounted to $91,000, $71,000 and $65,000 for 1993,
1992 and 1991, respectively.
The estimated fair value of the Bank's deposit portfolio at September 30,
1993 calculated in accordance with SFAS No. 107 is as follows:
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Passbook accounts............................................................. $ 117,847 $ 117,847
NOW accounts.................................................................. 65,767 65,767
Money market accounts......................................................... 135,413 135,413
Certificate accounts.......................................................... 387,187 398,784
----------- -----------
Total deposits............................................................ $ 706,214 $ 717,811
----------- -----------
----------- -----------
</TABLE>
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
8. DEPOSITS (CONTINUED)
The fair value of deposits with no stated maturity, such as passbook, NOW
and money market accounts, is equal to the amount payable on demand on September
30, 1993. The fair value of time deposits is based on the discounted value of
contractual cash flows, using rates currently offered for deposits with similar
remaining maturities.
The following table sets forth the maturities of deposit accounts in
denominations of $100,000 or more at September 30, 1993:
<TABLE>
<CAPTION>
MATURITY
- --------------------------------------------------------------------- AMOUNT
-------------
(IN
THOUSANDS)
<S> <C>
Under three months................................................... $ 22,267
Three to six months.................................................. 4,996
Six to twelve months................................................. 4,050
Over twelve months................................................... 10,674
-------------
$ 41,987
-------------
-------------
</TABLE>
9. FEDERAL HOME LOAN BANK ADVANCES AND BORROWED MONEY
Federal Home Loan Bank advances and borrowed money consisted of the
following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1993 1992
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Federal Home Loan Bank advances:
Due February 1994 -- 7.61%...................................................... $ 1,000 $ 1,000
Due April 1994 -- 7.56%......................................................... 2,000 2,000
Due March 1995 -- 8.01%......................................................... 1,000 1,000
Due April 1996 -- 8.10%......................................................... 500 500
Due August 1996 -- 4.52%........................................................ 5,000 --
Due August 1998 -- 5.19%........................................................ 5,000 --
Due September 2001 -- 8.20%..................................................... 1,000 1,000
--------- ---------
$ 15,500 $ 5,500
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1993 1992
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Borrowed money:
Customer repurchase agreements:
Due upon demand -- 2.32% at September 30, 1992.................................... $ -- $ 818
Employee Stock Ownership Plan debt:
1987 Borrowing -- 4.95% at September 30, 1993 and 1992............................ 270 388
1991 Borrowing -- 6.25% at September 30, 1993 and 1992............................ 482 620
--------- ---------
$ 752 $ 1,826
--------- ---------
--------- ---------
</TABLE>
The fair value of short-and long-term borrowings, estimated using rates
currently available for debt of similar terms and remaining maturities, was $16
million at September 30, 1993. In accordance with an agreement with the Federal
Home Loan Bank of Boston ("FHLB"), the Bank is required to maintain qualified
collateral, as defined in the FHLB Statement of Credit Policy, free and clear of
liens, pledges and encumbrances, as collateral for the advances. The FHLB
Statement of Credit Policy grants members the ability to borrow up to the value
of the member's qualified collateral that has not
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
9. FEDERAL HOME LOAN BANK ADVANCES AND BORROWED MONEY (CONTINUED)
been pledged to outside sources. Members whose total indebtedness, including
borrowings from outside sources, exceeds 30% of assets are required to list and
segregate collateral in a sufficient amount to cover the amount of advances
outstanding. The Bank has a capacity to borrow up to $460 million in advances
from FHLB as of September 30, 1993. The Bank has a preapproved line up to 2% of
total assets.
Underlying collateral on customer repurchase agreements was Federal Home
Loan Bank overnight deposits of $1,702,000 at September 30, 1992.
In connection with its purchase of the Company's common stock during 1987,
the Employee Stock Ownership Plan (the "Plan") borrowed $1,163,000 under a term
note maturing in 1997 with interest due quarterly at 82.5% of the lender's
floating prime rate. In 1991, the Plan borrowed $759,000 to purchase additional
shares of the Company's common stock under a term note maturing in 1997 with
interest due quarterly at the lender's floating prime rate plus .25%. Principal
payments ranging from $129,000 to $247,000 are due annually on March 31 until
1997 on the outstanding borrowings. A total of 65,967 unallocated shares in the
Plan Trust at September 30, 1993 have been pledged as collateral in conjunction
with the Plan borrowings. The Company reflects the Plan debt as borrowed money
and as a reduction of shareholders' equity.
10. INCOME TAXES
Charges for income taxes in the Consolidated Statements of Income comprised
the following:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal...................................................... $ 4,169 $ 3,707 $ 2,542
State........................................................ 1,691 1,550 981
--------- --------- ---------
5,860 5,257 3,523
--------- --------- ---------
Deferred:
Federal...................................................... (116) (252) (102)
State........................................................ (107) (105) (40)
--------- --------- ---------
(223) (357) (142)
--------- --------- ---------
Total:
Federal...................................................... 4,053 3,455 2,440
State........................................................ 1,584 1,445 941
--------- --------- ---------
$ 5,637 $ 4,900 $ 3,381
--------- --------- ---------
--------- --------- ---------
</TABLE>
Timing differences between the financial statement carrying amounts and tax
bases of assets and liabilities that give rise to significant portions of the
deferred taxes (benefit) related to the following:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Accrual versus cash basis items................................... $ (205) $ (166) $ (72)
Loan origination fees............................................. (27) (284) (55)
Other, net........................................................ 9 93 (15)
--------- --------- ---------
$ (223) $ (357) $ (142)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
10. INCOME TAXES (CONTINUED)
The actual income tax expense for 1993, 1992 and 1991 differs from the
"expected" income tax expense for those years (computed by applying the U.S.
Federal statutory corporate tax rate of 34%) as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Expected income tax on income before income taxes........................ $ 4,008 $ 3,422 $ 2,513
Increase (decrease) in income taxes resulting from:
Bad debt deduction..................................................... 410 185 338
State income taxes, net of Federal income tax benefit.................. 1,045 922 628
Loss (gain) on sale of real estate owned............................... (16) 173 (19)
Other, net............................................................. 190 198 (79)
--------- --------- ---------
$ 5,637 $ 4,900 $ 3,381
--------- --------- ---------
--------- --------- ---------
</TABLE>
11. SHAREHOLDERS' EQUITY
Retained earnings include $8.9 million at September 30, 1993 which has been
set aside in accordance with existing provisions of the Internal Revenue Code to
absorb losses on loans. Such total represents amounts claimed as deductions from
taxable income and, if used for any purpose other than to absorb losses on
loans, a Federal income tax liability could be incurred. In addition, the Tax
Reform Act of 1986 requires the Company to recognize a portion of this reserve
as income for income tax reporting purposes if the Company's qualifying assets
were to become less than 60% of total assets. It is not anticipated that the
Company will incur a Federal income tax liability relating to such reserve.
12. STOCK OPTION PLANS
At September 30, 1993, 1992 and 1991, 348,824, 493,752 and 390,045 shares,
respectively, were reserved for issuance in connection with incentive and
non-incentive stock option plans for the benefit of directors, officers and
other full-time employees.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
12. STOCK OPTION PLANS (CONTINUED)
Under the Company's stock option plans, options have been granted for terms
up to ten years at not less than the fair value of the shares at the dates of
grant and are exercisable at date of grant.
<TABLE>
<CAPTION>
SHARES
UNDER STOCK OPTION PRICE
OPTION PLAN PER SHARE
----------- -------------------------------
<S> <C> <C> <C> <C>
Outstanding and exercisable at September 30, 1989..................... 295,925 $5.78 -- 9.51
Exercised........................................................... (4,840 ) 5.78
Granted............................................................. 33,516 9.66 -- 9.77
Canceled............................................................ (33,516 ) 9.66 -- 9.77
----------- --------- ---------
Outstanding and exercisable at September 30, 1990..................... 291,085 5.78 -- 9.51
Granted............................................................. 11,000 8.75
Canceled............................................................ (4,364 ) 7.50
----------- ---------
Outstanding and exercisable at September 30, 1991..................... 297,721 5.78 -- 9.51
Exercised........................................................... (41,493 ) 5.78 -- 9.20
Granted............................................................. 76,259 9.20 -- 13.98
----------- --------- ---------
Outstanding and exercisable at September 30, 1992..................... 332,487 5.78 -- 13.98
Exercised........................................................... (79,483 ) 5.78 -- 13.98
Granted............................................................. 41,953 15.34 -- 18.18
Canceled............................................................ (10 )
-----------
Outstanding and exercisable at September 30, 1993..................... 294,947
-----------
-----------
</TABLE>
13. RESTRICTION ON SUBSIDIARY DIVIDENDS
The Company's ability to pay dividends to shareholders is substantially
dependent on funds received from the Bank. Regulations governing the payment of
dividends by savings institutions, as set forth by the Office of Thrift
Supervision ("OTS"), establish three tiers of institutions for purposes of
determining the level of dividends that can be paid. Under these rules, the Bank
is able to pay dividends in an amount equal to one-half of its surplus capital
at the beginning of the year plus all net income for the calendar year. At
September 30, 1993, the Bank had approximately $26.4 million in excess
risk-based capital, one-half of which would be available for declaration of
dividends to the Company. The OTS regulations permit the OTS to prohibit capital
distributions in certain circumstances.
The Bank is required by the OTS to meet minimum capital requirements, which
include tangible capital, core capital and risk-based capital requirements. The
Bank's actual capital as reported to the OTS at September 30, 1993 exceeded all
three requirements.
14. EMPLOYEE BENEFIT PLANS
The Bank maintains a noncontributory trusteed defined benefit pension plan
through the Financial Institutions Retirement Fund (the "Fund") covering all
eligible employees. The plan is part of a multi-employer plan in which details
as to the Bank's relative positions are not readily determinable. Therefore,
information relating to the value of vested and nonvested accumulated plan
benefits and assumed rates of return used in determining such values is not
disclosed. Employer contributions to the Fund in 1993, 1992 and 1991 were
$172,000, $206,000 and $176,000, respectively, and these amounts are expensed to
operations in the year contributed.
The Company sponsors an Employee Stock Ownership Plan (the "Plan") covering
substantially all full-time employees. The Plan, which is a tax qualified
employee benefit plan, was adopted by the
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Board of Directors to provide retirement benefits for employees. Contributions
are determined based upon the principal and interest amounts due related to the
Plan debt. Amounts for principal and interest are expensed as accrued.
A summary of the components of Plan contribution expense by the Company for
1993, 1992 and 1991 is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Principal component.................................................. $ 258 $ 180 $ 182
Interest component................................................... 54 62 93
--------- --------- ---------
Total contribution expense....................................... $ 312 $ 242 $ 275
--------- --------- ---------
--------- --------- ---------
</TABLE>
15. COMMITMENTS AND CONTINGENCIES
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These instruments expose the Company to credit risk in excess of the amount
recognized on the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Company uses the
same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments. Total credit exposure at September 30,
1993 related to these items is summarized below:
<TABLE>
<CAPTION>
CONTRACT
AMOUNT
-------------
(IN
THOUSANDS)
<S> <C>
Loan commitments:
Approved loan commitments.................................................... $ 13,487
Unadvanced portion of construction loans..................................... 3,818
Unadvanced portion of home equity lines of credit............................ 19,507
</TABLE>
Loan commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract. Loan
commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained if
deemed necessary by the Company upon extension of credit is based on
management's credit evaluation of the counterparty. Collateral held is primarily
residential property. Interest rates on approved loan commitments and home
equity lines of credit are a combination of fixed and variable. Interest rates
on unadvanced portions of construction loans are fixed rates which generally
mature within eighteen months.
16. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
The Company primarily grants residential and consumer loans to customers
located within its primary market area in the State of Connecticut. The majority
of the Company's loan portfolio is comprised of residential mortgages. At
September 30, 1993, residential loans, including residential construction loans,
totaled $641 million, excluding off-balance-sheet items. All such loans are
collateralized by real estate, of which approximately 95% is located in
Connecticut.
17. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 109, "Accounting for
Income Taxes." This SFAS relates
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
17. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
to the method of accounting for deferred income taxes. Implementation of SFAS
No. 109 was required for fiscal years beginning after December 15, 1992. This
SFAS requires companies to take into account changes in tax rates when valuing
the deferred income tax amounts recorded on the balance sheet. SFAS No. 109 also
requires that deferred taxes be provided for all temporary differences between
financial statement and tax basis in addition to the timing differences in the
recognition of income for financial statement and tax purposes which were
covered by prior accounting rules. Management intends to adopt SFAS No. 109
prospectively and the cumulative effect of the change in accounting for income
taxes will result in a tax benefit of approximately $1.7 million in the first
quarter of fiscal 1994.
The FASB also issued SFAS No. 106, "Accounting for Postretirement Benefits
Other Than Pensions." Under this SFAS, the cost of postretirement benefits other
than pensions must be recognized on an accrual basis as employees perform
services to earn the benefits, similar to current standards on accounting for
pensions. The Company currently provides certain health care benefits for
substantially all retired employees. These benefits are primarily provided
through insurance companies whose premiums are based on the benefits paid during
the year. The Company currently recognizes the cost of providing these benefits
by expensing the annual premiums, which were approximately $44,000 in 1993,
$29,000 in 1992 and $17,000 in 1991. The Company will prospectively adopt SFAS
No. 106 in fiscal 1994. Adoption will result in the recording of a onetime,
cumulative catch-up adjustment that, net of the related tax benefit, will reduce
net income in the first quarter of 1994 by approximately $1.3 million. It is
also estimated that the Company's postretirement cost charged to expense in
fiscal 1994 will be approximately $270,000 on a pre-tax basis as a result of
adopting this SFAS.
In May 1993, the FASB issued SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." The SFAS generally would require
that debt and equity securities that have readily determinable fair values be
carried at fair value unless they are classified as held to maturity. Securities
would be classified as held to maturity and carried at amortized cost only if
the reporting entity has a positive intent and ability to hold those securities
to maturity. If not classified as held to maturity, such securities would be
classified as trading securities or securities available for sale. Unrealized
holding gains or losses for securities available for sale would be excluded from
earnings and reported as a net amount in a separate component of stockholders'
equity. The effective date for the statement is for fiscal years beginning after
December 15, 1993. Based on the securities held by the Company as of September
30, 1993, the Company does not believe that this statement will have a material
effect on the classification of its securities. The impact on the Company's
future financial position or results of operations will be based on the future
fair values of its securities.
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
18. EAGLE FINANCIAL CORP. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1993 1992
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEETS
Assets:
Cash..................................................................................... $ 83 $ 64
Interest-bearing deposits................................................................ 1,575 1,714
--------- ---------
Cash and cash equivalents.............................................................. 1,658 1,778
Investment securities.................................................................... 85 602
Investment in Bank subsidiaries.......................................................... 59,141 53,688
Other assets............................................................................. 100 79
--------- ---------
$ 60,984 $ 56,147
--------- ---------
--------- ---------
Liabilities and shareholders' equity:
Payable to Bank subsidiary............................................................... $ 23 $ 29
Accrued expenses and other liabilities................................................... (198) 106
Borrowed money........................................................................... 752 1,008
Shareholders' equity..................................................................... 60,407 55,004
--------- ---------
$ 60,984 $ 56,147
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENTS OF INCOME
Interest on investments............................................................ $ 79 $ 111 $ 116
Dividends from Bank subsidiaries................................................... 1,000 2,500 2,106
Other expenses..................................................................... (767) (717) (653)
--------- --------- ---------
Income before income taxes and equity in undistributed earnings of Bank
subsidiaries...................................................................... 312 1,894 1,569
Income tax benefit................................................................. 387 271 215
--------- --------- ---------
Income before equity in undistributed earnings of Bank subsidiaries................ 699 2,165 1,784
Equity in undistributed earnings of Bank subsidiaries.............................. 5,453 3,001 2,227
--------- --------- ---------
Net income......................................................................... $ 6,152 $ 5,166 $ 4,011
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
18. EAGLE FINANCIAL CORP. (PARENT COMPANY ONLY) CONDENSED FINANCIAL
INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENTS OF CASH FLOWS
Operating activities:
Net income.................................................................... $ 6,152 $ 5,166 $ 4,011
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in undistributed earnings of Bank subsidiaries....................... (5,453) (3,001) (2,227)
Amortization of premiums on investments..................................... 2 4 --
Decrease (increase) in other assets......................................... (21) 348 386
Increase (decrease) in accrued expenses and other liabilities, net.......... (312) (326) 46
--------- --------- ---------
Net cash provided by operating activities..................................... 368 2,191 2,216
Investing activities:
Purchase of investment securities............................................. (85) -- (606)
Proceeds from maturity of investment security................................. 600 -- --
Decrease in Federal funds sold................................................ -- 800 (800)
--------- --------- ---------
Net cash provided by investing activities..................................... 515 800 (1,406)
Financing activities:
Cash dividends................................................................ (1,910) (1,602) (1,385)
Acquisition of treasury stock................................................. -- (21) (90)
Proceeds from exercise of stock options and other............................. 913 348 --
Increase (decrease) in payable to Bank subsidiaries........................... (6) 6 21
--------- --------- ---------
Net cash used by financing activities......................................... (1,003) (1,269) (1,454)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents.............................. (120) 1,722 (644)
Cash and cash equivalents at beginning of year................................ 1,778 56 700
--------- --------- ---------
Cash and cash equivalents at end of year...................................... $ 1,658 $ 1,778 $ 56
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993, 1992 AND 1991
19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------
FISCAL 1993 12/31/92 3/31/93 6/30/93 9/30/93 TOTAL
- ------------------------------------------------------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest income........................................ $ 14,180 $ 13,850 $ 13,910 $ 13,814 $ 55,754
Interest expense....................................... 7,436 7,302 6,829 6,902 28,469
--------- --------- --------- --------- ---------
Net interest income.................................... 6,744 6,548 7,081 6,912 27,285
Provision for loan losses.............................. 325 325 529 529 1,708
Net gain on sales of investment securities............. -- (1) 1 52 52
Other income........................................... 599 584 625 644 2,452
Other expenses......................................... 3,986 4,128 3,929 4,249 16,292
Income tax provision................................... 1,442 1,175 1,618 1,402 5,637
--------- --------- --------- --------- ---------
Net income............................................. $ 1,590 $ 1,503 $ 1,631 $ 1,428 $ 6,152
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share................................... $ .51 $ .48 $ .52 $ .46 $ 1.97
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------
FISCAL 1992 12/31/91 3/31/92 6/30/92 9/30/92 TOTAL
- ------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Interest income........................................ $ 11,859 $ 11,916 $ 13,855 $ 14,254 $ 51,884
Interest expense....................................... 7,045 6,690 8,032 7,931 29,698
--------- --------- --------- --------- ---------
Net interest income.................................... 4,814 5,226 5,823 6,323 22,186
Provision for loan losses.............................. 410 515 396 325 1,646
Net gain on sales of investment securities............. 2 (3) 38 -- 37
Other income........................................... 447 473 852 653 2,425
Other expenses......................................... 2,488 2,748 3,757 3,943 12,936
Income tax provision................................... 1,156 1,196 1,245 1,303 4,900
--------- --------- --------- --------- ---------
Net income............................................. $ 1,209 $ 1,237 $ 1,315 $ 1,405 $ 5,166
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share................................... $ .41 $ .41 $ .43 $ .45 $ 1.70
</TABLE>
F-25
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
JUNE 30,
1994 SEPTEMBER 30,
(unaudited) 1993
------------- -------------
<S> <C> <C>
Cash and amounts due from depository institutions................................... $ 18,285 $ 12,462
Interest-bearing deposits........................................................... 57,904 9,496
Federal funds sold.................................................................. 23,700 --
------------- -------------
Cash and cash equivalents......................................................... 99,889 21,958
Securities available for sale (market value $16,815 at June 30, 1994 and $15,601 at
September 30, 1993)................................................................ 16,815 15,599
Investment securities (market value $82,423 at June 30, 1994 and $47,954 at
September 30, 1993)................................................................ 84,415 46,880
Mortgage-backed securities (market value $72,311 at June 30, 1994 and $24,748 at
September 30, 1993)................................................................ 72,712 25,953
Loans receivable, net of allowance for loan losses of $8,370 at June 30, 1994 and
$5,005 at September 30, 1993....................................................... 775,135 656,344
Accrued interest receivable......................................................... 5,156 4,380
Real estate acquired in settlement of loans and in-substance repossessed real
estate, net........................................................................ 3,932 5,471
Stock in Federal Home Loan Bank of Boston, at cost.................................. 6,535 5,949
Premises and equipment, net......................................................... 6,132 6,029
Prepaid expenses and other assets................................................... 29,005 3,905
------------- -------------
Total assets........................................................................ $ 1,099,726 $ 792,468
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits.......................................................................... $ 982,673 $ 706,214
Federal Home Loan Bank advances................................................... 23,750 15,500
Borrowed money.................................................................... 7,892 752
Advance payments by borrowers for taxes and insurance............................. 6,533 3,577
Accrued expenses and other liabilities............................................ 14,233 6,018
------------- -------------
Total liabilities................................................................... 1,035,081 732,061
Shareholders' Equity:
Serial preferred stock, $.01 par value, 2,000,000 shares authorized and
unissued......................................................................... -- --
Common stock, $.01 par value, 8,000,000 shares authorized; 3,161,851 and 3,097,547
shares issued at June 30, 1994 and September 30, 1993, respectively, including
43,066 shares held in treasury................................................... 32 31
Additional paid-in capital........................................................ 34,415 33,562
Retained earnings................................................................. 31,777 27,928
Cost of common treasury stock..................................................... (362) (362)
Employee stock ownership plan stock............................................... (542) (752)
Unrealized securities losses, net................................................. (675) --
------------- -------------
Total shareholders' equity...................................................... 64,645 60,407
------------- -------------
Commitments and contingencies.......................................................
Total liabilities and shareholders' equity.......................................... $ 1,099,726 $ 792,468
------------- -------------
------------- -------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-26
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans................................. $ 12,540 $ 12,163 $ 36,834 $ 36,383
Interest on mortgage-backed securities..................... 628 459 1,357 1,420
Interest on investment securities.......................... 1,164 941 2,530 3,113
Dividends on investment securities......................... 494 347 1,354 1,024
----------- ----------- ----------- -----------
Total interest income.................................... 14,826 13,910 42,075 41,940
Interest Expense:
Interest on deposits....................................... 6,649 6,716 19,277 21,228
Interest on Federal Home Loan Bank advances................ 402 109 896 326
Interest on borrowed money................................. 34 4 36 13
----------- ----------- ----------- -----------
Total interest expense................................... 7,085 6,829 20,209 21,567
Net interest income...................................... 7,741 7,081 21,866 20,373
Provision for loan losses.................................... 300 529 900 1,179
----------- ----------- ----------- -----------
Net interest income after provision for loan losses...... 7,441 6,552 20,966 19,194
Other income:
Net gain on sale of investment securities.................. -- 1 -- --
Net gain on sale of loans.................................. -- -- 120 --
Customer service fee income................................ 546 421 1,343 1,247
Other...................................................... 269 204 786 561
----------- ----------- ----------- -----------
Total other income....................................... 815 626 2,249 1,808
----------- ----------- ----------- -----------
8,256 7,178 23,215 21,002
----------- ----------- ----------- -----------
Other expenses:
Compensation, payroll taxes and benefits................... 2,094 1,840 6,391 5,464
Office occupancy........................................... 535 482 1,529 1,379
Advertising................................................ 138 109 425 400
Provision for losses on real estate acquired in settlement
of loans.................................................. 80 91 435 199
Operation of real estate acquired in settlement of loans... 159 158 597 532
Federal insurance premium.................................. 408 347 1,106 1,054
Data processing expenses................................... 322 265 874 809
Other...................................................... 750 637 2,138 2,206
----------- ----------- ----------- -----------
Total other expenses..................................... 4,486 3,929 13,495 12,043
----------- ----------- ----------- -----------
Income before income taxes and cumulative effect of
accounting changes...................................... 3,770 3,249 9,720 8,959
Income taxes................................................. 1,608 1,618 4,078 4,235
----------- ----------- ----------- -----------
Income before cumulative effect of accounting changes.... 2,162 1,631 5,642 4,724
Cumulative effect of accounting changes...................... -- -- 30 --
----------- ----------- ----------- -----------
Net income............................................... $ 2,162 $ 1,631 $ 5,612 $ 4,724
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share before cumulative effect of accounting
change...................................................... 0.67 0.52 1.75 1.51
Cumulative effect of accounting change....................... -- -- 0.01 --
Net income per share......................................... $ 0.67 $ 0.52 $ 1.74 $ 1.51
Weighted-average shares outstanding.......................... 3,239,679 3,145,049 3,219,244 3,122,846
Dividends per share.......................................... 0.19 0.15 0.57 0.46
</TABLE>
See Notes to Consolidated Financial Statements.
F-27
<PAGE>
EAGLE FINANICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Net Employee
Cost of Unrealized Stock
Common Stock Additional Common Loss on Ownership
-------------- Paid-in Retained Stock in Equity Plan
(dollars in thousands, except for per share data) Shares Amount Capital Earnings Treasury Securities Stock Total
------ ------ ---------- -------- -------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1992 2,731 $27 $27,640 $28,707 ($362) $0 ($1,008) $55,004
Net income................................. 4,724 4,724
Cash dividends declared, $0.63 per share... (1,394) (1,394)
Reduction in debt related to
Employee Stock Ownership Plan............ 194 194
Exercise of stock options and other........ 52 1 499 500
Payment for fractional shares.............. (1) (1)
Dividend reinvestment plan................. 9 132 132
----- ----- ------- ------- ----- ----- ----- -------
BALANCE AT JUNE 30, 1993 2,792 $28 $28,270 $32,037 ($362) $0 ($814) $59,159
----- ----- ------- ------- ----- ----- ----- -------
----- ----- ------- ------- ----- ----- ----- -------
</TABLE>
<TABLE>
<CAPTION>
Net Employee
Cost of Unrealized Stock
Common Stock Additional Common Loss on Ownership
-------------- Paid-in Retained Stock in Equity Plan
Shares Amount Capital Earnings Treasury Securities Stock Total
------ ------ ---------- -------- -------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993 3,097 $31 $33,562 $27,928 ($362) $0 ($752) $60,407
Net income................................. 5,612 5,612
Cash dividends declared, $0.57 per share... (1,763) (1,763)
Reduction in debt related to
Employee Stock Ownership Plan............ 210 210
Exercise of stock options and other........ 40 1 378 379
Dividend reinvestment plan................. 25 475 475
Increase in net unrealized loss
on equity securities..................... (675) (675)
----- ----- ------- ------- ----- ----- ----- -------
BALANCE AT JUNE 30, 1994 3,162 $32 $34,415 $31,777 ($362) ($675) ($542) $64,645
----- ----- ------- ------- ----- ----- ----- -------
----- ----- ------- ------- ----- ----- ----- -------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-28
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
(dollars in thousands) ------------------
1994 1993
OPERATING ACTIVITIES: ------ ------
<S> <C> <C>
Net Income......................................................... $5,612 $4,724
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses.................................. 900 1,179
Provision for losses on real estate acquired
in settlement for loans................................. 435 199
Provision for depreciation and amortization................ 419 415
Accretion of discounts and fees on loans................... (764) (400)
Amortization of premiums on loans.......................... 1 1
Amortization of premiums (accretion of discounts)
on mortgage-backed securities.......................... (7) 7
Amortization of premiums (accretion of discounts)
on investments......................................... 110 73
Amortization of core deposit intangibles................... 361 217
Realized mortgage loan losses (gains), net................. (120) 0
Decrease (increase) in accrued interest receivable......... (776) 216
Increase (decrease) in accrued interest payable............ 173 (84)
Loan origination fees...................................... 981 989
Other, net................................................. 15,647 3,703
------- -------
Net Cash Provided by Operating Activities.................. 22,972 11,239
INVESTING ACTIVITIES:
Proceeds from sales of investment securities available
for sale......................................................... 2,800 0
Proceeds from sales of investment securities prior
to maturity...................................................... 0 2,099
Proceeds from maturities of investment securities.................. 8,000 5,750
Proceeds from amortization of investment securities................ 17,297 14,474
Purchases of securities available for sale......................... (4,800) 0
Purchases of investment securities................................. (38,685) (1,932)
Principal payments on mortgage-backed securities................... 8,902 2,995
Purchases of mortgage-backed securities............................ (7,135) 0
Principal payments on loans receivable............................. 108,815 76,167
Loan originations.................................................. (164,068) (147,839)
Proceeds from sales of loans....................................... 10,980 673
Proceeds from sales of real estate acquired in
settlement of loans............................................. 2,187 2,600
Purchases of premises and equipment................................ (522) (476)
Increase in investment in Federal Home Loan Bank stock............. (586) (1,610)
Acquisition of loans, investments and other assets................. (185,280) 0
-------- --------
Net Cash Used by Investing Activities...................... (242,095) (47,099)
FINANCING ACTIVITIES:
Net increase in Passbook, NOW and Money
Market Accounts.................................................. 23,688 22,480
Net increase (decrease) in certificate accounts.................... (20,056) 1,226
Assumption of deposits and liabilities of acquired banks........... 275,986 0
Borrowings under Federal Home Loan Bank advances................... 31,950 0
Principal payments under Federal Home Loan Bank advances........... (23,700) 0
Net increase (decrease) in borrowed money.......................... 7,140 (1,012)
Net increase in advance payments by borrowers
for taxes and insurance.......................................... 2,956 2,574
Proceeds from exercise of stock options and dividends reinvested... 853 631
Cash dividends..................................................... (1,763) (1,393)
-------- --------
Net Cash Provided by Financing Activities.................. 297,054 24,506
-------- --------
Increase (decrease) in cash and cash equivalents........... 77,931 (11,354)
Cash and cash equivalents at beginning of period.................... 21,958 33,132
-------- --------
Cash and cash equivalents at end of period................. $99,889 $21,778
-------- --------
-------- --------
NON-CASH INVESTING ACTIVITIES:
Transfers of loans to foreclosed real estate....................... $1,760 $2,736
-------- --------
-------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. All adjustments
were of a normal recurring nature. The results of operations for the nine-month
period ended June 30, 1994 are not necessarily indicative of the results which
may be expected for the entire fiscal year.
NOTE 2: PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Eagle
Financial Corp. ("Eagle Financial") and its wholly owned subsidiary, Eagle
Federal Savings Bank ("Eagle Federal"), a federally-chartered savings bank.
NOTE 3: ACQUISITION
The Company acquired assets of $267 million and liabilities of The Bank
of Hartford, Inc. from the Federal Deposit Insurance Corporation in an assisted
transaction on June 10, 1994. The acquisition, accounted for as a purchase
transaction, increased the Company's assets to approximately $1.1million.
NOTE 4: ACCOUNTING PRONOUNCEMENTS
In February, 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No.109 "Accounting for
Income Taxes." This SFAS requires a change from the deferred method of
accounting for income taxes to the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No.109, the effect on deferred tax assets and
liabilities of a change in tax rate is recognized in income in the period that
includes the enactment date.
The Company adopted SFAS No.109 as of October 1, 1993. The cumulative
effect of this change in accounting for income taxes of $1,273,000 as of
October 1, 1993 is reported as a cumulative effect of an accounting change
in the statement of operations for the nine months ended June 30, 1994.
Prior periods' financial statements have not been restated to apply the
provisions of SFAS No.109.
At June 30, 1994, the Company has a net deferred tax asset of approximately
$2.9 million. In order to fully realize the net deferred tax asset, the Company
will need to either generate tax losses to carryback to recover taxes previously
paid or generate future taxable income. Based upon the Company's historical and
current pre-tax earnings, management believes it is more likely than not that
the Company will realize the net deferred tax asset. However, there can be no
specific assurance that the Company will generate any specific level of
continuing earnings.
The Company had taxable income, pre-tax book income and taxes paid for the
periods presented as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
Taxable income $11,358 $10,600 $7,834
Pre-tax book income 11,789 10,066 7,392
Federal taxes paid 3,934 3,614 2,671
</TABLE>
The primary difference between taxable income and pre-tax book income relates
to the provisions for loan losses and charge-offs. The Company would expect
these differences to continue in the future.
F-30
<PAGE>
NOTE 4: ACCOUNTING PRONOUNCEMENTS (CONTINUED)
For the nine months ended June 30, 1994, income tax expense attributable to
income from continuing operations consists of:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- ------
(in thousands)
<S> <C> <C> <C>
Federal $3,202 $(184) $3,018
State 1,120 (60) 1,060
------ ----- ------
$4,322 $(244) $4,078
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
June 30, 1994 and October1, 1993 are presented below:
<TABLE>
<CAPTION>
June 30, 1994 October 1, 1993
------------- ---------------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Deferred loan fees $ 996 $ 907
Post retirement benefits 938 891
Deferred compensation 249 190
Loans receivable, primarily due to
allowance for loan losses 3,398 2,046
Other miscellaneous 76
-------- --------
Total gross deferred assets $ 5,581 $ 4,110
Less valuation allowance 0 0
-------- --------
Net deferred tax asset $ 5,581 $ 4,110
-------- --------
Deferred tax liabilities:
Premises and equipment primarily due
to depreciation $ (786) $ (772)
Tax discount on acquired loans (1,912) (714)
Other miscellaneous (14)
-------- --------
Total gross deferred tax liabilities $ (2,712) $ (1,486)
Net deferred tax asset $ 2,869 $ 2,624
-------- --------
-------- --------
</TABLE>
The valuation allowance for deferred tax assets as of June 30, 1994 was $0.
There was no change in the allowance for the nine months ended June 30, 1994.
The actual income tax expense for the nine months ended June 30, 1994 and
June 30, 1993 differs from the expected income tax expense for the same periods
(computed by applying the U.S., Federal statutory corporate tax rate of 35% and
34%, respectively) as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(in thousands)
<S> <C> <C>
Expected income taxes on income taxes $ 3,402 $ 3,046
State income taxes, net of Federal
income tax benefit 700 788
Other, net (24) 400
-------- --------
$ 4,078 $ 4,234
-------- --------
-------- --------
</TABLE>
Eagle Federal has not provided deferred income taxes for Eagle Federal's tax
return reserve for bad debts that arose in tax years beginning before
December 31, 1987 because it is not expected that this difference will reverse
in the foreseeable future. The cumulative net amount of income tax temporary
difference related to the reserve for bad debts for which deferred taxes have
not been provided was approximately $8.9 million at June 30, 1994. If Eagle
Federal does not meet the income tax requirements necessary to permit it to
claim a percentage of taxable income loan loss deduction in the future, the Bank
under certain circumstances could incur a tax liability for the previously
F-31
<PAGE>
NOTE 4: ACCOUNTING PRONOUNCEMENTS (CONTINUED)
deducted tax return loan loss in the year in which such requirements are not
met. This potential liability for which no deferred income taxes have been
provided was approximately $3.7 million as of June 30, 1994.
On October 1, 1993, the Company also adopted SFAS No.106, "Accounting for
Post-retirement Benefits Other Than Pensions." The accumulated post-retirement
benefit obligation ("APBO") existing at time of adoption was approximately
$2,194,000 before income taxes of $891,000. The $1,303,000 reduction in income
net of taxes was recognized as the cumulative effect of a change in accounting
method in the statement of operations for the nine months ended June 30, 1994.
The Company provides health benefits for future retirees within certain
limits and for current retirees. The Company does not have any assets
specifically segregated for the payment of health benefits.
The following is a summary of the obligation to provide health
benefits at October 1, 1993:
<TABLE>
<CAPTION>
<S> <C>
Accumulated post-retirement benefit obligation
related to active employees $1,594,000
Accumulated post-retirement benefit related to
retirees 600,000
----------
Total accumulated post-retirement benefit obligation
and amount recognized in statement of condition $2,194,000
----------
----------
Net periodic post-retirement benefit cost for the
year ended September 30, 1994 will be approximately:
Service cost $89,000
Interest on APBO 135,000
Amortization of APBO(a) (28,000)
----------
Total cost $196,000
----------
----------
<FN>
(a)Amortization to reflect changes in Eagle Financial post-retirement benefits
plan made subsequent to October1, 1993.
</TABLE>
The Company has used a composite health care cost trend rate of seven percent
to measure the expected cost benefits. The weighted average discount rate is
also seven percent.
F-32
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Eagle Federal Savings Bank:
We have audited the accompanying statement of assets acquired and liabilities
assumed by Eagle Federal Savings Bank, a federally-chartered savings bank and
wholly-owned subsidiary of Eagle Financial Corporation, at June 10, 1994,
related to the acquisition of certain assets and assumption of certain
liabilities of The Bank of Hartford, Inc. by Eagle Federal Savings Bank. This
statement is the responsibility of the management of Eagle Federal Savings Bank.
Our responsibility is to express an opinion on the statement of assets acquired
and liabilities assumed based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance that the statement of assets acquired and liabilities assumed is free
of material misstatement. The audit of the statement of assets acquired and
liabilities assumed included examining, on a test basis, evidence supporting the
amounts and disclosures in the statement. The audit of the statement of assets
acquired and liabilities assumed also included assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of such statement. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement referred to above presents fairly, in all material
respects, the assets acquired and liabilities assumed by Eagle Federal Savings
Bank related to the aforementioned acquisition at June 10, 1994, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick
Hartford, Connecticut
August 5, 1994
F-33
<PAGE>
EAGLE FEDERAL SAVINGS BANK
Statement of Assets Acquired and Liabilities Assumed
June 10, 1994
(In Thousands)
<TABLE>
<CAPTION>
ASSETS ACQUIRED
<S> <C>
Cash and amounts due from banks (note 3) . . . . . . . . . . . . . $ 4,933
Interest bearing deposits. . . . . . . . . . . . . . . . . . . . . 25,503
Investments and mortgage-backed securities (note 4). . . . . . . . 72,667
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,776
Less allowance for loan losses . . . . . . . . . . . . . . . . . . (3,500)
---------
Loans, net (note 5) . . . . . . . . . . . . . . . . . . . . . . 77,276
---------
Due from the FDIC (note 6) . . . . . . . . . . . . . . . . . . . . 82,001
Other assets (note 7). . . . . . . . . . . . . . . . . . . . . . . 13,606
---------
Total assets acquired . . . . . . . . . . . . . . . . . . . . . $ 275,986
---------
---------
LIABILITIES ASSUMED
Deposits (note 8). . . . . . . . . . . . . . . . . . . . . . . . . $ 272,752
Advance payments by borrowers for taxes and insurance. . . . . . . 2,256
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 978
---------
Total liabilities assumed . . . . . . . . . . . . . . . . . . . $ 275,986
---------
---------
</TABLE>
See accompanying notes to statement of assets acquired and liabilities assumed.
F-34
<PAGE>
(1) ORGANIZATION AND BASIS OF PRESENTATION
On June 10, 1994, Eagle Federal Savings Bank, a federally-chartered
savings bank ("Eagle Federal" or the "Bank") and wholly-owned subsidiary
of Eagle Financial Corporation (the "Corporation"), acquired certain
assets and assumed all of the deposits and certain other liabilities of
The Bank of Hartford, Inc., Hartford, Connecticut ("The Bank of Hartford")
from the Federal Deposit Insurance Corporation ("FDIC") in an assisted
transaction. The Bank and the Corporation have a fiscal year-end of
September 30.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF FINANCIAL STATEMENT PRESENTATION
The statement of assets acquired and liabilities assumed has been
prepared in conformity with generally accepted accounting principles
and represents only those assets and liabilities of Eagle Federal
Savings Bank relating to The Bank of Hartford acquisition. The
financial information of The Bank of Hartford was developed based
primarily upon the records of The Bank of Hartford and information
supplied by the FDIC. Such financial information is subject to
change upon resolution of certain settlement issues and completion of
the customary FDIC settlement process which are to be completed
within 270 days after June 10, 1994 as stipulated by the Purchase and
Assumption Agreement.
The transaction has been accounted for as a purchase, whereby the
purchase price has been allocated to the assets acquired and
liabilities assumed based on their respective fair values as of the
date of acquisition. Such allocation has been based on preliminary
estimates which may be revised at a later date based upon more
complete information.
(b) LOANS
Loans are stated at estimated fair value upon acquisition which is
comprised of the principal amount outstanding plus a net premium.
Interest income on loans is accrued based upon the principal amount
outstanding. Interest income is not accrued on loans that are 90
days or more past due. The net premium on loans purchased is
recognized in interest income over the lives of the loans using a
method that approximates a level-yield method.
(c) ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established at a level believed
adequate by management to absorb probable losses in the loan
portfolio. Management's determination of the adequacy of the
allowance for loan losses is based upon an evaluation of the
portfolio, past loan loss experience, current economic conditions,
composition of the loan portfolio and other relevant factors.
While management uses available information to recognize losses on
loans, future additions to the allowance for loan losses may be
necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses.
F-35
<PAGE>
Such agencies may require the Bank to recognize additions to the
allowance based on their judgment of information available to them at
the time.
(d) INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES
Investment securities and mortgage-backed securities are carried
at cost (i.e., fair value on the date of acquisition). Premiums
are amortized and discounts are accreted to income over the
estimated life of the respective securities using methods which
approximate the level-yield method.
(e) PREMISES AND EQUIPMENT
Under the Purchase and Assumption Agreement with the FDIC, Eagle
Federal has an exclusive option, for a period of 60 days after
June 10, 1994 (the "Bank Closing"), to purchase any or all of The
Bank of Hartford's owned bank premises at the price (the "AVR Price")
set forth in the FDIC's asset valuation review (the "AVR") of The
Bank of Hartford and to assume the leases for The Bank of Hartford's
leased bank premises at prices in effect under existing lease
agreements. Eagle Federal presently anticipates that it will
exercise its option to purchase or lease all of The Bank of Hartford
banking offices (excluding the operations center and one branch
location). The AVR Price of The Bank of Hartford owned bank premises
is $65,188. If Eagle Federal elects to purchase and lease The Bank
of Hartford premises, Eagle Federal will be required to purchase the
furniture, fixtures and equipment located on such premises at a price
determined by appraisals obtained by the FDIC. Such appraisals are
currently in process. Since Eagle Federal did not purchase The Bank
of Hartford premises and equipment on June 10, 1994, these assets are
not reflected in the accompanying statement of assets acquired and
liabilities assumed.
(f) INTANGIBLE ASSETS
The excess of the purchase price over the fair value of the tangible
net assets acquired has been allocated to mortgage servicing rights,
core deposits and goodwill.
The mortgage servicing rights is being amortized over the life of the
related loans using a method that approximates the level-yield
method. The core deposit intangible is being amortized on an
accelerated method over a period of ten years. Goodwill is being
amortized on a straight-line basis over a period of fifteen years.
(3) CASH AND AMOUNTS DUE FROM BANKS
Eagle Federal is subject to requirements of the Federal Reserve to
maintain certain average cash reserve balances related to certain deposits
accounts assumed. At June 10, 1994, these reserves were appropriately
maintained.
F-36
<PAGE>
(4) INVESTMENTS AND MORTGAGE-BACKED SECURITIES
Investments and mortgage-backed securities on June 10, 1994 are as
follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Debt securities:
U.S. Treasury securities . . . . . . . . . . . . . . . . . $ 2,316
U.S. Government agencies and corporations. . . . . . . . . 4,928
Colateralized mortgage obligations . . . . . . . . . . . . 16,024
Municipal bond . . . . . . . . . . . . . . . . . . . . . . 880
-------
Total debt securities . . . . . . . . . . . . . . . . . 24,148
-------
Mortgage-backed securities:
Federal Home Loan Mortage Corporation certificates . . . . 48,519
-------
Total investments and mortgage-backed securities. . . . $72,667
-------
-------
</TABLE>
The accompanying financial statement has been prepared based upon
management's estimated market values of the investment and mortgage-backed
securities on June 10, 1994, which will be adjusted when third-party
derived market values of these securities have been obtained by the FDIC.
The maturity schedule of debt securities, excluding collateralized
mortgage obligations, at June 10, 1994 is shown below. Expected
maturities will differ from contractual maturities because borrowers have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Debt securities:
Due within one year. . . . . . . . . . . . . . . . . . . . $ 1,003
Due after one year through five years. . . . . . . . . . . 2,113
Due after five years through ten years . . . . . . . . . . 4,480
Due after ten years. . . . . . . . . . . . . . . . . . . . 528
Colateralized mortgage obligations . . . . . . . . . . . . 16,024
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $24,148
-------
-------
</TABLE>
(5) LOANS
Loans at June 10, 1994 consist of the following:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Residential 1-4 family . . . . . . . . . . . . . . . . . . . $59,990
Consumer loans, including home equity loans. . . . . . . . . 20,596
-------
80,586
Net premium on loans acquired. . . . . . . . . . . . . . . . 190
Allowance for loan losses. . . . . . . . . . . . . . . . . . (3,500)
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $77,276
-------
-------
</TABLE>
Of the residential 1-4 family loans presented above, approximately 58% are
fixed rate and 42% are adjustable rate.
F-37
<PAGE>
Nonperforming loans, which consist of loans 90 days or more past due, are
approximately $2.5 million on June 10, 1994.
(6) DUE FROM THE FDIC
The amount due from the FDIC represents the excess of liabilities assumed
over assets acquired in the acquisition, and the estimated amount due from
the FDIC to adjust the investment and mortgage-backed securities to market
value at June 10, 1994 and certain settlement items currently being
discussed with the FDIC, less $8.7 million paid by Eagle Federal to the
FDIC to purchase the assets and assume the liabilities.
On June 13, 1994, Eagle Federal received $72.3 million from the FDIC as an
initial payment.
(7) OTHER ASSETS
Other assets at June 10, 1994 are as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Core deposit intangible. . . . . . . . . . . . . . . . . . . $ 2,381
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 8,650
Mortgage servicing rights. . . . . . . . . . . . . . . . . . 880
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 1,435
Real estate acquired in settlement of loans. . . . . . . . . 260
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $13,606
-------
-------
</TABLE>
A portion of the amount shown above for goodwill will be allocated as the
purchase price adjustment to the fair value of bank premises to be
acquired from the FDIC as part of the acquisition which is over and above
the AVR Price (see Note 1(e)).
(8) DEPOSITS
Deposits at June 10, 1994 consist of the following:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Regular savings. . . . . . . . . . . . . . . . . . . . . . . $45,770
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . 15,364
Demand deposits. . . . . . . . . . . . . . . . . . . . . . . 6,181
Money market deposit accounts. . . . . . . . . . . . . . . . 16,806
Certificates of deposit. . . . . . . . . . . . . . . . . . . 188,631
-------
Total deposits. . . . . . . . . . . . . . . . . . . . . $272,752
-------
-------
</TABLE>
The aggregate amount of time deposits of $100,000 or more totaled
$9,231,166 at June 10, 1994.
The weighted average interest rates for deposits at June 10, 1994
was 3.84%. The Purchase and Assumption Agreement stipulates that Eagle
Federal is to pay interest on
F-38
<PAGE>
assumed liabilities in accordance with the terms of the respective deposit
agreements for a period of 14 days after assumption. After the 14 day
period, the Bank reduced rates on certain deposit accounts. It is
expected that deposit run-off will be funded by excess liquidity;
primarily from the net amount due from the FDIC.
(9) COMMITMENTS AND CONCENTRATIONS OF CREDIT RISK
At June 10, 1994, there were no mortgage commitments outstanding. Unused
portions of home equity credit lines approximate $5,421,000 on June 10,
1994.
The Loans acquired are primarly secured by real estate located in
Connecticut.
(10) LITIGATION AND OTHER MATTERS
The FDIC has agreed to indemnify Eagle Federal against certain costs,
liabilities and expenses, including legal fees, incurred in connection
with certain third party claims that may be brought against Eagle Federal
based on liabilities of The Bank of Hartford that were not assumed by
Eagle Federal under the Purchase and Assumption Agreement. Eagle Federal
has agreed to indemnify the FDIC against certain costs, liabilities and
expenses, including legal fees, incurred in connection with certain third
party claims that may be brought against the FDIC based on liabilities of
The Bank of Hartford that were assumed by Eagle Federal under the Purchase
and Assumption Agreement.
(11) RECENT ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 114, ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN. This statement requires that loans be
impaired when it is probable that a creditor will be unable to collect all
amounts (i.e., principal and interest) contractually due, and that the
impairment be measured based on the present value of expected future cash
flows discounted at the loan's original effective interest rate. The
statement also allows impairments to be measured based on the loan's
market price or the fair value of the collateral if the loan is collateral
dependent. The effective date for the statement is for fiscal years
beginning after December 15, 1994. The Bank has not yet determined the
timing or impact of adoption of this statement.
In May 1993, the FASB issued SFAS No. 115, ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES. The Statement generally would
require that debt and equity securities that have readily determinable
fair values be carried at fair value unless they are classified as held to
maturity. Securities would be classified as held to maturity and carried
at amortized cost only if the reporting entity has a positive intent and
ability to hold those securities to maturity. If not classified as held
to maturity, such securities would be classified as trading securities or
securities available for sale. Unrealized holding gains or losses for
securities available for sale would be excluded from earnings and reported
as a net amount in a separate component of shareholders' equity. The
effective date for the statement is for fiscal years beginning after
December 15, 1993. Based on the securities held by the Bank as of
June 10, 1994 related to the acquired securities of The Bank of Hartford,
the Bank does not believe that this statement will have a material effect
on the classification of its securities upon adoption. The impact on the
Bank's future financial position or results of operations will be based on
the future fair values of its securities.
F-39
<PAGE>
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPEC-TUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER TO OR
SOLICITATION OF ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION CONTAINED HEREIN SINCE THE RESPECTIVE DATES AS OF
WHICH SUCH INFORMATION IS GIVEN HEREIN OR THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Map............................................ 3
The Company.................................... 4
Use of Proceeds................................ 6
Market Prices and Dividends.................... 7
Capitalization................................. 8
Selected Financial and Other Data.............. 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 11
Management..................................... 30
Description of Capital Stock................... 31
Underwriting................................... 34
Legal Matters.................................. 35
Experts........................................ 35
Index to Consolidated Financial Statements..... F-1
</TABLE>
1,130,000 SHARES
EAGLE FINANCIAL CORP.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
KEEFE, BRUYETTE & WOODS, INC.
, 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses are expected to be incurred in
connection with issuance and sale of the securities being
registered:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee .................... $ 9,914.29
American Stock Exchange listing fees...... 17,500.00
NASD filing fee........................... 3,376.00
Printing and mailing expenses............. *
Legal fees................................ *
Accounting fees........................... *
Blue Sky legal fees and filing expenses... *
Transfer agent fees and expenses.......... *
Miscellaneous expenses.................... *
----------
Total................................ $ *
----------
<FN>
----------
- ---------------
* To be filed by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law sets
forth certain circumstances under which directors, officers,
employees and agents may be indemnified against liability that
they may incur in their capacity as such. Section 145 of the
Delaware General Corporation Law, which is filed as Exhibit 99 to
this Registration Statement, is incorporated herein by
reference.
Article Nine of the Company's Bylaws, entitled
"Indemnification," provides for indemnification of the Company's
directors, officers, employees and agents under certain
circumstances. Article Nine of the Company's By-laws, which are
filed as Exhibit 3.2 to this Registration Statement, is
incorporated herein by reference.
ITEM 16. EXHIBITS
The following exhibits are filed herewith as part of this
Registration Statement or incorporated herein by reference:
Exhibit
No. Exhibit
- ------- -------
1 Form of Underwriting Agreement among the Company
and the Underwriter.*
3.2 By-laws of the Company, as amended to date
(incorporated by reference from the Company's
Current Report on Form 8-K, as filed with the SEC
on November 12, 1993).
4.1 Form of Common Stock Certificate (incorporated by
reference from the Company's Registration
Statement on Form S-4 (Reg. No. 33-21122) filed
with the SEC on April 8, 1988).
II-1
<PAGE>
5 Opinion of Hogan & Hartson L.L.P. regarding
legality of securities being registered.*
10.1 Eagle Financial Corp. Stock Option Plan
(incorporated by reference from the Company's
Annual Report on Form 10-K for the year ended
September 30, 1987, as filed with the SEC on
December 22, 1987).
10.2 BFS Bancorp, Inc. Stock Option Plan (incorporated
by reference from the Company's Registration
Statement on Form S-8 (Reg. No. 33-28403) filed
with the SEC on April 28, 1989).
10.3 Eagle Financial Corp. 1988 Stock Option Plan
(incorporated by references from the Company's
definitive Proxy Statement dated December 21, 1988
for the 1989 Annual Meeting of Shareholders, as
filed with the SEC on December 22, 1988).
10.4 Employment Agreement dated April 1, 1994 among the
Company, the Bank and Ralph T. Linsley, as amended
on July 26, 1994.
10.5 Consulting Agreement dated August 25, 1988 between
the Company and Ralph T. Linsley (incorporated by
reference from the Company's Annual Report on Form
10-K for the year ended September 30, 1988, as
filed with the SEC on December 29, 1988).
10.6 Employment Agreement dated April 1, 1994 among the
Company, the Bank and Robert J. Britton, as
amended on July 26, 1994.
10.7 Employment Agreement dated April 1, 1994 among the
Company, the Bank and Ercole J. Labadia.
10.8 Employment Agreement dated April 1, 1994 among the
Company, the Bank and Mark J. Blum.
10.9 Employment Agreement dated April 1, 1994 among the
Company, the Bank and Irene K. Hricko.
10.10 Employment Agreement dated April 1, 1994, among
the Company, the Bank and Barbara S. Mills.
10.11 The Bank deferred compensation plan (incorporated
by reference from Pre-Effective Amendment No. 1 to
the Company's Registration Statement on Form S-4
(No. 33-21122) filed with the SEC on May 17,
1988).
10.12 Deferred Compensation Plan for Non-Employee
Directors (incorporated by reference from the
Company's Annual Report on Form 10-K for the year
ended September 30, 1988, as filed with the SEC on
December 29, 1988).
10.13 Outside Directors Post Retirement Plan, dated July
26, 1994.
10.14 Guarantee and Pledge Agreement dated November 1,
1990 between the Company and Bank of Boston
Connecticut (incorporated by reference from the
Company's Annual Report on Form 10-K for the year
ended September 30, 1990, as filed with the SEC on
December 28, 1990).
10.15 Annual Incentive Compensation Plan.
II-2
<PAGE>
23.1 Consent of Hogan & Hartson L.L.P. (included in
Exhibit 5).
23.2 Consent of KPMG Peat Marwick.
23.3 Consent of Ernst & Young LLP.
99 Section 145 of the Delaware General Corporation
Law.
____________________
*To be filed by Amendment.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(3) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bristol, State of Connecticut, on the 9th day of
August, 1994.
EAGLE FINANCIAL CORP.
By________/s/_RALPH T. LINSLEY________
Ralph T. Linsley
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
POWER OF ATTORNEY
Know all Persons by These Presents, that each individual whose signature
appears below constitutes and appoints Ralph T. Linsley, Robert J. Britton and
Mark J. Blum and each of them, his or her true and lawful attorney-in-fact and
agent, with power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their, his or her substitutes
or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 9th day of August, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ------------------------------------------------------
<C> <S>
/s/FRANK J. PASCALE
Frank J. Pascale Chairman of the Board
/s/RALPH T. LINSLEY President, Chief Executive Officer and Director
Ralph T. Linsley (Principal Executive Officer)
/s/MARK J. BLUM Vice President and Chief Financial Officer
Mark J. Blum (Principal Financial and Accounting Officer)
/s/RICHARD H. ALDEN
Richard H. Alden Director
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ------------------------------------------------------
<C> <S>
/s/ROBERT J. BRITTON
Robert J. Britton Executive Vice President and Director
/s/GEORGE T. CARPENTER
George T. Carpenter Director
/s/THEODORE M. DONOVAN
Theodore M. Donovan Director
/s/STEVEN E. LASEWICZ, JR.
Steven E. Lasewicz, Jr. Director
/s/THOMAS V. LAPORTA
Thomas V. LaPorta Director
/s/JOHN F. MCCARTHY
John F. McCarthy Director
/s/ERNEST J. TORIZZO
Ernest J. Torizzo Director
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
- ----------- -------------
<C> <S> <C>
1 Form of Underwriting Agreement among the Company and the Underwriter.*
3.2 By-laws of the Company, as amended to date (incorporated by reference from the Company's
Current Report on Form 8-K, as filed with the SEC on November 12, 1993).
4 Form of Common Stock Certificate (incorporated by reference from the Company's
Registration Statement on Form S-4 (Reg. No. 33-21122) filed with the SEC on April 8,
1988).
5 Opinion of Hogan & Hartson L.L.P regarding legality of securities being registered.*
10.1 Eagle Financial Corp. Stock Option Plan (incorporated by reference from the Company's
Annual Report on Form 10-K for the year ended September 30, 1987, as filed with the SEC
on December 22, 1987).
10.2 BFS Bancorp, Inc. Stock Option Plan (incorporated by reference from the Company's
Registration Statement on Form S-8 (Reg. No. 33-28403) filed with the SEC on April 28,
1989).
10.3 Eagle Financial Corp. 1988 Stock Option Plan (incorporated by reference from the
Company's definitive Proxy Statement dated December 21, 1988 for the 1989 Annual
Meeting of Shareholders, as filed with the SEC on December 22, 1988).
10.4 Employment Agreement dated April 1, 1994 among the Company, the Bank and Ralph T.
Linsley, as amended on July 26, 1994.
10.5 Consulting Agreement dated August 25, 1988 between the Company and Ralph T. Linsley
(incorporated by reference from the Company's Annual Report on Form 10-K for the year
ended September 30, 1988, as filed with the SEC on December 29, 1988).
10.6 Employment Agreement dated April 1, 1994 among the Company, the Bank and Robert J.
Britton, as amended on July 26, 1994.
10.7 Employment Agreement dated April 1, 1994 among the Company, the Bank and Ercole J.
Labadia.
10.8 Employment Agreement dated April 1, 1994 among the Company, the Bank and Mark J. Blum.
10.9 Employment Agreement dated April 1, 1994 among the Company, the Bank and Irene K.
Hricko.
10.10 Employment Agreement dated April 1, 1994, among the Company, the Bank and Barbara S.
Mills.
10.11 The Bank deferred compensation plan (incorporated by reference from Pre-Effective
Amendment No. 1 to the Company's Registration Statement on Form S-4 (No. 33-21122)
filed with the SEC on May 17, 1988).
10.12 Deferred Compensation Plan for Non-Employee Directors (incorporated by reference from
the Company's Annual Report on Form 10-K for the year ended September 30, 1988, as
filed with the SEC on December 29, 1988).
10.13 Outside Directors Post Retirement Plan, dated July 26, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
- ----------- -------------
10.14 Guarantee and Pledge Agreement dated November 1, 1990 between the Company and Bank of
Boston Connecticut (incorporated by reference from the Company's Annual Report on Form
10-K for the year ended September 30, 1990, as filed with the SEC on December 28,
1990).
<C> <S> <C>
10.15 Annual Incentive Plan.
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
23.2 Consent of KPMG Peat Marwick.
23.3 Consent of Ernst & Young LLP.
99 Section 145 of the Delaware General Corporation Law.
</TABLE>
- ------------------------
*To be filed by Amendment.
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Ralph T. Linsley (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Vice Chairman,
President and Chief Executive Officer of the Company and the Chairman and Chief
Executive Officer of the Bank under an Employment Agreement dated as of August
25, 1988, as amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and
superseded and the Prior Agreement shall be of no further force or effect after
the date of this Agreement. The Employee is employed as the Vice Chairman,
President and Chief Executive Officer of the Company and the Chairman and Chief
Executive Officer of the Bank from the date hereof through the term of this
Agreement. As an executive of the Company and of the Bank, the Employee shall
render executive, policy, and other management services to the Company and the
Bank of the type customarily performed by persons serving in similar executive
officer capacities. The Employee shall also perform such duties as the Boards of
Directors of the Company and of the Bank may from time to time reasonably
direct. During the term of this Agreement, there shall be no material increase
or decrease in the duties and responsibilities of the Employee otherwise than as
provided herein, unless the parties otherwise agree in writing. During the term
of this Agreement, the Employee shall not be required to relocate to an area
more than 25 miles from the Bank's home office in order to perform the services
hereunder.
2. SALARY. The Bank agrees to pay the Employee during the term of
this Agreement a salary as follows: from the date hereof through December 31,
1994, a salary at an annual rate equal to $215,000, with the salary to be
increased on January 1 of each year during the term of this Agreement as
determined by the Boards of Directors of the Company and the Bank. In
determining salary increases, the Board of Directors may compensate the Employee
for increases in the cost of living and may also provide for performance or
merit increases. The salary of the Employee shall not be decreased at any time
during the term of this Agreement from the amount then in effect, unless the
Employee otherwise agrees in writing.
<PAGE>
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
hereunder. The Employee shall not be entitled to receive fees for serving as a
director of the Company, the Bank, or any subsidiary, or for serving as a member
of any committee of the Board of Directors of the Company, the Bank, or any
subsidiary.
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE
BENEFIT PLANS; FRINGE BENEFITS.
(a) The Employee shall be entitled to participate in any plan of
the Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations, the
provision of an automobile primarily for business use and any other benefits
which are commensurate with the duties and responsibilities to be performed by
the Employee under this Agreement. Participation in these plans and fringe
benefits shall not reduce the salary payable to the Employee under Section 2
hereof.
(b) In addition to the benefits enumerated above, upon the
Employee's voluntary termination of employment (other than a voluntary
termination under Section 8 hereof), the Employee shall be entitled to special
retirement payments from the Bank equal to one month's gross salary (based on
his salary at the time of such severance) for each complete year of his service
with the Bank or Bristol Federal Savings Bank, but not in excess of the lesser
of (i) 36 months or (ii) the number of full months by which the date of such
severance precedes his sixty-fifth birthday, payable in 60 equal monthly
installments, and to continuation for such period of the insurance coverages set
out in Section 7(a)(iii) hereof, PROVIDED, the Employee gives the Company and
the Bank written notice of his intent to resign at least six months in advance
of his resignation. The amounts to be paid to the Employee under this Section
3(b) shall cease immediately and no other payments shall be made pursuant to
this Section 3(b) if the Employee accepts employment by a significant competitor
of the Bank as defined in Section 7(f) hereof.
4. TERM. The initial term of employment under this Agreement shall
be for a period commencing on the date hereof and ending on March 31, 1997. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written
-2-
<PAGE>
notice to the other parties hereto prior to such renewal date. If at any time
during the term of this Agreement, there is a change in control as defined in
Section 8(b) hereof, the provisions of Sections 7(g) and 8(a) hereof shall
continue to apply for two years from the date of such change in control
regardless of whether the term of employment is subsequently renewed under this
Section 4. Each initial term and all such renewed terms are collectively
referred to herein as the term of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
of Directors of the Company or the Bank otherwise approves. The Employee shall
be entitled to an annual paid vacation of at least five weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank
may terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
-3-
<PAGE>
(ii) The parties acknowledge and agree that damages
which will result to Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, the Bank shall be obligated, concurrently with such
termination, to make a cash payment to the Employee as liquidated damages of an
amount equal to the Employee's then current salary under Section 2 of this
Agreement calculated for a period equal to the remaining term of this Agreement,
payable monthly over such remaining term; provided, however, that the amount
payable to the Employee under this Section 7(a)(ii) shall not exceed the amount
that would be payable to the Employee in the event of an involuntary termination
of the Employee's employment under Section 8(a)(ii) hereof. The Employee agrees
that, except for such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such liquidated
damages shall be in lieu of all other claims which the Employee may make by
reason of such termination. Such payment to the Employee shall be made on or
before the Employee's last day of employment with the Company or the Bank. The
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other employment with another employer after
termination of his employment with the Company or the Bank.
(iii) In addition to the liquidated damages above
described that are payable to the Employee for termination without cause, the
following shall apply in the event of any termination without cause or in the
event of any termination subject to Section 8 hereof: (1) the Employee shall
continue to participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to receive annually for the purposes of such plans the Employee's
then current salary (at the time of his termination) under Section 2 of the
Agreement), except to the extent that such continued participation and accrual
is expressly prohibited by law, or to the extent such plan constitutes a
"qualified plan" under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"); (2) the Employee shall be entitled to continue to receive
all other employee benefits referred to in Section 3 hereof for the remaining
term of this Agreement as if the termination of employment had not occurred; and
(3) all insurance or other provisions for indemnification, defense or hold-
harmless of officers or directors of the Company or the Bank which are in effect
on the date the notice of termination is sent to the Employee shall continue for
the benefit of the Employee with respect to all of his acts and omissions while
an officer or director as fully and completely as if such termination had not
occurred, and until the final expiration or running of all periods of limitation
against action which may be applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
-4-
<PAGE>
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act, as amended), all obligations under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee, at the time the
Federal Deposit Insurance Corporation or Resolution Trust Company enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act, as amended, or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director or his or
her designee to be in an unsafe or unsound condition. Any rights of the parties
that have already vested, however, shall not be affected by any termination
hereunder.
(f) The Employee shall have no right to terminate employment
under this Agreement before the end of the term of this Agreement, unless (i)
such termination (1) is approved by the Board of Directors of the Company or the
Bank or (2) is in connection with or within two years after a change in control
(as defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the
Employee gives the Company and the Bank at least six months advance written
notice of his intent to terminate employment. In the event that the Employee
violates this provision, the Company and the Bank shall be entitled, in addition
to its other legal remedies, to enjoin the employment of the Employee with any
significant competitor of the Bank for a period of one year or the remaining
term of this Agreement plus six months, whichever is less. The term "significant
competitor" shall mean any commercial bank, savings bank, savings and loan
association, or mortgage banking company, or a holding company affiliate of any
of the foregoing, which at the date of its employment of the Employee has an
office out of which the Employee would be primarily based within 30 miles of the
Bank's home office.
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(g) In the event the employment of the Employee is terminated by
the Company or the Bank without cause under Section 7(a) hereof or the
Employee's employment is terminated voluntarily or involuntarily in accordance
with Section 8 hereof and the Bank fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in
control of the Company or the Bank, the Employee shall be entitled to receive as
a severance payment for services previously rendered to the Company and the
Bank, or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates this Agreement, in connection with or within two years after the
change in control of the Company or the Bank, unless such termination occurs by
virtue of normal retirement, permanent and total disability (as defined in
Section 22(e) of the Code) or death. Subject to Section 8(c) below, the amount
of the payment shall be equal to (i) one year's salary, if the Employee
voluntarily terminates his employment or this Agreement without "Good Reason"
(as hereinafter defined) or (ii) three times the "Base Amount" (as hereinafter
defined) less one dollar, if the Employee's termination of employment or of this
Agreement was either voluntary with Good Reason or involuntary. The "Base
Amount" shall be the Employee's average annualized compensation that was payable
by the Company, the Bank or any other subsidiary of the Company and that was
includible in the Employee's gross income for federal income tax purposes with
respect to the five most recent taxable years of the Employee ending before such
change in control. If the Employee has been employed by the Company or the Bank
for part but less than all of such five-taxable-year period, the "Base Amount"
shall be determined by first annualizing the compensation paid to the Employee
during the partial taxable year included in the period of employment, in
accordance with regulations issued under Section 280G of the Code, and then
dividing the sum of the compensation paid during the full taxable year(s) plus
the annualized compensation paid during the partial year by the number of full
and partial taxable years included in the period of employment. "Good Reason"
shall include (i) a reduction in the position of the Employee so that he is no
longer the Vice Chairman, President and Chief Executive Officer of the Company
and the Chairman and Chief Executive Officer of the Bank or (ii) a material
reduction in the position, authority, duties or responsibilities of the
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Employee from those which existed prior to the change in control. If the
Employee notifies the Boards of Directors of the Company and the Bank that he
intends to resign voluntarily or terminate this Agreement for Good Reason, he
shall state in his notice the reasons why he believes that Good Reason exists
for his resignation. Unless the Company and the Bank, within 30 days of the date
of the Employee's notice of resignation or termination, reject the Employee's
statement that Good Reason exists, the Employee's entitlement to the severance
payment provided in clause (ii) above shall be conclusive. If both Boards of
Directors reject the Employee's statement of Good Reason within such 30-day
period, the dispute shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof, but the Company and the Bank shall have the burden
of proving in such arbitration that their rejection of the Employee's statement
was proper. Payment under this Section 8(a) shall be in lieu of any amount owed
to the Employee as liquidated damages for termination without cause under
Sections 7(a)(i) and (ii) hereof. However, payment under this Section 8(a) shall
not be reduced by any compensation which the Employee may receive from other
employment with another employer after termination of the Employee's employment.
In addition, Section 7(a)(iii) shall apply in the case of any termination of
employment within the scope of this Section 8(a). Payment to the Employee under
this Section 8(a) shall be made on or before the Employee's last day of
employment with the Company or the Bank.
(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such person has filed a certification with the Director, a change in
control will not be so deemed to have occurred unless the Board of Directors of
the Company has made a determination that such beneficial ownership constitutes
or will constitute control of the Company; (iii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies, as to the election or removal
of two or more directors of the Company, for 25 percent or more of the total
number of voting shares of the Company; (iv) any person has received the
approval of the Director under Section 10 of the Home Owners' Loan Act, as
amended (the "Holding Company Act"), or regulations issued thereunder, to
acquire control of the Company; (v) any person has received approval of the
Director under Section 7(j) of the Federal Deposit Insurance Act, as amended
(the "Control Act"), or regulations issued thereunder, to acquire control of the
Company; (vi) any person has commenced a tender or exchange offer, or entered
into an agreement or received an option, to acquire beneficial ownership of 25
percent or more of the total number of voting shares of the Company, whether or
not the requisite approval for such acquisition has been received under the
Holding Company Act, the Control Act, or the respective regulations issued
thereunder, provided that a change in control will not be deemed to have
occurred under this
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<PAGE>
clause (vi) unless the Board of Directors of the Company has made a
determination that such action constitutes or will constitute a change in
control; or (vii) as the result of, or in connection with, any cash tender or
exchange offer, merger, or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction shall cease to
constitute at least two-thirds of the Board of Directors of the Company or any
successor institution. For purposes of this Section 8(b), a "person" includes an
individual, corporation, partnership, trust, association, joint venture, pool,
syndicate, unincorporated organization, joint-stock company or similar
organization or group acting in concert. A person for these purposes shall be
deemed to be a beneficial owner as that term is used in Rule 13d-3 under the
Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or of
any other agreement, contract, or understanding heretofore or hereafter entered
into by the Employee with the Company or the Bank, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Company or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the
receipt of any such payment or benefit under this Agreement, any Other
Agreement, or any Benefit Plan would cause the Employee to be considered to have
received a Parachute Payment under this Agreement, then the Employee shall have
the right, in the Employee's sole discretion, to designate those payments or
benefits under this Agreement, any Other Agreements, and/or any Benefit Plans,
which should be reduced or eliminated so as to avoid having the payment to the
Employee under this Agreement be deemed to be a Parachute Payment. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 USC SECTION 1828(k) and any
regulations promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's
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duties and responsibilities hereunder, the Employee shall be entitled to receive
disability benefits of the type provided for other executive employees of the
Company and the Bank and the obligations of the Company and the Bank hereunder
shall be limited to providing such benefits for the period of such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
termination of employment with or without cause under Section 7(a) hereof,
except that a simple majority vote shall be sufficient for the Boards to approve
a renewal of the Agreement under Section 4 hereof.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
- -------------------- By -----------------------------
Secretary Executive Vice President
Attest: EAGLE FEDERAL SAVINGS BANK
- -------------------- By -----------------------------
Secretary President
EMPLOYEE
--------------------------------
Ralph T. Linsley
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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Robert J. Britton (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Executive Vice
President of the Company and the Vice Chairman, President and Chief Operating
Officer of the Bank under an Employment Agreement dated as of July 1, 1989, as
amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and
superseded and the Prior Agreement shall be of no further force or effect after
the date of this Agreement. The Employee is employed as the Executive Vice
President of the Company and the Vice Chairman, President and Chief Operating
Officer of the Bank from the date hereof through the term of this Agreement. As
an executive of the Company and of the Bank, the Employee shall render
executive, policy, and other management services to the Company and the Bank of
the type customarily performed by persons serving in similar executive officer
capacities, in accordance with the organizational charts of the Company and the
Bank. The Employee shall also perform such duties as the Boards of Directors of
the Company and of the Bank may from time to time reasonably direct. During the
term of this Agreement, there shall be no material increase or decrease in the
duties and responsibilities of the Employee otherwise than as provided herein,
unless the parties otherwise agree in writing.
2. SALARY. The Bank agrees to pay the Employee during the term of
this Agreement a salary as follows: from the date hereof through December 31,
1994, a salary at an annual rate equal to $140,000, with the salary to be
increased on January 1 of each year during the term of this Agreement as
determined by the Boards of Directors of the Company and the Bank. In
determining salary increases, the Board of Directors may compensate the Employee
for increases in the cost of living and may also provide for performance or
merit increases. The salary of the Employee shall not be decreased at any time
during the term of this Agreement from the amount then in effect, unless the
Employee otherwise agrees in writing.
<PAGE>
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
hereunder. The Employee shall not be entitled to receive fees for serving as a
director of the Company, the Bank, or any subsidiary, or for serving as a member
of any committee of the Board of Directors of the Company, the Bank, or any
subsidiary.
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations, the
provision of an automobile for business use and any other benefits which are
commensurate with the duties and responsibilities to be performed by the
Employee under this Agreement. Participation in these plans and fringe benefits
shall not reduce the salary payable to the Employee under Section 2 hereof.
4. TERM. The initial term of employment under this Agreement shall
be for a period commencing on the date hereof and ending on March 31, 1997. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written notice to
the other parties hereto prior to such renewal date. If at any time during the
term of this Agreement, there is a change in control as defined in Section 8(b)
hereof, the provisions of Sections 7(g) and 8(a) hereof shall continue to apply
for two years from the date of such change in control regardless of whether the
term of employment is subsequently renewed under this Section 4. Each initial
term and all such renewed terms are collectively referred to herein as the term
of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All
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such voluntary absences shall count as paid vacation time, unless the Board of
Directors of the Company or the Bank otherwise approves. The Employee shall be
entitled to an annual paid vacation of at least four weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank
may terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages which
will result to Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, the Bank shall be obligated, concurrently with such
termination, to make a cash payment to the Employee as liquidated damages of an
amount equal to the Employee's then current salary under Section 2 of this
Agreement calculated for a period equal to the remaining term of this Agreement,
payable monthly over such remaining term; provided, however, that the amount
payable to the Employee under this Section 7(a)(ii) shall not exceed the amount
that would be payable to the Employee in the event of an involuntary termination
of the Employee's employment under Section 8(a)(ii) hereof. The Employee agrees
that, except for such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such liquidated
damages shall be in lieu of all other claims which the Employee may make by
reason of such termination. Such payment to the Employee shall be made on or
before the Employee's last day of employment with the Company or the Bank. The
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other
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employment with another employer after termination of his employment with the
Company or the Bank.
(iii) In addition to the liquidated damages above
described that are payable to the Employee for termination without cause, the
following shall apply in the event of any termination without cause or in the
event of any termination subject to Section 8 hereof: (1) the Employee shall
continue to participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to receive annually for the purposes of such plans the Employee's
then current salary (at the time of his termination) under Section 2 of the
Agreement), except to the extent that such continued participation and accrual
is expressly prohibited by law, or to the extent such plan constitutes a
"qualified plan" under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"); (2) the Employee shall be entitled to continue to receive
all other employee benefits referred to in Section 3 hereof for the remaining
term of this Agreement as if the termination of employment had not occurred; and
(3) all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of the Company or the Bank which are in
effect on the date the notice of termination is sent to the Employee shall
continue for the benefit of the Employee with respect to all of his acts and
omissions while an officer or director as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
periods of limitation against action which may be applicable to such acts or
omissions.
(b) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Bank may in its discretion (i) pay the
Employee all or part of the compensation withheld while such contractual
obligations were suspended, and (ii) reinstate in whole or in part any of its
obligations which were suspended.
(c) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1)
of the Federal Deposit Insurance Act, as amended), all obligations under this
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Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee, at the time the
Federal Deposit Insurance Corporation or Resolution Trust Company enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act, as amended, or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director or his or
her designee to be in an unsafe or unsound condition. Any rights of the parties
that have already vested, however, shall not be affected by any termination
hereunder.
(f) The Employee shall have no right to terminate employment
under this Agreement before the end of the term of this Agreement, unless (i)
such termination (1) is approved by the Board of Directors of the Company or the
Bank or (2) is in connection with or within two years after a change in control
(as defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the
Employee gives the Company and the Bank at least six months advance written
notice that the Employee intends to terminate employment.
(g) In the event the employment of the Employee is terminated
by the Company or the Bank without cause under Section 7(a) hereof or the
Employee's employment is terminated voluntarily or involuntarily in accordance
with Section 8 hereof and the Bank fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in
control of the Company or the Bank, the Employee shall be entitled to receive as
a severance payment for services previously rendered to the Company and the
Bank, or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates
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this Agreement, in connection with or within two years after the change in
control of the Company or the Bank, unless such termination occurs by virtue of
normal retirement, permanent and total disability (as defined in Section 22(e)
of the Code) or death. Subject to Section 8(c) below, the amount of the payment
shall be equal to (i) one year's salary, if the Employee voluntarily terminates
his employment or this Agreement without "Good Reason" (as hereinafter defined)
or (ii) three times the "Base Amount" (as hereinafter defined) less one dollar,
if the Employee's termination of employment or of this Agreement was either
voluntary with Good Reason or involuntary. The "Base Amount" shall be the
Employee's average annualized compensation that was payable by the Company, the
Bank or any other subsidiary of the Company and that was includible in the
Employee's gross income for federal income tax purposes with respect to the five
most recent taxable years of the Employee ending before such change in control.
If the Employee has been employed by the Company or the Bank for part but less
than all of such five- taxable-year period, the "Base Amount" shall be
determined by first annualizing the compensation paid to the Employee during the
partial taxable year included in the period of employment, in accordance with
regulations issued under Section 280G of the Code, and then dividing the sum of
the compensation paid during the full taxable year(s) plus the annualized
compensation paid during the partial year by the number of full and partial
taxable years included in the period of employment. "Good Reason" shall include
(i) a reduction in the position of the Employee so that he is no longer the
Executive Vice President of the Company and the Vice Chairman, President and
Chief Operating Officer of the Bank or (ii) a material reduction in the
position, authority, duties or responsibilities of the Employee from those which
existed prior to the change in control. If the Employee notifies the Boards of
Directors of the Company and the Bank that he intends to resign voluntarily or
terminate this Agreement for Good Reason, he shall state in his notice the
reasons why he believes that Good Reason exists for his resignation. Unless the
Company and the Bank, within 30 days of the date of the Employee's notice of
resignation or termination, reject the Employee's statement that Good Reason
exists, the Employee's entitlement to the severance payment provided in clause
(ii) above shall be conclusive. If both Boards of Directors reject the
Employee's statement of Good Reason within such 30-day period, the dispute shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof, but the
Company and the Bank shall have the burden of proving in such arbitration that
their rejection of the Employee's statement was proper. Payment under this
Section 8(a) shall be in lieu of any amount owed to the Employee as liquidated
damages for termination without cause under Sections 7(a)(i) and (ii) hereof.
However, payment under this Section 8(a) shall not be reduced by any
compensation which the Employee may receive from other employment with another
employer after termination of the Employee's employment. In addition, Section
7(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 8(a). Payment to the Employee under this Section 8(a)
shall be made on or before the Employee's last day of employment with the
Company or the Bank.
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(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such person has filed a certification with the Director, a change in
control will not be so deemed to have occurred unless the Board of Directors of
the Company has made a determination that such beneficial ownership constitutes
or will constitute control of the Company; (iii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies, as to the election or removal
of two or more directors of the Company, for 25 percent or more of the total
number of voting shares of the Company; (iv) any person has received the
approval of the Director under Section 10 of the Home Owners' Loan Act, as
amended (the "Holding Company Act"), or regulations issued thereunder, to
acquire control of the Company; (v) any person has received approval of the
Director under Section 7(j) of the Federal Deposit Insurance Act, as amended
(the "Control Act"), or regulations issued thereunder, to acquire control of the
Company; (vi) any person has commenced a tender or exchange offer, or entered
into an agreement or received an option, to acquire beneficial ownership of 25
percent or more of the total number of voting shares of the Company, whether or
not the requisite approval for such acquisition has been received under the
Holding Company Act, the Control Act, or the respective regulations issued
thereunder, provided that a change in control will not be deemed to have
occurred under this clause (vi) unless the Board of Directors of the Company has
made a determination that such action constitutes or will constitute a change in
control; or (vii) as the result of, or in connection with, any cash tender or
exchange offer, merger, or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction shall cease to
constitute at least two-thirds of the Board of Directors of the Company or any
successor institution. For purposes of this Section 8(b), a "person" includes
an individual, corporation, partnership, trust, association, joint venture,
pool, syndicate, unincorporated organization, joint-stock company or similar
organization or group acting in concert. A person for these purposes shall be
deemed to be a beneficial owner as that term is used in Rule 13d-3 under the
Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Employee with the Company or the Bank, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
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<PAGE>
hereafter adopted by the Company or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the
receipt of any such payment or benefit under this Agreement, any Other
Agreement, or any Benefit Plan would cause the Employee to be considered to have
received a Parachute Payment under this Agreement, then the Employee shall have
the right, in the Employee's sole discretion, to designate those payments or
benefits under this Agreement, any Other Agreements, and/or any Benefit Plans,
which should be reduced or eliminated so as to avoid having the payment to the
Employee under this Agreement be deemed to be a Parachute Payment. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 USC Section 1828(k) and any
regulations promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement,
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or to take any other action under this Agreement including any termination of
employment with or without cause under Section 7(a) hereof, except that a simple
majority vote shall be sufficient for the Boards to approve a renewal of the
Agreement under Section 4 hereof.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
___________________________________ By______________________________________
Secretary President and Chief Executive Officer
Attest: EAGLE FEDERAL SAVINGS BANK
___________________________________ By______________________________________
Secretary Chairman and Chief Executive Officer
EMPLOYEE
________________________________________
Robert J. Britton
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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Ercole J. Labadia (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Vice President -
Administration of the Company and the Executive Vice President - Administration
and Operations of the Bank under an Employment Agreement dated as of August 25,
1988, as amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and
superseded and the Prior Agreement shall be of no further force or effect after
the date of this Agreement. The Employee is employed as the Vice President -
Administration of the Company and the Executive Vice President - Administration
and Operations of the Bank from the date hereof through the term of this
Agreement. As an executive of the Company and of the Bank, the Employee shall
render executive, policy, and other management services to the Company and the
Bank of the type customarily performed by persons serving in similar executive
officer capacities, in accordance with the organizational charts of the Company
and the Bank. The Employee shall also perform such duties as the Boards of
Directors of the Company and of the Bank may from time to time reasonably
direct. During the term of this Agreement, there shall be no material increase
or decrease in the duties and responsibilities of the Employee otherwise than as
provided herein, unless the parties otherwise agree in writing. During the term
of this Agreement, the Employee shall not be required to relocate to an area
more than 25 miles from the Bank's home office in order to perform the services
hereunder.
2. SALARY. The Bank agrees to pay the Employee during the term of
this Agreement a salary as follows: from the date hereof through December 31,
1994, a salary at an annual rate equal to $118,000, with the salary to be
increased on January 1 of each year during the term of this Agreement as
determined by the Boards of Directors of the Company and the Bank. In
determining salary increases, the Board of Directors may compensate the Employee
for increases in the cost of living and may also provide for performance or
merit increases. The salary of the Employee shall not be decreased at any time
during the term of this Agreement from the amount then in effect, unless the
Employee otherwise agrees in writing.
<PAGE>
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
hereunder. The Employee shall not be entitled to receive fees for serving as a
director of the Company, the Bank, or any subsidiary, or for serving as a member
of any committee of the Board of Directors of the Company, the Bank, or any
subsidiary.
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations, the
provision of an automobile for business use and any other benefits which are
commensurate with the duties and responsibilities to be performed by the
Employee under this Agreement. Participation in these plans and fringe benefits
shall not reduce the salary payable to the Employee under Section 2 hereof.
4. TERM. The initial term of employment under this Agreement shall
be for a period commencing on the date hereof and ending on March 31, 1997. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written notice to
the other parties hereto prior to such renewal date. If at any time during the
term of this Agreement, there is a change in control as defined in Section 8(b)
hereof, the provisions of Sections 7(g) and 8(a) hereof shall continue to apply
for two years from the date of such change in control regardless of whether the
term of employment is subsequently renewed under this Section 4. Each initial
term and all such renewed terms are collectively referred to herein as the term
of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All
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such voluntary absences shall count as paid vacation time, unless the Board of
Directors of the Company or the Bank otherwise approves. The Employee shall be
entitled to an annual paid vacation of at least four weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank
may terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages
which will result to Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, the Bank shall be obligated, concurrently with such
termination, to make a cash payment to the Employee as liquidated damages of an
amount equal to the Employee's then current salary under Section 2 of this
Agreement calculated for a period equal to the remaining term of this Agreement,
payable monthly over such remaining term; provided, however, that the amount
payable to the Employee under this Section 7(a)(ii) shall not exceed the amount
that would be payable to the Employee in the event of an involuntary termination
of the Employee's employment under Section 8(a)(ii) hereof. The Employee agrees
that, except for such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such liquidated
damages shall be in lieu of all other claims which the Employee may make by
reason of such termination. Such payment to the Employee shall be made on or
before the Employee's last day of employment with the Company or the Bank. The
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other
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<PAGE>
employment with another employer after termination of his employment with the
Company or the Bank.
(iii) In addition to the liquidated damages above
described that are payable to the Employee for termination without cause, the
following shall apply in the event of any termination without cause or in the
event of any termination subject to Section 8 hereof: (1) the Employee shall
continue to participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to receive annually for the purposes of such plans the Employee's
then current salary (at the time of his termination) under Section 2 of the
Agreement), except to the extent that such continued participation and accrual
is expressly prohibited by law, or to the extent such plan constitutes a
"qualified plan" under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"); (2) the Employee shall be entitled to continue to receive
all other employee benefits referred to in Section 3 hereof for the remaining
term of this Agreement as if the termination of employment had not occurred; and
(3) all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of the Company or the Bank which are in
effect on the date the notice of termination is sent to the Employee shall
continue for the benefit of the Employee with respect to all of his acts and
omissions while an officer or director as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
periods of limitation against action which may be applicable to such acts or
omissions.
(b) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act, as amended), all obligations under this
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<PAGE>
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee, at the time the
Federal Deposit Insurance Corporation or Resolution Trust Company enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act, as amended, or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director or his or
her designee to be in an unsafe or unsound condition. Any rights of the parties
that have already vested, however, shall not be affected by any termination
hereunder.
(f) The Employee shall have no right to terminate employment
under this Agreement before the end of the term of this Agreement, unless (i)
such termination (1) is approved by the Board of Directors of the Company or the
Bank or (2) is in connection with or within two years after a change in control
(as defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the
Employee gives the Company and the Bank at least six months advance written
notice that the Employee intends to terminate employment.
(g) In the event the employment of the Employee is terminated by
the Company or the Bank without cause under Section 7(a) hereof or the
Employee's employment is terminated voluntarily or involuntarily in accordance
with Section 8 hereof and the Bank fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in
control of the Company or the Bank, the Employee shall be entitled to receive as
a severance payment for services previously rendered to the Company and the
Bank, or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates
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<PAGE>
this Agreement, in connection with or within two years after the change in
control of the Company or the Bank, unless such termination occurs by virtue of
normal retirement, permanent and total disability (as defined in Section 22(e)
of the Code) or death. Subject to Section 8(c) below, the amount of the payment
shall be equal to (i) one year's salary, if the Employee voluntarily terminates
his employment or this Agreement without "Good Reason" (as hereinafter defined)
or (ii) three times the "Base Amount" (as hereinafter defined) less one dollar,
if the Employee's termination of employment or of this Agreement was either
voluntary with Good Reason or involuntary. The "Base Amount" shall be the
Employee's average annualized compensation that was payable by the Company, the
Bank or any other subsidiary of the Company and that was includible in the
Employee's gross income for federal income tax purposes with respect to the five
most recent taxable years of the Employee ending before such change in control.
If the Employee has been employed by the Company or the Bank for part but less
than all of such five-taxable-year period, the "Base Amount" shall be
determined by first annualizing the compensation paid to the Employee during the
partial taxable year included in the period of employment, in accordance with
regulations issued under Section 280G of the Code, and then dividing the sum of
the compensation paid during the full taxable year(s) plus the annualized
compensation paid during the partial year by the number of full and partial
taxable years included in the period of employment. "Good Reason" shall include
(i) a reduction in the position of the Employee so that he is no longer the Vice
President - Administration of the Company and the Executive Vice President -
Administration and Operations of the Bank or (ii) a material reduction in the
position, authority, duties or responsibilities of the Employee from those which
existed prior to the change in control. If the Employee notifies the Boards of
Directors of the Company and the Bank that he intends to resign voluntarily or
terminate this Agreement for Good Reason, he shall state in his notice the
reasons why he believes that Good Reason exists for his resignation. Unless the
Company and the Bank, within 30 days of the date of the Employee's notice of
resignation or termination, reject the Employee's statement that Good Reason
exists, the Employee's entitlement to the severance payment provided in clause
(ii) above shall be conclusive. If both Boards of Directors reject the
Employee's statement of Good Reason within such 30-day period, the dispute shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof, but the
Company and the Bank shall have the burden of proving in such arbitration that
their rejection of the Employee's statement was proper. Payment under this
Section 8(a) shall be in lieu of any amount owed to the Employee as liquidated
damages for termination without cause under Sections 7(a)(i) and (ii) hereof.
However, payment under this Section 8(a) shall not be reduced by any
compensation which the Employee may receive from other employment with another
employer after termination of the Employee's employment. In addition, Section
7(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 8(a). Payment to the Employee under this Section 8(a)
shall be made on or before the Employee's last day of employment with the
Company or the Bank.
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<PAGE>
(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such person has filed a certification with the Director, a change in
control will not be so deemed to have occurred unless the Board of Directors of
the Company has made a determination that such beneficial ownership constitutes
or will constitute control of the Company; (iii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies, as to the election or removal
of two or more directors of the Company, for 25 percent or more of the total
number of voting shares of the Company; (iv) any person has received the
approval of the Director under Section 10 of the Home Owners' Loan Act, as
amended (the "Holding Company Act"), or regulations issued thereunder, to
acquire control of the Company; (v) any person has received approval of the
Director under Section 7(j) of the Federal Deposit Insurance Act, as amended
(the "Control Act"), or regulations issued thereunder, to acquire control of the
Company; (vi) any person has commenced a tender or exchange offer, or entered
into an agreement or received an option, to acquire beneficial ownership of 25
percent or more of the total number of voting shares of the Company, whether or
not the requisite approval for such acquisition has been received under the
Holding Company Act, the Control Act, or the respective regulations issued
thereunder, provided that a change in control will not be deemed to have
occurred under this clause (vi) unless the Board of Directors of the Company has
made a determination that such action constitutes or will constitute a change in
control; or (vii) as the result of, or in connection with, any cash tender or
exchange offer, merger, or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction shall cease to
constitute at least two-thirds of the Board of Directors of the Company or any
successor institution. For purposes of this Section 8(b), a "person" includes an
individual, corporation, partnership, trust, association, joint venture, pool,
syndicate, unincorporated organization, joint-stock company or similar
organization or group acting in concert. A person for these purposes shall be
deemed to be a beneficial owner as that term is used in Rule 13d-3 under the
Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or of
any other agreement, contract, or understanding heretofore or hereafter entered
into by the Employee with the Company or the Bank, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
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<PAGE>
hereafter adopted by the Company or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the
receipt of any such payment or benefit under this Agreement, any Other
Agreement, or any Benefit Plan would cause the Employee to be considered to have
received a Parachute Payment under this Agreement, then the Employee shall have
the right, in the Employee's sole discretion, to designate those payments or
benefits under this Agreement, any Other Agreements, and/or any Benefit Plans,
which should be reduced or eliminated so as to avoid having the payment to the
Employee under this Agreement be deemed to be a Parachute Payment. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 USC SECTION 1828(k) and any
regulations promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement,
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<PAGE>
or to take any other action under this Agreement including any termination of
employment with or without cause under Section 7(a) hereof, except that a simple
majority vote shall be sufficient for the Boards to approve a renewal of the
Agreement under Section 4 hereof.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
- -------------------- By -----------------------------
Secretary Executive Vice President
Attest: EAGLE FEDERAL SAVINGS BANK
- -------------------- By -----------------------------
Secretary President
EMPLOYEE
--------------------------------
Ercole J. Labadia
<PAGE>
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Mark J. Blum (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Vice President -
Chief Financial Officer of the Company and the Senior Vice President - Chief
Financial Officer of the Bank under an Employment Agreement dated as of July 1,
1989, as amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and
superseded and the Prior Agreement shall be of no further force or effect after
the date of this Agreement. The Employee is employed as the Vice President -
Chief Financial Officer of the Company and the Senior Vice President - Chief
Financial Officer of the Bank from the date hereof through the term of this
Agreement. As an executive of the Company and of the Bank, the Employee shall
render executive, policy, and other management services to the Company and the
Bank of the type customarily performed by persons serving in similar executive
officer capacities, in accordance with the organizational charts of the Company
and the Bank. The Employee shall also perform such duties as the Boards of
Directors of the Company and of the Bank may from time to time reasonably
direct.
2. SALARY. The Bank agrees to pay the Employee during the term of
this Agreement a salary as follows: from the date hereof through December 31,
1994, a salary at an annual rate equal to $95,000, with the salary to be
increased on January 1 of each year during the term of this Agreement as
determined by the Boards of Directors of the Company and the Bank. In
determining salary increases, the Board of Directors may compensate the Employee
for increases in the cost of living and may also provide for performance or
merit increases. The salary of the Employee shall not be decreased at any time
during the term of this Agreement from the amount then in effect, unless the
Employee otherwise agrees in writing.
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
<PAGE>
hereunder. The Employee shall not be entitled to receive fees for serving as a
director of the Company, the Bank, or any subsidiary, or for serving as a member
of any committee of the Board of Directors of the Company, the Bank, or any
subsidiary.
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations and
any other benefits which are commensurate with the duties and responsibilities
to be performed by the Employee under this Agreement. Participation in these
plans and fringe benefits shall not reduce the salary payable to the Employee
under Section 2 hereof.
4. TERM. The initial term of employment under this Agreement shall
be for a period commencing on the date hereof and ending on March 31, 1997. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written notice to
the other parties hereto prior to such renewal date. If at any time during the
term of this Agreement, there is a change in control as defined in Section 8(b)
hereof, the provisions of Sections 7(g) and 8(a) hereof shall continue to apply
for two years from the date of such change in control regardless of whether the
term of employment is subsequently renewed under this Section 4. Each initial
term and all such renewed terms are collectively referred to herein as the term
of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
of Directors of the Company or the Bank otherwise approves. The Employee shall
be entitled to an annual paid vacation of at least four weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
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<PAGE>
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank
may terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages
which will result to Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, the Bank shall be obligated, concurrently with such
termination, to make a cash payment to the Employee as liquidated damages of an
amount equal to the Employee's then current salary under Section 2 of this
Agreement calculated for a period equal to the remaining term of this Agreement,
payable monthly over such remaining term; provided, however, that the amount
payable to the Employee under this Section 7(a)(ii) shall not exceed the amount
that would be payable to the Employee in the event of an involuntary termination
of the Employee's employment under Section 8(a)(ii) hereof. The Employee agrees
that, except for such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such liquidated
damages shall be in lieu of all other claims which the Employee may make by
reason of such termination. Such payment to the Employee shall be made on or
before the Employee's last day of employment with the Company or the Bank. The
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other employment with another employer after
termination of his employment with the Company or the Bank.
(iii) In addition to the liquidated damages above
described that are payable to the Employee for termination without cause, the
following shall apply in the event of any termination without cause or in the
event
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<PAGE>
of any termination subject to Section 8 hereof: (1) the Employee shall continue
to participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to receive annually for the purposes of such plans the Employee's
then current salary (at the time of his termination) under Section 2 of the
Agreement), except to the extent that such continued participation and accrual
is expressly prohibited by law, or to the extent such plan constitutes a
"qualified plan" under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"); (2) the Employee shall be entitled to continue to receive
all other employee benefits referred to in Section 3 hereof for the remaining
term of this Agreement as if the termination of employment had not occurred; and
(3) all insurance or other provisions for indemnification, defense or hold-
harmless of officers or directors of the Company or the Bank which are in effect
on the date the notice of termination is sent to the Employee shall continue for
the benefit of the Employee with respect to all of his acts and omissions while
an officer or director as fully and completely as if such termination had not
occurred, and until the final expiration or running of all periods of limitation
against action which may be applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act, as amended), all obligations under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee, at the time the
Federal Deposit
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<PAGE>
Insurance Corporation or Resolution Trust Company enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, as amended, or (ii) by the
Director or his or her designee at the time the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director or his or her designee to be
in an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any termination hereunder.
(f) The Employee shall have no right to terminate employment
under this Agreement before the end of the term of this Agreement, unless (i)
such termination (1) is approved by the Board of Directors of the Company or the
Bank or (2) is in connection with or within two years after a change in control
(as defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the
Employee gives the Company and the Bank at least six months advance written
notice that the Employee intends to terminate employment.
(g) In the event the employment of the Employee is terminated by
the Company or the Bank without cause under Section 7(a) hereof or the
Employee's employment is terminated voluntarily or involuntarily in accordance
with Section 8 hereof and the Bank fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in
control of the Company or the Bank, the Employee shall be entitled to receive as
a severance payment for services previously rendered to the Company and the
Bank, or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates this Agreement, in connection with or within two years after the
change in control of the Company or the Bank, unless such termination occurs by
virtue of normal retirement, permanent and total disability (as defined in
Section 22(e) of the Code) or death. Subject to Section 8(c) below, the amount
of the payment shall be equal to (i) one year's salary, if the Employee
voluntarily terminates his employment or this Agreement without "Good Reason"
(as hereinafter defined) or (ii) three times the "Base Amount" (as hereinafter
defined) less one dollar, if the Employee's
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<PAGE>
termination of employment or of this Agreement was either voluntary with Good
Reason or involuntary. The "Base Amount" shall be the Employee's average
annualized compensation that was payable by the Company, the Bank or any other
subsidiary of the Company and that was includible in the Employee's gross income
for federal income tax purposes with respect to the five most recent taxable
years of the Employee ending before such change in control. If the Employee has
been employed by the Company or the Bank for part but less than all of such
five- taxable-year period, the "Base Amount" shall be determined by first
annualizing the compensation paid to the Employee during the partial taxable
year included in the period of employment, in accordance with regulations issued
under Section 280G of the Code, and then dividing the sum of the compensation
paid during the full taxable year(s) plus the annualized compensation paid
during the partial year by the number of full and partial taxable years included
in the period of employment. "Good Reason" shall include (i) a reduction in the
position of the Employee so that he is no longer the Vice President - Chief
Financial Officer of the Company and the Senior Vice President - Chief Financial
Officer of the Bank or (ii) a material reduction in the position, authority,
duties or responsibilities of the Employee from those which existed prior to the
change in control. If the Employee notifies the Boards of Directors of the
Company and the Bank that he intends to resign voluntarily or terminate this
Agreement for Good Reason, he shall state in his notice the reasons why he
believes that Good Reason exists for his resignation. Unless the Company and the
Bank, within 30 days of the date of the Employee's notice of resignation or
termination, reject the Employee's statement that Good Reason exists, the
Employee's entitlement to the severance payment provided in clause (ii) above
shall be conclusive. If both Boards of Directors reject the Employee's statement
of Good Reason within such 30-day period, the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof, but the Company and the
Bank shall have the burden of proving in such arbitration that their rejection
of the Employee's statement was proper. Payment under this Section 8(a) shall be
in lieu of any amount owed to the Employee as liquidated damages for termination
without cause under Sections 7(a)(i) and (ii) hereof. However, payment under
this Section 8(a) shall not be reduced by any compensation which the Employee
may receive from other employment with another employer after termination of the
Employee's employment. In addition, Section 7(a)(iii) shall apply in the case of
any termination of employment within the scope of this Section 8(a). Payment to
the Employee under this Section 8(a) shall be made on or before the Employee's
last day of employment with the Company or the Bank.
(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such
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<PAGE>
person has filed a certification with the Director, a change in control will not
be so deemed to have occurred unless the Board of Directors of the Company has
made a determination that such beneficial ownership constitutes or will
constitute control of the Company; (iii) any person (other than the persons
named as proxies solicited on behalf of the Board of Directors of the Company)
holds revocable or irrevocable proxies, as to the election or removal of two or
more directors of the Company, for 25 percent or more of the total number of
voting shares of the Company; (iv) any person has received the approval of the
Director under Section 10 of the Home Owners' Loan Act, as amended (the "Holding
Company Act"), or regulations issued thereunder, to acquire control of the
Company; (v) any person has received approval of the Director under Section 7(j)
of the Federal Deposit Insurance Act, as amended (the "Control Act"), or
regulations issued thereunder, to acquire control of the Company; (vi) any
person has commenced a tender or exchange offer, or entered into an agreement or
received an option, to acquire beneficial ownership of 25 percent or more of the
total number of voting shares of the Company, whether or not the requisite
approval for such acquisition has been received under the Holding Company Act,
the Control Act, or the respective regulations issued thereunder, provided that
a change in control will not be deemed to have occurred under this clause (vi)
unless the Board of Directors of the Company has made a determination that such
action constitutes or will constitute a change in control; or (vii) as the
result of, or in connection with, any cash tender or exchange offer, merger, or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions, the persons who were directors of the
Company before such transaction shall cease to constitute at least two-thirds of
the Board of Directors of the Company or any successor institution. For purposes
of this Section 8(b), a "person" includes an individual, corporation,
partnership, trust, association, joint venture, pool, syndicate, unincorporated
organization, joint-stock company or similar organization or group acting in
concert. A person for these purposes shall be deemed to be a beneficial owner as
that term is used in Rule 13d-3 under the Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or of
any other agreement, contract, or understanding heretofore or hereafter entered
into by the Employee with the Company or the Bank, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Company or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any
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<PAGE>
Benefit Plan if such payment or benefit, taking into account all other payments
or benefits to or for the Employee under this Agreement, all Other Agreements,
and all Benefit Plans, would cause any payment to the Employee under this
Agreement to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code (a "Parachute Payment"). In the event that the receipt of
any such payment or benefit under this Agreement, any Other Agreement, or any
Benefit Plan would cause the Employee to be considered to have received a
Parachute Payment under this Agreement, then the Employee shall have the right,
in the Employee's sole discretion, to designate those payments or benefits under
this Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment. Any payments made to the
Employee pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 USC SECTION 1828(k) and any
regulations promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
termination of employment with or without cause under Section 7(a) hereof,
except that a simple majority vote shall be sufficient for the Boards to approve
a renewal of the Agreement under Section 4 hereof.
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<PAGE>
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
By
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Secretary Executive Vice President
Attest: EAGLE FEDERAL SAVINGS BANK
By
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Secretary President
EMPLOYEE
-------------------------
Mark J. Blum
<PAGE>
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Irene K. Hricko (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Vice President -
Corporate Secretary of the Company and the Bank under an Employment Agreement
dated as of July 1, 1989, as amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and superseded
and the Prior Agreement shall be of no further force or effect after the date of
this Agreement. The Employee is employed as the Vice President - Corporate
Secretary of the Company and the Bank from the date hereof through the term of
this Agreement. As an executive of the Company and of the Bank, the Employee
shall render executive, policy, and other management services to the Company and
the Bank of the type customarily performed by persons serving in similar
executive officer capacities, in accordance with the organizational charts of
the Company and the Bank. The Employee shall also perform such duties as the
Boards of Directors of the Company and of the Bank may from time to time
reasonably direct.
2. SALARY. The Bank agrees to pay the Employee during the term of this
Agreement a salary as follows: from the date hereof through December 31, 1994, a
salary at an annual rate equal to $60,000, with the salary to be increased on
January 1 of each year during the term of this Agreement as determined by the
Boards of Directors of the Company and the Bank. In determining salary
increases, the Board of Directors may compensate the Employee for increases in
the cost of living and may also provide for performance or merit increases. The
salary of the Employee shall not be decreased at any time during the term of
this Agreement from the amount then in effect, unless the Employee otherwise
agrees in writing.
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
hereunder.
<PAGE>
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations and
any other benefits which are commensurate with the duties and responsibilities
to be performed by the Employee under this Agreement. Participation in these
plans and fringe benefits shall not reduce the salary payable to the Employee
under Section 2 hereof.
4. TERM. The initial term of employment under this Agreement shall be
for a period commencing on the date hereof and ending on March 31, 1995. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written notice to
the other parties hereto prior to such renewal date. If at any time during the
term of this Agreement, there is a change in control as defined in Section 8(b)
hereof, the provisions of Sections 7(g) and 8(a) hereof shall continue to apply
for two years from the date of such change in control regardless of whether the
term of employment is subsequently renewed under this Section 4. Each initial
term and all such renewed terms are collectively referred to herein as the term
of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
of Directors of the Company or the Bank otherwise approves. The Employee shall
be entitled to an annual paid vacation of at least four weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
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<PAGE>
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank may
terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages which will
result to Employee for termination without cause shall be extremely difficult or
impossible to establish or prove, and agree that, unless the termination is for
cause, the Bank shall be obligated, concurrently with such termination, to make
a cash payment to the Employee as liquidated damages of an amount equal to the
Employee's then current salary under Section 2 of this Agreement calculated for
a period equal to the remaining term of this Agreement, payable monthly over
such remaining term; provided, however, that the amount payable to the Employee
under this Section 7(a)(ii) shall not exceed the amount that would be payable to
the Employee in the event of an involuntary termination of the Employee's
employment under Section 8(a)(ii) hereof. The Employee agrees that, except for
such other payments and benefits to which the Employee may be entitled as
expressly provided by the terms of this Agreement, such liquidated damages shall
be in lieu of all other claims which the Employee may make by reason of such
termination. Such payment to the Employee shall be made on or before the
Employee's last day of employment with the Company or the Bank. The liquidated
damages amount shall not be reduced by any compensation which the Employee may
receive for other employment with another employer after termination of her
employment with the Company or the Bank.
(iii) In addition to the liquidated damages above described that
are payable to the Employee for termination without cause, the following shall
apply in the event of any termination without cause or in the event of any
termination subject to Section 8 hereof: (1) the Employee shall continue to
participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to
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receive annually for the purposes of such plans the Employee's then current
salary (at the time of her termination) under Section 2 of the Agreement),
except to the extent that such continued participation and accrual is expressly
prohibited by law, or to the extent such plan constitutes a "qualified plan"
under Section 401 of the Internal Revenue Code of 1986, as amended (the "Code");
(2) the Employee shall be entitled to continue to receive all other employee
benefits referred to in Section 3 hereof for the remaining term of this
Agreement as if the termination of employment had not occurred; and (3) all
insurance or other provisions for indemnification, defense or hold-harmless of
officers or directors of the Company or the Bank which are in effect on the date
the notice of termination is sent to the Employee shall continue for the benefit
of the Employee with respect to all of her acts and omissions while an officer
or director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended), all obligations under this Agreement
shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of the Office of Thrift
Supervision (the "Director") or his or her designee, at the time the Federal
Deposit Insurance Corporation or Resolution Trust Company enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act, as amended, or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank
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<PAGE>
or when the Bank is determined by the Director or his or her designee
to be in an unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by any termination hereunder.
(f) The Employee shall have no right to terminate employment under
this Agreement before the end of the term of this Agreement, unless (i) such
termination (1) is approved by the Board of Directors of the Company or the Bank
or (2) is in connection with or within two years after a change in control (as
defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the Employee
gives the Company and the Bank at least six months advance written notice that
the Employee intends to terminate employment.
(g) In the event the employment of the Employee is terminated by the
Company or the Bank without cause under Section 7(a) hereof or the Employee's
employment is terminated voluntarily or involuntarily in accordance with Section
8 hereof and the Bank fails to make timely payment of the amounts then owed to
the Employee under this Agreement, the Employee shall be entitled to
reimbursement for all reasonable costs, including attorneys' fees, incurred by
the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in control
of the Company or the Bank, the Employee shall be entitled to receive as a
severance payment for services previously rendered to the Company and the Bank,
or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates this Agreement, in connection with or within two years after the
change in control of the Company or the Bank, unless such termination occurs by
virtue of normal retirement, permanent and total disability (as defined in
Section 22(e) of the Code) or death. Subject to Section 8(c) below, the amount
of the payment shall be equal to (i) one year's salary, if the Employee
voluntarily terminates her employment or this Agreement without "Good Reason"
(as hereinafter defined) or (ii) three times the "Base Amount" (as hereinafter
defined) less one dollar, if the Employee's termination of employment or of this
Agreement was either voluntary with Good Reason or involuntary. The "Base
Amount" shall be the Employee's average annualized compensation that was payable
by the Company, the Bank or any other subsidiary of the Company and that was
includible in the Employee's gross income for federal income tax purposes with
respect to the five most recent taxable years of
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<PAGE>
the Employee ending before such change in control. If the Employee has been
employed by the Company or the Bank for part but less than all of such
five-taxable-year period, the "Base Amount" shall be determined by first
annualizing the compensation paid to the Employee during the partial taxable
year included in the period of employment, in accordance with regulations issued
under Section 280G of the Code, and then dividing the sum of the compensation
paid during the full taxable year(s) plus the annualized compensation paid
during the partial year by the number of full and partial taxable years included
in the period of employment. "Good Reason" shall include (i) a reduction in the
position of the Employee so that she is no longer the Vice President - Corporate
Secretary of the Company and the Bank or (ii) a material reduction in the
position, authority, duties or responsibilities of the Employee from those which
existed prior to the change in control. If the Employee notifies the Boards of
Directors of the Company and the Bank that she intends to resign voluntarily or
terminate this Agreement for Good Reason, she shall state in her notice the
reasons why she believes that Good Reason exists for her resignation. Unless the
Company and the Bank, within 30 days of the date of the Employee's notice of
resignation or termination, reject the Employee's statement that Good Reason
exists, the Employee's entitlement to the severance payment provided in clause
(ii) above shall be conclusive. If both Boards of Directors reject the
Employee's statement of Good Reason within such 30-day period, the dispute shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof, but the
Company and the Bank shall have the burden of proving in such arbitration that
their rejection of the Employee's statement was proper. Payment under this
Section 8(a) shall be in lieu of any amount owed to the Employee as liquidated
damages for termination without cause under Sections 7(a)(i) and (ii) hereof.
However, payment under this Section 8(a) shall not be reduced by any
compensation which the Employee may receive from other employment with another
employer after termination of the Employee's employment. In addition, Section
7(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 8(a). Payment to the Employee under this Section 2(a)
shall be made on or before the Employee's last day of employment with the Bank.
(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such person has filed a certification with the Director, a change in
control will not be so deemed to have occurred unless the Board of Directors of
the Company has made a determination that such beneficial ownership constitutes
or will constitute control of the Company; (iii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies, as to the election or removal
of two or more directors of the Company, for
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<PAGE>
25 percent or more of the total number of voting shares of the Company; (iv) any
person has received the approval of the Director under Section 10 of the Home
Owners' Loan Act, as amended (the "Holding Company Act"), or regulations issued
thereunder, to acquire control of the Company; (v) any person has received
approval of the Director under Section 7(j) of the Federal Deposit Insurance
Act, as amended (the "Control Act"), or regulations issued thereunder, to
acquire control of the Company; (vi) any person has commenced a tender or
exchange offer, or entered into an agreement or received an option, to acquire
beneficial ownership of 25 percent or more of the total number of voting shares
of the Company, whether or not the requisite approval for such acquisition has
been received under the Holding Company Act, the Control Act, or the respective
regulations issued thereunder, provided that a change in control will not be
deemed to have occurred under this clause (vi) unless the Board of Directors of
the Company has made a determination that such action constitutes or will
constitute a change in control; or (vii) as the result of, or in connection
with, any cash tender or exchange offer, merger, or other business combination,
sale of assets or contested election, or any combination of the foregoing
transactions, the persons who were directors of the Company before such
transaction shall cease to constitute at least two- thirds of the Board of
Directors of the Company or any successor institution. For purposes of this
Section 8(b), a "person" includes an individual, corporation, partnership,
trust, association, joint venture, pool, syndicate, unincorporated organization,
joint-stock company or similar organization or group acting in concert. A person
for these purposes shall be deemed to be a beneficial owner as that term is used
in Rule 13d- 3 under the Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement, shall be
deemed to have taken place if the Company's beneficial ownership of the total
number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by the Employee with the Company or the Bank, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this Section 8(c) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter adopted
by the Company or the Bank for the direct or indirect provision of compensation
to the Employee (including groups or classes of participants or beneficiaries of
which the Employee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the Employee (a "Benefit
Plan"), the Employee shall not have any right to receive any payment or other
benefit under this Agreement, any Other Agreement, or any Benefit Plan if such
payment or benefit, taking into account all other payments or benefits to or for
the Employee under this Agreement, all Other Agreements, and all Benefit Plans,
would cause any payment to the Employee under this Agreement to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit
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<PAGE>
Plan would cause the Employee to be considered to have received a Parachute
Payment under this Agreement, then the Employee shall have the right, in the
Employee's sole discretion, to designate those payments or benefits under this
Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment. Any payments made to the
Employee pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 USC SECTION 1828(k) and any
regulations promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of
this Agreement, have any other paid employment other than with a subsidiary of
the Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
termination of employment with or without cause under Section 7(a) hereof,
except that a simple majority vote shall be sufficient for the Boards to approve
a renewal of the Agreement under Section 4 hereof.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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<PAGE>
15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
By
- ------------ --------------------------
Assistant Secretary Executive Vice President
Attest: EAGLE FEDERAL SAVINGS BANK
By
- ------------ --------------------------
Assistant Secretary President
EMPLOYEE
--------------------------
Irene K. Hricko
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<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1994, among EAGLE FEDERAL SAVINGS BANK
(the "Bank"), EAGLE FINANCIAL CORP. (the "Company") and Barbara S. Mills (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as the Vice President -
Treasurer of the Company and the Bank under an Employment Agreement dated as of
August 25, 1988, as amended (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and
superseded and the Prior Agreement shall be of no further force or effect after
the date of this Agreement. The Employee is employed as the Vice President -
Treasurer of the Company and the Bank from the date hereof through the term of
this Agreement. As an executive of the Company and of the Bank, the Employee
shall render executive, policy, and other management services to the Company and
the Bank of the type customarily performed by persons serving in similar
executive officer capacities, in accordance with the organizational charts of
the Company and the Bank. The Employee shall also perform such duties as the
Boards of Directors of the Company and of the Bank may from time to time
reasonably direct.
2. SALARY. The Bank agrees to pay the Employee during the term of
this Agreement a salary as follows: from the date hereof through December 31,
1994, a salary at an annual rate equal to $74,200, with the salary to be
increased on January 1 of each year during the term of this Agreement as
determined by the Boards of Directors of the Company and the Bank. In
determining salary increases, the Board of Directors may compensate the Employee
for increases in the cost of living and may also provide for performance or
merit increases. The salary of the Employee shall not be decreased at any time
during the term of this Agreement from the amount then in effect, unless the
Employee otherwise agrees in writing.
The salary under this Section 2 shall be payable by the Bank to the
Employee not less frequently than monthly. The Company shall reimburse the Bank
for a portion of the salary paid to the Employee hereunder, which portion shall
represent an appropriate allocation for the services rendered to the Company
hereunder.
<PAGE>
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
BENEFITS. The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees. The Employee shall also be entitled to participate
in any other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees, including the payment of reasonable
expenses for attending annual and periodic meetings of trade associations and
any other benefits which are commensurate with the duties and responsibilities
to be performed by the Employee under this Agreement. Participation in these
plans and fringe benefits shall not reduce the salary payable to the Employee
under Section 2 hereof.
4. TERM. The initial term of employment under this Agreement shall
be for a period commencing on the date hereof and ending on March 31, 1995. The
Company and the Bank may renew this Agreement by written notice to the Employee
for one additional year on March 31, 1995 and each subsequent March 31 during
the term of this Agreement, unless the Employee gives contrary written notice to
the other parties hereto prior to such renewal date. If at any time during the
term of this Agreement, there is a change in control as defined in Section 8(b)
hereof, the provisions of Sections 7(g) and 8(a) hereof shall continue to apply
for two years from the date of such change in control regardless of whether the
term of employment is subsequently renewed under this Section 4. Each initial
term and all such renewed terms are collectively referred to herein as the term
of this Agreement.
5. STANDARDS. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
6. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
of Directors of the Company or the Bank otherwise approves. The Employee shall
be entitled to an annual paid vacation of at least four weeks per year or such
longer period as the Board of Directors of the Company or the Bank may approve.
The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive any additional
compensation from the Bank on account of failure to take a paid vacation or (ii)
to accumulate more than two weeks of unused paid vacation time from one fiscal
year to the next.
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<PAGE>
7. TERMINATION OF EMPLOYMENT.
(a) (i) The Board of Directors of the Company or the Bank
may terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; PROVIDED,
that it shall be the Company's or the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company or the Bank
shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages
which will result to Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, the Bank shall be obligated, concurrently with such
termination, to make a cash payment to the Employee as liquidated damages of an
amount equal to the Employee's then current salary under Section 2 of this
Agreement calculated for a period equal to the remaining term of this Agreement,
payable monthly over such remaining term; provided, however, that the amount
payable to the Employee under this Section 7(a)(ii) shall not exceed the amount
that would be payable to the Employee in the event of an involuntary termination
of the Employee's employment under Section 8(a)(ii) hereof. The Employee agrees
that, except for such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such liquidated
damages shall be in lieu of all other claims which the Employee may make by
reason of such termination. Such payment to the Employee shall be made on or
before the Employee's last day of employment with the Company or the Bank. The
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other employment with another employer after
termination of her employment with the Company or the Bank.
(iii) In addition to the liquidated damages above
described that are payable to the Employee for termination without cause, the
following shall apply in the event of any termination without cause or in the
event of any termination subject to Section 8 hereof: (1) the Employee shall
continue to participate in, and accrue benefits under, all retirement, pension,
profit-sharing, employee stock ownership, and other deferred compensation plans
of the Company or the Bank for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to
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<PAGE>
receive annually for the purposes of such plans the Employee's then current
salary (at the time of her termination) under Section 2 of the Agreement),
except to the extent that such continued participation and accrual is expressly
prohibited by law, or to the extent such plan constitutes a "qualified plan"
under Section 401 of the Internal Revenue Code of 1986, as amended (the "Code");
(2) the Employee shall be entitled to continue to receive all other employee
benefits referred to in Section 3 hereof for the remaining term of this
Agreement as if the termination of employment had not occurred; and (3) all
insurance or other provisions for indemnification, defense or hold-harmless of
officers or directors of the Company or the Bank which are in effect on the date
the notice of termination is sent to the Employee shall continue for the benefit
of the Employee with respect to all of her acts and omissions while an officer
or director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended, the
Company's and the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If the charges
in the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act, as amended), all obligations under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee, at the time the
Federal Deposit Insurance Corporation or Resolution Trust Company enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act, as amended, or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank
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<PAGE>
or when the Bank is determined by the Director or his or her designee to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any termination hereunder.
(f) The Employee shall have no right to terminate employment
under this Agreement before the end of the term of this Agreement, unless (i)
such termination (1) is approved by the Board of Directors of the Company or the
Bank or (2) is in connection with or within two years after a change in control
(as defined in Section 8(b) hereof) of the Company or the Bank, or (ii) the
Employee gives the Company and the Bank at least six months advance written
notice that the Employee intends to terminate employment.
(g) In the event the employment of the Employee is terminated by
the Company or the Bank without cause under Section 7(a) hereof or the
Employee's employment is terminated voluntarily or involuntarily in accordance
with Section 8 hereof and the Bank fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by THE WALL STREET JOURNAL), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. CHANGE IN CONTROL.
(a) If during the term of this Agreement there is a change in
control of the Company or the Bank, the Employee shall be entitled to receive as
a severance payment for services previously rendered to the Company and the
Bank, or in lieu of a severance payment, a lump sum cash payment as provided for
herein (subject to Section 8(c) below) in the event the Employee's employment is
terminated, voluntarily or involuntarily, or in the event the Employee
terminates this Agreement, in connection with or within two years after the
change in control of the Company or the Bank, unless such termination occurs by
virtue of normal retirement, permanent and total disability (as defined in
Section 22(e) of the Code) or death. Subject to Section 8(c) below, the amount
of the payment shall be equal to (i) one year's salary, if the Employee
voluntarily terminates his employment or this Agreement without "Good Reason"
(as hereinafter defined) or (ii) three times the "Base Amount" (as hereinafter
defined) less one dollar, if the Employee's termination of employment or of this
Agreement was either voluntary with Good Reason or involuntary. The "Base
Amount" shall be the Employee's average annualized compensation that was payable
by the Company, the Bank or any other subsidiary of the Company and that was
includible in the Employee's gross income for federal income tax purposes with
respect to the five most recent taxable years of
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<PAGE>
the Employee ending before such change in control. If the Employee has been
employed by the Company or the Bank for part but less than all of such five-
taxable-year period, the "Base Amount" shall be determined by first annualizing
the compensation paid to the Employee during the partial taxable year included
in the period of employment, in accordance with regulations issued under Section
280G of the Code, and then dividing the sum of the compensation paid during the
full taxable year(s) plus the annualized compensation paid during the partial
year by the number of full and partial taxable years included in the period of
employment. "Good Reason" shall include (i) a reduction in the position of the
Employee so that she is no longer the Vice President - Treasurer of the Company
and the Bank or (ii) a material reduction in the position, authority, duties or
responsibilities of the Employee from those which existed prior to the change in
control. If the Employee notifies the Boards of Directors of the Company and the
Bank that she intends to resign voluntarily or terminate this Agreement for Good
Reason, she shall state in her notice the reasons why she believes that Good
Reason exists for her resignation. Unless the Company and the Bank, within 30
days of the date of the Employee's notice of resignation or termination, reject
the Employee's statement that Good Reason exists, the Employee's entitlement to
the severance payment provided in clause (ii) above shall be conclusive. If both
Boards of Directors reject the Employee's statement of Good Reason within such
30-day period, the dispute shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof, but the Company and the Bank shall have the burden
of proving in such arbitration that their rejection of the Employee's statement
was proper. Payment under this Section 8(a) shall be in lieu of any amount owed
to the Employee as liquidated damages for termination without cause under
Sections 7(a)(i) and (ii) hereof. However, payment under this Section 8(a) shall
not be reduced by any compensation which the Employee may receive from other
employment with another employer after termination of the Employee's employment.
In addition, Section 7(a)(iii) shall apply in the case of any termination of
employment within the scope of this Section 8(a). Payment to the Employee under
this Section 8(a) shall be made on or before the Employee's last day of
employment with the Company or the Bank.
(b) A "change in control" of the Company, for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person becomes the beneficial owner of 10 percent or more,
but less than 25 percent, of the total number of voting shares of the Company,
provided that, if the Director has approved a rebuttal agreement filed by such
person or such person has filed a certification with the Director, a change in
control will not be so deemed to have occurred unless the Board of Directors of
the Company has made a determination that such beneficial ownership constitutes
or will constitute control of the Company; (iii) any person (other than the
persons named as proxies solicited on behalf of the Board of Directors of the
Company) holds revocable or irrevocable proxies, as to the election or removal
of two or more directors of the Company, for
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<PAGE>
25 percent or more of the total number of voting shares of the Company; (iv) any
person has received the approval of the Director under Section 10 of the Home
Owners' Loan Act, as amended (the "Holding Company Act"), or regulations issued
thereunder, to acquire control of the Company; (v) any person has received
approval of the Director under Section 7(j) of the Federal Deposit Insurance
Act, as amended (the "Control Act"), or regulations issued thereunder, to
acquire control of the Company; (vi) any person has commenced a tender or
exchange offer, or entered into an agreement or received an option, to acquire
beneficial ownership of 25 percent or more of the total number of voting shares
of the Company, whether or not the requisite approval for such acquisition has
been received under the Holding Company Act, the Control Act, or the respective
regulations issued thereunder, provided that a change in control will not be
deemed to have occurred under this clause (vi) unless the Board of Directors of
the Company has made a determination that such action constitutes or will
constitute a change in control; or (vii) as the result of, or in connection
with, any cash tender or exchange offer, merger, or other business combination,
sale of assets or contested election, or any combination of the foregoing
transactions, the persons who were directors of the Company before such
transaction shall cease to constitute at least two-thirds of the Board of
Directors of the Company or any successor institution. For purposes of this
Section 8(b), a "person" includes an individual, corporation, partnership,
trust, association, joint venture, pool, syndicate, unincorporated organization,
joint-stock company or similar organization or group acting in concert. A person
for these purposes shall be deemed to be a beneficial owner as that term is used
in Rule 13d-3 under the Securities Exchange Act of 1934.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(c) Notwithstanding any other provisions of this Agreement or of
any other agreement, contract, or understanding heretofore or hereafter entered
into by the Employee with the Company or the Bank, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Company or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the
receipt of any such payment or benefit under this Agreement, any Other
Agreement, or any Benefit
-7-
<PAGE>
Plan would cause the Employee to be considered to have received a Parachute
Payment under this Agreement, then the Employee shall have the right, in the
Employee's sole discretion, to designate those payments or benefits under this
Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment. Any payments made to the
Employee pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 USC 1828(k) and any regulations
promulgated thereunder.
9. DISABILITY. If the Employee shall become disabled or
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Employee all rights to receive
payments hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a two-thirds affirmative
vote of the full Boards of Directors of the Company and the Bank shall be
required in order for the Company and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
termination of employment with or without cause under Section 7(a) hereof,
except that a simple majority vote shall be sufficient for the Boards to approve
a renewal of the Agreement under Section 4 hereof.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
-8-
<PAGE>
15. GOVERNING LAW. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Connecticut, excluding the choice of law rules thereof.
Attest: EAGLE FINANCIAL CORP.
By
- -------------------- -------------------------
Secretary Executive Vice
President
Attest: EAGLE FEDERAL SAVINGS BANK
By
- -------------------- ------------------------
Secretary President
EMPLOYEE
--------------------------
Barbara S. Mills
<PAGE>
EXHIBIT 10.13
EAGLE FINANCIAL CORPORATION
Post-Retirement Compensation Plan
for Outside Directors
(EFFECTIVE JANUARY 1, 1994)
<PAGE>
EAGLE FINANCIAL CORPORATION
Post-Retitement Compensation Plan
for Outside Directors
SECTION 1. PURPOSE. The purpose of the Eagle Financial Corporation
Post-Retirement Compensation Plan for Outside Directors (the "Plan") is the
attract and retain individuals of exceptional talent to serve as directors (the
"Directors").
SECTION 2. DEFINITIONS. For purposes of the Plan, the following terms shall
have the meanings specified below:
"Administrator" shall mean the Board of Directors of the Corporation,
acting to administer the Plan.
"Board" shall mean the Board of Directors of the Corporation.
"Change in Control" shall have the meaning assigned to such term in
Section 5.
"Common Stock" shall mean the shares of common stock, par value $1 per
share, of the Corporation.
"Corporation" shall mean Eagle Financial Corporation, a Delaware
corporation.
"Effective Date" shall mean January 1, 1994.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Outside Director" shall mean any Director who has never been an employee
or officer of the Corporation or a Subsidiary.
"Participant" shall have the meaning assigned to such term in Section 3.
"Subsidiary" shall mean any corporation which at the time qualifies as a
subsidiary of the Corporation under the definition of "subsidiary
corporation" in Section 242(f) of the Internal Revenue Code of 1986, as the
same may be amended from time to time.
SECTION 3. PARTICIPANTS. Each Outside Director shall automatically become a
Participant in the Plan upon completion of five years of service on the Board. A
Participant shall continue to be such until the Participant has received all
amounts to which the Participant is entitled under the Plan, or until the
Participant becomes an employee or an officer of the Corporation or a
Subsidiary.
SECTION 4. COMPENSATION. The Corporation (or, if applicable, a Grantor
Trust established under Section 6 hereof) shall pay each year during the
<PAGE>
Participant's lifetime to each Participant an amount equal to the dollar value
of the annual retainer fee (such dollar value to be determined by the
Administrator from time to time) payable to Directors of the corporation as of
the date the Participant retires or resigns as a Director or is not reelected as
a Director after accepting a nomination for election. No benefits will be
payable under the Plan in the event that a Director is removed from service by
the regulatory authorities or for cause by the Corporation's shareholders.
Such compensation shall commence upon the earlier of (a) a Participant's
retirement, resignation or removal from service as a Director on the Board, (b)
any failure of a Participant to be reelected as a Director after accepting a
nomination of reelection, (c) becoming disabled (as determined by the
Administrator), or (d) after a Change in Control. Payments to a Participant will
continue for a period equal to the number of years and partial years served on
the Board, but in no event will more than ten years of payments be made.
However, if a Participant dies prior to receiving the total number of payments
to which he or she is entitled, his or her named beneficiary, or if no named
beneficiary, to his or her surviving spouse (or the Participant's estate, if
there is no beneficiary or surviving spouse) will receive a benefit equal to
100% of the benefit payable to the Participant, payable for the balance of the
applicable payment period. If the payment is made to the Participant's estate,
the payment shall be made in an actuarially equivalent lump sum. If the
beneficiary or surviving spouse dies during this period, the lump sum value of
the remaining payments which would have been payable to the beneficiary or
surviving spouse will be made to such beneficiary's or spouse's estate.
If a Participant dies prior to commencement of benefits under the Plan after
having served at least five years on the Board, his or her named beneficiary, or
if no named beneficiary, to his or her surviving spouse will receive a benefit
equal to 100% of the benefit payable to the Participant had the Participant
retired at the time of death, for a period equal to the number of years and
partial years served by the Participant on the Board, up to a maximum of 10
years If there is no named beneficiary or surviving spouse, such payment shall
be made to the Participant's estate in an actuarially equivalent lump sum.
SECTION 5. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
taken place if: (i) any person becomes the beneficial owner of 25 percent or
more of the total number of voting shares of the Corporation; (ii) any person
(other than the persons named as proxies solicited on behalf of the Board) holds
revocable or irrevocable proxies, and to the election or removal of two or more
Directors of the Corporation, for 25 percent or more of the total number of
voting shares of the Corporation; (iii) any person has received the approval of
the Office of Thrift Supervision (or its successor agency) ("OTS") under Section
10 of the Home Owners' Loan Act, as amended (the "Holding Company Act"), or
regulations issued thereunder, to acquire control of the Corporation; (iv) any
person has received approval of the OTS under Section 7(j) of the Federal
Deposit Insurance Act, as amended (the "Control Act"), or regulations issued
thereunder, to acquire control of the Corporation; (v) any person has commenced
a tender or exchange offer, or
2
<PAGE>
entered into an agreement or received an option, to acquire beneficial ownership
of 25 percent or more of the total number of voting shares of the Corporation,
whether or not the requisite approval for such acquisition has been received
under the Holding Company Act, the Control Act, or the respective regulations
issued thereunder; or (vi) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions, the
persons who were Directors of the Corporation before such transaction shall
cease to constitute at least two- thirds of the Board of the Corporation (or its
successor). For purposes of this Section 5, a "person" includes an individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
unincorporated organization, joint-stock company or similar organization or
group acting in concert. A person for these purposes shall be deemed to be a
beneficial owner as that term is used in Rule 13d-3 under the Securities
Exchange Act of 1934
A "Change in Control" shall also be deemed to have taken place if the
Corporation's beneficial ownership of the total number of voting shares of Eagle
Federal Savings Bank is reduced to less than 50 percent.
SECTION 6. ESTABLISHMENT OF GRANTOR TRUST. The Administrator at any time
may, and upon the occurrence of a Change in Control the Administrator shall,
direct the Corporation to establish a grantor trust to provide for the payment
of the benefits of the Participants under the Plan through the funding of such
grantor trust, such funding to be effected at any time as the Administrator
shall designate, but in any event within ten days of the occurrence of such
Change in Control. Following its establishment, such grantor trust shall be
funded by the Corporation in an amount not less than the aggregate present
value, as determined by the Administrator, of all amounts that in the future
will be payable to persons who are Participants on the date of such funding.
SECTION 7. NONTRANSFERABILITY. No amount due to any Participant shall be
assignable or transferable, and no right or interest of any Participant shall be
subject to any lien, obligation or liability. Any attempted assignment or
alienation of payments hereunder shall be void and of no force or effect.
SECTION 8. AMENDMENT. The Board may amend, suspend or terminate the Plan or
any portion hereof at any time; provided, however, no right under the Plan of
any Participant (including the right to receive future compensation in specified
amounts) immediately prior to any amendment of the Plan shall in any way be
amended, modified, suspended or terminated without such Participant's prior
written consent, and no compensation to which a Participant who has retired from
the Board is entitled to receive pursuant to Section 4 may be reduced,
terminated or forfeited at any time.
SECTION 9. WITHHOLDING. The Corporation shall have the right to deduct from
any and all amounts paid to any Participant under this Plan any taxes required
by law to be withheld therefrom.
3
<PAGE>
SECTION 10. ADMINISTRATION. The Plan shall be administered by the
Administrator who shall have the authority to adopt rules and regulations for
carrying out the Plan, and who shall interpret, construe and implement the
provisions of the Plan.
SECTION 11. PARTICIPANT'S RIGHTS UNSECURED. The right of any Participant to
receive future payments under the provisions of the Plan shall be an unsecured
claim against the general assets of the Corporation, notwithstanding the
established of a grantor trust to provide for the payment of Participants'
benefits hereunder.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be executed by
its duly authorized officer this 26th day of April, 1994.
EAGLE FINANCIAL CORPORATION
--------------------------------------
Vice President and Corporate Secretary
<PAGE>
EXHIBIT 10.15
Eagle Financial Corporation
ANNUAL INCENTIVE
COMPENSATION PLAN
March 11, 1994
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PAGE V
OVERVIEW OF THE EXECUTIVE COMPENSATION PHILOSOPHY. . . . . . . . . . . . . 1
HIGHLIGHTS OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SPECIFIC FEATURES OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . 3
I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. Eligibility To Participate. . . . . . . . . . . . . . . . . . . 4
III. Performance Measures. . . . . . . . . . . . . . . . . . . . . . 5
IV. Calculation of Awards . . . . . . . . . . . . . . . . . . . . . 6
V. How The Plan Works. . . . . . . . . . . . . . . . . . . . . . . 8
VI. Distribution of Awards. . . . . . . . . . . . . . . . . . . . . 9
VII. Plan Administration . . . . . . . . . . . . . . . . . . . . . . 10
VIII. Amendment, Modification, Suspension or Termination. . . . . . . 11
IX. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . 12
X. Employer Relations with Participants. . . . . . . . . . . . . . 13
XI. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 14
XII. President's Discretion. . . . . . . . . . . . . . . . . . . . . 15
XIII. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix A Plan Participants
Prepared by: THE WYATT COMPANY
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 1
OVERVIEW OF THE EXECUTIVE
COMPENSATION PHILOSOPHY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Based upon analyses conducted by The Wyatt Company and subsequent
meetings with the Compensation Committee of the Board of Directors and
senior management representatives, Eagle Financial Corporation has
determined that the executive compensation program will be designed
against a competitive framework of similar organizations and take into
account all elements of compensation.
In the interests of balancing all key stakeholder interests, the
executives of Eagle Financial Corporation will be compensated using a
combination of fixed base pay, short-term variable cash and long-term
stock options. While the program elements will be balanced in total in
comparison to other banking organizations, significantly more
potential compensation will be provided in the form of
performance-related variable compensation. Variable compensation will
be both short-term and long-term based. The resulting total package
has been designed to reward executives for the creation of long-term
shareholder value in excess of other comparable organizations.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 2
HIGHLIGHTS OF THE PLAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Key aspects of Eagle Financial's annual incentive compensation plan
are as follows:
- Total compensation levels are compared to similar-sized thrifts
in the Northeast.
- The Board of Directors controls all aspects of the plan.
- Senior management employees are participants.
- Based upon the business objectives of the Bank, the annual
incentive program is based upon the following measures:
- Return on Average Assets (ROAA)
- Return on Average Equity (ROAE)
- Expense Ratio
- These performance measures are weighted as follows in determining
the overall performance:
- ROAA - 40%
- ROAE - 35%
- Expense Ratio - 25%
- Incentive distributions range from 0% of base salary (did not
meet goal) to 40% of base salary (maximum performance under
plan).
- Award distributions are made during the first quarter of the new
fiscal year for the previous fiscal year performance.
- The three categories of incentive plan participants are as
follows:
<TABLE>
<CAPTION>
Position Range of Bonus Awards
-------- ---------------------
<S> <C>
Chief Executive Officer 0% - 40%
Executive Vice President/Sr. Vice President 0% - 35%
Vice Presidents 0% - 25%
</TABLE>
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 3
SPECIFIC FEATURES OF THE PLAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The annual executive incentive program is designed to pay average
incentive compensation if performance matches that of the sample
comparison banks. The payouts above and below competitive performance
will be more leveraged.
I. DEFINITIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Various terms used in the plan are defined as follows:
BASE SALARY: The base salary at the end of the plan year,
excluding any bonuses, contributions to
employee benefit programs, or other
compensation not designated as salary.
BOARD OF DIRECTORS: The Board of Directors of Eagle Financial
Corporation.
PRESIDENT AND CEO: President and CEO of Eagle Financial
Corporation.
MANAGEMENT
PERFORMANCE GOALS: Those pre-set objectives and goals which are
required to activate distribution of awards
under the plan.
COMPENSATION
COMMITTEE: The Compensation Committee of the Board of
Directors of the Holding Company.
PLAN PARTICIPANT: An eligible employee of the Holding Company
or the Bank designated by the President and
CEO and approved by the Compensation
Committee for participation for the plan
year.
PLAN YEAR: A fiscal year.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 4
II. ELIGIBILITY TO PARTICIPATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To be eligible for an award under the plan, a plan participant must be
in the full-time service of the Holding Company or the Bank at the
start and close of the plan year. If a plan participant voluntarily
terminates employment during the plan year, he/she is not eligible to
receive an award. However, if active full-time service is terminated
due to death, disability, retirement, or if a participant is on an
approved leave of absence, the President may recommend an award based
on the proportion of the plan year that the plan participant was in
active service with the Bank. The plan participants for the plan year
are listed in Appendix A.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 5
III. PERFORMANCE MEASURES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The operation of the plan is predicated on attaining and exceeding the
business objectives of the Bank. The annual incentive program will be
based upon the following measures:
- Return on Average Assets (ROAA)
- Return on Average Equity (ROAE)
- Expense Ratio
These performance measures will be weighted as follows in determining
the overall performance:
- ROAA - 40%
- ROAE - 35%
- Expense Ratio - 25%
Based upon the business objectives established by the Bank and
considering the performance of similar-sized thrifts in the Northeast,
the following performance targets have been established for
performance levels 1 through 5:
<TABLE>
<CAPTION>
PERFORMANCE TABLE
PERFORMANCE LEVELS
TARGETED PERFORMANCE UNWEIGHTED WEIGHTED
TARGET PERFORMANCE WEIGHT 1 2 3 4 5 RESULTS RESULTS
------ ----------- ------------ --- --- --- --- --- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ROAA .84% .40 .67 .76 .84 .92 1.01 ___ ___
ROAE 10.85% .35 8.53 9.76 10.85 11.94 13.13 ___ ___
Exp. Ratio 2.18% .25 2.40 2.29 2.18 2.07 1.97 ___ ___
Total Performance ____
</TABLE>
Performance level 3 is equal to the targeted performance.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 6
IV. CALCULATION OF AWARDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following table establishes the range of incentives available
for each of the following positions and the target incentive payout
assuming each performance target is met.
<TABLE>
<CAPTION>
STANDARD INCENTIVE TABLE
POSITION PERCENT OF
GROUPING BASE SALARY
--------- -----------
<S> <C>
CEO 0% - 40%
(Target = 20%)
Exec. VP, Sr. VP's 0% - 35%
(Target = 17.5%)
VP's 0% - 25%
(Target = 12.5%)
</TABLE>
In order to accommodate a compensation philosophy that
significantly leverages the incentives paid based upon
performance, a modification factor table is used. This
table modifies the standard incentive table based on
the total performance rating and establishes the basis
for incentive payouts.
<TABLE>
<CAPTION>
MODIFICATION FACTOR TABLE
TOTAL PERCORMANCE PAYOUT AS A PERCENT
RATING OF STANDARD (TARGET)
----------------- --------------------
<S> <C>
0 -1.0 0%
1.01 -2.0 0%
2.01 -3.0 25% - 100%
3.01 -4.0 100% - 175%
4.01 -5.0 175% - 250%
</TABLE>
When applying this modification factor, the range of potential payouts
for each position grouping could be modified. It would be modified in
those cases where an "outstanding" performance rating warrants. For
instance, for the CEO position, a total performance rating of 5.0
would result in a payout that is greater than the standard incentive
of 40%. In this case, the payout would be 50% of base salary, or 250%
of target (2.5 x 20%). Each year the standard incentive and
modification factor tables will be reviewed to ensure consistency with
the Bank's compensation philosophy.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 7
Award distributions using the modification factor table are summarized
below:
<TABLE>
<CAPTION>
AWARD DISTRIBUTION
% OF BASE SALARY
TOTAL EVP
PERFORMAMCE CEO SVP VP
RATING AWARD AWARD AWARD
------ ----- ----- -----
<S> <C> <C> <C>
1.0 0% 0% 0%
2.0 0% 0% 0%
2.25 5.0% 3.5% 2.0%
2.50 10.0% 8.2% 5.5%
2.75 15.0% 12.8% 9.0%
3.00 20.0% 17.5% 12.5%
3.25 23.8% 20.8% 14.9%
3.50 27.5% 24.1% 17.2%
3.75 31.3% 27.3% 19.6%
4.00 35.0% 30.6% 21.9%
4.25 38.8% 33.9% 24.3%
4.50 42.5% 37.2% 26.6%
4.75 46.3% 40.5% 29.0%
5.00 50.0% 43.8% 31.3%
</TABLE>
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 8
V. HOW THE PLAN WORKS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Here is an example of how the plan works. In this example, assume the Bank
achieves an ROAA of .87, an ROAE of 11.00 and an Expense Ratio of 2.23.
Using the performance table below and the performance weights identified
on page 5, a total performance rating of 3.1 would be calculated.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
PERFORMANCE LEVELS
TARGETED PERFORMANCE UNWEIGHTED WEIGHTED
TARGET PERFORMANCE WEIGHT 1 2 3 4 5 RESULTS RESULTS
------ ----------- ------------ --- --- --- --- --- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ROAA .84% .40 .67 .76 .84 .92 1.01 3.4 1.36
ROAE 10.85% .35 8.53 9.76 10.85 11.94 13.13 3.1 1.09
Exp. Ratio 2.18% .25 2.40 2.29 2.18 2.07 1.97 2.5 .63
Total Performance 3.08 or 3.1
</TABLE>
In this example, the unweighted result is the interpolated performance
level, which is then multiplied by the performance weight. Each
weighted result is added together to develop the total performance
rating.
Using the awards distribution on page 7, this total performance of 3.1
can again be interpolated between 3.0 and 3.25. The resulting
incentive payouts as a percent of base pay would be as follows:
CEO - 21.5%
EVP/SVP- 18.8%
VP - 13.5%
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 9
VI. DISTRIBUTION OF AWARDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Awards will be made during the first quarter following the plan year
and must be approved by the Compensation Committee. IN THE EVENT OF A
DEATH, any approved award will be paid to the designated beneficiary
of the participant as recorded under the Bank's group life insurance
program, or in the absence of a valid designation, to the
participant's estate.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 10
VII. PLAN ADMINISTRATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Compensation Committee has the power and authority to construe,
interpret and manage, control and administer this plan, and to pass
and decide upon cases in conformity with the objectives of the plan as
established by the Board of Directors of the Holding Company.
Any decision made or action taken by the Holding Company, the Board of
Directors, or the Compensation Committee arising out of, or in
connection with, the administration, interpretation, and effect of the
plan shall be at their absolute discretion and will be conclusive and
binding. No member of the Board of Directors or the Compensation
Committee, or any employee, shall be liable for any action, whether of
omission or commission, made in accordance with the provisions of the
plan.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 11
VIII. AMENDMENT, MODIFICATION,
SUSPENSION OR TERMINATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The organization reserves the right to amend, modify, suspend,
reinstate or terminate all or part of the plan within 90 days after
the end of any plan year. If so, the Compensation Committee will give
prompt written notice, within said period of plan changes, to each
participant. In the event of a merger or acquisition, the plan and
related financial formulas will be reviewed and, if necessary,
revised to take into account the financial status of any merged
institution.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 12
IX. EFFECTIVE DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The effective date of the plan is October 1, 1993 and will be October
1 for each year for succeeding plan years.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 13
X. EMPLOYER RELATION WITH PARTICIPANTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The plan shall not be construed as conferring any legal rights upon
participants or guaranteeing continued employment. Also, the plan will
not interfere with the right of an employer to discharge or otherwise
deal with a participant.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 14
XI. GOVERNING LAW
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Except to the extent pre-empted under Federal law, the provisions of
the plan shall be construed, administered and enforced in accordance
with the domestic internal law of the State of Connecticut.
In the event of relevant changes in the Internal Revenue Code, related
rulings and regulations, the Board may accelerate or change the manner
of payments or amend the provisions of the plan.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 15
XII. PRESIDENT'S DISCRETION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The President and CEO of the Holding Company will review the amounts
to be awarded to individual participants. The President and CEO may
recommend a change to a bonus award (increase or decrease) based on
assessment of individual performance. The Board of Directors may amend
the President and CEO's bonus award.
No award will be made to an officer who does not meet performance
standards.
<PAGE>
Eagle Financial Corporation
Annual Incentive Compensation Plan
Page 16
XIII. SUMMARY
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The intent of this plan is to provide short-term incentive
opportunities that:
- Are leveraged to reflect performance.
- Establish a target, but also recognize the variation in
performance around the target.
- Consider the relationship among the different
performance measures when determining award levels.
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APPENDIX A
PLAN PARTICIPANTS
NAME INCENTIVE RANGE
---- ---------------
Ralph Linsley 0% - 40%
Robert Britton 0% - 35%
Ercole Labadia 0% - 35%
Mark Blum 0% - 35%
Kenneth Burns 0% - 35%
James Donnelly 0% - 35%
Kathy Leach 0% - 25%
Don Crandall 0% - 25%
Joan Warkoski 0% - 25%
Louis Rohner 0% - 25%
Peter Leone 0% - 25%
Janet Recidivi 0% - 25%
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EXHIBIT 23.2
The Board of Directors
and the Shareholders
Eagle Financial Corp:
We consent to the use of our reports included herein and to the reference to our
Firm under the headings "Selected Financial and Other Data" and "Experts" in the
prospectus.
KPMG PEAT MARWICK
Hartford, Connecticut
August 9, 1994
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EXHIBIT 23.3
The Board of Directors
and the Shareholders of
Eagle Financial Corp:
We consent to the reference to our firm under the captions "Experst" and
"Selected Financial and Other Data" and to the use of our report dated
October 29, 1992in the Registration Statement (Form S-2) and related
Prospectus of Eagle Financial Corp. for the registration of 1,299,500
shares of its common stock.
ERNST & YOUNG LLP
Hartford, Connecticut
August 9, 1994
<PAGE>
EXHIBIT 99
SECTION 145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
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(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. (8 Del. C. 1953, Section 145;56
Del. Laws, c. 50;56 Del. Laws, c. 186, Section 6;57 Del. Laws, c. 421, Section
2;59 Del. Laws, c. 437, Section 7;63 Del. Laws, c. 25, Section 1;64 Del. Laws,
c. 112, Section 7;65 Del. Laws, c. 289, Sections 3-6;67 Del. Laws, c. 376,
Section 3).
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