<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
-----------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- --------------------------
Commission file number 0-15311
-------------------------------------------------------
EAGLE FINANCIAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 06-1194047
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
P.O. Box 1157, Bristol, CT 06010
(Address of principal executive offices)
(203) 589 4600
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding for the issuer's classes of common
stock, as of the latest practicable date.
Common Stock (par value $0.01) 4,403,187
-------------------------------- ---------------------------------
(Class) (Approximate No. of Shares
Outstanding at February 8,
1995)(Excluding Treasury Stock and
adjusted for 10% stock dividend
payable 3/1/95)
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets at December 31, 1994
and September 30, 1994................................. 2
Consolidated Statements of Income for the Three Months
Ended December 31, 1994 and 1993....................... 3
Consolidated Statements of Cash Flows for the Three
Months Ended December 31, 1994 and 1993................. 4
Notes to Consolidated Financial Statements.............. 5-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 7-12
PART II - OTHER INFORMATION 13
SIGNATURES 14
<PAGE>
EAGLE FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
ASSETS (Unaudited)
- ---------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Cash and amounts due from depository institutions ................................ $ 28,100 $ 21,549
Interest-bearing deposits ........................................................ 8,185 3,103
----------- -----------
CASH AND CASH EQUIVALENTS .............................................. 36,285 24,652
Federal funds sold ............................................................... 0 0
Securities available for sale (amortized cost $67,188 at December 31,
1994 and $17,615 at September 30, 1994) ........................................ 64,832 16,936
Investment securities held to maturity (market value $40,865 at December 31, 1994
and $95,228 at September 30, 1994) ............................................ 42,821 97,249
Mortgage-backed securities available for sale (*amortized cost $17,699
at December 31, 1994) ......................................................... 17,259 0
Mortgage-backed securities held to maturity (market value $74,615 at December 31,
1994 and $67,224 at September 30, 1994) ....................................... 76,948 68,706
Loans receivable, net of allowance for loan losses of $8,393 at
December 31, 1994 and $8,311 at September 30, 1994 ............................ 827,105 810,705
Accrued interest receivable:
Loans .................................................................. 5,439 5,119
Investments ............................................................ 1,139 1,013
Real estate acquired in settlement of loans
and in-substance repossessed real estate, net ................................. 3,021 4,310
Stock in Federal Home Loan Bank of Boston, at cost ............................... 6,535 6,535
Premises and equipment, net ...................................................... 7,712 7,255
Prepaid expenses and other assets ................................................ 30,025 26,623
----------- -----------
TOTAL ASSETS ........................................................... $ 1,119,121 $ 1,069,103
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------- -----------
LIABILITIES
Deposits ......................................................................... $ 934,888 $ 948,829
Federal Home Loan Bank advances .................................................. 42,545 31,775
Borrowed money ................................................................... 35,224 7,817
Advance payments by borrowers for taxes and insurance ............................ 10,620 5,522
Accrued expenses and other liabilities ........................................... 11,674 8,884
----------- -----------
TOTAL LIABILITIES ...................................................... 1,034,951 1,002,827
SHAREHOLDERS' EQUITY (a)
Serial preferred stock, $.01 par value 2,000,000 shares
authorized and unissued ....................................................... -- --
Common stock, $.01 par value
8,000,000 shares authorized; 4,450,339 shares issued at December
31, 1994 and 3,492,475 shares issued at September 30, 1994,
including 47,373 shares held in treasury ...................................... 44 32
Additional paid-in capital ....................................................... 58,629 34,613
Retained earnings ................................................................ 27,976 33,139
Cost of common treasury stock .................................................... (362) (362)
Employee Stock Ownership Plan stock .............................................. (467) (467)
Unrealized securities losses, net ................................................ (1,650) (679)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY ............................................. 84,170 66,276
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................. $ 1,119,121 $ 1,069,103
=========== ===========
<FN>
a) Shareholders' equity at December 31, 1994 includes 862,310 new shares of common stock (or 948,541 after
giving effect to the 10% stock dividend) sold during the quarter resulting in $16.7 million net proceeds.
</TABLE>
NOTE: all share data and the number of outstanding common shares for all periods
have been adjusted retroactively to give effect to a 10% stock dividend to
common on February 15, 1994.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
EAGLE FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except for per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
12/31/94 12/31/93
--------------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans .................................................. $ 15,368 $ 12,249
Interest on mortgage-backed securities....................................... 1,224 385
Interest on investment securities ........................................... 1,640 691
Dividends on investment securities .......................................... 518 425
----------- -----------
Total interest income .................................................... 18,750 13,750
Interest Expense:
Interest on deposits ........................................................ 8,261 6,471
Interest on Federal Home Loan Bank advances ................................. 478 234
Interest on borrowed money .................................................. 149 1
----------- -----------
Total interest expense ................................................... 8,888 6,706
----------- -----------
Net interest income ...................................................... 9,862 7,044
----------- -----------
Provision for loan losses ...................................................... 225 300
----------- -----------
Net interest income after provision for
loan losses ........................................................... 9,637 6,744
----------- -----------
Other income:
Net gain (loss) on sale of investment securities ............................ (104) 0
Net gain on sale of loans ................................................... 0 119
Customer service fee income ................................................. 659 490
Other ....................................................................... 422 182
----------- -----------
Total other income ....................................................... 977 791
----------- -----------
10,614 7,535
----------- -----------
Other expenses: ................................................................ -- --
Compensation, payroll taxes and benefits .................................... 2,675 2,105
Office occupancy ............................................................ 627 458
Advertising ................................................................. 232 138
Provision for losses on real estate
acquired in settlement of loans ............................................ (3) 253
Operation of real estate acquired in
settlement of loans ........................................................ 114 283
Federal insurance premium ................................................... 491 291
Data processing expenses .................................................... 391 272
Amortization of intangible assets ........................................... 404 102
Other ....................................................................... 763 611
----------- -----------
Total other expenses ..................................................... 5,694 4,513
----------- -----------
Income before income taxes and cumulative
effect of accounting changes ............................................ 4,920 3,022
Income taxes ................................................................... 2,040 1,246
----------- -----------
Income before cumulative effect of
accounting changes ...................................................... 2,880 1,776
Cumulative effect of accounting changes ........................................ 0 30
----------- -----------
Net Income ............................................................... $ 2,880 $ 1,746
=========== ===========
Net income per share before cumulative effect
of accounting change ......................................................... $ 0.65 $ 0.50
Cumulative effect of accounting change ......................................... $ 0.00 $ 0.01
----------- -----------
Net Income per share ........................................................... $ 0.65 $ 0.49
=========== ===========
Weighted average shares outstanding............................................. 4,463,934 3,528,516
Dividends per share ............................................................ $ 0.19 $ 0.17
</TABLE>
NOTE: All per share data and the number of outstanding shares for all perio
dates above have been adjusted retroactively to give effect to a 10% stock d to
common shareholders of record on February 15, 1995.
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
3 Months Ended December 31,
---------------------------
1994 1993
OPERATING ACTIVITIES: ----- -----
<S> <C> <C>
Net Income ......................................................................... $ 2,880 $ 1,746
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses .................................................. 225 300
Provision for losses on real estate acquired
in settlement for loans ................................................. (3) 253
Provision for depreciation and amortization ................................ 150 135
Accretion of fees on loans ................................................. 58 (387)
Amortization of premiums (accretion of discounts) on loans
mortgage-backed securities and investments ............................. (178) 41
Amortization of core deposit and other intangibles ......................... 404 102
Realized mortgage-backed and investment
securities losses (gains), net ........................................... 104 0
Realized mortgage loan losses (gains), net ................................. 0 (119)
Decrease (increase) in accrued interest receivable ......................... (446) 187
Increase (decrease) in accrued interest payable ............................ (421) (858)
Loan origination fees ...................................................... 80 361
Other, net ................................................................. (268) (206)
--------- ---------
Net Cash Provided by Operating Activities .................................. 2,585 1,555
INVESTING ACTIVITIES:
Proceeds from sales of investment securities available
for sale ......................................................................... 2,210 0
Proceeds from maturities of investment securities held to maturity.................. 1,300 500
Proceeds from amortization of securities available for sale ........................ 2,223 0
Proceeds from amortization of investment securities held to maturity................ 1,521 5,812
Purchases of securities available for sale ......................................... 0 (3,800)
Purchases of investment securities held to maturity................................. (1,400) (9,993)
Principal payments on mortgage-backed securities available for sale ................ 1,020 0
Principal payments on mortgage-backed securities held to maturity................... 2,066 3,816
Purchases of mortgage-backed securities held to maturity............................ (28,810) 0
Principal payments on loans receivable ............................................. 20,272 41,873
Loan originations .................................................................. (37,752) (52,410)
Proceeds from sales of loans ....................................................... 354 9,918
Proceeds from sales of real estate acquired in
settlement of loans ............................................................. 1,332 1,266
Purchases of premises and equipment ................................................ (607) (131)
--------- ---------
Net Cash Used by Investing Activities ...................................... (36,271) (3,149)
FINANCING ACTIVITIES:
Net increase (decrease) in Passbook, NOW and Money
Market Accounts .................................................................. (13,978) 10,969
Net increase (decrease) in certificate accounts .................................... 37 (4,496)
Borrowings under Federal Home Loan Bank advances ................................... 19,745 0
Principal payments under Federal Home Loan Bank advances ........................... (8,975) 0
Net increase (decrease) in borrowed money .......................................... 27,407 0
Net increase in advance payments by borrowers
for taxes and insurance .......................................................... 5,098 3,428
Proceeds from exercise of stock options and dividends reinvested ................... 151 284
Proceeds from sale of common stock ................................................. 16,673 0
Cash dividends ..................................................................... (839) (585)
--------- ---------
Net Cash Provided by Financing Activities .................................. 45,319 9,600
--------- ---------
Increase (decrease) in cash and cash equivalents ........................... 11,633 8,006
Cash and cash equivalents at beginning of period .................................... 24,652 21,958
--------- ---------
Cash and cash equivalents at end of period ................................. $ 36,285 $ 29,964
========= =========
NON-CASH INVESTING ACTIVITIES:
Transfers of loans to foreclosed real estate ....................................... $ 367 $ 213
========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
EAGLE FINANCIAL CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1994 AND 1993
(1) Basis of Presentation
---------------------
Eagle Financial Corp. (the "Company") is the holding company and parent of
Eagle Federal Savings Bank ("Eagle Federal"). Eagle Federal serves customers
from twenty three branch offices located in Hartford, Litchfield and
northern Fairfield counties.
The accompanying unaudited, consolidated financial statements include all
adjustments of a normal, recurring nature which are, in the opinion of
management, necessary for a fair presentation. The results of operations for
the three-month periods ended December 31, 1994 and 1993 are not necessarily
indicative of the results which may be expected for the entire fiscal year.
The accompanying financial statements should be read in conjunction with the
financial statements contained in the Company's 1994 annual report on Form
10-K.
(2) Accounting Pronouncements
--------------------------
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." SFAS No. 115 requires 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 can 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 gains or losses for trading securities are included in earnings.
Unrealized holding gains or losses for securities available for sale are
excluded from earnings and reported as an increase or decrease in
shareholders' equity, net of estimated income taxes.
Upon adoption of SFAS No. 115, $71.7 million of investment and
mortgage-backed securities were classified as available for sale which
resulted in the net unrealized loss on those securities of $1.1 million, net
of an income tax benefit of $358,000, being shown as a reduction to
shareholders' equity. No investment or mortgage-backed securities were
classified as trading securities.
The amortized cost and estimated fair values of investment and
mortgage-backed securities at December 31, 1994 is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for Sale Cost Gains Losses Value
------------------ --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Investment securities:
Mutual fund investments $15,405 $0 ($748) $14,657
U.S. Treasury & Agency securities 25,265 6 (483) 24,788
Collateralized mortgage obligations 8,773 0 (385) 8,388
Corporate and other securities 17,745 4 (750) 16,999
------ ----- ----- ------
67,188 10 (2,366) 64,832
Mortgage-backed securities:
FHLMC 13,080 0 (267) 12,813
FNMA 4,619 0 (173) 4,446
GNMA 0 0 0 0
------ ----- ----- ------
17,699 0 (440) 17,259
------ ----- ----- ------
Total Available for Sale $84,887 $10 ($2,806) $82,091
====== ===== ===== ======
</TABLE>
At December 31, 1994, the net unrealized loss on securities available for
sale of $2,796,000 net of income tax benefits of $1,146,000, has been shown
as a reduction to shareholders' equity.
<PAGE>
(2) Accounting Pronouncements
(Continued)
---------------------------
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to Maturity Cost Gains Losses Value
------------------ --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Investments:
U.S. Treasury & Agency securities $ 3,500 $8 ($51) $ 3,457
Collateralized mortgage obligations 36,954 25 (1,944) 35,035
Corporate and other securities 2,367 6 0 2,373
------- ---- ------ ------
42,821 39 (1,995) 40,865
Mortgage-backed securities:
FHLMC 66,694 0 (1,545) 65,149
FNMA 9,707 0 (792) 8,915
GNMA 416 15 (7) 424
Private Placement 131 0 (4) 127
------- ---- ------ ------
76,948 15 (2,348) 74,615
------- ---- ------ ------
Total Held to Maturity $119,769 $54 ($4,343) $115,480
======= ==== ====== ======
</TABLE>
Proceeds from sales of investment and mortgage-backed securities available
for sale were $2,106,000 in the three months ended December 31, 1994. Gross
realized gains and losses were $89,000 and $194,000, respectively, in the
three months ended December 31, 1994.
The amortized costs and estimated fair values of debt securities at December
31, 1994, by contractual maturity, are shown below (dollars in thousands):
Available for Sale Amortized Fair
-------------------- Cost Value
------ ------
Due after one year through five years $45,202 $44,089
Due after five years through ten years 0 0
Due after ten years 39,685 38,002
------ ------
Total Available for Sale $84,887 $82,091
====== ======
Held to Maturity
--------------------
Due after one year through five years $4,711 $4,601
Due after five years through ten years 11,840 11,343
Due after ten years 103,218 99,536
------ ------
Total Held to Maturity $119,769 $115,480
====== ======
(3) Shareholders' Equity
----------------------
In the first quarter of fiscal 1995, the Company completed a common stock
offering in which 862,310 new shares of common stock were sold (or 948,541
shares sold after giving effect to a 10% stock dividend declared in January,
1995), resulting in net proceeds of approximately $16.7 million. The additional
capital was raised primarily to increase the Bank's core capital ratio, which
had decreased as a result of its recent substantial increase in asset size as a
result of the Bank of Hartford acquisition. The new capital should also increase
the market liquidity of the Eagle Financial's stock and may assist the Company
in future acquisition activity.
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL - Eagle Financial Corp. (the "Company") is a $1.12 billion savings bank
holding company and parent to Eagle Federal Savings Bank (the "Bank"). The Bank
is a federally chartered savings bank headquartered in Bristol, Connecticut,
which conducts business from 23 banking offices located in Hartford, Litchfield,
and northern Fairfield Counties. The primary business of the Bank is to provide
consumer banking services in the communities in Connecticut that it serves. The
Bank primarily invests its funds in first mortgage loans on one-to-four family
residential real estate in Connecticut. The Bank's major source of funds is
deposits from the communities in which its banking offices are located.
The Bank's earnings depend largely on its net interest income, which is the
difference between interest earned on its loans and investments versus the
interest paid on its deposits and borrowed funds. Additional earnings are
derived from a variety of financial services provided to customers, mainly
deposit and loan products.
In the first quarter of fiscal 1995, the Company completed a common stock
offering in which 862,310 new shares of common stock were sold (or 948,541
shares after giving effect to a 10% stock dividend declared in January, 1995)
resulting in net proceeds of approximately $16.7 million. The additional capital
was raised primarily to increase the Bank's core capital ratio, which had
decreased as a result of its recent substantial increase in asset size as a
result of The Bank of Hartford acquisition in June, 1994. The additional capital
may also assist the Company in making further acquisitions and should increase
the market liquidity of its common stock.
In January, 1995, the Company declared a 10% stock dividend in addition to its
regular quarterly cash dividend of $0.21 per share. As a result of the stock
dividend, each shareholder will receive one additional share of Eagle Financial
common stock for every ten shares owned on February 15, 1995. The shareholders
will receive a $0.21 per share cash dividend based upon the new, increased
number of shares held.
LIQUIDITY - As a member of the Federal Home Loan Bank System, the Bank is
required to maintain liquid assets at 5% of its net withdrawable deposits plus
short-term borrowings. At December 31, 1994, Eagle Federal was in compliance
with the Federal Home Loan Bank liquidity requirements having a liquidity ratio
of 8.42% compared to 7.72% at September 30, 1994.
The Bank's principal sources of funds include deposits, loan payments (including
interest, amortization of principal and prepayments), earnings and amortization
on investments, maturing investments and Federal Home Loan Bank advances and
other borrowings. The Bank historically has not been an active seller of loans.
Principal uses of funds include loan originations and investment purchases,
payments of interest on deposits and payments to meet operating expenses. At
December 31, 1994, the Bank had approximately $43 million in loan commitments
outstanding, including $24.5 million in available home equity lines of credit
and $5.0 million in amounts due borrowers for construction loan advances. It is
expected that these and future loans will be funded by deposits, loan
repayments, investment maturities and amortization and borrowings. The Bank has
the capacity to borrow up to approximately $613 million in advances from the
Federal Home Loan Bank of Boston and will continue to consider this source of
funds for lending. Federal Home Loan Bank advances at December 31, 1994 were
$42.5 million compared to $31.8 million at September 30, 1994. Other borrowed
money was $35.2 million at December 31, 1994 compared to $7.8 million at the
start of the quarter.
Loan originations for the three months ended December 31, 1994 were $37.8
million compared to $52.4 million for the same period in 1993 and there were no
loans purchased in either period. There were $354,000 loans sold during the
three month period ended December 31, 1994, compared to $9.9 million during the
same period of 1993.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
It has been the Bank'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. Debt securities (including mortgage-backed
securities) are also classified as "available for sale" when appropriate,
primarily to meet the Bank's regulatory, liquidity requirements, and accounted
for at market value. Equity securities and mutual fund investements are also
classified as available for sale and accounted for at market value. When a
security available for sale is sold, the proceeds are used to fund loans when
deposit inflows are not adequate, the rates offered on Federal Home Loan Bank
advances are not favorable, and liquidity ratios support such sales. The Bank
also occasionally sells securities available for sale to restructure an
asset/liability mismatch. There were $2.2 million of securities sold during the
three month period ended December 31, 1994. There were no securities sold in the
first quarter of fiscal 1994.
REGULATORY CAPITAL REQUIREMENTS - The Bank is required by the Office of Thrift
Supervision ("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 December 31, 1994 exceeded the currently
applicable tangible, core and risk-based capital requirements as the following
chart indicates (in thousands):
OTS Requirement Actual Excess
-------------------------------------------------------
Tangible Capital $16,582 1.5% $71,817 6.50% $55,235
Core Capital 33,167 3.0% 72,031 6.52% 38,864
Risk-based Capital 42,751 8.0% 75,376 14.11% 32,625
ASSET/LIABILITY MANAGEMENT - The primary component of Eagle Financial's earnings
is net interest income. Eagle's asset/liability management strategy is to
maximize net interest income over time by reducing the impact of fluctuating
interest rates. This is accomplished by matching the mix and maturities of its
assets and liabilities. At the same time Eagle's asset/liability strategies for
managing interest rate risk must also accommodate customer demands for
particular types of deposit and loan products. Eagle uses various
asset/liability management techniques in an attempt to maintain a profitable mix
of financial assets and liabilities, provide deposit and loan products that meet
the needs of its market area, and maintain control over interest rate risk
resulting from changes in interest rates.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
Strategies employed by Eagle to manage the rate sensitivity of its assets
include origination of adjustable rate mortgage and consumer loans and purchase
of short-term and adjustable rate investments. Eagle Financial also attempts to
reduce the rate sensitivity of its liabilities by emphasizing core deposits,
which are less sensitive to changes in interest rates, attracting longer term
certificates of deposits when the market permits, and using long term Federal
Home Loan Bank advances. Management will continue to monitor the impact of its
borrowing and lending policies on Eagle Financial's interest rate sensitivity.
NON-PERFORMING ASSETS - At December 31, 1994, Eagle Financial had total
non-performing assets in the amount of $12.0 million, or 1.07% of total assets,
including $9.0 million in non-performing loans and $3.0 million in real estate
owned and in-substance foreclosures. Loan loss reserves totaled $8.4 million, or
94% of total non-performing loans. Most of the real estate owned is in
residential properties except for one local piece of commercial real estate
valued at $215,000 and a $55,000 land development loan. At September 30, 1994,
Eagle Financial had total non-performing assets in the amount of $12.3 million,
or 1.15% of total assets, including $8.0 million in non-performing loans and
$4.3 million in real estate owned and in-substance foreclosures. Eagle
Financial's loan delinquencies (greater than 60 days) totaled $11.2 million, or
1.36% of total loans, at December 31, 1994 compared to $9.5 million, or 1.17% of
total loans, at September 30, 1994. The following table represents a breakdown
of non-performing assets as of December 31, 1994 (in thousands):
Foreclosed
Real Estate & Total
Non-performing In-substance Non-performing % of
Loans Foreclosures Assets Total
--------------- -------------- --------------- --------
Mortgage Loans -
Residential $7,597 $2,751 $10,348 86.5%
Commercial R.E. 0 215 215 1.8%
Land Development 0 55 55 .5%
Consumer loans 11 0 11 .1%
Home equity loans 1,329 0 1,329 11.1%
------------ ------------- -------------- ------
Total $8,937 $3,021 $11,958 100.0%
============ ============= ============== ======
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
Management continued to add to the loan loss allowance during the quarter ended
December 31, 1994 based upon continued uncertainty in the local economy.
Provisions for loan losses totaled $225,000 for the quarter. Management monitors
the adequacy of the allowances for losses on loans and real estate owned on an
ongoing basis. While management uses available information to recognize losses
on loans and real estate owned, future additions to the allowances may be
necessary based on changes in economic conditions, particularly in Connecticut.
In connection with the determination of the allowances for losses on loans and
real estate owned, management obtains independent appraisals for significant
properties.
In addition, 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 the examination.
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
GENERAL - Eagle Financial's net income for the three month period ended December
31, 1994 was $2.9 million, or $0.65 per share, a 64.9% increase over the same
period in 1993. Net interest income increased $2.8 million, or 40.0%, in the
1994 period compared to the three months ended December 31, 1993. Non-interest
income increased $186,000, or 23.5%, in the three months ended December 31,
1993. Other expenses increased $1.2 million, or 26.2% in the first quarter of
fiscal 1995.
INTEREST INCOME - Interest income from loans and investments increased $5.0, or
36.4%, for the three months ended December 31, 1994 compared to the same period
in 1993. The growth in interest income is attributable to both growth in earning
assets resulting from the Bank's acquisition of the Bank of Hartford in June,
1994, and an increase in the yield on interest earning assets as a result of
rising interest rates.
INTEREST EXPENSE - Interest expense on deposits and borrowed money increased
$2.2 million, or 32.5%, for the three months ended December 31, 1994 compared to
the same period in 1993. The increase in interest expense is attributable to
both growth in deposits resulting from the Bank's assumption of deposits as part
of the Bank of Hartford acquisition, and an increase in other borrowed money.
NET INTEREST INCOME - Net interest income increased $2.8 million, or 40.0%, for
the first quarter of fiscal 1995 compared to the first quarter of fiscal 1993.
The increase is attributable to both growth in earning assets as a result of the
Bank of Hartford acquisition and a widening of the Company's interest rate
spread.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
PROVISION FOR LOAN LOSSES - The provision for loan losses totaled $225,000 in
the three month period ended December 31, 1994 compared to $300,000 in the three
month period ended December 31, 1993. Management monitors the adequacy of the
allowance for loan losses and periodically makes additions based upon an ongoing
assessment of the loan portfolio. These provisions are based on an evaluation of
the loan portfolio, past loan loss experience, current 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. Eagle Financial's allowance for loan losses is currently $8.4
million, which represents 94% of total non-performing loans.
OTHER INCOME - Non-interest income increased $186,000, or 23%, for the three
months ended December 31, 1994 versus the same period in the prior year. The
increase is primarily attributable to a $409,000, or 61% increase in customer
service fees and other income which was partly offset by a $104,000 net loss on
the sale of investment securities in the first quarter of fiscal 1995 and a
$119,000 gain on sale of loans in the first quarter of fiscal 1994.
OTHER EXPENSES - Non-interest expenses increased $1.2 million or 26%, to during
the three months ended December 31, 1994 compared to the three months ended
December 31, 1993. The largest contributing factor to the increase relates to
the acquisition of the Bank of Hartford. A $570,000 increase in compensation,
taxes and benefits and a $ 169,000 increase in occupancy expenses were both due
primarily to the operation of six additional branch offices acquired in that
transaction. An increase of $200,000 in federal insurance premiums reflects the
increase in insurable deposits from the acquisition, while advertising and data
processing expense increases are also due, in part, to the acquisition. In
general, most other operating expenses such as office supplies, postage and
telephone increased due to the operation of six additional branches.
<PAGE>
EAGLE FINANCIAL CORP.
PART II
Item 1 Legal Proceedings
- -----------------------------
Not applicable
Item 2 Changes in Securities
- -----------------------------
Not applicable
Item 3 Defaults upon Senior Securities
- ----------------------------------------
Not applicable
Item 4 Submission of Matter to a Vote of Security Holders
- -------------------------------------------------------------
The annual meeting of shareholders of Eagle Financial Corp. was held on January
24, 1995, at which time the following proposals were considered and voted upon;
(1) the election of two directors for a three-year term; (2) the approval of the
amendment to Eagle's 1991 Stock Option Plan; and (3) the ratification of the
appointment by the Board of Directors of the firm of KPMG Peat Marwick as
independent auditors of the Company for the fiscal year ending September 30,
1995.
With respect to Proposal One, the following votes were cast in the election of
directors:
Withhold Authority
Nominees For To Vote
------------------- ---------- -------------------
Richard H. Alden 2,850,476 288,734
Ernest J. Torizzo 2,872,005 267,205
With respect to Proposal Two, 1,988,435 (49.7% of the total eligible votes) were
cast FOR the approval of the amendment to Eagle's 1991 Stock Option Plan,
533,336 (13.3% of the total eligible votes) were cast AGAINST the amendment, and
35,826 (.89% of the total eligible votes) were abstention.
With respect to Proposal Three, 3,018,767 votes (75.4% of the total eligible
votes) were cast FOR ratification of the appointment of the firm of KPMG Peat
Marwick as independent auditors of the Company, 16,178 votes (.40% of the total
eligible votes) were against such ratification, and 31,075 votes (.77% of the
total eligible votes) were abstention.
Item 5 Other Information
- ---------------------------
Not applicable
Item 6 Exhibits and Reports on Form 8-K
- ------------------------------------------
On January 30, 1995 Eagle filed a report on Form 8-K which reported under Item 5
- - Other Events, an announcement that the Board of Directors of Eagle Financial
Corp. declared a 10% stock dividend and a regular quarterly cash dividend of
$0.21 per share. Both dividends are payable on March 1, 1995 to shareholders of
record at the close of business on February 15, 1995.
<PAGE>
EAGLE FINANCIAL CORP.
SIGNATURES
Pursuant to the requirements of The Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE FINANCIAL CORP.
Date: By: /s/ Mark J. Blum
-------------------------
Mark J. Blum
Vice President and
Chief Financial Officer
Date: By: /s/ Barbara S. Mills
-------------------------
Barbara S. Mills
Vice President and
Treasurer
