<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 1, 1996
CFX CORPORATION
---------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW HAMPSHIRE 1-10633 02-0402421
(State or other (Commission (I.R.S. employer
jurisdiction file number) identification
of incorporation) no.)
</TABLE>
<TABLE>
<S> <C>
102 MAIN STREET, KEENE, NEW HAMPSHIRE
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (603) 352-2502
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
CONSUMMATION OF MERGER TRANSACTIONS
On July 1, 1996, the Registrant consummated the following previously
announced transactions:
(1) the merger of The Safety Fund Corporation, a Massachusetts corporation
headquartered in Fitchburg, Massachusetts ("Safety Fund"), with and into the
Registrant through a series of intermediate transactions (the "Safety Fund
Merger"); and
(2) the merger of Milford Co-operative Bank, a New Hampshire state chartered
co-operative bank headquartered in Milford, New Hampshire ("Milford"), with and
into Registrant's wholly owned subsidiary, CFX Bank, a New Hampshire state
chartered savings bank headquartered in Keene, New Hampshire (the "Milford
Merger").
The consummation of the foregoing transactions is discussed in a press
release attached hereto as Exhibit 99.1.
THE SAFETY FUND MERGER
In the Safety Fund Merger, each of Safety Fund's 1,665,000 outstanding
shares of common stock (including all related preferred stock purchase rights)
was converted into 1.700 shares of the Registrant's common stock and cash in
lieu of fractional shares. At the closing, Safety Fund had total assets of
approximately $297.1 million and total deposits of approximately $252.5 million.
The transaction was accounted for as a pooling of interests. Safety Fund
National Bank, Fitchburg, Massachusetts, Safety Fund's principal subsidiary,
will continue to operate under its present name and charter as a wholly owned
subsidiary of the Registrant.
Immediately following the closing, in accordance with the Agreement and Plan
of Merger dated January 5, 1996 by and between the Registrant and Safety Fund
(the "Safety Fund Merger Agreement"), the following directors of Safety Fund
were appointed to the Registrant's board of directors, increasing the number of
Registrant's directors from 11 to 15: Christopher W. Bramley, P. Kevin Condron,
William E. Aubuchon, III, and David R. Grenon.
The Safety Fund Merger Agreement was previously filed as Exhibit 2 of the
Registrant's Schedule 13D filed on January 16, 1996 with respect to Safety
Fund's common stock and incorporated by reference as Exhibit 2 of the
Registrant's Current Report on Form 8-K dated January 16, 1996. On March 28,
1996, the Registrant and Safety Fund executed an amendment to the Safety Fund
Merger Agreement deleting Section 2.6 of the Safety Fund Merger Agreement,
relating to additional merger consideration, and making certain other conforming
changes. The amendment is attached hereto as Exhibit 2.1. On April 30, 1996, the
Registrant and Safety Fund executed a second amendment to the Safety Fund Merger
Agreement correcting certain scrivener's errors in Section 6.13 of the Safety
Fund Merger Agreement. The second amendment is attached hereto as Exhibit 2.2.
On June 15, 1996, as contemplated by the Safety Fund Merger Agreement, CFX
Acquisition Corporation, a wholly owned subsidiary of the Registrant formed
solely for the purpose of facilitating the Safety Fund Merger, executed a
joinder to the Safety Fund Merger Agreement, which joinder was consented to by
the Registrant and Safety Fund. The joinder is attached hereto as Exhibit 2.3.
THE MILFORD MERGER
In the Milford Merger, each of Milford's 689,000 shares of common stock
outstanding was converted into 2.6446 shares of the Registrant's common stock
and cash in lieu of fractional shares. At the closing, Milford had total assets
of approximately $160.1 million and total deposits of approximately $141.3
million. The transaction was accounted for as a pooling of interests. Upon
consummation of the Milford Merger, Milford was merged with and into CFX Bank,
and Milford ceased operating under its own name and charter. On June 25, 1996,
prior to the consummation of the Milford Merger and consistent with Milford's
prior practices, Milford declared a regular semi-annual dividend in the amount
of $0.45 per share of Milford common stock outstanding as of record on June 28,
1996.
The Agreement and Plan of Merger dated February 9, 1996 by and between CFX
Bank and Milford and joined in by the Registrant (the "Milford Merger
Agreement"), and a related Agreement
2
<PAGE>
and Plan of Reorganization dated February 9, 1996 by and among the Registrant,
CFX Bank and Milford (the "Milford Reorganization Agreement"), were previously
filed as Exhibits 2.1 and 2.2, respectively, to the Registrant's Current Report
on Form 8-K dated February 16, 1996. The Registrant and Milford executed an
amendment to the Milford Reorganization Agreement on April 29, 1996, making
certain technical corrections to the Milford Reorganization Agreement. The
amendment is attached hereto as Exhibit 2.4.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS.
(1) Audited financial statements of Safety Fund as of December 31, 1995
and 1994 and for the years ended December 31, 1995, 1994 and 1993, and the
independent auditors' reports thereon, were previously included on pages F-1
through F-36 of the Registrant's definitive proxy statement for the 1996
annual meeting of the Registrant's shareholders and were incorporated by
reference into Part III of the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
(2) Unaudited interim financial statements of Safety Fund as of March
31, 1996 and 1995 and for the quarters then ended are filed herewith as
Exhibit 99.2.
(3) Audited financial statements of Milford as of June 30, 1995 and 1994
and for the years ended June 30, 1995, 1994 and 1993, and the independent
auditors' reports thereon, and the unaudited interim financial statements of
Milford as of December 31, 1995 and December 31, 1994 and for the six months
then ended, were previously filed as Exhibit 99.1 to the Registrant's
Current Report on Form 8-K dated April 12, 1996.
(4) Unaudited interim financial statements of Milford as of March 31,
1996 and 1995 and the nine months then ended are filed herewith as Exhibit
99.3.
(b) PRO FORMA FINANCIAL INFORMATION.
(1) Unaudited pro forma combined financial information as of December
31, 1995 and for the years ended December 31, 1995, 1994 and 1993, giving
effect to the Safety Fund Merger and the Milford Merger, were previously
included on pages 46-53 of the Registrant's definitive proxy statement for
the 1996 annual meeting of the Registrant's shareholders and were
incorporated by reference into Part III of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.
(2) Unaudited pro forma combined financial information as of March 31,
1996 and for the three months ended March 31, 1996 and 1995, giving effect
to the Safety Fund Merger and the Milford Merger, are filed herewith as
Exhibit 99.4.
(c) Exhibits.
<TABLE>
<S> <C>
2.1 First Amendment to the Safety Fund Merger Agreement dated March 28, 1996.
2.2 Second Amendment to the Safety Fund Merger Agreement dated April 30, 1996.
2.3 Joinder to the Safety Fund Merger Agreement dated June 15, 1996.
2.4 Amendment to the Milford Reorganization Agreement dated April 29, 1996.
99.1 Press Release dated July 1, 1996
99.2 Unaudited interim financial statements of Safety Fund as of March 31, 1996.
99.3 Unaudited interim financial statements of Milford as of March 31, 1996.
99.4 Unaudited pro forma combined financial information as of March 31, 1996 and for the
three months ended March 31, 1996 and 1995, giving effect to the Safety Fund Merger
and the Milford Merger.
</TABLE>
3
<PAGE>
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.
CFX CORPORATION
<TABLE>
<S> <C>
Date: July 16, 1996 By: /s/ Mark A. Gavin
--------------------------------------------
Mark A. Gavin,
CHIEF FINANCIAL OFFICER
</TABLE>
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION IN
SEQUENTIALLY
NUMBERED COPY
- -----------------
<C> <S>
2.1 First Amendment to the Safety Fund Merger Agreement dated March 28, 1996.
2.2 Second Amendment to the Safety Fund Merger Agreement dated April 30, 1996.
2.3 Joinder to the Safety Fund Merger Agreement dated June 15, 1996.
2.4 Amendment to the Milford Reorganization Agreement dated April 29, 1996.
99.1 Press Release dated July 1, 1996.
99.2 Unaudited interim financial statements of Safety Fund as of March 31, 1996.
99.3 Unaudited interim financial statements of Milford as of March 31, 1996.
99.4 Unaudited pro forma combined financial information as of March 31, 1996 and for the three months
ended March 31, 1996 and 1995, giving effect to the Safety Fund Merger and the Milford Merger.
</TABLE>
5
<PAGE>
EXHIBIT 2.1
FIRST AMENDMENT TO THE SAFETY FUND MERGER AGREEMENT
The Safety Fund Corporation
470 Main Street
Fitchburg, Massachusetts 01420
March 28, 1996
CFX Corporation
102 Main Street
Keene, New Hampshire 03431
Attention: Mark A. Gavin
Chief Financial Officer
Re: Amendment to Agreement and Plan of Merger
Ladies and Gentlemen:
Reference is made to that certain Agreement and Plan of Merger dated as of
January 5, 1996 (the "Agreement"), by and between CFX Corporation, a New
Hampshire corporation, and The Safety Fund Corporation, a Massachusetts
corporation. Capitalized terms used but not defined herein shall have the
meanings defined in the Agreement.
We have discussed the need to amend the Agreement so as to eliminate
provisions for "Additional Merger Consideration", as provided in Section 2.6 of
the Agreement. We propose the following:
1. DELETION AND RENUMBERING. Section 2.6 of the Agreement is deleted in its
entirety, and Sections 2.7 through 2.12, respectively, are hereby renumbered as
Sections 2.6 through 2.11. All cross references to Section 2.6 are hereby
deleted, and all cross references to former Sections 2.7 through 2.12 shall be
appropriately renumbered.
2. AMENDMENT TO SECTION 3.3. Section 3.3 of the Agreement is amended by
deleting the words "two-thirds" in the fourth sentence thereof and replacing
them with the words "a majority."
3. SCHEDULE A. Attached hereto for the convenience of the parties as
Schedule A are the pages of the Agreement affected by this Amendment Agreement,
with the changes marked. Deletions appear as struck-through text surrounded by
[ ], and additions appear as double underlined text.
4. NO OTHER AMENDMENTS. Except as specifically amended hereby, the
Agreement shall remain in full force and effect.
5. COUNTERPARTS. This Amendment Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
We would appreciate your indicating your concurrence that the foregoing
represents our mutual agreement by countersigning below and returning a copy of
this Amendment Agreement to the undersigned.
THE SAFETY FUND CORPORATION
By: ____/s/_Christopher W. Bramley____
Christopher W. Bramley
PRESIDENT
6
<PAGE>
By: ____/s/_Martin F. Connors, Jr.____
Martin F. Connors, Jr.
TREASURER
Accepted and agreed to:
CFX CORPORATION
By: ________/s/_Peter J. Baxter_______
Peter J. Baxter
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
7
<PAGE>
EXHIBIT 2.2
SECOND AMENDMENT TO THE SAFETY FUND MERGER AGREEMENT
THE SAFETY FUND CORPORATION
470 MAIN STREET
FITCHBURG, MASSACHUSETTS 01420
APRIL 30, 1996
Peter J. Baxter
President and Chief Executive Officer
CFX Corporation
102 Main Street
Keene, New Hampshire 03431
Dear Peter:
We have discussed the need to further correct a scrivener's error in the
Agreement and Plan of Merger by and between Safety Fund and CFX (the
"AGREEMENT"). We have agreed that Section 6.13 of the Agreement shall be amended
to add the following (inadvertently deleted) language immediately after the word
"Agreement" in the final line of Section 6.13:
", and (iv) Buyer Sub to execute one or more counterparts of this
Agreement and to deliver at least one such counterpart so executed to
Safety Fund, whereupon Buyer Sub shall become a party to and be bound by
this Agreement.".
We would appreciate your indicting your concurrence that this correction
should be made by countersigning below and returning a copy of this letter to
the address above.
THE SAFETY FUND CORPORATION
By: ____/s/_Christopher W. Bramley____
Christopher W. Bramley
PRESIDENT
By: ____/s/_Martin F. Connors, Jr.____
Martin F. Connors, Jr.
TREASURER
Accepted and agreed to:
CFX CORPORATION
__________/s/_Peter J. Baxter_________
Peter J. Baxter
PRESIDENT AND CHIEF EXECUTIVE OFFICER
8
<PAGE>
EXHIBIT 2.3
JOINDER IN AGREEMENT AND PLAN OF MERGER
JOINDER IN AGREEMENT AND PLAN OF MERGER dated as of June 15, 1996
("Joinder"), by CFX Acquisition Corporation, a Massachusetts corporation (the
"Corporation"), and agreed to by CFX Corporation, a New Hampshire corporation
("CFX"), and The Safety Fund Corporation, a Massachusetts corporation ("Safety
Fund").
WHEREAS, CFX and Safety Fund entered into an Agreement and Plan of Merger
(the "Merger Agreement") on January 5, 1996.
WHEREAS, the Merger Agreement was subsequently amended by CFX and Safety
Fund on March 28 and April 30, 1996 by written amendments (the "Amendments").
WHEREAS, the Merger Agreement contemplates the formation of the Corporation
and the merger of the Corporation with and into Safety Fund (the "Merger") and
the subsequent merger of the surviving corporation with and into CFX.
WHEREAS, the Corporation was organized as a wholly owned direct subsidiary
of CFX and was formed solely for the purpose of facilitating the Merger.
NOW, THEREFORE, in consideration of the covenants, representations,
warranties and agreements contained in the Merger Agreement, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation hereby agrees as follows:
1. JOINDER. The Corporation agrees to be bound by the terms and conditions
of the Merger Agreement, as amended by the Amendments and any other amendments
thereto. The Corporation intends that the execution of this Joinder shall be
deemed an execution of the Merger Agreement and each of the Amendments as fully
as if executed by the Corporation on the original of the Merger Agreement and
the Amendments.
2. CONSENT. By executing this Joinder, each of CFX and Safety Fund consents
and agrees to the Corporation's joinder in the Merger Agreement and the
Amendments.
3. NOTICES. All notices to the Corporation under Section 12.4 of the Merger
Agreement shall be sent to the Corporation in care of, and to the address
specified for, CFX.
4. COUNTERPARTS. This Joinder may be executed in one or more counterparts
all of which shall be considered one and the same agreement and each of which
shall be deemed an original.
IN WITNESS WHEREOF, the Corporation has executed this Joinder as of the day
and year first written above.
CFX ACQUISITION CORPORATION
By: ________/S/_MARK A. GAVIN_______
Mark A. Gavin
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
TREASURER AND CHIEF FINANCIAL
OFFICER
9
<PAGE>
AGREED TO BY:
<TABLE>
<S> <C>
CFX CORPORATION THE SAFETY FUND CORPORATION
By: /S/ PETER J. BAXTER By: /S/ CHRISTOPHER W. BRAMLEY
Peter J. Baxter Christopher W. Bramley
PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /S/ MARTIN F. CONNORS, JR.
Martin F. Connors, Jr.
TREASURER
</TABLE>
10
<PAGE>
EXHIBIT 2.4
AMENDMENT TO THE MILFORD REORGANIZATION AGREEMENT
AMENDMENT NO. 1
Pursuant to the provisions of Section 6.5 of the Agreement and Plan of
Reorganization (the "Agreement) dated as of February 9, 1996 by and among
Milford Cooperative Bank ("Milford") and CFX Corporation ("CFX") and CFX Bank
("CFX Bank"), the parties hereby wish to amend the Agreement, as appropriate, to
include references to Milford's present legal counsel.
Accordingly, Section 7.4 is hereby revised to replace the references to
Milford's legal counsel as follows:
Thacher Proffitt & Wood
1500 K Street, N.W.
Suite 200
Washington, D.C. 20005
Attn: Richard A. Schaberg, Esq.
Telephone: (202) 347-8400
Facsimile No.: (202) 347-5862 or (202) 347-6238
Additionally, Section 5.3(f) of the Agreement is hereby revised to read as
follows:
f) CFX and Bank shall have received an opinion of Thacher Proffitt &
Wood, counsel to Milford, dated the Closing Date, as to such matters
as CFX and Bank may reasonably request with respect to the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this amendment to the Agreement to be executed in
counterparts by their duly authorized officers and their corporate seal to be
hereunto affixed and attested by their officers thereunto duly authorized, all
as of the date and year first above written.
MILFORD CO-OPERATIVE BANK
By: ______/s/_Richard D. D'Amato______
Richard D. D'Amato
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
CFX CORPORATION
By: _________/s/_Mark A. Gavin________
CFX BANK
By: _________/s/_Mark A. Gavin________
11
<PAGE>
EXHIBIT 99.1
CFX CORPORATION COMPLETES
SAFETY FUND AND
MILFORD CO/OPERATIVE MERGERS
KEENE, NH, JULY 1, 1996 -- CFX CORPORATION (AMEX: CFX) ANNOUNCED THAT IT
COMPLETED ITS MERGERS WITH THE SAFETY FUND CORPORATION AND MILFORD CO/OPERATIVE
BANK.
Pursuant to the definitive agreements, each of Safety Fund's 1,665,000
outstanding and Milford's 689,000 outstanding shares of common stock were
converted into 1.7 shares and 2.6446 shares, respectively, of the Company's
common stock, resulting in the issuance of 2,831,000 shares and 1,823,000
shares, respectively, of the Company's common stock to Safety Fund and Milford
shareholders. Cash will be paid in lieu of issuing fractional shares.
The Milford Co/operative was a state-chartered co/operative bank,
headquartered in Milford, New Hampshire. Milford was merged into CFX's New
Hampshire banking subsidiary, CFX Bank in the merger.
The Safety Fund Corporation was a bank holding company headquartered in
Fitchburg, Massachusetts. Safety Fund's subsidiary bank, Safety Fund National
Bank, will continue to operate as a subsidiary of CFX.
Both the Safety Fund and Milford mergers will be accounted for by the
pooling-of-interests method of accounting.
Peter J. Baxter, President and Chief Executive Officer of CFX Corporation
said, "We welcome the shareholders, customers and employees of Safety Fund and
Milford to the CFX family of community banks. As a combined company, all
customers will share in the many benefits of a larger and more diversified
community banking company."
CFX Corporation is a multi-bank holding company with total assets of $1.4
billion following the mergers. The Company's three banking subsidiaries are CFX
Bank, headquartered in Keene, New Hampshire, Orange Savings Bank, headquartered
in Orange, Massachusetts, and The Safety Fund National Bank, headquartered in
Fitchburg, Massachusetts. CFX Mortgage, Inc., CFX Bank's mortgage banking
subsidiary, services approximately $686 million in mortgage loans for others.
The Company operates 41 full service offices, 2 loan production offices, and 61
automated teller and remote service banking locations in New Hampshire and north
central Massachusetts, and operates a trust division with $349 million in assets
under management.
###
12
<PAGE>
EXHIBIT 99.2
UNAUDITED INTERIM FINANCIAL STATEMENTS OF SAFETY FUND
AS OF MARCH 31, 1996
13
<PAGE>
THE SAFETY FUND CORPORATION
CONSOLIDATED BALANCE SHEETS
_______________________________________________________________________________
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 11,273,097 $ 13,305,505
Federal funds sold 7,300,000 2,500,000
Investment securities available for sale (amortized cost
of $55,838,968 in 1996 and $62,427,502 in 1995) 56,340,118 63,737,909
Investment securities held to maturity (market value
of $57,853,257 in 1996 and $41,024,069 in 1995) 58,291,919 39,924,078
Loans 155,191,032 160,433,831
Less allowance for possible loan losses (6,977,286) (7,350,150)
------------------------------
Net loans 148,213,746 153,083,681
------------------------------
Premises and equipment, net 9,392,499 9,638,596
Accrued interest receivable 2,886,491 2,473,884
Other real estate owned, net 151,809 50,000
Deferred income tax asset, net 2,055,393 1,665,799
Other assets 1,235,134 1,103,800
------------------------------
Total assets $297,140,206 $287,483,252
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Interest bearing $187,001,375 $184,897,462
Noninterest bearing 65,510,848 67,891,000
------------------------------
Total deposits 252,512,223 252,788,462
Securities sold under repurchase agreements 18,617,807 11,119,611
Treasury tax and loan notes 3,304,639 1,156,804
Other liabilities 1,243,320 1,031,315
------------------------------
Total liabilities 275,677,989 266,096,192
------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $10 par value;
100,000 shares authorized, none issued
Common stock, $5 par value;
3,200,000 shares authorized
1,660,665 issued and outstanding 8,303,325 8,303,325
Surplus 7,584,846 7,584,846
Retained earnings 5,380,304 4,815,433
Net unrealized gain on investment securities
available for sale 193,742 683,456
------------------------------
Total stockholders' equity 21,462,217 21,387,060
------------------------------
Total liabilities and stockholders' equity $297,140,206 $287,483,252
==============================
</TABLE>
-1-
<PAGE>
THE SAFETY FUND CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
________________________________________________________________________________
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1996 1995
----------------------------
<S> <C> <C>
Interest income:
Interest on loans $3,641,350 $3,467,820
Interest and dividends on investment securities:
Available for sale 910,897 840,597
Held to maturity 866,066 794,874
Interest on federal funds sold 43,353 20,385
----------------------------
Total interest income 5,461,666 5,123,676
----------------------------
Interest expense:
Interest on deposits 1,798,024 1,554,336
Interest on borrowed funds 168,771 191,092
----------------------------
Total interest expense 1,966,795 1,745,428
----------------------------
Net interest income 3,494,871 3,378,248
Provision for possible loan losses 75,000 525,000
----------------------------
Net interest income after provision for possible loan losses 3,419,871 2,853,248
----------------------------
Noninterest income:
Trust fees 559,051 519,462
Service fees 294,252 258,383
Gains on loans sold, net 0 709
Gains on sales of investment securities
available for sale, net 0 781
Other 235,126 160,733
----------------------------
Total noninterest income 1,088,429 940,068
----------------------------
Noninterest expense:
Salaries and wages 1,451,452 1,474,866
Employee benefits 348,229 339,678
Occupancy, net 266,418 258,405
Equipment 290,001 292,738
Professional fees 195,026 198,059
Marketing 144,972 162,013
Expenses related to proposed merger 324,873 0
Deposit insurance 18,066 141,852
Other real estate owned, net 30,371 17,574
Directors' fees 64,800 61,300
Other 484,221 498,049
----------------------------
Total noninterest expense 3,618,429 3,444,534
----------------------------
Income before income taxes 889,871 348,782
Income tax expense 325,000 130,800
----------------------------
Net income $ 564,871 $ 217,982
============================
Net income per common share $.34 $.13
Weighted average shares outstanding 1,660,665 1,657,120
</TABLE>
-2-
<PAGE>
THE SAFETY FUND CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
________________________________________________________________________________
<TABLE>
<CAPTION>
Common Retained
Stock Surplus Earnings Other Total
------------- ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 $8,303,325 $7,584,846 $4,815,433 $ 683,456 $21,387,060
Net income - - 564,871 - 564,871
Reduction in unrealized gain on
investment securities available for
sale, net of income taxes - - - (489,714) (489,714)
------------- ------------- ------------- ------------ ------------
Balance, March 31, 1996 $8,303,325 $7,584,846 $5,380,304 $ 193,742 $21,462,217
============= ============= ============= ============ ============
</TABLE>
-3-
<PAGE>
THE SAFETY FUND CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
________________________________________________________________________________
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES: 1996 1995
------------- -------------
<S> <C> <C>
Net income $ 564,871 $ 217,982
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Proceeds from sale of mortgage loans - 78,009
Origination of mortgage loans held for sale - (77,300)
Repurchase of mortgage loans previously sold - (222,788)
Gains on mortgage loans sold, net - (709)
Depreciation and amortization 289,996 300,312
Gains on sales of investment securities available for sale, net - (781)
Amortization (accretion) of bond premiums and discounts, net 3,720 (50,685)
Provision for possible losses on loans and other real estate owned 75,000 541,333
Increase in accrued interest receivable (412,607) (521,505)
(Increase) decrease in other assets, net (308,143) 218,682
Increase (decrease) in other liabilities 212,005 (94,985)
--------------- -------------
Net cash provided by operating activities 424,842 387,565
--------------- -------------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Proceeds from sales of investment securities available for sale - 6,632,345
Proceeds from maturities of investment securities available for sale 9,000,000 2,000,000
Proceeds from maturities of investment securities held to maturity 5,294,739 179,954
Purchase of investment securities available for sale (2,430,078) -
Purchase of investment securities held to maturity (23,642,739) -
Increase in federal funds sold (4,800,000) (3,200,000)
(Increase) decrease in loans outstanding 4,794,935 (7,316,327)
Purchases of premises and equipment (43,899) (249,535)
--------------- -------------
Net cash used by investing activities (11,827,042) (1,953,563)
--------------- -------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Increase (decrease) in securities sold under repurchase agreements 7,498,196 (7,418,960)
Increase (decrease) in treasury tax and loan notes 2,147,835 (1,378,013)
Increase (decrease) in deposits (276,239) 9,812,230
--------------- -------------
Net cash provided by financing activities 9,369,792 1,015,257
--------------- -------------
DECREASE IN CASH AND DUE FROM BANKS (2,032,408) (550,741)
CASH AND DUE FROM BANKS, BEGINNING OF YEAR 13,305,505 15,223,830
--------------- -------------
CASH AND DUE FROM BANKS, END OF PERIOD $ 11,273,097 $14,673,089
=============== =============
Supplemental disclosures of cash flow information:
Cash paid during quarter for:
Interest $ 1,914,509 $ 1,628,364
Income taxes 288,000 141,901
Non-cash transactions:
Transfers from loans to other real estate owned 101,809 -
</TABLE>
-4-
<PAGE>
THE SAFETY FUND CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. The financial information furnished herein reflects all adjustments
which, in the opinion of management, are necessary for a fair
presentation of the financial position and results of operations for
interim periods. All such adjustments consist of normal recurring
accruals.
2. Results of operations for the three month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the entire
year.
3. The accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements included in the
Form 10-KSB for the year ended December 31, 1995.
4. Financial statements for interim periods, by their very nature, require
estimations which may result in greater imprecision than those associated
with annual audited financial statements.
5. Earnings per share are based upon the weighted average number of shares
outstanding during the period.
6. In accordance with the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
the Company has a net deferred tax asset. Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. As of March 31, 1996, the Company
had established a valuation allowance of $424,059 ($499,059 at December
31, 1995).
7. The "net unrealized gain on investment securities available for sale"
included in the stockholders' equity section of the Company's balance
sheet as of March 31, 1996 consists of three components:
<TABLE>
<S> <C>
Net unrealized gain on investment securities
available for sale, net of deferred income
taxes of $197,954 $ 303,196
Net unrealized loss related to investment
securities transferred during 1994 from the
available for sale portfolio to the held to
maturity portfolio, net of deferred income
taxes of $188,595 (288,861)
Net unrealized gain related to investment
securities transferred during 1995 from the
available for sale portfolio to the held to
maturity portfolio, net of deferred income
taxes of $117,133 179,407
----------
$ 193,742
==========
</TABLE>
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
8. As of March 31, 1996, the Company had commitments to extend credit of
approximately $33 million.
-6-
<PAGE>
EXHIBIT 99.3
MILFORD CO/OPERATIVE BANK
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1995
MARCH 31, 1996 ----------------
----------------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks.................................................... $ 2,099,564 $ 1,605,747
Interest bearing deposit accounts.......................................... 19,765,274 16,967,728
Securities (Note 4):
Available for sale at fair value (cost $34,159,006 at March 31, 1996 and
$31,672,830 at June 30, 1995)........................................... 33,852,285 31,681,762
Held to maturity at cost (fair value $29,340,452 at March 31, 1996 and
$38,058,105 at June 30, 1995)........................................... 29,686,396 38,623,602
Loans receivable, net...................................................... 70,194,322 60,818,640
Accrued interest receivable:
Loans.................................................................... 524,709 434,212
Securities............................................................... 572,317 877,349
Stock in Federal Home Loan Bank of Boston.................................. 714,000 655,100
Premises and equipment..................................................... 2,015,254 2,138,750
Real estate owned.......................................................... 71,222 36,055
Deferred federal income tax benefit........................................ 363,796 228,748
Other assets............................................................... 252,755 284,144
---------------- ----------------
Total assets........................................................... $ 160,111,894 $ 154,351,837
---------------- ----------------
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposit accounts......................................................... $ 141,341,304 $ 135,746,914
Advances from Federal Home Loan Bank of Boston........................... 2,000,000 2,000,000
Accrued expenses and other liabilities................................... 1,242,310 1,562,351
---------------- ----------------
Total liabilities.................................................... $ 144,583,614 $ 139,309,265
---------------- ----------------
---------------- ----------------
Stockholders' Equity:
Common Stock, $1.00 par value; 1,800,000 authorized; 675,167 and 657,717
issued and outstanding, respectively.................................... 675,167 657,717
Additional paid-in capital............................................... 6,796,257 6,613,032
Net unrealized holding gain (loss) on securities available-for-sale, net
of taxes................................................................ (202,436) 5,895
Retained earnings (subject to restrictions).............................. 8,259,292 7,765,928
---------------- ----------------
Total stockholders' equity........................................... $ 15,528,280 $ 15,042,572
---------------- ----------------
Total liabilities and stockholders' equity........................... $ 160,111,894 $ 154,351,837
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to the financial statements.
14
<PAGE>
MILFORD CO/OPERATIVE BANK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
---------------------------- ----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Mortgage loans..................................... $ 1,341,019 $ 1,216,189 $ 3,881,392 $ 3,492,992
Other loans........................................ $ 135,752 $ 81,573 $ 325,898 $ 232,010
Demand accounts.................................... $ 220,973 $ 232,762 $ 598,870 $ 620,424
Investment securities.............................. $ 577,051 $ 569,223 $ 1,923,632 $ 1,711,710
Mortgage-backed securities......................... $ 412,759 $ 382,933 $ 1,253,102 $ 1,128,534
------------- ------------- ------------- -------------
Total interest income............................ $ 2,687,554 $ 2,482,680 $ 7,982,894 $ 7,185,670
------------- ------------- ------------- -------------
Interest expense:
Deposit accounts................................... $ 1,310,893 $ 1,105,237 $ 3,893,412 $ 3,193,696
Borrowings......................................... $ 31,523 $ 36,694 $ 102,049 $ 132,798
------------- ------------- ------------- -------------
Total interest expense........................... $ 1,342,416 $ 1,141,931 $ 3,995,461 $ 3,326,494
------------- ------------- ------------- -------------
Net interest income.............................. $ 1,345,138 $ 1,340,749 $ 3,987,433 $ 3,859,176
Provision for probable loan losses............... $ 30,000 $ 30,000 $ 90,000 $ 70,000
------------- ------------- ------------- -------------
Net interest income after provision for probable loan
losses.............................................. $ 1,315,138 $ 1,310,749 $ 3,897,433 $ 3,789,176
------------- ------------- ------------- -------------
Non-interest income:
Customer service charges........................... $ 101,078 $ 98,601 $ 312,240 $ 307,999
Gain (loss) on sale of investment securities....... $ 0 $ 2,274 $ 51,166 $ (4,455)
Gain on loan sales................................. $ 98 $ 0 (131) 2,073
Gain (loss) on sale of other real estate owned..... $ (657) $ 0 $ 7,297 $ 0
Other.............................................. $ 60,223 $ 60,711 $ 215,444 $ 203,217
------------- ------------- ------------- -------------
Total non-interest income........................ $ 160,742 $ 161,586 $ 586,016 $ 508,834
------------- ------------- ------------- -------------
Non-interest expenses:
Compensation and fringe benefits................... $ 463,478 $ 428,739 $ 1,374,848 $ 1,277,263
Occupancy and equipment............................ $ 136,129 $ 120,518 $ 369,358 $ 340,920
Data processing service fees....................... $ 91,031 $ 85,146 $ 269,661 $ 248,855
Federal insurance premium.......................... $ 78,234 $ 75,344 $ 231,085 $ 225,500
Advertising........................................ $ 14,560 $ 13,499 $ 48,144 $ 40,350
Other.............................................. $ 166,581 $ 199,920 $ 548,844 $ 531,880
------------- ------------- ------------- -------------
Total non-interest expenses...................... $ 950,013 $ 923,166 $ 2,841,940 $ 2,664,768
------------- ------------- ------------- -------------
Income before provision for income taxes............. $ 525,867 $ 549,169 $ 1,641,509 $ 1,633,242
------------- ------------- ------------- -------------
Provision for income taxes........................... $ 187,425 $ 131,167 $ 554,615 $ 499,167
------------- ------------- ------------- -------------
Net income....................................... $ 338,442 $ 418,002 $ 1,086,894 $ 1,134,075
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net income per share................................. $ 0.51 $ 0.64 $ 1.65 $ 1.73
Dividends per share.................................. $ 0.50 $ 0.25 $ 0.90 $ 0.55
Average shares outstanding........................... 659,917 656,217 659,917 656,217
</TABLE>
See accompanying notes to the financial statements.
15
<PAGE>
MILFORD CO/OPERATIVE BANK
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NET
UNREALIZED
HOLDING GAIN
(LOSS) ON
ADDITIONAL AVAIL-FOR- TOTAL
COMMON PAID-IN RETAINED SALE STOCKHOLDERS'
STOCK CAPITAL EARNINGS SECURITIES EQUITY
----------- ------------- ------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1995................ $ 657,717 $ 6,613,032 $ 7,765,928 $ 5,895 $ 15,042,572
Issuance of common stock................ $ 17,450 $ 183,225 -- -- $ 200,675
Change in unrealized holding gain on
available-for-sale securities, net of
taxes.................................. -- -- -- $ (208,331) $ (208,331)
Net income.............................. -- -- $ 1,086,894 -- $ 1,086,894
Dividends paid.......................... -- -- $ (593,530) -- $ (593,530)
----------- ------------- ------------- ------------ --------------
Balance at March 31, 1996............... $ 675,167 $ 6,796,257 $ 8,259,292 $ (202,436) $ 15,528,280
----------- ------------- ------------- ------------ --------------
----------- ------------- ------------- ------------ --------------
</TABLE>
See accompanying notes to the financial statements.
16
<PAGE>
MILFORD CO/OPERATIVE BANK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------------------
1996 1995
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
Cash flows provided by operating activities:
Net income................................................................... $ 1,086,894 $ 1,134,075
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 178,482 204,054
Provision for probable loan losses......................................... 90,000 70,000
Loss (gain) on sale of securities.......................................... (51,166) 4,455
Gross receipts associated with loans originated for resale................. 119,569 181,073
Gross payments associated with loans originated for resale................. (119,700) (179,000)
Loss (gain) on loan sales.................................................. 131 (2,073)
Gain on sale of real estate owned.......................................... (7,297) --
Writedown of real estate owned............................................. 99,207 --
Changes in assets and liabilities:
Deferred income taxes.................................................... (27,727) (4,356)
Accrued interest receivable.............................................. 214,535 31,891
Other assets............................................................. 31,389 (84,857)
Accrued expenses and other liabilities................................... $ (328,639) $ 64,556
--------------- ---------------
Net cash provided by operating activities.............................. 1,285,678 1,419,818
--------------- ---------------
Cash flows used in investing activities:
Purchases of securities available-for-sale................................... $ (22,689,598) --
Proceeds from maturities of securities available-for-sale.................... 2,500,000 --
Proceeds from called securities available-for-sale........................... 8,000,000 --
Proceeds from sales of securities available-for-sale......................... 10,594,552 --
Purchases of securities held-to-maturity..................................... (7,664,765) --
Proceeds from called securities held-to-maturity............................. 9,500,000 --
Proceeds from maturities of securities held-to-maturity...................... 1,000,000
Purchases of investment securities........................................... -- (10,630,177)
Proceeds from sales and maturities of investment securities.................. -- 9,675,000
Purchase of mortgage-backed securities....................................... -- (1,415,045)
Proceeds from paydowns of mortgage-backed securities......................... 5,262,008 2,278,261
Purchase of collateralized mortgage obligations.............................. (1,000,000)
Proceeds from the sales and paydowns of collateralized mortgage
obligations................................................................. -- 984,493
Purchase of Federal Home Loan Bank stock..................................... (58,900) (28,900)
Net increase in loans receivable............................................. (9,719,398) (2,811,576)
Capital expenditures......................................................... (54,986) (231,225)
Proceeds from sale of real estate owned...................................... 126,639 --
Change in other real estate owned............................................ -- (82,059)
--------------- ---------------
Net cash used in investing activities.................................. $ (3,204,448) $ (3,261,228)
--------------- ---------------
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposit accounts.................................. $ 5,594,390 $ (476,527)
Advances from Federal Home Loan Bank......................................... (1,000,000)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------------------
1996 1995
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
Increase in advanced payments by borrowers for taxes and insurance........... 8,598 100,903
Dividends paid............................................................... (593,530) (360,919)
Issuance of common stock..................................................... 200,675 --
--------------- ---------------
Net cash provided by (used in) financing activities.................... $ 5,210,133 $ (1,736,543)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents........................... 3,291,363 (3,577,953)
Cash and cash equivalents, beginning........................................... 18,573,475 19,222,579
--------------- ---------------
Cash and cash equivalents, ending.............................................. $ 21,864,838 $ 15,644,626
--------------- ---------------
--------------- ---------------
Supplemental cash flow information:
Interest paid on deposits.................................................... $ 3,893,412 $ 3,193,696
Interest paid on borrowings.................................................. $ 102,049 $ 132,798
Taxes paid................................................................... $ 571,495 $ 527,039
</TABLE>
See accompanying notes to the financial statements.
18
<PAGE>
MILFORD CO/OPERATIVE BANK
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(1) ACCOUNTING PRINCIPLES
The financial information as of March 31, 1996, the results of operations
for the three and nine months ended March 31, 1996 and 1995, the cash flows for
the nine months ended March 31, 1996 and 1995, and the statement of changes in
stockholders' equity for the nine months ended March 31, 1996, are unaudited,
but in the opinion of management reflect all adjustments (none of which were
other than normal recurring accruals) necessary for a fair presentation of such
information. Interim results are not necessarily indicative of the results to be
expected for the entire year.
(2) INCOME TAXES
The provision for income taxes differs from the statutory rate due primarily
to differences in the loan loss provision for book and tax purposes.
(3) ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES
The Bank classifies securities as either held-to-maturity,
available-for-sale or trading. Securities held-to-maturity are reported at
amortized cost. Trading securities are reported at fair value, with unrealized
gains and losses included in earnings. The Bank did not have any securities
reported as trading securities as of March 31, 1996. Securities which are
available-for-sale are reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of stockholders'
equity (net of taxes). On July 1, 1994, in conjunction with the adoption of SFAS
No. 115, the Bank classified $27,716,866 of securities as available-for-sale and
recorded an unrealized loss of $155,399 (net of taxes) as a separate component
of stockholders' equity. During the nine months ended March 31, 1996, the amount
was an unrealized loss (net of taxes) of $202,436.
NOTE 4
Securities available-for-sale consist of the following at March 31, 1996:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAINS LOSSES VALUE
-------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Marketable equity securities....................... $ 2,265,856 $ 948 $ (32,485) $ 2,234,319
Investment securities.............................. $ 22,315,031 $ 55,958 $ (334,061) $ 22,036,928
Mortgage-backed securities......................... $ 9,578,119 $ 32,550 $ (29,631) $ 9,581,038
-------------- ------------ ------------- --------------
$ 34,159,006 $ 89,456 $ (396,177) $ 33,852,285
-------------- ------------ ------------- --------------
-------------- ------------ ------------- --------------
</TABLE>
Securities held-to-maturity consist of the following at March 31, 1996:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAINS LOSSES VALUE
-------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Investment securities.............................. $ 13,007,953 $ 6,247 $ (84,910) $ 12,929,290
Mortgage-backed securities......................... $ 16,678,443 $ 61,804 $ (329,085) $ 16,411,162
-------------- ------------ ------------- --------------
$ 29,686,396 $ 68,051 $ (413,995) $ 29,340,452
-------------- ------------ ------------- --------------
-------------- ------------ ------------- --------------
</TABLE>
19
<PAGE>
EXHIBIT 99.4
CFX CORPORATION -- THE SAFETY CORPORATION -- MILFORD COOP
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
CFX
PRO FORMA CFX
SAFETY COMB. W/ PRO FORMA CFX FULLY
CFX FUND SAFETY MILFORD COMB. W/ PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) FUND (HISTORICAL) MILFORD COMBINED
- ------------------------------------- ----------- ------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Interest on loans and leases....... 13,303 3,468 16,771 1,531 14,834 18,302
Interest and dividends on
securities........................ 1,676 1,635 3,311 952 2,628 4,263
Other interest income.............. 287 20 307 0 287 307
----------- ------------- ----------- ------------- ----------- -----------
Total Interest and Dividend
Income.......................... 15,266 5,123 20,389 2,483 17,749 22,872
Interest expense:
Interest on deposits............... 5,987 1,554 7,541 1,105 7,092 8,646
Interest on borrowings............. 1,388 191 1,579 37 1,425 1,616
----------- ------------- ----------- ------------- ----------- -----------
Total Interest Expense........... 7,375 1,745 9,120 1,142 8,517 10,262
----------- ------------- ----------- ------------- ----------- -----------
Net Interest and Dividend
Income.......................... 7,891 3,378 11,269 1,341 9,232 12,610
Provision of loan and lease
losses............................ 150 525 675 30 180 705
----------- ------------- ----------- ------------- ----------- -----------
Net Interest and Dividend Income
After Provision for Loan and
Lease Losses.................... 7,741 2,853 10,594 1,311 9,052 11,905
Other income......................... 2,064 940 3,004 161 2,225 3,165
Other expense........................ 7,307 3,444 10,751 923 8,230 11,674
----------- ------------- ----------- ------------- ----------- -----------
Income Before Income Taxes....... 2,498 349 2,847 549 3,047 3,396
Income taxes......................... 942 131 1,073 131 1,073 1,204
----------- ------------- ----------- ------------- ----------- -----------
Net Income....................... 1,556 218 1,774 418 1,974 2,192
Preferred stock dividends............ 67 0 67 0 67 67
----------- ------------- ----------- ------------- ----------- -----------
Net Income Available to Common
Stock........................... 1,489 218 1,707 418 1,907 2,125
----------- ------------- ----------- ------------- ----------- -----------
Weighted average common shares
outstanding......................... 7,056 1,661 9,880 656 8,791 11,615
----------- ------------- ----------- ------------- ----------- -----------
----------- ------------- ----------- ------------- ----------- -----------
Earnings per common share............ $ 0.21 $ 0.13 $ 0.17 $ 0.64 $ 0.22 $ 0.18
----------- ------------- ----------- ------------- ----------- -----------
----------- ------------- ----------- ------------- ----------- -----------
</TABLE>
20
<PAGE>
CFX CORPORATION -- THE SAFETY FUND CORPORATION -- MILFORD COOP
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
CFX
PRO FORMA
SAFETY COMBINED W/
CFX FUND PRO FORMA SAFETY MILFORD PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) ADJUSTMENTS FUND (HISTORICAL) ADJUSTMENTS
- ---------------------------------------- ----------- ----------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cash and due from banks............... $ 24,281 $ 11,273 $ 35,554 $ 2,100
Interest bearing deposits with other
banks................................ 314 7,300 7,614 19,765
Federal Home Loan Bank of Boston
stock................................ 7,496 0 7,496 714
Securities available for sale......... 125,703 56,340 182,043 33,852
Securities held to maturity........... 19,410 58,292 77,702 29,686
Mortgage loans held for sale.......... 7,794 7,794 0
Loans and leases...................... 725,703 155,191 880,894 70,603
Less allowance for loan and lease
losses............................. 7,936 6,977 14,913 409
----------- ----------- ----------- -------------- ----------- ------
Net Loans and Leases.............. 717,767 148,214 0 865,981 70,194 0
Premises and equipment................ 13,513 9,392 22,905 2,015
Mortgage servicing rights............. 4,473 4,473
Goodwill and deposit base
intangibles.......................... 9,720 9,720
Foreclosed real estate................ 1,141 152 1,293 71
Other assets.......................... 26,677 6,177 32,854 1,715
----------- ----------- ----------- -------------- ----------- ------
$ 958,289 $ 297,140 $ 0 $1,255,429 $ 160,112 $ 0
----------- ----------- ----------- -------------- ----------- ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing.................... $ 669,703 $ 187,001 $ 856,704 132,957
Noninterest bearing................. 55,275 65,511 120,786 8,384
----------- ----------- ----------- -------------- ----------- ------
Total Deposits.................... 724,978 252,512 0 977,490 141,341 0
Short-term borrowed funds............. 27,901 18,618 46,519 0
Advances from FHLBB................... 97,355 4,548 101,903 2,000
Other liabilities..................... 17,422 17,422 1,243
----------- ----------- ----------- -------------- ----------- ------
Total Liabilities................. 867,656 275,678 0 1,143,334 144,584 0
Shareholders' Equity
Common stock (1)(2)(3)................ 5,041 8,303 (6,421) 6,923 675 515
Paid-in capital....................... 66,150 7,585 6,421 80,156 6,796 (515)
Retained earnings..................... 20,389 5,380 25,769 8,259
Net unrealized losses on securities
available for sale, after tax
effects.............................. (947) 194 (753) (202)
----------- ----------- ----------- -------------- ----------- ------
Total Shareholders' Equity........ 90,633 21,462 0 112,095 15,528 0
----------- ----------- ----------- -------------- ----------- ------
$ 958,289 $ 297,140 $ 0 $1,255,429 $ 160,112 $ 0
----------- ----------- ----------- -------------- ----------- ------
Number of common shares outstanding 7,561 1,661 10,385 675
----------- ----------- -------------- -----------
----------- ----------- -------------- -----------
Common shareholders' equity per share
(4).................................... $ 11.99 $ 12.92 $ 10.79 $ 23.00
----------- ----------- -------------- -----------
----------- ----------- -------------- -----------
<CAPTION>
CFX
PRO FORMA CFX FULLY
COMBINED W/ PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA) MILFORD COMBINED
- ---------------------------------------- ------------ ----------
<S> <C> <C>
Cash and due from banks............... $ 26,381 $ 37,654
Interest bearing deposits with other
banks................................ $ 20,079 $ 27,379
Federal Home Loan Bank of Boston
stock................................ $ 8,210 $ 8,210
Securities available for sale......... $ 159,555 $ 215,895
Securities held to maturity........... $ 49,096 $ 107,388
Mortgage loans held for sale.......... $ 7,794 $ 7,794
Loans and leases...................... $ 796,306 $ 951,497
Less allowance for loan and lease
losses............................. $ 8,345 $ 15,322
------------ ----------
Net Loans and Leases.............. 787,961 936,175
Premises and equipment................ $ 15,528 $ 24,920
Mortgage servicing rights............. $ 4,473 $ 4,473
Goodwill and deposit base
intangibles.......................... $ 9,720 $ 9,720
Foreclosed real estate................ $ 1,212 $ 1,364
Other assets.......................... $ 28,392 $ 34,569
------------ ----------
$1,118,401 $1,415,541
------------ ----------
Deposits:
Interest bearing.................... $ 802,660 $ 989,661
Noninterest bearing................. $ 63,659 $ 129,170
------------ ----------
Total Deposits.................... $ 866,319 $1,118,831
Short-term borrowed funds............. $ 27,901 $ 46,519
Advances from FHLBB................... $ 99,355 $ 103,903
Other liabilities..................... $ 18,665 $ 18,665
------------ ----------
Total Liabilities................. 1,012,240 1,287,918
Shareholders' Equity
Common stock (1)(2)(3)................ $ 6,231 $ 8,113
Paid-in capital....................... $ 72,431 $ 86,437
Retained earnings..................... $ 28,648 $ 34,028
Net unrealized losses on securities
available for sale, after tax
effects.............................. $ (1,149) $ (955)
------------ ----------
Total Shareholders' Equity........ $ 106,161 $ 127,623
------------ ----------
$1,118,401 $1,415,541
------------ ----------
Number of common shares outstanding 9,346 12,169
------------ ----------
------------ ----------
Common shareholders' equity per share
(4).................................... $ 11.36 $ 10.49
------------ ----------
------------ ----------
</TABLE>
21
<PAGE>
CFX CORPORATION -- THE SAFETY CORPORATION -- MILFORD COOP
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
CFX
PRO FORMA CFX
SAFETY COMB. W/ PRO FORMA
CFX FUND SAFETY MILFORD COMB. W/
(IN THOUSANDS, EXCEPT PER SHARE DATA) (HISTORICAL) (HISTORICAL) FUND (HISTORICAL) MILFORD
----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income:
Interest on loans and leases..................... 15,677 3,642 19,319 1,477 17,154
Interest and dividends on securities............. 1,741 1,777 3,518 989 2,730
Other interest income............................ 132 43 175 221 353
----------- ------------- ----------- ------------- -----------
Total Interest and Dividend Income............. 17,550 5,462 23,012 2,687 20,237
Interest Expense:
Interest on deposits............................. 6,980 1,798 8,778 1,311 8,291
Intereset on borrowings.......................... 1,749 169 1,918 31 1,780
----------- ------------- ----------- ------------- -----------
Total Interest Expense......................... 8,729 1,967 10,696 1,342 10,071
----------- ------------- ----------- ------------- -----------
Net Interest and Dividend Income............... 8,821 3,495 12,316 1,345 10,166
Provision of loan and lease losses................. 800 75 875 30 830
----------- ------------- ----------- ------------- -----------
Net Interest and Dividend Income After
Provision for Loan and Lease Losses........... 8,021 3,420 11,441 1,315 9,336
Other income....................................... 2,613 1,088 3,701 161 2,774
Other expense...................................... 7,291 3,618 10,909 950 8,241
----------- ------------- ----------- ------------- -----------
Income Before Income Taxes..................... 3,343 890 4,233 526 3,869
Income taxes....................................... 1,015 325 1,340 188 1,203
----------- ------------- ----------- ------------- -----------
Net Income..................................... 2,328 565 2,893 338 2,666
Preferred stock dividends.......................... 0 0 0 0 0
----------- ------------- ----------- ------------- -----------
Net Income Available to Common Stock........... 2,328 565 2,893 338 2,666
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
Weighted average common shares outstanding (5)..... 7,540 1,661 10,364 660 9,285
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
Earnings per common share.......................... $ 0.31 $ 0.34 $ 0.28 $ 0.51 $ 0.29
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
<CAPTION>
CFX FULLY
PRO FORMA
(IN THOUSANDS, EXCEPT PER SHARE DATA) COMBINED
-----------
<S> <C>
Interest income:
Interest on loans and leases..................... 20,796
Interest and dividends on securities............. 4,507
Other interest income............................ 396
-----------
Total Interest and Dividend Income............. 25,699
Interest Expense:
Interest on deposits............................. 10,089
Intereset on borrowings.......................... 1,949
-----------
Total Interest Expense......................... 12,038
-----------
Net Interest and Dividend Income............... 13,661
Provision of loan and lease losses................. 905
-----------
Net Interest and Dividend Income After
Provision for Loan and Lease Losses........... 12,756
Other income....................................... 3,862
Other expense...................................... 11,859
-----------
Income Before Income Taxes..................... 4,759
Income taxes....................................... 1,528
-----------
Net Income..................................... 3,231
Preferred stock dividends.......................... 0
-----------
Net Income Available to Common Stock........... 3,231
-----------
-----------
Weighted average common shares outstanding (5)..... 12,108
-----------
-----------
Earnings per common share.......................... $ 0.27
-----------
-----------
</TABLE>
22
<PAGE>
SAFETY FUND AND MILFORD CO-OPERATIVE MERGERS
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Common Stock at March 31, 1996:
CFX, $0.66 2/3 par value, 22,500,000 authorized shares, of which 7,561,176
shares have been issued and are outstanding.
SAFETY FUND, $5.00 par value, 3,200,000 authorized shares, of which
1,660,665 shares have been issued and are outstanding.
MILFORD, $1.00 par value, 1,800,000 authorized shares, of which 675,167
shares have been issued and are outstanding.
(2) The pro forma financial statements reflect the exchange of Safety Fund and
Milford Common Stock for CFX Common Stock in connection with the mergers at
the exchange ratios of 1.7 and 2.6446, respectively.
In combining the companies, a pro forma adjustment at March 31, 1996 was
made to reflect the issuance of 2,823,131 shares of CFX Common Stock to
Safety Fund shareholders and 1,785,547 shares of CFX Common Stock to Milford
shareholders in exchange for the outstanding shares of Safety Fund and
Milford Common Stock.
(3) The merger agreements provide that each holder of Safety Fund and Milford
Common Stock, who would otherwise have been entitled to a fraction of CFX
Common Stock, will be paid the cash value of such fraction. Such cash
payments have not been reflected in the pro forma information.
(4) Pro forma common shareholders' equity per share was computed by dividing
combined historical common shareholders' equity by the sum of the common
shares outstanding at period end, adjusted to give effect to both of the
mergers, using the exchange ratios of 1.7 and 2.6446, respectively.
(5) Pro forma weighted average common shares outstanding represent the
historical weighted average common shares outstanding of CFX during the
periods, plus the historical weighted average common shares outstanding of
Safety Fund and Milford adjusted to give effect to both of the mergers,
using the exchange ratios of 1.7 and 2.6446, respectively.
23
