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 quarterly period ended
September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-16455
NEWMIL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1186389
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19 Main St., P.O. Box 600, New Milford, Conn. 06776
(Address of principal executive offices) (Zip Code)
(860) 355-7600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
The number of shares of Common Stock outstanding as of September
30, 2000 is 3,606,525.
NEWMIL BANCORP, INC. and SUBSIDIARY
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page
Item 1 Financial Statements:
Consolidated Balance Sheets as of
September 30, 2000 and June 30, 2000. . . . . . . . . . .3
Consolidated Statements of Income
for the three month periods
ended September 30, 2000 and 1999 . . . . . . . . . . . .4
Consolidated Statements of Changes in
Shareholders' Equity for the three month
periods ended September 30, 2000 and 1999 . . . . . . . .5
Consolidated Statements of Cash Flows
for the three month periods ended
September 30, 2000 and 1999 . . . . . . . . . . . . . . .6
Notes to Consolidated Financial Statements. . . . . . . .7
Item 2 Management's Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . 12
Item 3 Quantitative and Qualitative Disclosures
about Market Risk . . . . . . . . . . . . . . . . . . . 20
PART II OTHER INFORMATION
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . 21
Item 4 Submission of matters to a vote of
security holders. . . . . . . . . . . . . . . . . . . . 21
Item 5 Other information . . . . . . . . . . . . . . . . . . . 22
Item 6 Exhibits and Reports on Form 8-K. . . . . . . . . . . . 22
<TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<S> <C> <C>
September 30, June 30,
2000 2000
---- ----
(unaudited)
ASSETS
------
Cash and due from banks $ 13,703 $12,623
Federal funds sold 10,361 -
-------- -------
Total cash and cash equivalents 24,064 12,623
Securities:
Available-for-sale at market 103,236 104,528
Held-to-maturity at amortized cost
(market value: $37,106 and $38,005) 38,317 39,779
Loans (net of allowance for
loan losses: $4,982 and $4,978) 229,050 223,734
Other real estate owned 150 366
Bank premises and equipment, net 5,998 5,679
Accrued income 2,765 2,747
Deferred tax asset, net 1,572 2,000
Other assets 1,622 1,116
-------- --------
Total Assets $406,774 $392,572
======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
------------------------------------
Deposits
Demand (non-interest bearing) $ 21,173 $ 20,703
NOW accounts 39,925 43,950
Money market 92,347 75,465
Savings and other 45,542 48,652
Certificates of deposit 132,096 130,856
-------- --------
Total deposits 331,083 319,626
Federal Home Loan Bank advances 33,245 35,750
Repurchase agreements 3,258 -
Accrued interest and other liabilities 3,311 2,871
-------- --------
Total Liabilities 370,897 358,247
-------- --------
Commitments and contingencies - -
Shareholders' Equity
Common stock - $.50 per share par value
Authorized - 20,000,000 shares
Issued - 5,990,138 shares 2,995 2,995
Paid-in capital 43,226 43,332
Retained earnings 13,991 13,199
Accumulated other comprehensive income (509) (1,362)
Treasury stock, at cost - 2,383,613
and 2,384,113 shares (23,826) (23,839)
-------- --------
Total Shareholders' Equity 35,877 34,325
-------- --------
Total Liabilities and Shareholders' Equity $406,774 $392,572
======== ========
</TABLE>
<TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share amounts)
(unaudited)
<S> <C> <C>
Three months ended
September 30
2000 1999
---- ----
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $4,707 $4,144
Interest on securities 2,348 1,752
Dividend income 51 35
Interest on federal funds sold 43 28
------ ------
Total interest and dividend income 7,149 5,959
------ ------
INTEREST EXPENSE
Deposits 3,044 2,381
Borrowed funds 467 192
Repurchase agreements 30 -
------ ------
Total interest expense 3,541 2,573
------ ------
Net interest and dividend income 3,608 3,386
------ ------
PROVISION FOR LOAN LOSSES - (520)
------ ------
Net interest and dividend
income after provision
for loan losses 3,608 3,906
------ ------
NON-INTEREST INCOME
Service charges on deposit accounts 369 328
Gain on sale of branch - 75
Gains on sales of mortgage loans, net 48 54
Securities losses, net - (109)
Gains on sales of OREO 39 -
Loan servicing fees 15 17
Other 92 80
------ ------
Total non-interest income 563 445
------ ------
NON-INTEREST EXPENSE
Salaries 1,262 1,216
Employee benefits 167 311
Occupancy 245 238
Equipment 241 212
Insurance 27 28
Professional, collection and
OREO expense 78 256
Other 593 584
------ ------
Total non-interest expense 2,613 2,845
------ ------
Income before income taxes 1,558 1,506
Provision for income taxes 518 504
------ ------
NET INCOME $1,040 $1,002
====== ======
Diluted earnings per share $0.28 $0.26
===== =====
Basic earnings per share $0.29 $0.27
===== =====
Dividends per share $0.10 $0.10
===== =====
</TABLE>
<TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(dollars in thousands)
<S> <C> <C> <C> <C>
Common Paid-in Retained Treasury
Stock capital earnings stock
------ ------- -------- --------
Balances at
June 30, 1999 $2,995 $43,773 $10,637 $(23,138)
Net income - - 1,002 -
Change in net
unrealized gains
(losses) on
securities, net of
taxes - - - -
Total comprehensive
income
Cash dividends paid - - (372) -
Proceeds from exercise
of stock options - (408) - 715
Acquisition of
treasury stock - - - (529)
------ ------- ------- --------
Balances at
September 30, 1999 $2,995 $43,365 $11,267 $(22,952)
====== ======= ======= ========
Balances at
June 30, 2000 $2,995 $43,332 $13,199 $(23,839)
Net income - - 1,040 -
Change in net
unrealized gains
(losses) on
securities, net of
taxes - - - -
Total comprehensive
income
Cash dividends paid - - (361) -
Tax benefit of exercise of
non-qualifying options - - 113 -
Proceeds from
exercise of stock
options - (106) - 163
Acquisition of
treasury stock - - - (150)
------ ------- ------- --------
Balances at
September 30, 2000 $2,995 $43,226 $13,991 $(22,826)
====== ======= ======= ========
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(dollars in thousands)
<C> <C> <C>
Accumulated
other
comprehensive Total
income Unrealized shareholders'
gains (losses) equity
----------------- -------------
Balances at
June 30, 1999 $(1,132) $33,135
Net income - 1,002
Change in net
unrealized gains
(losses) on
securities, net of
taxes 23 23
-------
Total comprehensive
income 1,025
-------
Cash dividends paid - (372)
Proceeds from exercise
of stock options - 307
Acquisition of
treasury stock - (529)
------- -------
Balances at
September 30, 1999 $(1,109) $33,566
======= =======
Balances at
June 30, 2000 $(1,362) $34,325
Net income - 1,040
Change in net
unrealized gains
(losses) on
securities, net of taxes 853 853
-------
Total comprehensive
income 1,893
-------
Cash dividends paid - (361)
Tax benefit of exercise of
non-qualifying options - 113
Proceeds from
exercise of stock
options - 57
Acquisition of
treasury stock - (150)
------- -------
Balances at
September 30, 2000 $ (509) $35,877
======= =======
</TABLE>
<TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) Three months ended
(unaudited) September 30,
2000 1999
---- ----
<S> <C> <C>
Operating Activities
Net income $1,040 $1,002
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses - (520)
Provision for depreciation and amortization 202 184
(Increase) decrease in deferred income tax asset (12) 8
Amortization and accretion of securities
premiums and discounts, net (31) 100
Securities losses, net - 109
Realized gains on loan sales, net (47) (54)
Realized gains on OREO sales, net (39) -
Decrease (increase) in accrued income (18) 162
Increase (decrease) in accrued interest expense
and other liabilities 390 (2,372)
Increase in other assets, net (506) (185)
Net cash provided (used) by
operating activities 979 (1,566)
------- -------
Investing Activities
Proceeds from sales of mortgage backed securities
available-for-sale - 8,411
Proceeds from maturities and principal
repayments of securities 523 1,110
Purchases of securities held-to-maturity - -
Purchases of mortgage backed securities
available-for-sale - (2,034)
Principal collected on mortgage
backed securities 3,556 5,804
Loan (advances) repayments, net (5,269) 895
Loans purchased for portfolio - (3,864)
Proceeds from sales of OREO 255 -
Payments to improve OREO - (26)
Purchases of Bank premises
and equipment, net (522) (88)
------- -------
Net cash (used) provided by
investing activities (1,457) 10,208
------- -------
Financing Activities
Net increase (decrease) in deposits $11,507 $(4,710)
Net repayments of FHLB advances (2,505) (7,500)
Net increase in repurchase agreements 3,258 -
Cash dividends paid (361) (372)
Treasury stock purchased (150) (529)
Treasury Stock reissued - 417
Tax benefit from the exercise of stock options 113 -
Proceeds from exercise of stock options 57 306
------- -------
Net cash provided (used) by
financing activities 11,919 (12,388)
------- -------
Increase (decrease) in cash
and cash equivalents 11,441 (3,746)
Cash and federal funds sold, beginning of year 12,623 12,886
------- -------
Cash and federal funds sold, end of period $24,064 $ 9,140
======= =======
Cash paid during period
Interest to depositors $ 2,988 $ 2,372
Interest on borrowings 489 219
Interest on repurchase agreements 30 -
Income taxes 450 567
Non-cash transfers
From loans to OREO - 18
</TABLE>
NEWMIL BANCORP, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim consolidated financial statements of NewMil Bancorp, Inc.
("NewMil") include those of NewMil and its wholly-owned subsidiary,
NewMil Bank (the "Bank"). Certain prior period amounts in the
statement of income and balance sheets have been reclassified to
conform with the current financial presentation. In the opinion of
management, the interim unaudited consolidated financial statements
include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the financial position of NewMil and the
statements of operations and cash flows for the interim periods
presented.
The financial statements have been prepared in accordance with
generally accepted accounting principles. In preparing the financial
statements, management is required to make extensive use of estimates
and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet, and revenues and
expenses for the period. Actual results could differ significantly
from those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the
determination of the allowance for loan losses and the valuation of
real estate acquired in connection with foreclosures or in satisfaction
of loans. In connection with the determination of the allowance for
loan losses and valuation of real estate, management obtains
independent appraisals for significant properties.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes,
has been condensed or omitted. Operating results for the three month
period ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2001. The
accompanying condensed financial statements should be read in
conjunction with the financial statements and notes thereto included
in NewMil's Annual Report for the year ended June 30, 2000.
NOTE 2 - SECURITIES
<TABLE>
Securities classified available-for-sale (carried at fair value)
were as follows:
<S> <C> <C> <C> <C>
(dollars in thousands) Estimated Gross
fair unrealized Amortized
value gains losses cost
--------- ------------- ---------
September 30, 2000
U.S. Government Agency notes
After 1 but within 5 years $ 10,006 $ 204 $ - $ 9,802
Corporate bonds
After 1 but within 5 years 22,375 218 57 22,214
Mortgage backed securities 66,944 431 1,288 67,801
Collateralized mortgage
obligations 1,146 - 171 1,317
-------- ------ ------ --------
Total debt securities 100,471 853 1,516 101,134
Equity securities 2,765 - - 2,765
-------- ------ ------ --------
Total securities
available-for-sale $103,236 $ 853 $1,516 $103,899
======== ====== ====== ========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
June 30, 2000
U.S. Government Agency notes
After 1 but within 5 years $ 9,822 $ 41 $ 11 $ 9,792
Corporate bonds
After 1 but within 5 years 22,034 98 263 22,199
Mortgage backed securities 68,787 346 1,967 70,408
Collateralized mortgage
obligations 1,120 - 197 1,317
-------- ------ ------ --------
Total debt securities 101,763 485 2,438 103,716
Equity securities 2,765 - - 2,765
-------- ------ ------ --------
Total securities
available-for-sale $104,528 $ 485 $2,438 $106,481
======== ====== ====== ========
</TABLE>
<TABLE>
Securities classified held-to-maturity (carried at amortized cost)
were as follows:
<S> <C> <C> <C> <C>
(dollars in thousands) Gross Estimated
Amortized unrealized fair
cost (a) gains losses value
--------- ------------- ---------
September 30, 2000
Municipal Bonds
After 1 but within 5 years $ 250 $ - $ 12 $ 238
After 10 years 10,547 - 800 9,747
Mortgage backed securities 20,123 9 46 20,086
Collateralized mortgage
obligations 7,397 3 365 7,035
------- ----- ------ -------
Total securities
held-to-maturity $38,317 $ 12 $1,223 $37,106
======= ===== ====== =======
June 30, 2000
Municipal Bonds
After 1 but within 5 years $ 250 $ - $ 16 $ 234
After 10 years 10,550 - 912 9,638
Mortgage backed securities 21,064 4 397 20,671
Collateralized mortgage
obligations 7,915 6 459 7,462
------- ----- ------ -------
Total securities
held-to-maturity $39,779 $ 10 $1,784 $38,005
======= ===== ====== =======
(a) Securities transferred from available-for-sale are carried at
estimated fair value as of the transfer date and adjusted for
subsequent amortization.
</TABLE>
Securities with an amortized cost of $786,000 and a market value of
$759,000 were pledged as collateral against public funds at September
30, 2000.
<TABLE>
Cash proceeds and realized gains and losses from sales of securities
during the three month periods ended September 30 are as follows:
<S> <C> <C> <C>
(dollars in thousands) Cash Realized Realized
proceeds gains losses
-------- -------- --------
Three months ended September 30, 2000
Available-for-sale $ - $ - $ -
======= ===== =====
Three months ended September 30, 1999
Available-for-sale
Mortgage backed securities $ 8,411 $ - $ 109
======= ===== =====
</TABLE>
NOTE 3 - LOANS
<TABLE>
The composition of the loan portfolio was as follows:
<S> <C> <C>
September 30, June 30,
(in thousands) 2000 2000
---- ----
Real estate mortgages:
One-four family residential $130,841 $130,770
Five or more family residential 4,159 4,185
Commercial 52,429 51,633
Land 1,778 1,995
Commercial and industrial 21,405 17,404
Home equity lines of credit 20,897 20,257
Installment and other 2,582 2,439
-------- --------
Total loans, gross 234,091 228,683
Deferred loan origination fees
and purchase premium, net (59) 29
Allowance for loan losses (4,982) (4,978)
-------- --------
Total loans, net $229,050 $223,734
======== ========
Impaired loans
With valuation allowance $ 501 $ 502
With no valuation allowance 27 2
----- -----
Total impaired loans $ 528 $ 504
===== =====
Valuation allowance $ 238 $ 234
</TABLE>
NewMil's loans consist primarily of residential and commercial real
estate loans located principally in western Connecticut, NewMil's
service area. NewMil offers a broad range of loans and credit
facilities to borrowers in its service area, including residential
mortgage loans, commercial real estate loans, construction loans,
working capital loans and a variety of consumer loans, including home
equity lines of credit, installment and collateral loans. All
residential and commercial mortgage loans are secured by first or
second mortgages on real estate. The ability and willingness of
borrowers to satisfy their loan obligations is dependent in large
part upon the status of the regional economy and regional real estate
market. Accordingly, the ultimate collectability of a substantial
portion of NewMil's loan portfolio and the recovery of a substantial
portion of OREO is susceptible to changes in market conditions.
<TABLE>
Changes in the allowance for loan losses during the three month
periods ended September 30, are as follows:
<S> <C> <C>
(in thousands) 2000 1999
---- ----
Balance, beginning of period $4,978 $4,989
Provision for losses - (520)
Charge-offs - (22)
Recoveries 4 554
------ ------
Balance, end of period $4,982 $5,001
====== ======
</TABLE>
NOTE 4 - NON-PERFORMING ASSETS
<TABLE>
The components of non-performing assets were as follows:
<S> <C> <C>
September 30, June 30,
(in thousands) 2000 2000
---- ----
Non-accrual loans $ 629 $ 621
Accruing loans past due
90 days or more 149 231
Accruing troubled debt
restructured loans - -
------ ------
Total non-performing loans 778 852
------ ------
Other real estate owned 150 366
------ ------
Total non-performing assets $ 928 $1,218
====== ======
</TABLE>
Other real estate owned (OREO) includes collateral acquired through
foreclosure, forgiveness of debt or otherwise in lieu of debt, or
loans where NewMil has taken physical possession of the collateral.
NOTE 5 - EARNINGS PER SHARE
Basic earnings per share is computed using the weighted-average common
shares outstanding during the year. The computation of diluted
earnings per share is similar to the computation of basic earnings
per share except the denominator is increased to include the number
of additional common shares that would have been outstanding if
dilutive potential common shares had been issued. Shares used in the
computations for the three month periods ended September 30, are as
follows:
<TABLE>
<S> <C> <C>
Three months ended
September 30,
(in thousands) 2000 1999
---- ----
Basic 3,611 3,654
Effect of dilutive stock options 150 162
----- -----
Diluted 3,761 3,816
===== =====
</TABLE>
NOTE 6 - COMPREHENSIVE INCOME
<TABLE>
The components of comprehensive income for the three month periods
ended September 30, 2000 and 1999 are as follows:
<S> <C> <C>
Three months ended
September 30,
(in thousands) 2000 1999
---- ----
Comprehensive income
Net income $1,040 $1,002
Net unrealized gains on
securities during period 853 23
------ ------
Comprehensive income $1,893 $1,025
====== ======
</TABLE>
<TABLE>
The components of other comprehensive income, and related tax effects
were as follows:
<S> <C> <C> <C>
(in thousands) Before Tax Net of
tax (expense) tax
amount benefit amount
------ ------- ------
Three months ended September 30, 2000
Net unrealized gains on securities
available-for-sale arising
during the period $1,289 $ (439) $ 850
Accretion of unrealized loss on
securities transferred from
available-for-sale to held-to-
maturity 5 (2) 3
------ ----- -----
Net unrealized gains on
securities during period $1,294 $(441) $ 853
====== ===== =====
</TABLE>
<TABLE>
<S> <C> <C> <C>
Three months ended September 30, 1999
Net unrealized losses on securities
available-for-sale arising
during the period $ (94) $ 32 $ (62)
Reclassification adjustment for realized
losses included in net income 109 (37) 72
Accretion of unrealized loss on
securities transferred from
available-for-sale to held-to-
maturity 19 (6) 13
------ ----- -----
Net unrealized gains on
securities during period $ 34 $ (11) $ 23
====== ===== =====
</TABLE>
NOTE 7 - SHAREHOLDERS' EQUITY
Capital Requirements
NewMil and the Bank are subject to minimum capital requirements
established, respectively, by the Federal Reserve Board (the "FRB")
and the Federal Deposit Insurance Corporation (the "FDIC"). NewMil's
and the Bank's regulatory capital ratios at September 30, 20009, were
as follows:
<TABLE>
<S> <C> <C>
NewMil Bank
------ ----
Leverage ratio 9.14% 9.04%
Tier I risk-based ratio 15.22% 15.50%
Total risk-based ratio 16.48% 16.77%
</TABLE>
NewMil and the Bank are categorized as "well capitalized". A well
capitalized institution, as defined by the Prompt Corrective Action
rules issued by the FDIC and the FRB, is one which maintains a total
risk-based ratio of 10% or above, a Tier I risk-based ratio of 6% or
above and a leverage ratio of 5% or above. In addition to meeting
these numerical thresholds, well capitalized institutions may not be
subject to any written order, written agreement, capital directive,
or prompt corrective action directive to meet and maintain a specific
capital level.
Restrictions on Subsidiary's Dividends and Payments
---------------------------------------------------
NewMil's ability to pay dividends is dependent on the Bank's ability
to pay dividends to NewMil. There are certain restrictions on the
payment of dividends and other payments by the Bank to NewMil. Under
Connecticut law the Bank is prohibited from declaring a cash dividend
on its common stock except from its net earnings for the current year
and retained net profits for the preceding two years. Consequently,
the maximum amount of dividends payable by the Bank to NewMil for the
three month period ended September 30, 2000 is $2,139,000. In some
instances, further restrictions on dividends may be imposed on NewMil
by the Federal Reserve Bank.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
In September 2000, The Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 140 ("SFAS 140"),
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." This Statement replaces FASB
Statement No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." it revises the standards
for accounting for securitizations and other transfers of financial
assets and collateral and requires certain disclosures, but it carries
over most of Statement No. 125's provisions without reconsideration.
This Statement will be effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after
March 31, 2001. Management anticipates that SFAS 140 will not have a
significant effect on the Corporation's results of operations or its
financial position based on its current operations.
NewMil Bancorp, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations of NewMil and its subsidiary should be read in
conjunction with NewMil's Annual Report on Form 10-K for the year
ended June 30, 2000.
BUSINESS
NewMil Bancorp, Inc. ("NewMil"), a Delaware corporation, is a bank
holding company for NewMil Bank (the "Bank"), a Connecticut-chartered
and Federal Deposit Insurance Corporation (the "FDIC") insured savings
bank headquartered in New Milford, Connecticut. The principal business
of NewMil consists of the business of the Bank. The Bank is engaged
in customary banking activities, including general deposit taking and
lending activities to both retail and commercial markets, and conducts
its business from fifteen offices (fourteen full service offices and
one limited service office) in Litchfield, New Haven and Fairfield
Counties. NewMil and the Bank were formed in 1987 and 1858,
respectively.
In May 2000, NewMil announced a definitive agreement to acquire Nutmeg
Federal Savings and Loan Association ("Nutmeg"). Nutmeg is a federally
chartered savings and loan association headquartered in Danbury,
Connecticut. Nutmeg had $118.0 million in assets with four branch
locations, two in Danbury, one Bethel and one in Ridgefield Connecticut,
as of September 30, 2000. The shareholders of Nutmeg held a special
meeting on October 18, 2000 and approved the merger agreement. The
shareholders of NewMil held a special meeting on October 25, 2000 and
also approved the merger agreement. NewMil expects to complete the
transaction, with a total purchase price of approximately $20.0 million
and complete the conversion during the quarter ending December 2000.
RESULTS OF OPERATIONS
For the three month periods ended September 30, 2000 and 1999
Overview
--------
NewMil earned net income of $1,040,000, or 28 cents per share
(diluted), for the quarter ended September 30, 2000 as compared with
$1,002,000, or 26 cents per share (diluted), for the quarter ended
September 30, 1999.
Analysis of net interest and dividend income
--------------------------------------------
Net interest and dividend income increased $222,000, or 6.6%, for
the quarter ended September 30, 2000 as compared with the prior year
period. This increase resulted from a $41.1 million, or 12.2%
increase in average earning assets offset in part by a decrease of
20 basis points in the net interest margin.
The following table sets forth the components of NewMil's net interest
income and yields on average interest-earning assets and interest-
bearing funds for the three month periods ended September 30, 2000 and
1999.
<TABLE>
<S> <C> <C> <C>
Three months ended September 30, 2000 Average Income/ Average
(dollars in thousands) balance expense yield/rate
------- ------- ----------
Loans(a) $230,827 $4,707 8.16%
Mortgage backed securities(d) 89,982 1,509 6.71
Other securities(b)(d) 57,323 933 6.51
-------- ------
Total earning assets 378,132 7,149 7.56
Other assets 14,644 ------
--------
Total assets $392,776
========
NOW accounts $ 40,723 116 1.14
Money market accounts 84,454 824 3.90
Savings & other 46,893 286 2.44
Certificates of deposit 131,836 1,818 5.52
-------- ------
Total interest-bearing deposits 303,906 3,044 4.01
Borrowings 28,646 467 6.52
Repurchase agreements 2,061 30 5.82
-------- ------
Total interest-bearing funds 334,613 3,541 4.23
Demand deposits 20,984 ------
Other liabilities 2,427
shareholders' equity 34,752
--------
Total liabilities and
shareholders' equity $392,776
========
Net interest income $3,608
======
Spread on interest-bearing funds 3.33
Net interest margin(c) 3.82
Three months ended September 30, 2000 Average Income/ Average
(dollars in thousands) balance expense yield/rate
------- ------- ----------
Loans(a) $216,636 $4,144 7.65%
Mortgage backed securities(d) 93,098 1,470 6.32
Other securities(b)(d) 27,315 345 5.05
-------- ------
Total earning assets 337,049 5,959 7.07
Other assets 10,662 ------
Total assets $347,711
========
NOW accounts $ 36,636 105 1.15
Money market accounts 72,004 528 2.93
Savings & other 48,762 289 2.37
Certificates of deposit 125,092 1,459 4.67
-------- ------
Total interest-bearing deposits 282,494 2,381 3.37
Borrowings 12,149 192 6.32
-------- ------
Total interest-bearing funds 294,643 2,573 3.49
Demand deposits 18,573 ------
Other liabilities 1,612
Shareholders' equity 32,883
--------
Total liabilities and
shareholders' equity $347,711
========
Net interest income $3,386
======
Spread on interest-bearing funds 3.58
Net interest margin(c) 4.02
(a) Includes non-accrual loans.
(b) Includes interest-bearing deposits in other banks and federal
funds sold.
(c) Net interest income divided by average interest-earning assets.
(d) Average balances of investments are based on historical cost.
</TABLE>
The following table sets forth the changes in interest due to volume and
rate for the three month periods ended September 30, 2000 and 1999.
<TABLE>
<S> <C> <C> <C> <C>
Three months ended September 30, 2000 versus 1999
(dollars in thousands) Change in interest due to
Volume Rate Vol/rate Net
------ ---- -------- ---
Interest-earning assets:
Loans $ 271 $ 274 $ 18 $ 563
Mortgage backed securities (49) 91 (3) 39
Other securities 379 100 109 588
------ ------ ------ ------
Total 601 465 124 1,190
------ ------ ------ ------
Interest-bearing liabilities:
Deposits 180 449 34 663
Borrowings 261 6 8 275
Repurchase agreements - - 30 30
------ ------ ------ ------
Total 441 455 72 968
------ ------ ------ ------
Net change to interest income $ 160 $ 10 $ 52 $ 222
====== ====== ====== ======
</TABLE>
Interest income
---------------
Total interest and dividend income increased $1,190,000, or 20.0%,
for the quarter ended September 30, 2000 as compared with the same
period a year ago. This increase resulted from a $41.1 million, or
12.9%, increase in average earning assets coupled with an increase
in average yield of 49 basis points to 7.56%.
Loan interest and fee income increased $563,000, or 13.6%, for the
quarter ended September 30, 2000 as compared with the prior year
period. This increase is a result of an increase in average loan
balances coupled by an increase in average yield. Average yield
increased 51 basis points to 8.16%, as a result of a higher interest
rate environment, in the current year. Average loan balances increased
$14.2 million, or 6.6%.
Interest and dividends on investments and federal funds sold increased
$627,000, or 34.5%, as a result of a $26.9 million, or 22.3%, increase
in average balances coupled with a higher average yield. The average
yield increased 60 basis points to 6.63%, also a result of the higher
interest rate environment, in the current quarter. The increase in
volume results from purchase of corporate bonds and US Agency issued
securities offset in part by monthly repayments on MBS and CMOs.
Interest expense
----------------
Interest expense for the quarter ended September 30, 2000 increased
$968,000, or 37.6%, as compared with the same period a year ago as a
result of a $40.0 million, or 13.6%, increase in average borrowings and
deposit balances for the period coupled with a 74 basis point increase
in the cost of funds to 4.23%.
Deposit expense increased $663,000, or 27.8%, as a result of a $21.4
million, or 7.6%, increase in average deposits coupled with a 64 basis
points increase in the average cost of deposits. The average NOW
account balance has increased over the period by $4.1 million, or
11.2%, Money Market accounts have increased $12.5 million, or 17.3%,
and certificates of deposit increased by $6.7 million, or 5.4%. The
average Saving account balance has decreased over the period by $1.9
million, or 3.8%. During the quarter rates on deposits have increased
from the prior year, the average rate paid on Certificate of deposit
has increased to 5.52% from 4.67% a year ago, Savings rates have
increased to 2.44% from 2.37% and Money Market rates have increased
to 3.90% from 2.93%, while NOW deposit rates have declined to 1.14%
from 1.15% a year ago.
Interest expense on borrowings (including repurchase agreements)
increased $305,000, or 158.9%, as a result of increased average
borrowings coupled with a higher average cost of funds. Average
borrowings for the current quarter are $18.6 million, or 152.8%,
higher than the prior year period. The average borrowings cost is
15 basis points higher than the prior year period. NewMil's current
borrowings are for terms of less than six months.
Provision and Allowance for loan losses
---------------------------------------
NewMil did not make a provision for loan losses during the quarter
ended September 30, 2000, compared with negative provision of $520,000
for the prior year period. The negative provision, in the quarter
ended September 30, 1999, resulted from a loan loss recovery of
$545,000 related to a loan that had been charged off in prior years.
The recovery represents cash received from the borrower's bankruptcy
court proceedings. The following table details key ratios for the
periods ended Sept 30, 2000, June 30, 2000 and September 30, 1999:
<TABLE>
<S> <C> <C> <C>
Sept 30, June 30, Sept 30,
2000 2000 1999
-------- -------- --------
Ratio of allowance for loan losses:
to non-performing loans 640.4% 584.3% 234.4%
to total gross loans 2.1 2.2 2.3
</TABLE>
While there was growth in the loan portfolio during the quarter ended
September 30, 2000 the Bank did not experience any loan charge-offs
and the level of unallocated reserves remained stable during the
quarter, which allowed the Bank not to record a provision for loan
losses in the quarter. In addition, during the quarter, non-performing
loans have decreased $74,000, or 8.7%,. NewMil remains adequately
reserved both against total loans and non-performing loans. For a
discussion on loan quality see "Non-Performing Assets".
The Bank determines its allowance and provisions for loan losses based
upon a detailed evaluation of the loan portfolio through a process
which considers numerous factors, including estimated credit losses
based upon internal and external portfolio reviews, delinquency levels
and trends, estimates of the current value of underlying collateral,
concentrations, portfolio volume and mix, changes in lending policy,
historical loan loss experience, current economic conditions and
examinations performed by regulatory authorities. Determining the
level of the allowance at any given period is difficult, particularly
during deteriorating or uncertain economic periods. Management must
make estimates using assumptions and information which is often
subjective and changing rapidly. The review of the loan portfolio is
a continuing event in the light of a changing economy and the dynamics
of the banking and regulatory environment. In management's judgement
the allowance for loan losses at September 30, 2000, is adequate.
Should the economic climate deteriorate, borrowers could experience
difficulty and the level of non-performing loans, charge-offs and
delinquencies could rise and require increased provisions. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan
losses. Such agencies could require the Bank to recognize additions
to the allowance based on their judgements of information available
to them at the time of their examination. The Bank was last examined
by its banking regulators in August 1999 and no additions to the
allowance were requested as a result of this examination.
The allowance for loan losses is reviewed and approved by the Bank's
Board of Directors on a quarterly basis. The allowance for loan
losses is computed by taking the loan portfolio and segregating it
into various risk rating categories. Some loans have been further
segregated and carry specific reserve amounts. Loans that do not
have specific reserve are assigned reserves based on a loss percentage
assigned to the outstanding balances in their risk rating category.
In addition, the Bank maintains an unallocated reserve. The level of
unallocated reserves from June 30, 2000 to September 30, 2000 remained
substantially the same.
Non-interest income
-------------------
The following table details the principal categories of non-interest
income for the three month periods ended September 30:
<TABLE>
<S> <C> <C> <C> <C>
(in thousands) 2000 1999 Change
---- ---- ------
Service charges on
deposit accounts $ 369 $ 328 $ 41 12.5%
Gain on sale of branch - 75 (75) (100.0)
Gains on sale of OREO 39 - 39 100.0
Gains on sales of mortgage
loans, net 48 54 (6) (11.1)
Loan servicing 15 17 (2) (11.8)
Securities losses, net - (109) 109 100.0
Other 92 80 12 15.0
----- ----- -----
Total non-interest income $ 563 $ 445 $ 118 26.5
===== ===== =====
</TABLE>
The increase in non-interest income is the result of security losses
in 1999 and OREO gain in 2000, offset by an additional premium received,
in the September 1999 quarter, from the sale of our Winsted Office,
which occurred in May 1999. The additional premium on the sale of the
Winsted Office was the result of certain competitive events that did
not occur within the time frame that was stipulated in the sale
agreement. The increase on gains on OREO is the result of one sale of
OREO property, in the quarter ended September 30, 2000 as compared with
no sales for 1999. The decrease in gains on sales of residential
mortgage loans resulted from reduced sales volume in the quarter ended
September 2000. Gains were generated on loan sales of $3.0 million in
2000 compared with $3.1 million in 1999. Secondary market loan sales
are generally pre-arranged on a loan by loan basis prior to origination
and loans are sold service-released. The decrease in loan servicing
fees results from portfolio run-off. No loans have been sold with the
servicing rights retained since June 1995.
Operating expenses
------------------
The following table details the principal categories of operating
expenses for the three month periods ended September 30:
<TABLE>
<S> <C> <C> <C> <C>
(in thousands) 2000 1999 Change
---- ---- ------
Salaries $1,262 $1,216 $ 46 3.8%
Employee benefits 167 311 (144) (46.3)
Occupancy 245 238 7 2.9
Equipment 241 212 29 13.7
Insurance 27 28 (1) (3.6)
Professional fees, Collection
and OREO expense 78 256 (178) (69.5)
Postage and telecommunications 82 85 (3) (3.5)
Marketing 90 70 20 28.6
Other operating 421 429 (8) (1.9)
------ ------ -----
Total operating expenses $2,613 $2,845 $(232) (8.2)
====== ====== =====
</TABLE>
The increase in salaries expense for the quarter ended September 30,
2000 as compared with the prior year period was due primarily to annual
salary increases of approximately 4.5% offset, in part, by a lower
accrual for bonuses for the current fiscal year. The decrease in
employee benefits is a result of the recognition of net periodic
pension income, for the quarter, of $150,000 on the Bank's frozen
defined benefit pension plan. The increase in equipment expense is a
result of increased service and depreciation on new computer equipment.
Professional, Collection and OREO expense decreased as a result of
legal fees for litigation over the sale of OREO, and expenses related
to several strategic initiatives that had been undertaken during the
quarter ended September 1999. Changes in other operating expenses,
which include shareholder relations, office supplies and other
expenses, result from increased lending activities and changes in
operations activities.
Income taxes
------------
Net income for the quarter included an income tax provision of
$518,000, representing a 33.2% effective rate, as compared with a
provision of $504,000 a year ago, representing a 33.6% effective rate.
FINANCIAL CONDITION
Total assets increased $14.2 million, or 3.6%, to $406.8 million
during the three month period from June 30, 2000 through September 30,
2000. Cash and cash equivalents increased $11.4 million, or 90.6%.
Securities decreased $2.8 million, or 1.9%, during the three month
period. Net loans increased $5.3 million, or 2.4%. Deposits increased
$11.5 million, or 3.6%, and borrowings and repurchase agreements
increased by $753,000.
Securities
----------
NewMil's securities portfolio consists of U.S. Government obligations,
corporate bonds, MBSs, CMOs, bank qualified municipal bonds, and equity
securities. At September 30, 2000, 92.4% of the portfolio consisted of
fixed rate securities, principally MBS and to a lesser extent, CMOs,
U.S. Government agency, corporate bonds and municipal bonds. At
September 30, 2000 total fixed rate securities had a projected weighted
average duration and life of 4.5 years and 6.0 years, respectively,
based on median projected prepayment speeds at current interest rates.
At September 30, 2000, 5.7% of the portfolio consisted of floating rate
CMOs and MBSs, which generally reprice monthly based on pre-determined
spreads to underlying index, subject to life-time caps and floors. The
floating rate securities had a projected weighted average duration and
life of 0.1 years and 7.2 years, respectively, based on median
projected prepayment speeds at current interest rates. Floating rate
MBSs are tied to the Eleventh District Cost of Funds index, while the
floating rate CMOs are tied to several Treasury indices. The remaining
1.9% of the portfolio at September 30, 2000, was represented by Federal
Home Loan Bank stock and Bankers Bank Northeast stock.
At September 30, 2000, securities totaling $103.2 million, or 72.9%,
were classified as available-for-sale and securities totaling $38.3
million, or 27.1%, were classified as held-to-maturity.
Loans
-----
Net loans grew $5.3 million, or 2.4%, during the three month period
ended September 30, 2000. Loans originated and loan advances totaled
$20.2 million, while loan repayments and loans sold in the secondary
market were $11.9 million and $3.0 million, respectively.
<TABLE>
Major classifications of loans are as follows:
<S> <C> <C>
September 30, June 30,
(in thousands) 2000 2000
---- ----
Real estate mortgages:
One-four family residential $130,841 $130,770
Five or more family residential 4,159 4,185
Commercial 52,429 51,633
Land 1,778 1,995
Commercial and industrial 21,405 17,404
Home equity lines of credit 20,897 20,257
Installment and other 2,582 2,439
-------- --------
Total loans, gross 234,091 228,683
Deferred loan origination fees
and purchase premium, net (59) 29
Allowance for loan losses (4,982) (4,978)
-------- --------
Total loans, net $229,050 $223,734
======== ========
</TABLE>
The Commercial Lending department specializes in lending to small and
mid-size companies and professional practices and provides short-term
and long-term financing, construction loans, commercial mortgages and
property improvement loans. The department also works with several
government-assisted lending programs. Commercial mortgage loans,
including mortgages on land and multi-family property increased
$553,000, or 1.0% since June 30, 2000, and C & I loans increased
$4,001,000, or 23.0%, for the period.
The Residential Mortgage Department, in addition to traditional
portfolio lending, has a secondary market distribution capability,
which provides the flexibility to sell a variety of mortgage products
on a service-released basis. During the three month period ended
September 30, 2000 the department has originated and sold $3.0 million
of loans to the secondary market. The department has the capability
to supplement the Bank's own originations by purchasing residential
mortgage loans originated within the State of Connecticut from several
correspondent lenders. During the three month period ended September
30, 2000 the department did not purchase any loans for the Bank's
portfolio. Since June 30, 2000 the residential mortgage loan portfolio
has increased by $71,000, or 0.05%, while home equity lines and loans
increased $640,000, or 3.2%, for the period.
Non-performing assets
---------------------
The following table details changes in non-performing assets during
the three month periods ended September 30.
<TABLE>
<S> <C> <C>
(in thousands) 2000 1999
---- ----
Balance, beginning of year $1,218 $1,569
Loans placed on non-accrual status 109 448
Change in accruing loans past
due 90 or more days, net (82) 668
Payments to improve OREO - 26
Loan payments (101) (1)
Loans returned to accrual status - (179)
Loan charge-offs - (20)
Gross proceeds from OREO sales (255) -
Gains on OREO sales, net 39 -
------ ------
Balance, end of period $ 928 $2,511
====== ======
Percent of total assets 0.23% 0.74%
</TABLE>
During the three month period ended September 30, 2000 non-performing
assets decreased $290,000, or 23.8%, due principally to the sale of an
OREO property during the quarter coupled with a decrease in loans 90
days past due and accruing offset by an increase in non-accrual loans.
Additions to non-accrual loans generally represent loans which had
previously been classified on NewMil's internally monitored list and
had been adequately reserved. Additions to loans 90 days past due and
still accruing represent loans which are classified on NewMil's
internally monitored list, have adequate collateral value, and are in
the process of collection.
In addition to non-performing assets, at September 30, 2000 NewMil had
$3,290,000 of performing classified loans that are considered potential
problem loans. Although not impaired, performing classified loans, in
the opinion of management, exhibit a higher than normal degree of risk
and warrant monitoring due to various considerations, including (i) the
degree of documentation supporting the borrower's current financial
position, (ii) potential weaknesses in the borrowers' ability to service
the loan, (iii) possible collateral value deficiency, and (iv) other
risk factors such as geographic location, industry focus and negatively
trending financial results. These deficiencies create some uncertainty,
but not serious doubt, as to the borrowers' ability to comply with the
loan repayment terms in the future. Management believes that reserves
for these loans are adequate.
The following table details the composition of non-performing assets as
of September 30.
<TABLE>
<S> <C> <C> <C> <C>
Non-Performing Assets Accruing
(dollars in thousands) loans Total
Non- past due non-
accrual 90 or performing
loans more days OREO assets
September 30, 2000
Real estate:
Residential $ 199 $ 149 $ 58 $ 406
Commercial 27 - 92 119
Land and land
development 403 - - 403
------ ------ ------ ------
Totals $ 629 $ 149 $ 150 $ 928
====== ====== ====== ======
</TABLE>
NewMil pursues the resolution of all non-performing assets through
restructurings, credit enhancements or collections. When collection
procedures do not bring a loan into performing or restructured status,
NewMil generally initiates action to foreclose the property or to
acquire it by deed in lieu of foreclosure. NewMil actively markets
all OREO property.
LIQUIDITY
NewMil manages its liquidity position to ensure that there is
sufficient funding availability at all times to meet both anticipated
and unanticipated deposit withdrawals, new loan originations,
securities purchases and other operating cash outflows. The principal
sources of liquidity for NewMil are principal payments and maturities
of securities and loans, short term borrowings through repurchase
agreements and Federal Home Loan Bank advances, net deposit growth and
funds provided by operations. Liquidity can also be provided through
sales of loans and available-for-sale securities.
Operating activities for the three month period ended September 30, 2000
provided net cash of $979,000. Investing activities used net cash of
$1,457,000, principally as a result of net loan advances offset, in
part, by securities repayments. Financing activities provided net cash
of $11,919,000, principally due to net deposit increases, stock option
proceeds and repurchase agreements offset, in part, by repayment of FHLB
advances, dividends paid and treasury stock purchases. Funds provided
by operating and financing activities were utilized to funds investing
activities and increase cash and overnight federal funds sold.
At September 30, 2000, NewMil's liquidity ratio, as represented by cash,
short term available-for-sale securities, marketable assets and the
ability to borrow against held-to-maturity securities and loans through
unused FHLB and other short term borrowing capacity, of approximately
$186.4 million, to net deposits and short term unsecured liabilities,
was 54.9%, well in excess of NewMil's minimum guideline of 15%. At
September 30, 2000, NewMil had outstanding commitments to fund new loan
originations of $6.7 million, construction mortgage commitments of $7.1
million and unused lines of credit of $27.8 million. These commitments
will be met in the normal course of business. NewMil believes that its
liquidity sources will continue to provide funding sufficient to support
operating activities, loan originations and commitments, and deposit
withdrawals.
CAPITAL RESOURCES
Shareholders' equity increased $1,552,000, to $35,877,000, while book
value per share increased $0.43 to $9.95, during the three month period
ended September 30, 2000. The increase in equity resulted from net
income of $1,040,000, or $0.28 per share (diluted), net unrealized gains
on securities during the period, net of taxes, $853,000, the tax benefit
of the exercise of non-qualifying stock options of $113,000 and stock
option proceeds of $57,000, offset by treasury stock purchases of
$150,000 and dividends paid of $361,000.
NewMil and the Bank are subject to minimum capital requirements
established, respectively, by the Federal Reserve Board (the "FRB") and
the FDIC. At September 30, 2000 NewMil's leverage capital ratio was
9.14% and its tier I and total risk-based capital ratios were 15.22% and
16.48%, respectively. At September 30, 2000 the Bank's leverage capital
ratio was 9.04% and its tier I and total risk-based capital ratios were
15.50% and 16.77%, respectively. NewMil and the Bank are categorized as
"well capitalized". A well capitalized institution, which is the
highest capital category for an institution as defined by the Prompt
Corrective regulations issued by the FDIC and the FRB, is one which
maintains a total risk-based ratio of 10% or above, a Tier I risk-based
ratio of 6% or above and a leverage ratio of 5% or above, and is not
subject to any written order, written agreement, capital directive, or
prompt corrective action directive to meet and maintain a specific
capital level.
Dividends
---------
NewMil's ability to pay dividends is dependent on the Bank's ability to
pay dividends to NewMil. There are certain restrictions on the payment
of dividends and other payments by the Bank to NewMil. Under
Connecticut law the Bank is prohibited from declaring a cash dividend
on its common stock except from its net earnings for the current
calendar year and retained net profits for the preceding two years.
Consequently, the maximum amount of dividends payable by the Bank to
NewMil as of September 30, 2000 was $2,139,000. In some instances,
further restrictions on dividends may be imposed on NewMil by the
Federal Reserve Bank.
NewMil believes that the payment of cash dividends to its shareholders
is appropriate, provided that such payment considers NewMil's capital
needs, asset quality, and overall financial condition and does not
adversely affect the financial stability of NewMil or the Bank. The
continued payment of cash dividends by NewMil will be dependent on
NewMil's future core earnings, financial condition and capital needs,
regulatory restrictions, and other factors deemed relevant by the Board
of Directors of NewMil.
Item 3. QUANTITATIVE and QUALITATIVE DISCLOSURE of MARKET RISK
NewMil manages interest rate risk through an ALCO Committee comprised
of senior management. The committee monitors exposure to interest
rate risk on a quarterly basis using both a traditional gap analysis
and simulation analysis. Traditional gap analysis identifies short
and long term interest rate positions or exposure. Simulation analysis
measures the amount of short term earnings at risk under both rising
and falling rate scenarios. NewMil's interest rate risk has not
significantly changed from the prior year.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending against NewMil or the
Bank or any of their properties, other than ordinary routine litigation
incidental to NewMil's business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders' meeting was held on October 25, 2000. The
following matters were considered and voted on, as certified by the
election officer at the annual meeting:
<TABLE>
<S> <C> <C> <C>
Votes Votes Votes
For Against Withheld
----- ------- --------
Director Election
Herbert E. Bullock 2,418,534 - -
for 3 year term
Director Election
Kevin L. Dumas 2,428,134 - -
for 3 year term
Director Election
Francis J. Wiatr 2,418,534 - -
for 3 year term
Amendment to the Corporation's
1986 Stock Option Plan for Key
Officers and Employees 2,195,499 772,363 36,977
Amendment to the Corporation's
1992 Stock Option Plan for Outside
Directors 2,009,416 944,910 50,528
Ratification of
PricewaterhouseCoopers LLP
as auditors 2,977,226 22,719 4,917
A special shareholders' meeting was held on October 25, 2000. The
following matters were considered and voted on, as certified by the
election officer at the special meeting:
Votes Votes Votes
For Against Withheld
----- ------- --------
Approve and adopt the agreement
and plan of merger NewMil, New
Milford Savings Bank and
Nutmeg Federal Savings
and Loan Association 1,954,671 425,577 7,454
</TABLE>
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Computation of earnings per share.
(b) Report on Form 8-K.
None
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.
NEWMIL BANCORP, INC.
November 9, 2000 By /s/ Francis J. Wiatr
---------------------------
Francis J. Wiatr,
Chairman, President and CEO
November 9, 2000 By /s/ B. Ian McMahon
---------------------------
B. Ian McMahon,
Chief Financial Officer
