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Previous: SMITH BARNEY VARIABLE ACCOUNT FUNDS, 24F-2NT, 1997-02-21 |
Next: FIRST ESSEX BANCORP INC, S-8, 1997-02-21 |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
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):
February 21, 1997 (December 30, 1996)
FIRST ESSEX BANCORP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-16143 04-2943217
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification Number)
71 Main Street
Andover, MA 01810
(Address of Principal Executive Offices)
(508) 475-4313
(Registrant's Telephone Number, including Area Code)
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following financial statements are included in this report:
FINEST FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets, September 30, 1996 and 1995 (unaudited)
Consolidated Statements of Income, nine months ended September 30, 1996
and 1995 (unaudited)
Consolidated Statements of Changes in Stockholders' Equity, nine months
ended September 30, 1996 and 1995 (unaudited)
Consolidated Statements of Cash Flows, nine months ended September 30,
1996 and 1995 (unaudited)
The following financial statements are incorporated by reference in
this report from the Company's Registration Statement on Form S-4 (Reg. No.
333-12793):
FINEST FINANCIAL CORPORATION AND SUBSIDIARY
Report of Shatswell, MacLeod & Company, P.C, Independent Accountants
Consolidated Balance Sheets, December 31, 1995 and 1994
Consolidated Statements of Income, years ended December 31, 1995
and 1994
Consolidated Statements of Changes in Stockholders' Equity, years
ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows, years ended December 31, 1995
and 1994
Notes to Consolidated Financial Statements, years ended December 31,
1995 and 1994
(b) Pro Forma Financial Information.
The following pro forma financial information is included in this
report:
FIRST ESSEX BANCORP - FINEST FINANCIAL CORPORATION PRO FORMA
Pro Forma Condensed Balance Sheet at September 30, 1996
Pro Forma Condensed Statement of Operations, year ended
December 31, 1995
Pro Forma Condensed Statement of Operations, nine months ended
September 30, 1996 Notes to Pro Forma Condensed Financial Statements
(c) Exhibits.
23.1 Consent of Shatswell, MacLeod & Company, P.C.
2
<PAGE>
<TABLE>
<CAPTION>
FINEST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1996
Sept 30, 1996
-------------
(unaudited)
(Dollars in thousands)
<S> <C>
ASSETS
Cash and due from banks $ 5,407
Federal funds sold 900
Investment in available-for-sale securities (at fair value) 38,966
Investment in held-to-maturity securities 34,343
Federal Home Loan Bank stock, at cost 648
Loans, net 96,024
Loans held-for-sale 0
Other real estate owned 576
Premises and equipment 1,652
Accrued interest receivable 1,510
Income taxes receivable and net deferred tax asset 0
Other assets 2,170
---------
Total Assets $ 182,196
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 159,828
Accrued interest payable 1,116
Other liabilities 1,677
---------
Total liabilities $ 162,621
---------
Stockholders' equity:
Common stock, par value $.10 per share; authorized 2,000,000 shares;
1,478,750 and 1,478,750 shares issued and outstanding 148
Paid-in-capital 7,508
Retained earnings 11,931
Treasury stock (15,970 shares at cost) 0
Net unrealized holding gain (loss) on available-for-sale securities (12)
---------
Total stockholders' equity $ 19,575
---------
Total liabilities and stockholders' equity $ 182,196
=========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
FINEST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine MOnth Period Ended September 30, 1996 and 1995
(Dollars in thousands, except per share amounts)
Nine Months Ended
September 30,
---------------------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 7,117,021 $ 7,497,488
Interest and dividends on securities:
Taxable 2,846,302 1,974,558
Tax-exempt 123,497 158,468
Dividends on marketable equity securities 191,540 186,515
Other interest 157,194 228,560
------------ ------------
Total interest and dividend income 10,435,553 10,045,589
Interest expense:
Interest on deposits 4,251,701 4,079,640
Interest on capitalized leases 30,402 33,827
Interest on short term borrowings 5,277 0
------------ ------------
Total interest expense 4,287,380 4,113,467
------------ ------------
Net interest and dividend income 6,148,173 5,932,122
Provision for loan losses 194,000 550,000
------------ ------------
Net interest and dividend income after provisions for loan losses 5,954,173 5,382,122
Other income:
Fees and service charges 443,923 519,579
Securities gains (losses), net 0 (1,858)
Recognition of deferred gain on other real estate owned sales 113,365 289,465
Other income 109,442 80,050
------------ ------------
Total other income 666,730 887,236
------------ ------------
Other expense:
Salaries and employee benefits 1,750,375 1,779,806
Occupancy expense 294,157 278,544
Equipment expense 88,565 133,785
Professional fees 747,852 1,161,246
Deposit insurance premium 34,853 44,852
Data processing 173,474 179,323
Insurance expense 88,734 107,954
Write-downs and provisions for market value decline
in other real estate owned 87,872 366,246
Net loss (gain) on sales of other real estate owned (161,458) 0
Net loss from real estate operations 150,274 100,000
Merger agreement termination fee 225,000 0
Loss on litigation 0 0
Other expense 473,225 528,605
------------ ------------
Total other expense 3,952,923 4,680,361
Income (loss) before income tax (benefit) expense 2,667,980 1,588,997
------------ ------------
Income tax (benefit) expense 168,887 261,053
Net income 2,499,093 1,327,944
Earnings per share:
Weighted average shares outstanding 4,223,467 1,208,429
Net income per share 1.69 0.91
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
FINEST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Month Period Ended September 30, 1996 and 1995
Net
Unrealized
Holding Gain
(Loss) On
Available-
Common Paid-In Retained Treasury For-Sale
Stock Capital Earnings Stock Securities Total
------------ ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 147,865 7,506,508 9,431,809 -- 180,694 17,266,876
Net income -- -- 2,499,093 -- -- 2,499,093
Issuance of common stock 10 1,340 -- -- -- 1,350
Net change in unrealized holding
gain on available-for-sale securities -- -- -- -- (201,394) (201,394)
------------ ------------ ------------ ------------ ------------ ------------
Balance September 30, 1996 (unaudited) 147,875 7,507,848 1 -- (20,700) 19,565,925
============ ============ ============ ============ ============ ============
Balance, December 31, 1994 147,452 7,306,971 8,227,995 (71,400) (329,837) 15,281,181
Net income -- -- 1,327,944 -- -- 1,327,944
Net change in unrealized holding
loss on available-for-sale securities -- -- -- -- 369,429 369,429
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 1995 (unaudited) 147,452 7,306,971 9,555,939 (71,400) 39,592 16,978,554
============ ============ ============ ============ ============ ============
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
FINEST FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Period Ended September 30, 1996 and 1995
(Dollars in thousands, except per share amounts)
Nine Months Ended
September 30,
---------------------------------------------
1996 1995
---- (unaudited) ----
<S> <C> <C>
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by 2,499,093.00 1,327,944.00
operating activities:
Gain on sale of equipment, net 0 0
Depreciation and amortization 51,634.45 106,172.68
Provision for possible loan losses 194,000.00 550,000.00
Provision for market decline of other real estate owned 87,871.73 116,493.59
Net (gain) loss on sales of other real estate owned 161,458.42 132,308.55
Amortization of deferred gains on sales of other real estate owned 113,365.01 273,649.81
Change in deferred loan fees 15,619.93 (32,140.46)
Accretion, net of amortization of securities 152,113.25 1,047,543.79
Securities loss (gains), net 0 1,858.26
Decrease (increase) in accrued interest receivable (81,191.55) (240,681.65)
Decrease (increase) in prepaid expenses (11,967.87) 25,469.54
(Decrease) increase in accrued interest payable (128,279.90) 550,370.45
Decrease (increase) in accrued expenses 111,225.18 (233,280.99)
Deferred tax (benefit) expense (975,457.00) (980,089.00)
(Decrease) increase in taxes payable 886,692.00 566,261.29
Decrease in income tax receivable (117,030.62) 0
-------------- --------------
Net cash provided by operating activities 2,959,146.03 3,211,879.86
Cash flows from investing activities:
Purchases of available-for-sale securities (23,911,027.50) (29,096,350.42)
Proceeds from sales of available-for-sale securities 974,821.11 249,600.00
Proceeds from maturities of available-for-sale securities 12,494,275.40 2,995,688.28
Purchases of held-to-maturity securities (8,702,573.88) (23,745,632.46)
Proceeds from maturities of held-to-maturity securities 2,566,332.08 40,799,410.73
(Increase) decrease in federal funds sold 8,600,000.00 4,100,000.00
Purchase of Federal Home Loan Bank stock (82,000.00) 0
Net (increase) decrease in loans 6,228,673.97 (2,771,425.30)
Increase in loans held-for-sale 74,800.00 0
Recoveries of previously charged off loans 307,580.90 566,681.76
(Increase) decrease in other assets (41,338.00) (5,397.00)
Increase (decrease) in other liabilities (24,721.96) (26,807.48)
Proceeds from sales of other real estate owned 1,421,327.99 5,830,772.90
Principal payments recovered on other real estate owned 360.00 600.00
Proceeds from sales of equipment 0 0
Capital expenditures (51,614.45) (106,172.68)
Proceeds from sales and maturities of investment securities 0 0
Purchase of investment securities 0 0
Net cash used in investing activities (145,104.34) (1,209,031.67)
Cash flows from financing activities:
Net increase (decrease) in demand deposits, Now, money market
and savings accounts (6,028,804.03) (8,377,179.63)
Net increase (decrease) of time deposits 3,805,202.58 5,286,216.52
Net increase in depositors' accounts 0 0
Dividends paid 0 0
Issuance of common stock 1,350.00 0
Sales of treasury stock 0 400.00
Net cash provided by financing activities (2,222,251.45) (3,090,563.11)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 591,790.24 (1,087,714.92)
Cash and cash equivalents at beginning of the period 4,815,329.00 5,347,857.00
-------------- --------------
Cash and cash equivalents at end of the period 5,407,119.24 4,260,142.08
============== ==============
Supplemental disclosure of cash flow information:
Loans originated from sales of other real estate owned 574,100.00 2,435,750.00
498,642.10 2,055,209.56
Loans transferred to other real estate owned 0 0
Other real estate owned transferred to loans 0 2,727,703.00
Interest paid 4,256,978.35 4,079,639.52
Income taxes paid (received) 195,696.00 13,794.00
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
FIRST ESSEX BANCORP - FINEST FINANCIAL CORPORATION
PRO FORMA CONDENSED BALANCE SHEETS
September 30, 1996
(Dollars in Thousands)
(Unaudited)
First Essex Pro Forma
BANCORP Finest Adjustments
(Historical) (Historical) Dr (Cr) Pro Forma
------------ ------------- --------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 18,395 $ 6,307 $ (13,176) (5) $ 11,526
Investment securities available for sale 139,231 38,966 178,197
Investment securities held for investment 125,597 34,991 (640) (1) 159,948
Loans 571,245 100,215 (500) (1) 670,960
Allowance for loan losses (6,757) (4,191) 0 (10,948)
---------- ---------- ---------- ----------
Net Loans 564,488 96,024 (500) 660,012
Bank premises and equipment 9,738 1,652 11,390
Intangibles 0 0 13,167 (7) 13,167
Accrued interest receivable 4,813 1,510 6,323
Foreclosed property 1,159 576 1,735
Other assets 5,747 2,170 881 (4) 8,798
---------- ---------- ---------- ----------
Total assets 869,168 182,196 (268) 1,051,096
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities:
Total deposits 512,517 159,828 672,345
Short-term borrowings 277,806 0 277,806
Other liabilities 14,208 2,793 (2,100)(2,3) 19,101
---------- ---------- ---------- ----------
Total liabilities 804,531 162,621 (2,100) 969,252
Stockholders Equity:
Common stock 804 148 (9) (6) 961
Additional paid in capital 58,476 7,508 (9,542) (6) 75,526
Retained earnings 21,913 11,931 11,931 (6) 21,913
Valuation allowance for unrealized losses on
investment securities available for sale (714) (12) (12) (6) (714)
Treasury stock at cost (15,842) (15,842)
---------- ---------- ---------- ----------
Total stockholders equity 64,637 19,575 2,368 81,844
---------- ---------- ---------- ----------
Total liabilities and stockholders equity $ 869,168 $ 182,196 $ 268 $1,051,096
========== ========== ========== ==========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
FIRST ESSEX BANCORP - FINEST FINANCIAL CORPORATION
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(Dollars in Thousands except share data)
(Unaudited)
First Essex Finest Pro Forma
(Historical) (Historical) Adjustments Pro Forma
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans 34,133 7,117 47 (8) 41,297
Interest and dividends on securities 12,202 3,161 96 (8) 15,459
Other 317 157 474
---------- ---------- --------- ----------
Total interest income 46,652 10,435 143 57,230
Interest expense:
Deposits 16,244 4,252 20,496
Other 11,291 35 11,326
---------- ---------- --------- ---------
Total interest expense 27,535 4,287 0 31,822
Net interest income 19,117 6,148 143 25,408
Provision for possible loan losses 1,055 194 1,249
---------- ---------- --------- ---------
Net interest income after provision for
possible loan losses 18,062 5,954 143 24,159
Non-interest income 2,957 828 3,785
Non-interest expense 14,581 4,114 659 (9) 19,354
Income (loss) before income taxes 6,438 2,668 (516) 8,590
Provision (benefit) for income taxes 30 169 49 (10) 248
---------- ---------- --------- ---------
Net income (loss) 6,408 2,499 (565) 8,342
========== ========== ========= =========
Average common and equivalent shares outstanding (11) 6,164,322 0 1,503,285 (11) 7,667,607
Earnings per share (11,12)
Fully diluted $1.04 $1.10
Primary $1.04 $1.10
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
SELECTED UNAUDITED COMBINED FINANCIAL DATA
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Dollars in Thousands except share data)
(Unaudited)
First Essex Finest Pro Forma
(Historical) (Historical) Adjustments Pro Forma
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans 41,218 10,180 61(8) 51,459
Interest and dividends on securities 19,408 3,072 128(8) 22,608
Other 288 343 631
---------- ---------- --------- ---------
Total interest income 60,914 13,595 189 74,698
Interest expense:
Deposits 19,844 5,581 25,425
Other 17,237 43 17,280
---------- ---------- ---------- ----------
Total interest expense 37,081 5,624 0 42,705
Net interest income 23,833 7,972 189 31,994
Provision for possible loan losses 770 1,600 2,370
---------- ---------- ---------- -----------
Net interest income after provision for
possible loan losses 23,063 6,372 189 29,624
Non-interest income 3,708 853 4,561
Non-interest expense 19,244 6,047 939(9) 26,230
Income (loss) before income taxes 7,527 1,178 (750) 7,955
Provision (benefit) for income taxes 75 (172) 64(10) (33)
---------- ---------- ---------- ----------
Net income (loss) 7,452 1,350 (814) 7,988
========== ========== ========== ===========
Average common and equivalent shares outstanding (11) 6,104,579 1,615,754(11) 7,720,333
Earnings per share (11,12)
Fully diluted $1.22 $1.03
Primary $1.22 $1.03
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FIRST ESSEX BANCORP - FINEST FINANCIAL CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Dollars in Thousands)
<S> <C>
$
Dr (Cr.)
Note 1.
To adjust the assets and liabilities to their fair values:
Loans (500)
Investments (640)
Note 2.
Accrued expenses (600)
Note 3.
To accrue estimated costs associated with merger (1,500)
Note 4.
To reflect effects of transaction:
Tax effect of fair value adjustments 388
Tax effect of accrued expenses 204
Tax effect of estimated other costs associated with merger 289
Note 5.
To reflect issuance of stock and payment of cash to Finest Market value
of 1,574,556 shares of First Essex common stock at effective time
(assumes 56% of purchase price paid in First Essex common stock with an
assumed market value per share of $10.65) (including effect of stock
options assumed) 17,207
Total cash to be paid 13,176
---------
30,383
=========
<CAPTION>
Nine Months Ended
September 30, 1996
-------------------------
<S> <C>
Note 6.
Elimination of Finest equity capital:
Common stock 148
Additional paid in capital 7,508
Retained earnings 11,931
Valuation allowance for unrealized losses
on investment securities available for sale (12)
Treasury stock at cost --
---------
Total stockholders equity 19,575
=========
10
<PAGE>
Note 7.
Goodwill is calculated as follows:
Stockholders equity of Finest at September 30, 19,575
1996
Increase (decrease) to Finest's equity as a result of adjustments:
Loans (500)
Investments (640)
Accrued Expenses (600)
Accrued estimated professional and other costs associated with merger (1,500)
Tax effects of fair value adjustments, accrued expenses, and estimated
professional and other expenses associated with the merger 881
---------
(2,359)
Unallocated purchase price (goodwill) 13,167
---------
Total purchase price (including merger costs) 30,383
=========
Note 8.
To accrete fair value adjustments for loans and investments
<CAPTION>
Note 9.
To amortize intangibles
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Goodwill (15 years) 659 939
</TABLE>
Note 10.
To record tax impact of of accretion and amortization of fair value
adjustments
Note 11.
Pursuant to the Merger Agreement, described elsewhere in this document,
and assuming that 56% of the purchase price will be paid in common
stock, First Essex will issue 1,574,556 shares of common stock in
connection with the merger, provided that the price of First Essex
common stock at the Effective Time, as defined in the Merger Agreement,
is greater than $9.50 per share (minimum price) and less than $11.50 per
share (maximum price). Common stock equivalents, taking into account
First Essex's assumption of Finest's options and assuming that 56% of
the purchase price will be paid in common stock, will be 1,615,754.
11
<PAGE>
Note 12.
Pursuant to the Merger Agreement, described elsewhere in this document,
the portion of the purchase price paid in stock may range from 50%
(minimum) to 62% (maximum) dependant on tax considerations. The
following table represents the pro forma effect on earnings per share
data assuming these minimum and maximum portions of First Essex stock at
a value of $10.65 per share.
<TABLE>
<CAPTION>
Minimum Maximum
------------- -------------
<S> <C> <C>
Weighted average common stock equivalents:
Year ended December 31, 1995 7,551,630 7,889,035
Nine months ended September 30, 7,611,373 7,949,078
1996
Earnings per share:
Year ended December 31, 1995 $1.06 $1.01
Nine months ended September 30, $1.11 $1.06
1996
</TABLE>
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Bancorp has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST ESSEX BANCORP, INC.
Date: February 21, 1997 By: /s/ David W. Dailey
David W. Dailey
Executive Vice President and Chief
Financial Officer
13
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
23.1 Consent of Shatswell, MacLeod & Company, P.C. 15
14
Exhibit 23.1
SHATSWELL, MacLEOD & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
83 Pine Street
West Peabody, Massachusetts 01960-3635
(508) 535-0206
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference of our report dated February
9, 1996, except for Note 15, as to which the date is August 2, 1996, Note 20 as
to which the date is August 5, 1996, and Note 17, as to which the date is
September 24, 1996, in the Registration Statement on Form S-8 (Reg. No.
33-21292) of First Essex Bancorp, Inc.
/s/ Shatswell, MacLeod & Company, P.C.
SHATSWELL, MacLEOD & COMPANY, P.C.
W. Peabody, Massachusetts
February 21, 1997
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