SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of THE SECURITIES EXCHANGE
ACT OF 1934
FOR the quarter ended June 30, 1994
or
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 1-10396
NBB BANCORP,INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2997971
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
174 Union Street, New Bedford, Massachusetts 02740
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 996-5000
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
At August 5, 1994, there were 8,662,394 shares of common stock, par value $.10,
issued and outstanding.
<PAGE>
NBB Bancorp, Inc. and Subsidiary
INDEX
PART I - FINANCIAL INFORMATION Page No.
--------
Item 1.
Consolidated Balance Sheets at June 30, 1994
and December 31, 1993 3
Consolidated Statements of Income for the
three months ended June 30, 1994 and 1993 4
Consolidated Statements of Income for the
six months ended June 30, 1994 and 1993 5
Consolidated Statements of Changes in
Stockholders' Equity for the six months
ended June 30, 1994 and 1993 6
Consolidated Statements of
Cash Flows for the six months ended
June 30, 1994 and 1993 7
Notes to Consolidated Financial Statements 8
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-25
PART II - OTHER INFORMATION 26
SIGNATURES 27
EXHIBITS
Exhibit 10(s) Special Termination Agreement
Exhibit 10(t) Special Termination Agreement
Exhibit 10(u) Special Termination Agreement
Exhibit 11 Computation of Per Share Earnings
<PAGE>
NBB Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(In Thousands, Except Share Data, Unaudited)
June 30, December 31,
1994 1993
--------- ------------
ASSETS:
Cash and due from banks $ 58,220 $ 65,876
Federal funds sold and overnight deposits 12,500 11,000
- - ---------------------------------------------------------------------
Total cash and cash equivalents 70,720 76,876
- - ---------------------------------------------------------------------
Securities available-for-sale: (cost of
$562,536 and $576,790) 548,719 588,442
Securities held-to-maturity: market value of
$380,207 and $409,713 385,224 399,453
Loans 1,349,720 1,319,287
Allowance for loan losses (28,646) (29,596)
- - ----------------------------------------------------------------------
Loans, net 1,321,074 1,289,691
- - ---------------------------------------------------------------------
Banking premises and equipment, net 22,669 22,794
Accrued interest receivable 17,492 18,949
Other real estate owned 17,480 21,236
Goodwill, core deposit and other intangibles 14,144 15,451
Segregated assets 7,619 8,922
Other assets 30,193 8,922
- - ---------------------------------------------------------------------
Total assets $2,435,334 $2,450,736
=====================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $2,165,974 $2,169,256
Mortgagors' escrow payments 5,577 5,621
Accrued interest payable 5,552 5,946
Accrued income taxes payable 0 7,202
Accrued expenses and other liabilities 8,326 7,761
- - ---------------------------------------------------------------------
Total liabilities 2,185,429 2,195,786
- - ---------------------------------------------------------------------
Stockholders' equity:
Serial preferred stock, $0.10 par value,
10,000,000 shares authorized; none issued -- --
Common stock, $0.10 par value, 40,000,000
shares authorized; 9,535,827 and 9,529,430
shares issued and outstanding 954 953
Additional paid-in capital 134,331 134,240
Retained earnings 132,575 122,926
Treasury stock, at cost, 873,433 shares (9,941) (9,941)
- - ----------------------------------------------------------------------
257,919 248,178
Net unrealized gain/(loss) on securities
available-for-sale (8,014) 6,772
- - ---------------------------------------------------------------------
Total stockholders' equity 249,905 254,950
- - ---------------------------------------------------------------------
Total liabilities and stockholders' equity $2,435,334 $2,450,736
=====================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
NBB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data, Unaudited)
Three Months Ended June 30, 1994 1993
- - --------------------------------------------------------------
Interest and dividend income:
Interest and fees on loans $26,842 $28,619
Interest and dividends on securities 14,393 14,216
Other interest 135 128
- - ----------------------------------------------------------------
Total interest and dividend income 41,370 42,963
- - ----------------------------------------------------------------
Interest expense:
Interest on deposits 16,810 18,784
- - ----------------------------------------------------------------
Total interest expense 16,810 18,784
- - ----------------------------------------------------------------
Net interest income 24,560 24,179
Provision for loan losses 150 900
- - ----------------------------------------------------------------
Net interest income after provision
for loan losses 24,410 23,279
- - ----------------------------------------------------------------
Non-interest income:
Deposit and other banking fees 1,442 1,478
Gain (loss) on sales of securities, net (841) 697
Other income 377 227
- - ----------------------------------------------------------------
Total non-interest income 978 2,402
- - ----------------------------------------------------------------
Operating expenses:
Salaries and employee benefits 5,479 5,364
Occupancy and equipment 1,127 1,520
Deposit insurance 1,250 1,205
Data processing 883 790
Amortization of goodwill, core deposit
and other intangibles 654 793
Professional fees 977 837
Office supplies, postage and
telephone 651 505
Customer account servicing 292 378
Marketing 348 210
Insurance 132 207
Other 419 568
- - ----------------------------------------------------------------
Total operating expenses 12,212 12,377
- - ----------------------------------------------------------------
Other expenses:
OREO expense 1,362 1,163
Equity in income of
unconsolidated subsidiary 0 (128)
- - ----------------------------------------------------------------
Total other expenses 1,362 1,035
- - ----------------------------------------------------------------
Total expenses 13,574 13,412
- - ----------------------------------------------------------------
Income before income taxes 11,814 12,269
Provision for income taxes 4,795 5,466
- - ----------------------------------------------------------------
Net income $ 7,019 $ 6,803
================================================================
Earnings per share $0.81 $0.79
Dividends per common share 0.30 0.26
Weighted average common shares
outstanding 8,662,130 8,605,873
See accompanying notes to consolidated financial statements.
<PAGE>
NBB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data, Unaudited)
Six Months Ended June 30, 1994 1993
- - --------------------------------------------------------------
Interest and dividend income:
Interest and fees on loans $53,381 $58,150
Interest and dividends on securities 29,035 27,515
Other interest 242 253
- - ----------------------------------------------------------------
Total interest and dividend income 82,658 85,918
- - ----------------------------------------------------------------
Interest expense:
Interest on deposits 33,593 38,044
- - ----------------------------------------------------------------
Total interest expense 33,593 38,044
- - ----------------------------------------------------------------
Net interest income 49,065 47,874
Provision for loan losses 350 2,200
- - ----------------------------------------------------------------
Net interest income after provision
for loan losses 48,715 45,674
- - ----------------------------------------------------------------
Non-interest income:
Deposit and other banking fees 2,834 2,846
Gain (loss) on sales of securities, net (389) 1,527
Other income 603 417
- - ----------------------------------------------------------------
Total non-interest income 3,048 4,790
- - ----------------------------------------------------------------
Operating expenses:
Salaries and employee benefits 10,984 10,649
Occupancy and equipment 2,405 3,178
Deposit insurance 2,501 2,410
Data processing 1,773 1,566
Amortization of goodwill, core deposit
and other intangibles 1,307 1,585
Professional fees 1,729 1,531
Office supplies, postage and
telephone 1,269 1,179
Customer account servicing 545 657
Marketing 572 381
Insurance 297 426
Other 778 971
- - ----------------------------------------------------------------
Total operating expenses 24,160 24,533
- - ----------------------------------------------------------------
Other expenses:
OREO expense 2,188 2,180
Equity in income of
unconsolidated subsidiary (22) (112)
- - ----------------------------------------------------------------
Total other expenses 2,166 2,068
- - ----------------------------------------------------------------
Total expenses 26,326 26,601
- - ----------------------------------------------------------------
Income before income taxes 25,437 23,863
Provision for income taxes 10,593 10,662
- - ----------------------------------------------------------------
Net income $14,844 $13,201
================================================================
Earnings per share $1.71 $1.53
Dividends per common share 0.60 0.50
Weighted average common shares
outstanding 8,659,610 8,603,447
See accompanying notes to consolidated financial statements.
<PAGE>
NBB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(In Thousands, Except Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Appreciation/
(Depreciation)
Additional Unearned on Securities
Common Paid-in Retained Treasury Compensation- Available for
Stock Capital Earnings Stock ESOP Sale Total
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $953 $134,240 $122,926 ($9,941) $ -- $6,772 $254,950
Net income -- -- 14,844 -- -- -- 14,844
Issuance of common stock
under stock option plan
(6,397 shares) 1 91 -- -- -- -- 92
Cash dividends paid
($.60 per share) -- -- (5,195) -- -- -- (5,195)
Decrease in net unrealized
appreciation on securities
available-for-sale, net of
income tax benefit
of $12,575 -- -- -- -- -- (14,786) (14,786)
- - ---------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1994 $954 $134,331 $132,575 ($9,941) $ -- ($8,014) $249,905
=================================================================================================================================
Balance at
December 31, 1992 $946 $133,274 $103,798 ($9,941) ($283) $ -- $227,794
Net income -- -- 13,201 -- -- -- 13,201
Issuance of common stock
under stock option plan
(16,353 shares) 2 173 -- -- -- -- 175
Cash dividends paid
($.50 per share) -- -- (4,303) -- -- -- (4,303)
- - --------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1993 $948 $133,447 $112,696 ($9,941) ($283) $ -- $236,867
================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NBB Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands) Six Months Ended June 30, 1994 1993
- - ------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 14,844 $ 13,201
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 350 2,200
Provision for OREO losses 1,019 1,467
Loss (gain) on sales of securities, net 389 (1,527)
Net accretion of investments, loans and deposits (811) (363)
Accretion of deferred loan fees (1,329) (1,048)
Amortization of goodwill, core deposit and
other intangibles 1,307 1,585
Depreciation expense 604 639
Increase in accrued interest
receivable and other assets, net (7,829) (6,192)
Decrease in mortgagors' escrow payments (44) (91)
Decrease in accrued expenses and other
liabilities, net (7,031) (554)
- - ------------------------------------------------------------------------------------
Net cash provided by operating activities 1,469 9,317
- - ------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Purchase of securities available-for-sale (273,958) (168,172)
Proceeds from sales of securities available-for-sale 274,730 122,781
Proceeds from maturities, calls and paydowns of
securities available-for-sale 13,442 7,272
Purchase of securities held-to-maturity (28,261) (78,402)
Proceeds from sales of securities held-to-maturity - 4,305
Proceeds from maturities, calls and paydowns of
securities held-to-maturity 42,568 6,394
Decrease (increase) in loans, net (30,998) 21,665
Proceeds from loans sold 505 1,733
Additions to banking premises and equipment (479) (4,795)
Decrease in other real estate owned 2,737 2,180
- - ------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 286 (85,039)
- - ------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Net increase (decrease) in deposits (2,808) 63,479
Proceeds from issuance of common stock 92 175
Dividends paid on common stock (5,195) (4,303)
- - ------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (7,911) 59,351
- - ------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (6,156) (16,371)
Cash and cash equivalents at beginning of year 76,876 73,635
- - ------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $70,720 $ 57,264
====================================================================================
Supplementary Cash Flow Information:
Interest paid on deposits $34,461 $37,563
Income taxes paid, net 24,101 11,574
Non-cash Investing Activities:
Foreclosures and in-substance foreclosures 4,507 5,812
Unrealized depreciation on securities
available-for-sale (14,786) -
- - ------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NBB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited interim consolidated financial statements of NBB Bancorp,
Inc. and Subsidiary (the Company) presented herein should be read in
conjunction with the consolidated financial statements of NBB Bancorp, Inc.
and Subsidiary for the year ended December 31, 1993 filed on Form 10-K.
In the opinion of management, all of the adjustments (consisting of
normal recurring accruals, unless otherwise indicated) necessary for a fair
statement of the results of operations have been included in the accompanying
consolidated financial statements. Interim results are not necessarily
indicative of results to be expected for the entire year.
2. SECURITIES AVAILABLE-FOR-SALE AND HELD-TO-MATURITY
Securities classified as 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. Debt securities that the Company
has the positive intent and ability to hold to maturity are classified as
held-to-maturity and reported at amortized cost.
3. EARNINGS PER SHARE
The earnings per share calculation for the three and six-month periods
ended June 30, 1994 and 1993 are based on weighted average shares
outstanding. Weighted average shares outstanding is computed based on common
stock issued less treasury stock held. The effect of outstanding stock
options granted is not material.
4. COMMITMENTS
At June 30, 1994, firm commitments to grant loans amounted to $13.0
million, commitments under standby letters of credit amounted to $121
thousand, unadvanced funds under construction loans amounted to $18.3
million, and unadvanced funds under commercial and home equity lines of
credit amounted to $28.4 million. There were no commitments to sell loans at
June 30, 1994.
5. DIVIDENDS
On July 21, 1994, the Company announced that a $.30 per share dividend
would be paid on August 12,1994 to stockholders of record on July 30, 1994.
6. RECENT DEVELOPMENT
The Company entered into an Agreement and Plan of Merger with Fleet
Financial Group, Inc. (Fleet) dated May 9, 1994, pursuant to which the
Company will be merged with and into Fleet in a transaction in which
Fleet will be the surviving entity. See the March 31, 1994 Form 10-Q
filed for the Company which includes the full text of the Agreement.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of the consolidated results of
operations and financial condition of the Company should be read in
conjunction with the consolidated financial statements and related notes
included in the 1993 Annual Report to Stockholders.
Comparison of Results of Operations for the Three Months Ended June 30, 1994
and 1993
OVERVIEW
Net income for the second quarter of 1994 was $7.0 million or $0.81 per
share, compared to $6.8 million or $0.79 per share earned in the second
quarter of 1993. Lower deposit costs combined with increased average earning
assets due to deposit growth was a major factor in the favorable variance.
In addition, improved asset quality continued to have a positive impact on
the results of operations.
Net interest margin was 4.22% for the current quarter compared to 4.24% for
the same quarter last year. Average earning assets increased by $43.9
million reflecting deposit and equity growth during the twelve-month period
ended June 30, 1994.
The provision for loan losses declined by $750 thousand from the second
quarter of 1993 due to continued improvement in nonperforming assets.
Nonperforming assets decreased by $17.0 million compared to June 30, 1993
and totaled $31.7 million at June 30, 1994.
Total operating expenses amounted to $12.2 million for the quarter ended
June 30, 1994 compared to $12.4 million for the same quarter last year. This
decrease is primarily due to the consolidation of operations from acquired
banks and the closing of two branch offices during the past twelve months.
NET INTEREST INCOME
Net interest income is the difference between interest and fees earned on
the Company's loan and investment portfolios and the interest paid on
deposits and borrowed funds.
Net interest income increased $381 thousand from the same quarter last year,
to $24.6 million, for the second quarter of 1994, due primarily to the
increase in average earning assets. The decrease of two basis points in the
net interest margin was not material and primarily reflects the fact that
higher yielding assets, such as loans, were a smaller percentage of
interest-earning assets due to the run-off of certain loans acquired as part
of the Attleboro Pawtucket acquisition in August, 1992. That bank was
acquired under a loss-sharing agreement with the FDIC and the loan run-off
has been in line with expectations.
<PAGE>
The following table presents an analysis of average balances of interest-earning
assets and interest-bearing liabilities, yields earned and rates paid:
CONSOLIDATED AVERAGE BALANCE SHEETS AND YIELDS EARNED AND RATES PAID
(Dollars in Thousands)
Three Months Ended June 30, 1994 December 31, 1993 June 30, 1993
Average Average Average
Balance Rate Balance Rate Balance Rate
ASSETS:
Interest-earning assets:
Loans $1,338,944 8.02% $1,316,056 8.14% $1,332,522 8.59%
Securities 909,124 5.89 914,485 5.95 891,303 6.10
Mortgage-backed
securities 61,076 6.64 68,129 6.34 38,535 6.43
Federal funds sold and
overnight deposits 14,082 3.84 11,402 3.01 16,989 3.01
---------- --------- ----------
Total interest-
earning assets 2,323,226 7.13% 2,310,072 7.19% 2,279,349 7.54%
Allowance for loan
losses (29,074) -- (30,043) -- (34,431) --
Noninterest-earning
assets 148,676 -- 158,257 -- 165,639 --
----------- ---------- ----------
Total assets $2,442,828 -- $2,438,286 -- $2,410,557 --
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing
liabilities:
Savings deposits $1,058,981 2.43% $1,055,915 2.54% $1,052,484 2.78%
Time certificates
of deposit 1,042,951 4.00 1,040,624 4.13 1,033,688 4.46
Long-term debt -- -- 94 -- 283 --
---------- ---------- ---------
Total interest-
bearing liabilities 2,101,932 3.21% 2,096,633 3.33% 2,086,455 3.61%
----- ----- -----
Noninterest-bearing
liabilities 92,402 -- 97,968 -- 91,074 --
---------- ---------- ----------
Total liabilities 2,194,334 -- 2,194,601 -- 2,177,529 --
---------- ---------- ----------
Stockholders' equity 248,494 -- 243,685 -- 233,028 --
---------- ---------- ----------
Total liabilities and
stockholders' equity $2,442,828 -- $2,438,286 -- $2,410,557 --
=========== ========== ==========
Interest rate spread 3.92% 3.87% 3.93%
Net interest margin 4.22% 4.17% 4.24%
RATE/VOLUME ANALYSIS
The following table shows the change in interest and dividend income, and
interest expense, for each major category of interest-earning assets and
interest-bearing liabilities. The amount of the change due to volume and rate
has been allocated proportionately to volume and rate for the periods indicated.
<PAGE>
Three Months Ended June 30, 1994 Compared to 1993
Increase Increase
(Decrease) (Decrease)
Due to Due to
(In Thousands) Volume Rate Total
Interest, fees and dividend income:
Loans $110 $(1,887) $(1,777)
Securities 642 (465) 177
Other (24) 31 7
- - ----------------------------------------------------------------
Total interest and dividend income 728 (2,321) (1,593)
- - ----------------------------------------------------------------
Interest expense:
Savings deposits 44 (919) (875)
Time certificates of deposit 102 (1,201) (1,099)
- - ----------------------------------------------------------------
Total interest expense 146 (2,120) (1,974)
- - ----------------------------------------------------------------
Net interest income $582 $ (201) $ 381
- - ---------------------------------------------------------------
PROVISION FOR LOAN LOSSES
The provision for loan losses for the second quarter of 1994 was $150 thousand,
a $750 thousand decrease from the amount provided in the second quarter of 1993.
In determining the amount to provide for loan losses, the key factor is the
adequacy of the allowance for loan losses. In making its decision, management
considers a number of factors, including prior experience relative to the loan
portfolio mix, economic conditions, especially regional economic trends,
internal analysis and the results of examinations conducted by bank regulatory
authorities. During the past twelve months, the Company experienced a
substantial decrease in nonperforming loans. This decrease resulted in the
Company's decision to reduce its provision for loan losses compared to prior
periods. In spite of this reduction in the provision, the Company maintains
strong asset-quality ratios. As of June 30, 1994, the allowance for loan losses
was $28.6 million or 2.12% of total loans, compared to $33.4 million or 2.52% at
June 30, 1993. Nonperforming loans represented 1.06% and 1.81% of the total loan
portfolio at June 30, 1994 and 1993, respectively.
OTHER INCOME
The increase in other income from the second quarter of 1993 to the second
quarter of 1994, excluding securities gains, was due primarily to interest
on state tax refunds due to the Company.
The trend in interest rates, as well as the uncertainty regarding future
government actions with regard to rates, prompted a decision to shorten the
maturity of the securities portfolios, which was accomplished by the sale of
some longer term securities available-for-sale resulting in net losses of $841
thousand being recognized during the current quarter. This resulted in the
unfavorable variance of $1.5 million in securities gains/losses compared to the
quarter ended June 30, 1993.
<PAGE>
OPERATING EXPENSES
Operating expenses totaled $12.2 million for the second quarter of 1994 compared
to $12.4 million in the second quarter of 1993. This decrease came as a result
of the consolidation of operations from the two prior acquisitions and a
critical review of the branch network which resulted in closing four branch
offices in 1993. The overhead ratio for the second quarter of 1994 was 2.01%,
five basis points lower than for the second quarter of 1993. Certain
nonrecurring expenses, totaling $350 thousand, were incurred in the second
quarter of 1994 as a result of the pending acquisition of the Company by Fleet
Financial Group.
The $115 thousand increase in compensation was primarily the result of general
salary increases, changes in certain staff positions and the addition of
commissioned loan originators. The reductions in occupancy and equipment as well
as insurance expense were the result of branch closings. Deposit insurance
increased due to the increase in the overall deposit base during the last
twelve-month period. Data processing increased as a result of growth and the
need for additional reporting capabilities. Professional fees increased as a
result of investment banker fees related to the pending acquisition of the
Bancorp by Fleet Financial Group. Office supplies, postage and telephone
increased primarily due to the costs related to the installation of an updated
phone system. Amortization of goodwill, core deposit and other intangibles
decreased as the core deposit intangibles created as a result of the two most
recent acquisitions amortize on accelerated methods triggering more expense in
the earlier years. Marketing increased as more resources were expended to better
promote the products offered throughout the Bank's market area.
OTHER EXPENSES
OREO consists of properties acquired through foreclosure or substantively
foreclosed properties as well as an investment in a condominium project from a
previous acquisition. OREO expense increased $199 thousand from the second
quarter of 1993 to $1.4 million in the second quarter of 1994. Provisions for
losses on OREO properties totaled $368 thousand, a decrease of $282 thousand
compared to the same period last year. Operating expenses for OREO properties
increased by $481 thousand for the second quarter of 1994 compared to the same
period last year. This increase was primarily due to expenses being paid for
several large commercial OREO properties.
INCOME TAX EXPENSE
The effective income tax rate for the second quarter of 1994 was 40.6% compared
to 44.6% for the same quarter in 1993. During the fourth quarter of 1993, the
Bank formed two securities corporations to manage portions of the Bank's
investment portfolio. These subsidiaries are Massachusetts securities
corporations which receive favorable tax treatment under Massachusetts tax laws.
The reduction
<PAGE>
in the effective tax rate for the current quarter is the result of
the reduced tax rate on the income of these corporations.
Comparison of Results of Operations for the Six Months Ended June 30,
1994 and 1993
OVERVIEW
Net income for the six-month period ended June 30, 1994 was $14.8 million or
$1.71 per share, 12% greater than the $13.2 million or $1.53 per share earned
in the first six months of 1993. Lower deposit costs combined with increased
average earning assets due to deposit growth was a major factor in the
favorable variance. In addition, improved asset quality continued to have a
positive impact on the results of operations.
Net interest margin was 4.21% for the current six-month period compared to 4.23%
for the same period last year. Average earning assets increased by $69.8 million
reflecting deposit and equity growth during the twelve-month period ended June
30, 1994.
The provision for loan losses declined by $1.9 million from the six months ended
June 30, 1993 due to continued improvement in nonperforming loans.
Total operating expenses amounted to $24.2 million for the six months ended June
30, 1994 compared to $24.5 million for the same period last year. This
represents a decrease of 1.5% and is the result of the continued consolidation
of operations from acquired banks and the closing of four branch offices since
January 1, 1993. As noted in the comparison of operations for the three month
periods above, $350 thousand of expenses were incurred in 1994 for investment
banker fees related to the Company's pending acquisition by Fleet Financial
Group.
NET INTEREST INCOME
Net interest income increased $1.2 million from the same six-month period last
year, to $49.1 million, for the six months ended June 30, 1994, due primarily to
the increase in average earning assets. The decrease of two basis points in the
net interest margin was not material and primarily reflects the fact that higher
yielding assets, such as loans, were a smaller percentage of interest-earning
assets due to the run-off of certain loans acquired as part of the Attleboro
Pawtucket acquisition in August, 1992. As noted above, the bank was acquired
under a loss-sharing agreement with the FDIC and the loan run-off has been in
line with expectations.
The following table presents an analysis of average balances of interest-earning
assets and interest-bearing liabilities, yields earned and rates paid:
<PAGE>
CONSOLIDATED AVERAGE BALANCE SHEETS AND YIELDS EARNED AND RATES PAID
(Dollars in Thousands)
Six Months Ended June 30, 1994 June 30, 1993
Average Average
Balance Rate Balance Rate
ASSETS:
Interest-earning assets:
Loans $1,333,239 8.02% $1,344,027 8.66%
Securities 913,902 5.90 854,905 6.13
Mortgage-backed
securities 62,646 6.66 38,125 6.91
Federal funds sold and
overnight deposits 14,005 3.49 16,915 3.02
--------- ---------
Total interest-
earning assets 2,323,792 7.12% 2,253,972 7.63%
Allowance for loan
losses (29,361) -- (34,630) --
Noninterest-earning
assets 153,358 -- 160,977 --
---------- ----------
Total assets $2,447,789 -- $2,380,319 --
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Savings deposits $1,055,109 2.43% $1,046,666 2.94%
Time certificates
of deposit 1,045,949 4.03 1,013,931 4.53
Long-term debt -- -- 283 --
---------- ------------
Total interest-
bearing liabilities 2,101,058 3.22% 2,060,880 3.72%
----- -----
Noninterest-bearing
liabilities 95,005 -- 88,567 --
---------- ----------
Total liabilities 2,196,063 -- 2,149,447 --
---------- ---------
Stockholders' equity 251,726 -- 230,872 --
---------- ----------
Total liabilities and
stockholders' equity $2,447,789 -- $2,380,319 --
========== ==========
Interest rate spread 3.90% 3.91%
Net interest margin 4.21% 4.23%
RATE/VOLUME ANALYSIS
The following table shows the change in interest and dividend income, and
interest expense, for each major category of interest-earning assets and
interest-bearing liabilities. The amount of the change due to volume and rate
has been allocated proportionately to volume and rate for the periods indicated.
<PAGE>
Six Months Ended June 30, 1994 Compared to 1993
Increase Increase
(Decrease) (Decrease)
Due to Due to
(In Thousands) Volume Rate Total
Interest, fees and dividend income:
Loans $ (436) $(4,333) $(4,769)
Securities 2,585 (1,065) 1,520
Other (47) 36 (11)
- - ---------------------------------------------------------------
Total interest and dividend income 2,102 (5,362) (3,260)
- - ---------------------------------------------------------------
Interest expense:
Savings deposits 122 (2,664) (2,542)
Time certificates of deposit 700 (2,609) (1,909)
- - ---------------------------------------------------------------
Total interest expense 822 (5,273) (4,451)
- - ---------------------------------------------------------------
Net interest income $1,280 $ (89) $ 1,191
- - ---------------------------------------------------------------
PROVISION FOR LOAN LOSSES
The provision for loan losses for the six months of 1994 was $350 thousand, a
$1.9 million decrease from the amount provided in the first six months of 1993.
The reduction in nonperforming loans and modest loan growth has resulted in the
Company's decision to reduce its provision for loan losses compared to prior
periods.
OTHER INCOME
The increase in other income from the six months of 1993 to the same period in
1994, excluding securities gains, was due primarily to interest on state tax
refunds due to the Company.
Net losses on sales of securities for the six-month period ended June 30, 1994
were $389 thousand compared to net gains on sales of securities of $1.5 million
for the six-month period ended June 30, 1993. Net losses of $841 thousand
recognized in the second quarter of 1994, as discussed in the analysis of
operations for the three month period ended June 30, 1994 compared to 1993
above, resulted in this variance.
OPERATING EXPENSES
Operating expenses totaled $24.2 million for the six months ended June 30, 1994
compared to $24.5 million for the same period in 1993. This decrease came as a
result of further consolidation of operations from the two prior acquisitions
and a critical review of the branch network. Four branches were closed during
1993. The overhead ratio for the first six months of 1994 was 1.99% compared to
2.08% for the same period in 1993.
The $335 thousand increase in compensation was primarily the result of general
salary increases, changes in certain staff positions and the addition of
commissioned loan originators. The reductions in occupancy and equipment and
insurance expense are the result of branch closings during 1993. Deposit
insurance increased due to the increase in the overall deposit base during the
last twelve-month period. Data processing increased as a result of growth and
the need
<PAGE>
for additional reporting capabilities. Professional fees increased as a
result of investment banker fees related to the pending acquisition of the
Company by Fleet Financial Group. Office supplies, postage and telephone
increased due to the costs related to the installation of an updated phone
system. Amortization of goodwill, core deposit and other intangibles decreased
as the core deposit intangibles created as a result of the two most recent
acquisitions amortize on accelerated methods triggering more expense in the
earlier years. Marketing increased as more resources were expended to better
promote the products offered throughout the Company's market area.
OTHER EXPENSES
Total OREO expense remained unchanged at $2.2 million for the six-month periods
ended June 30, 1994 and 1993. Provisions for OREO properties totaled $1.0
million, a decrease of $449 thousand compared to the same period last year.
Operating expenses for OREO properties increased by $456 thousand for the six
months ended June 30, 1994 compared to the same period last year. Larger
provisions were considered necessary to cover expected exposure in the first six
months of 1993 than in the current period. Certain expenses were incurred on
several large commercial OREO properties during 1994 causing operating expenses
to be higher in the current period than in the comparable period in 1993.
INCOME TAX EXPENSE
The effective income tax rate for the first six months of 1994 was 41.6%
compared to 44.7% for the same period in 1993. This reduction, as noted above in
the discussion of the reduction for the comparable quarters, is due to the
formation of two securities corporations to manage portions of the Bank's
investment portfolio which receive favorable tax treatment under Massachusetts
tax laws.
FINANCIAL CONDITION
Total assets and deposits decreased by $15.4 million and $3.3 million,
respectively, from December 31, 1993. The increase in loan demand and the slight
reduction in deposits since December 31, 1993 caused the reduction in the
securities portfolio as liquidity was needed to fund loan growth. The
improvement in nonperforming assets and changes made in the securities portfolio
have contributed to maintaining a strong, highly liquid balance sheet at June
30, 1994. Return on average assets was 1.15% for the current quarter and 1.22%
for the first six months of 1994. Return on average equity was 11.33% and 11.89%
for those same periods, respectively.
SECURITIES
Securities decreased $54.0 million since December 31, 1993 as a result of an
increase in residential loan demand coupled with level deposit flows during the
last six months. Securities were 40.7% of earning assets at June 30, 1994
compared to 42.6% at December 31, 1993. The Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," as of
December 31, 1993.
<PAGE>
In complying with SFAS No. 115, the Company classified $548.7
million, or 58.8% of its securities at June 30, 1994 as available-for-sale.
Securities available-for-sale provide liquidity, facilitate interest rate
sensitivity management, and enhance the Company's ability to respond quickly to
the customers' needs should loan demand increase and/or deposit growth slow. The
trend in interest rates prompted investment changes which resulted in a
shortening of the average maturity of the portfolio during the current quarter.
The shortening of the portfolio is evident from the impact on the one year
interest rate sensitivity decreasing from 16.1% at March 31, 1994 to 12.4% at
June 30, 1994.
Securities held-to-maturity, which totaled $385.2 million or 41.2% of securities
at June 30, 1994, are those securities which the Company has the positive intent
and ability to hold to maturity.
LOANS
Total loans, as well as loans as a percentage of earning assets, increased since
December 31, 1993. The increase is the result of more demand in residential
loans. Commercial loans continued to decrease. This decrease is driven by the
dynamics of the loan portfolio acquired as part of the Attleboro Pawtucket
Savings Bank (APSB) acquisition. Since the acquisition of APSB, there has been
an inherent loss in commercial loans outstanding which impacts the overall
potential for loan growth.
Former APSB mortgage, second mortgage, home equity and commercial loans which
become nonperforming are reclassified as Segregated Assets until they are
resolved, thus immediately reducing the appropriate loan category. In addition,
APSB was lending to certain lines of business which the Company had chosen not
to enter, or, in some cases, has chosen to reduce total exposure, which meant
that certain segments of the portfolio were intentionally not being replaced.
Commercial loan balances have declined but residential loan balances have
increased since June 30, 1993.
ASSET QUALITY
Because of some of the unique elements of the agreement between New Bedford
Institution for Savings (NBIS) and the FDIC in conjunction with the APSB
transaction, the discussion of asset quality is divided into two sections. The
first pertains to NBIS and includes, where applicable, performing loans from the
APSB portfolio and related reserves. It excludes, however, any APSB
nonperforming loans covered by the loss-sharing agreement. As a result of this,
certain ratios related to nonperforming assets and loans have been favorably
impacted. APSB nonperforming loans which fall under the loss-sharing agreement
have been designated as Segregated Assets throughout the consolidated financial
statements and are, along with the associated allowances, charge-offs and
recoveries, discussed separately under that caption. Because of the structure of
the
<PAGE>
agreement, there have been very few APSB nonperforming assets that are not
covered by the agreement (nonperforming consumer loans totaling $40 thousand),
so for discussion purposes, the term "shared-loss" will not be used when
discussing APSB nonperforming loans or Segregated Assets.
Under the terms of the three-year loss-sharing agreement, the FDIC reimburses
NBIS for 80% of any losses, net of recoveries, associated with all commercial,
commercial real estate, residential mortgage and home equity loans that occur
during the three years following the acquisition. Effectively, only consumer
loans are excluded from the loss sharing. The agreement also provides for
reimbursement of carrying costs on nonperforming assets at a previously agreed
upon rate of interest, as well as 80% of direct collection costs for
nonperforming assets.
During the fourth and fifth years following the acquisition, the Bank will pay
to the FDIC an amount equal to 80% of the gross amount of recoveries during such
period on charge-offs of commercial, commercial real estate, residential
mortgage and home equity loans that occur during the three years following the
acquisition. If, at the end of the five-year period, total net charge-offs
exceed $49 million, the FDIC will pay the Bank an amount equal to 15% of the
difference between total net charge-offs and $49 million. Net charge-offs on
shared-loss assets since the acquisition total $8.6 million, of which the
Company's share is 20%, or $1.7 million.
NONPERFORMING ASSETS
For the eighth consecutive quarter, the Company had a decrease in the level of
nonperforming assets. The level at June 30, 1994 of $31.7 million decreased $1.4
million from March 31, 1994.
<PAGE>
The following table shows the composition of nonperforming assets:
June 30, December 31,
(In thousands) 1994 1993
- - ---------------------------------------------------------------
Nonperforming Loans:
Residential real estate $ 4,934 $ 6,307
Commercial 9,253 9,096
Consumer 62 67
- - ---------------------------------------------------------------
Total nonperforming loans 14,249 15,470
- - ---------------------------------------------------------------
Other Real Estate Owned:
Real estate acquired by foreclosure 16,107 17,861
Real estate substantively foreclosed 560 2,375
Investment in condominium project 813 1,000
- - ---------------------------------------------------------------
Total other real estate owned 17,480 21,236
- - ---------------------------------------------------------------
Total nonperforming assets $31,729 $36,706
- - ---------------------------------------------------------------
Total nonperforming assets as
a percentage of total assets 1.3% 1.5%
- - ----------------------------------------------------------------
Allowance for loan losses
as a percentage of total non-
performing loans 201% 191%
- - ----------------------------------------------------------------
Restructured loans that are performing
and not included above $2,344 $6,182
- - ---------------------------------------------------------------
Foregone interest on nonperforming and restructured loans totaled approximately
$413 thousand for the six months ended June 30, 1994 compared to $885 thousand
for the same period in 1993.
While real estate values appear to have stabilized, weakness of the regional
economy leaves open the possibility of additional provisions for losses being
required in the future.
ALLOWANCE FOR LOAN LOSSES
The Company's methodology for determining the adequacy of the allowance for loan
losses is based on recurring evaluations of a number of factors, including the
composition of the portfolio, historic loan loss experience for categories of
loans, current and anticipated economic conditions, nonperforming loan levels
and trends, specific credit reviews, and the results of regulatory examinations,
as well as subjective factors. Since the allowance is established, in part, as a
result of an analysis of the risk elements of the various parts of the
portfolio, an allocation of the allowance to various loan categories results
from the process. However, while that allocation represents management's best
judgement as to risk, it should be understood that the allowance itself is
available as a single unallocated allowance to address any problems that may
occur in the portfolio.
<PAGE>
The tables below present average loans, total loans and an analysis of the
allowance for loans losses, including charge-offs and recoveries for the three
and six month periods as noted:
Three Months Ended June 30, 1994 1993
--------------------------- ----- ----
(In thousands)
Average loans outstanding during
the period $1,338,944 $1,332,522
- - --------------------------------------------------------------------
Loans outstanding, end of period 1,349,720 1,329,135
- - --------------------------------------------------------------------
Allowance for loan losses,
beginning of period 29,238 34,084
Loans charged off:
Commercial (144) (1,478)
Real estate-residential (718) (303)
Consumer (70) (144)
- - ---------------------------------------------------------------------
Total (932) (1,925)
- - ---------------------------------------------------------------------
Recoveries:
Commercial 141 166
Real estate-residential 15 100
Consumer 21 61
- - --------------------------------------------------------------------
Total 177 327
- - --------------------------------------------------------------------
Net loans charged off (755) (1,598)
Transfer from segregated assets 13 55
Provision for loan losses 150 900
- - --------------------------------------------------------------------
Allowance for loan losses
end of period 28,646 33,441
- - --------------------------------------------------------------------
Net loans charged off as a percent-
age of average loans outstanding (annualized) .23% .48%
- - ---------------------------------------------------------------------
Six Months Ended June 30, 1994 1993
- - ------------------------------ ----- ----
(In thousands)
Average loans outstanding during
the period $1,333,239 $1,344,027
- - --------------------------------------------------------------------
Loans outstanding, end of period 1,349,720 1,329,135
- - --------------------------------------------------------------------
Allowance for loan losses,
beginning of period 29,596 34,588
Loans charged off:
Commercial (688) (2,441)
Real estate-residential (899) (615)
Consumer (70) (224)
- - ---------------------------------------------------------------------
Total (1,657) (3,280)
- - ---------------------------------------------------------------------
Recoveries:
Commercial 478 169
Real estate-residential 37 140
Consumer 26 63
- - --------------------------------------------------------------------
Total 541 372
- - --------------------------------------------------------------------
Net loans charged off (1,116) (2,908)
Transfer to segregated assets (184) (439)
Provision for loan losses 350 2,200
- - --------------------------------------------------------------------
Allowance for loan losses
end of period 28,646 33,441
- - --------------------------------------------------------------------
<PAGE>
Net loans charged off as a percent-
age of average loans outstanding (annualized) .17% .43%
- - ----------------------------------------------------------------------
The decline in nonperforming loans, coupled with the decline in commercial loans
as a percentage of the loan portfolio, allowed the Company to decrease the total
allowance from $33.4 million at June 30, 1993 to $28.6 million at June 30, 1994
while maintaining strong asset quality ratios. The allowance totaled 2.12% of
total loans at June 30, 1994 compared to 2.52% on the same date last year, while
the allowance equaled 201% of nonperforming loans compared to 139%,
respectively, for those same dates.
SEGREGATED ASSETS
Because of the loss-sharing agreement with the FDIC, APSB assets acquired that
are covered by the loss-sharing agreement are disclosed separately on the
Company's balance sheets under the caption, "Segregated Assets." Included in
these amounts are nonperforming loans, OREO and in-substance foreclosures, net
of an allowance for losses which is deemed adequate to cover Segregated Assets
as indicated in the table below.
An analysis of Segregated Assets at June 30, follows:
- - -----------------------------------------------------
(In thousands)
1994 1993
-------- --------
Nonperforming loans $5,804 $ 6,431
In-substance foreclosures 1,279 4,992
Acquired by foreclosure 1,383 742
- - --------------------------------------------------------------------
8,466 12,165
Allowance for losses (847) (1,216)
- - --------------------------------------------------------------------
Total $7,619 $10,949
- - --------------------------------------------------------------------
At June 30, 1994, $8.5 million of Segregated Assets represented an exposure to
the Company of $1.7 million. An allowance of $847 thousand or 50% of the
exposure was considered adequate by management. During the quarter, $13 thousand
of allowance for losses was transferred back to the Bank's allowance for losses
due to the relative reduction in segregated asset balances while $217 thousand
of charge-offs were taken, representing the Company's 20% share of the losses
for the quarter. Year-to-date losses to the Bank totaled $330 thousand. The
credit loss experience to date on the APSB portfolio has been satisfactory and
it appears that the allowance established as part of the APSB transaction is
adequate to cover both shared losses and the Company's exposure after the
agreement expires.
OTHER ASSETS
Goodwill, core deposit and other intangibles decreased $1.3 million due to
amortization of the components since December 31, 1993. The other asset category
increased primarily due to the $12.6 million deferred income tax impact of the
market value change in securities available-for-sale.
DEPOSITS
Deposits decreased slightly from December 31, 1993. However, deposits have
increased $8.5 million during the twelve-month period ended June 30, 1994.
<PAGE>
STOCKHOLDERS' EQUITY
As a result of complying with SFAS No. 115, as of June 30, 1994, stockholders'
equity was decreased by approximately $8.0 million, representing the unrealized
loss on securities available-for-sale, less applicable income taxes. As of
December 31, 1993, stockholders' equity was increased by approximately $6.8
million, representing the unrealized gain on securities available-for-sale, less
applicable income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity refers to a Bank's ability to meet funding needs for operations,
deposit outflows, loan growth and other commitments on a timely and cost
effective basis. The Bank's principal sources of liquidity are deposits, loan
payments and income and investment maturities and sales. In addition, the Bank
is a member of the Federal Home Loan Bank of Boston (FHLB), where it has access
to a pre-approved line of credit as well as additional borrowing capacity. The
Bank has had no borrowings from the FHLB since 1990. The marketability of
certain assets, such as loans, that can be sold or securitized provides another
potential source of liquidity. During the last three years, through a
combination of acquisitions, limited loan growth due to the recession, and the
run-off of higher risk loans that were acquired, the Bank has become
increasingly liquid. At June 30, 1994 and December 31, 1993 the ratio of loans
to deposits were 62.3% and 60.8%, respectively. Average deposits and
stockholders' equity were 90.4% and 10.8% of average earning assets,
respectively, for the first six months of 1994 compared to 91.4% and 10.2% for
the six months of 1993. The Company's source of liquidity is dividends from the
Bank.
Total capital was $249.9 million at June 30, 1994, compared to $255.0 million at
December 31, 1993. All capital ratios at June 30, 1994, of both the Company and
the Bank exceed the regulatory minimums and are presented below:
Minimum
Regulatory
Company Bank Requirement
Tier 1 Capital ratio
to risk-weighted assets 20.4% 20.4% 4.0%
Total Risk-based Capital ratio 21.4% 21.4% 8.0%
Leverage Capital ratio 10.0% 9.9% 3.0 to 5.0%
ASSET AND LIABILITY MANAGEMENT
Financial institutions are subject to interest rate risk to the extent that
their interest-bearing liabilities mature and reprice more or less frequently
than their interest-earning assets. The Bank's largest category of interest-
earning assets are fixed-rate mortgage loans which are held in its own
portfolio. Historically, these loans have had an actual life that was
substantially less than contractual maturity. At June 30, 1994, the Bank's one-
year liability-sensitive gap of $300.9 million represented 12.4% of total
assets, a reduction from the 16.1% at March 31, 1994 and 17.9% at June 30, 1993
as Management took steps to recognize recent rate increases and continual
uncertainty regarding rates.
<PAGE>
The following table sets forth maturity and repricing information relating to
interest-sensitive assets and liabilities at June 30, 1994. Fixed-rate loans and
pass-through certificates are shown in the table in the time periods
corresponding to principal amortization which has been computed based on their
respective weighted average maturities and weighted average rates.
Adjustable-rate loans and securities are allocated to the period in which the
rates would be next adjusted. The table does not reflect partial or full
prepayment of loans and certain securities prior to final contractual maturity.
Analysis of the Bank's non-certificate deposit accounts in 1993 shows that only
a portion of savings, money market deposit and NOW accounts are rate sensitive.
Deposit balances have been distributed accordingly in the 0 to 5-year time
bands. In accordance with the proposed Federal Reserve guidelines for risk-based
capital standards which account for interest rate risk, no amounts related to
such deposit accounts are placed beyond five years. A deficiency of
rate-sensitive assets over rate-sensitive liabilities will generally result in
increased net interest income during a period of falling interest rates and in
decreased net interest income during a period of rising interest rates.
<TABLE>
<CAPTION>
UP TO 1-3 3-5 5-10
1 YEAR YEARS YEARS YEARS THEREAFTER TOTAL
<S> <C> <C> <C> <C> <C> <C>
Interest sensitive assets:
Federal funds sold $ 12,500 $ - $ - $ - $ - $ 12,500
U. S. Government, U. S. agency
and other bond obligations 255,389 281,977 275,372 36,201 102 849,041
Mortgage-backed securities 4,848 6,859 7,391 19,128 19,641 57,867
Residential mortgage loans:
Adjustable-rate loans 215,225 79,979 4,218 - 94 299,516
Fixed-rate loan amortization 18,119 39,869 45,012 138,202 486,719 727,921
Construction mortgage loans:
Adjustable-rate loans 315 854 78 - - 1,247
Fixed-rate loan amortization 174 364 419 1,348 10,689 12,994
Home equity loans 43,756 - 40 - - 43,796
Second mortgage loans 3,078 2,606 2,263 4,168 1,184 13,299
Consumer loans 19,309 4,482 1,210 490 19 25,510
Commercial loans:
Adjustable-rate loans 187,528 2,070 107 82 322 190,109
Fixed-rate loan amortization 19,075 9,358 4,059 1,898 746 35,136
Commercial construction loans:
Adjustable-rate loans 4,491 - - - - 4,491
Fixed-rate loan amortization 1,148 - - - - 1,148
- - ---------------------------------------------------------------------------------------------------------------
Total $784,955 $428,418 $340,169 $201,517 $519,516 $2,274,575
===============================================================================================================
Interest sensitive liabilities:
Money market deposits $ 115,598 $184,956 $161,837 $- $ - $ 462,391
Time certificates 810,048 240,655 3,044 3 11 1,053,761
NOW 19,931 80,199 63,805 - - 163,935
Other savings 140,296 100,211 160,338 - - 400,845
- - ---------------------------------------------------------------------------------------------------------------
Total $1,085,873 $606,021 $389,024 $3 $11 $2,080,932
===============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UP TO 1-3 3-5 5-10
1 YEAR YEARS YEARS YEARS THEREAFTER TOTAL
<S> <C> <C> <C> <C> <C> <C>
Excess (deficiency) of rate
sensitive assets over rate
sensitive liabilities $(300,918) $(177,603) $(48,855) $201,514 $519,505 $193,643
===============================================================================================================
Cumulative excess (deficiency) of
rate sensitive assets over rate
sensitive liabilities $(300,918) $(478,521) $(527,376) $(325,862) $193,643
===============================================================================================================
Cumulative excess (deficiency)
as a percentage of total assets (12.4)% (19.6)% (21.7)% (13.4)% 8.0%
</TABLE>
<PAGE>
RECENT ACCOUNTING DEVELOPMENTS
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." This new accounting standard became effective for the
Company on January 1, 1994 and requires accrual for postemployment benefits
during either employees' service lives or at the time a liability is incurred.
Postemployment benefits include salary continuation, supplemental unemployment
benefits, severance benefits, disability-related benefits, job training and
counseling, and continuation of benefits such as health care and life insurance.
The implementation of SFAS No. 112 did not have a material effect on the
Company's consolidated financial statements.
In May 1993, the FASB issued Statement No. 114, "Accounting by Creditors for
Impairment of a Loan," which is effective for the Company on January 1, 1995.
Generally, the quantification of the impairment of a loan under this statement
requires the discounting of expected future cash flows at the loan's original
effective rate as opposed to the utilization of a market rate. In addition, the
criteria for classifying a loan as an in-substance foreclosure was modified so
that such classification applies only when a creditor has taken possession of
the loan collateral. The effect of adopting this statement has not been fully
determined but is not expected to have a material adverse effect on the
Company's consolidated financial statements.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company and its subsidiary are not involved in any pending legal
proceedings other than those in the ordinary course of their
businesses. Management believes that the resolution of these matters
will not materially affect their businesses or the consolidated
financial condition of Bancorp and its subsidiary.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held it Annual Meeting of Stockholders on Wednesday, May
18, 1994 at 10:00 A.M., local time, at the Hawthorne Country Club, 970
Tucker Road, North Dartmouth, Massachusetts for the purpose of
electing a class of two directors to serve for a three-year term and
to ratify the appointment of KPMG Peat Marwick as independent
auditors.
Management of the Bancorp nominated and the stockholders
elected Maurice F. Downey and Charles T. Toomey to serve a term of
three years until the 1997 Annual Meeting. No other persons were
nominated for election as directors.
The Board of Directors recommended and the stockholders ratified the
appointment of KPMG Peat Marwick as independent auditors for the
Bancorp.
Item 5. Other Information.
DIVIDEND
A dividend of $.30 per common share was paid on May 13, 1994 to
shareholders of record on April 30, 1994.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits - Exhibit 10(s)
- Exhibit 10(t)
- Exhibit 10(u)
- Exhibit 11 Computation of Per Share Earnings
b. Reports on Form 8-K - None
<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.
NBB Bancorp, Inc.
(Registrant)
Date: August 12, 1994 By /s/ Robert McCarter
Robert McCarter
Chairman, President and CEO
Date: August 12, 1994 By /s/ Irving J. Goss
Irving J. Goss
Senior Vice President, Treasurer and CFO
(Principal Financial and Accounting Officer)
<PAGE>
Exhibit 11
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
For the Quarter and Six-Month Periods Ended June 30, 1994
(Dollars in thousands except per share amounts)
The information below is presented to comply with Regulation S-K Item 601. The
computation is not used or required in the consolidated statements of income as
its dilutive effect on simple earnings per share is less than 3%.
For the Quarter Ended June 30, 1994
Primary EPS Fully Diluted EPS
----------- -----------------
Weighted average shares 8,662,130 8,662,130
Common Stock Equivalents (CSE)
Stock options 169,462 169,462
--------- ---------
Primary weighted average shares 8,831,592 8,831,592
Additional CSE ========= 18,898
---------
Fully diluted weighted average shares 8,850,490
=========
Net income $ 7,019 $ 7,019
Earnings per share $ 0.79 $ 0.79
For the Six-Month Period Ended June 30, 1994
Primary EPS Fully Diluted EPS
----------- -----------------
Weighted average shares 8,659,610 8,659,610
Common Stock Equivalents (CSE) --------- ---------
Stock options 158,118 158,118
Primary weighted average shares 8,817,728 8,817,728
--------- ---------
Additional CSE 31,767
Fully diluted weighted average shares 8,849,495
=========
Net income $ 14,844 $ 14,844
========= =========
Earnings per share $ 1.68 $ 1.68
========= =========
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 26th day of May, 1994 by and among NBB Bancorp,
Inc., a Delaware corporation (the "Company") and its subsidiary, New Bedford
Institution for Savings, a Massachusetts savings bank with its main office in
New Bedford, Massachusetts (the "Bank") (the Bank and the Company shall be
hereinafter collectively referred to as the "Employers") and Jane M. Jacobsen,
an individual presently serving in the position of Vice President of the Bank
(the "Executive").
WHEREAS, the Employers wish to provide the Executive with certain
severance benefits under certain conditions as set forth herein.
NOW, THEREFORE, in consideration of services performed and to be
performed in the future as well as of the mutual promises and covenants herein
contained, it is agreed as follows:
1. Purpose. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Employers, the Employers are
willing to provide, subject to the terms of this Agreement, certain severance
benefits to protect the Executive from the consequences of a Terminating Event
(as defined in Section 3) occurring subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to
have occurred in either of the following events:
(i) if there has occurred a change in control which the Company
would be required to report in response to Item 6(e) of Schedule 14A of the
Rules and Regulations of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if
such regulation is no longer in effect, any regulations promulgated by the
Securities and Exchange Commission pursuant to the 1934 Act which are intended
to serve similar purposes; or
(ii) when any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly,
of securities of the Company or the Bank representing twenty-five percent (25%)
or more of the total number of votes that may be cast for the election of
directors of the Company or the Bank (other than in the case of the Bank, the
Company's ownership of the capital stock of the Bank); or
(iii) during any period of thirty consecutive months (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors of the
Company, and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason, including without limitation as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board of Directors of the Company; or
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(v) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by either of the Employers of the employment of the
Executive with either of the Employers for any reason other than (i) death, (ii)
deliberate dishonesty of the Executive with respect to either of the Employers
or any subsidiary or affiliate thereof, or (iii) conviction of the Executive of
a crime involving moral turpitude, or
(b) resignation of the Executive from the employ of either of
the Employers, subsequent to the occurrence of any of the following events:
(i) a significant change in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by the
Executive immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to such
Change in Control; or
(iii) a reduction in the Executive's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time; or
(iv) the relocation of either of the Employers' offices at which
the Executive is principally employed immediately prior to the date of the
Change in Control to a location more than 25 miles from New Bedford,
Massachusetts, or either of the Employers' requiring the Executive to be based
anywhere other than the Employers' offices at such location; or
(v) the failure by either of the Employers to pay to
the Executive any portion of his current compensation or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred compensation program of either of the Employers within seven (7) days
of the date such compensation is due; or
(vi) the failure by either of the Employers to continue in effect
any material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by either of the
Employers to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of the
Change in Control; or
(vii) the failure by either of the Employers to continue to provide
the Executive with benefits substantially similar to those available to the
Executive under any of either of the Employers life insurance, medical, health
and accident, or disability plans or any other material benefit plans in which
the Executive was participating at the time of the Change in Control, the taking
of any action by either of the Employers which would directly or indirectly
materially reduce any of such benefits, or the failure by either of the
Employers to provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service with either of
the Employers in accordance with their normal vacation policy in effect at the
time of the Change in Control; or
(viii) the failure of the Employers to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
4. Severance Payment. Subject to the provisions of Section 5 below, in
the event a Terminating Event occurs within three (3) years after a Change in
Control, the Employers shall pay to the Executive an aggregate amount equal to
(x) three times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) One Dollar ($1.00), payable in one lump-sum payment on the
date of such termination or resignation.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Employers
that no payments by the Employers to or for the benefit of the Executive under
this Agreement when combined with any other payments under any other agreement
or plan pursuant to which the Executive is entitled to receive payments or
benefits shall be non-deductible to the Employers by reason of the operation of
Section 280G of the Code relating to parachute payments. Accordingly, and
notwithstanding any other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G, any such payments
exceed the amount which can be deducted by the Employers, the payments made
pursuant to this Agreement shall be reduced to the maximum amount which can be
deducted by the Employers. To the extent that payments exceeding such maximum
deductible amount have been made pursuant to this Agreement to or for the
benefit of the Executive, such excess payments shall be refunded to the
Employers with interest thereon at the applicable Federal Rate determined under
Section 1274(d) of the Code, compounded annually, or at such other rate as may
be required in order that no such payments shall be non-deductible to the
Employers by reason of the operation of said Section 280G. To the extent that
there is more than one method of reducing the payments to bring them within the
limitations of said Section 280G, the Executive shall determine which method
shall be followed, provided that if the Executive fails to make such
determination within forty-five days after the Employers have sent the Executive
written notice of the need for such reduction, the Employers may determine the
method of such reduction in its sole discretion.
(b) If any dispute between the Employers and the Executive as to
any of the amounts to be determined under this Section 5, or the method of
calculating such amounts, cannot be resolved by the Employers and the Executive,
either the Employers or the Executive after giving three days written notice to
the other, may refer the dispute to a partner in the Boston office of a firm of
independent certified public accountants selected jointly by the Employers and
the Executive. The determination of such partner as to the amount to be
determined under Section 5(a) and the method of calculating such amounts shall
be final and binding on both the Employers and the Executive. The Employers
shall pay, as they are incurred, the costs of any such determination.
6. Employment Status. This Agreement is not an agreement for
the employment of the Executive and shall confer no rights on the Executive
except as herein expressly provided.
7. Term. This Agreement shall take effect on the day first above
written, and shall terminate upon the earlier of (a) the termination by the
Employers of the employment of the Executive because of death, deliberate
dishonesty of the Executive with respect to either of the Employers or any
subsidiary or affiliate thereof, or conviction of the Executive of a crime
involving moral turpitude, (b) the resignation or termination of the Executive
for any reason prior to a Change in Control, or (c) the resignation of the
Executive after a Change in Control for any reason other than the occurrence of
any of the events enumerated in Section 3(b)(i)-(viii) of this Agreement.
8. Withholding. All payments made by either of the Employers
under this Agreement shall be net of any tax or other amounts required to be
withheld by either of the Employers under applicable law.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 9. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the Executive's
rights under this Agreement, the Employers shall pay, as they are incurred, the
Executive's reasonable attorneys' fees and other reasonable costs and expenses
in connection with the enforcement of said rights (including the enforcement of
any arbitration award in court) regardless of the final outcome, unless and to
the extent the arbitrators shall determine that under the circumstances recovery
by the Executive of all or a part of any such fees and costs and expenses would
be unjust. This arbitration provision shall not be used for matters of the type
referred to in Section 5(b), except to settle the selection of the accounting
partner described in said Section in the event that the Employers and the
Executive cannot agree on the selection.
10. Assignment. Neither the Employers nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be binding upon the Employers and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the payment by
the Employers of all payments due to the Executive under this Agreement, the
Employers shall make such payments to the Executive's beneficiary designated in
writing to the Employers prior to his death (or to his estate, if the Executive
fails to make such designation).
11. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main office, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.
14. Election of Remedies. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Executive of any employment agreement between the Employers and
the Executive or a breach of any of the Executive's obligations as an employee
of the Employers. Nothing in this Agreement shall be construed to limit the
rights of the Executive under any employment agreement he may then have with the
Employers.
15. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by a duly authorized
representative of each of the Employers.
16. Allocation of Obligations Between Employers. The
obligations of the Employers under this Agreement are intended to be the
joint and several obligations of the Bank and the Company and the Employers
shall, as between themselves, allocate these obligations in a manner agreed
upon by them.
17. Governing Law. This is a Massachusetts contract and shall
be construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
18. Special Provisions Relating to Regulatory Matters.
Notwithstanding anything to the contrary elsewhere herein contained:
(a) If the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) of the Federal Deposit Insurance Act or Section 12A of Chapter
167 of the Massachusetts General Laws, the Employers' obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(1) or (2) of the Federal Deposit Insurance Act and/or Section 12A
of Chapter 167 of the Massachusetts General laws, all obligations of the
Employers under this Agreement shall terminate as of the effective date of the
order.
(c) All obligations under this Agreement shall be terminated,
(i) in the event that the Federal Deposit Insurance Corporation (the "FDIC") is
appointed as a conservator or receiver of the Bank pursuant to the provisions of
Section 11 of the Federal Deposit Insurance Act, as amended, or (ii) in the
event that the Commissioner of Banks, Commonwealth of Massachusetts, takes
possession of the Bank under the provisions of Section 22 of Massachusetts
General Laws, Chapter 167.
(d) No payments will be made under this Agreement if such
payments are prohibited by the FDIC either by regulation or order. To the extent
that the Bank is prohibited from paying the amounts but the Company would be
able to pay, the payments will be made by the Company.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employers, by their duly authorized officers, and by the
Executive, as of the date first above written.
ATTEST NBB BANCORP, INC.
/s/ Carol E. Correia By: /s/ Robert McCarter
- - --------------------------- --------------------------------
Carol E. Correia, Secretary Chairman, President and Chief
Executive Officer
ATTEST: NEW BEDFORD INSTITUTION FOR
SAVINGS
/s/ Carol E. Correia By: /s/ Robert McCarter
- - ---------------------------- --------------------------------
Carol E. Correia, Clerk Chairman, President and Chief
Executive Officer
WITNESS:
/s/ Carol E. Correia By: /s/ Jane M. Jacobsen
- - ---------------------------- --------------------------------
Name: Jane M. Jacobsen
78236.c1
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 26th day of May, 1994 by and among NBB Bancorp,
Inc., a Delaware corporation (the "Company") and its subsidiary, New Bedford
Institution for Savings, a Massachusetts savings bank with its main office in
New Bedford, Massachusetts (the "Bank") (the Bank and the Company shall be
hereinafter collectively referred to as the "Employers") and Charles P. O'Brien,
an individual presently serving in the position of Vice President of the Bank
(the "Executive").
WHEREAS, the Employers wish to provide the Executive with certain
severance benefits under certain conditions as set forth herein.
NOW, THEREFORE, in consideration of services performed and to be
performed in the future as well as of the mutual promises and covenants herein
contained, it is agreed as follows:
1. Purpose. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Employers, the Employers are
willing to provide, subject to the terms of this Agreement, certain severance
benefits to protect the Executive from the consequences of a Terminating Event
(as defined in Section 3) occurring subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to
have occurred in either of the following events:
(i) if there has occurred a change in control which the Company
would be required to report in response to Item 6(e) of Schedule 14A of the
Rules and Regulations of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if
such regulation is no longer in effect, any regulations promulgated by the
Securities and Exchange Commission pursuant to the 1934 Act which are intended
to serve similar purposes; or
(ii) when any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly,
of securities of the Company or the Bank representing twenty-five percent (25%)
or more of the total number of votes that may be cast for the election of
directors of the Company or the Bank (other than in the case of the Bank, the
Company's ownership of the capital stock of the Bank); or
(iii) during any period of thirty consecutive months (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors of the
Company, and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason, including without limitation as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board of Directors of the Company; or
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(v) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by either of the Employers of the employment of the
Executive with either of the Employers for any reason other than (i) death, (ii)
deliberate dishonesty of the Executive with respect to either of the Employers
or any subsidiary or affiliate thereof, or (iii) conviction of the Executive of
a crime involving moral turpitude, or
(b) resignation of the Executive from the employ of either of
the Employers, subsequent to the occurrence of any of the following events:
(i) a significant change in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by the
Executive immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to such
Change in Control; or
(iii) a reduction in the Executive's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time; or
(iv) the relocation of either of the Employers' offices at which
the Executive is principally employed immediately prior to the date of the
Change in Control to a location more than 25 miles from New Bedford,
Massachusetts, or either of the Employers' requiring the Executive to be based
anywhere other than the Employers' offices at such location; or
(v) the failure by either of the Employers to pay to
the Executive any portion of his current compensation or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred compensation program of either of the Employers within seven (7) days
of the date such compensation is due; or
(vi) the failure by either of the Employers to continue in effect
any material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by either of the
Employers to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of the
Change in Control; or
(vii) the failure by either of the Employers to continue to provide
the Executive with benefits substantially similar to those available to the
Executive under any of either of the Employers life insurance, medical, health
and accident, or disability plans or any other material benefit plans in which
the Executive was participating at the time of the Change in Control, the taking
of any action by either of the Employers which would directly or indirectly
materially reduce any of such benefits, or the failure by either of the
Employers to provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service with either of
the Employers in accordance with their normal vacation policy in effect at the
time of the Change in Control; or
(viii) the failure of the Employers to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
4. Severance Payment. Subject to the provisions of Section 5 below, in
the event a Terminating Event occurs within three (3) years after a Change in
Control, the Employers shall pay to the Executive an aggregate amount equal to
(x) three times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) One Dollar ($1.00), payable in one lump-sum payment on the
date of such termination or resignation.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Employers
that no payments by the Employers to or for the benefit of the Executive under
this Agreement when combined with any other payments under any other agreement
or plan pursuant to which the Executive is entitled to receive payments or
benefits shall be non-deductible to the Employers by reason of the operation of
Section 280G of the Code relating to parachute payments. Accordingly, and
notwithstanding any other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G, any such payments
exceed the amount which can be deducted by the Employers, the payments made
pursuant to this Agreement shall be reduced to the maximum amount which can be
deducted by the Employers. To the extent that payments exceeding such maximum
deductible amount have been made pursuant to this Agreement to or for the
benefit of the Executive, such excess payments shall be refunded to the
Employers with interest thereon at the applicable Federal Rate determined under
Section 1274(d) of the Code, compounded annually, or at such other rate as may
be required in order that no such payments shall be non-deductible to the
Employers by reason of the operation of said Section 280G. To the extent that
there is more than one method of reducing the payments to bring them within the
limitations of said Section 280G, the Executive shall determine which method
shall be followed, provided that if the Executive fails to make such
determination within forty-five days after the Employers have sent the Executive
written notice of the need for such reduction, the Employers may determine the
method of such reduction in its sole discretion.
(b) If any dispute between the Employers and the Executive as to
any of the amounts to be determined under this Section 5, or the method of
calculating such amounts, cannot be resolved by the Employers and the Executive,
either the Employers or the Executive after giving three days written notice to
the other, may refer the dispute to a partner in the Boston office of a firm of
independent certified public accountants selected jointly by the Employers and
the Executive. The determination of such partner as to the amount to be
determined under Section 5(a) and the method of calculating such amounts shall
be final and binding on both the Employers and the Executive. The Employers
shall pay, as they are incurred, the costs of any such determination.
6. Employment Status. This Agreement is not an agreement for
the employment of the Executive and shall confer no rights on the Executive
except as herein expressly provided.
7. Term. This Agreement shall take effect on the day first above
written, and shall terminate upon the earlier of (a) the termination by the
Employers of the employment of the Executive because of death, deliberate
dishonesty of the Executive with respect to either of the Employers or any
subsidiary or affiliate thereof, or conviction of the Executive of a crime
involving moral turpitude, (b) the resignation or termination of the Executive
for any reason prior to a Change in Control, or (c) the resignation of the
Executive after a Change in Control for any reason other than the occurrence of
any of the events enumerated in Section 3(b)(i)-(viii) of this Agreement.
8. Withholding. All payments made by either of the Employers
under this Agreement shall be net of any tax or other amounts required to be
withheld by either of the Employers under applicable law.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 9. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the Executive's
rights under this Agreement, the Employers shall pay, as they are incurred, the
Executive's reasonable attorneys' fees and other reasonable costs and expenses
in connection with the enforcement of said rights (including the enforcement of
any arbitration award in court) regardless of the final outcome, unless and to
the extent the arbitrators shall determine that under the circumstances recovery
by the Executive of all or a part of any such fees and costs and expenses would
be unjust. This arbitration provision shall not be used for matters of the type
referred to in Section 5(b), except to settle the selection of the accounting
partner described in said Section in the event that the Employers and the
Executive cannot agree on the selection.
10. Assignment. Neither the Employers nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be binding upon the Employers and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the payment by
the Employers of all payments due to the Executive under this Agreement, the
Employers shall make such payments to the Executive's beneficiary designated in
writing to the Employers prior to his death (or to his estate, if the Executive
fails to make such designation).
11. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main office, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.
14. Election of Remedies. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Executive of any employment agreement between the Employers and
the Executive or a breach of any of the Executive's obligations as an employee
of the Employers. Nothing in this Agreement shall be construed to limit the
rights of the Executive under any employment agreement he may then have with the
Employers.
15. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by a duly authorized
representative of each of the Employers.
16. Allocation of Obligations Between Employers. The
obligations of the Employers under this Agreement are intended to be the
joint and several obligations of the Bank and the Company and the Employers
shall, as between themselves, allocate these obligations in a manner agreed
upon by them.
17. Governing Law. This is a Massachusetts contract and shall
be construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
18. Special Provisions Relating to Regulatory Matters.
Notwithstanding anything to the contrary elsewhere herein contained:
(a) If the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) of the Federal Deposit Insurance Act or Section 12A of Chapter
167 of the Massachusetts General Laws, the Employers' obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(1) or (2) of the Federal Deposit Insurance Act and/or Section 12A
of Chapter 167 of the Massachusetts General laws, all obligations of the
Employers under this Agreement shall terminate as of the effective date of the
order.
(c) All obligations under this Agreement shall be terminated,
(i) in the event that the Federal Deposit Insurance Corporation (the "FDIC") is
appointed as a conservator or receiver of the Bank pursuant to the provisions of
Section 11 of the Federal Deposit Insurance Act, as amended, or (ii) in the
event that the Commissioner of Banks, Commonwealth of Massachusetts, takes
possession of the Bank under the provisions of Section 22 of Massachusetts
General Laws, Chapter 167.
(d) No payments will be made under this Agreement if such
payments are prohibited by the FDIC either by regulation or order. To the extent
that the Bank is prohibited from paying the amounts but the Company would be
able to pay, the payments will be made by the Company.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employers, by their duly authorized officers, and by the
Executive, as of the date first above written.
ATTEST NBB BANCORP, INC.
/s/ Carol E. Correia By: /s/ Robert McCarter
- - ----------------------------- -----------------------------
Carol E. Correia, Secretary Chairman, President and Chief
Executive Officer
ATTEST: NEW BEDFORD INSTITUTION FOR
SAVINGS
/s/ Carol E. Correia By: /s/ Robert McCarter
- - ----------------------------- -----------------------------
Carol E. Correia, Clerk Chairman, President and Chief
Executive Officer
WITNESS:
/s/ Carol E. Correia By: /s/ Charles P. O'Brien
- - ----------------------------- -----------------------------
Name: Charles P. O'Brien
78253.c1
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 26th day of May, 1994 by and among NBB Bancorp,
Inc., a Delaware corporation (the "Company") and its subsidiary, New Bedford
Institution for Savings, a Massachusetts savings bank with its main office in
New Bedford, Massachusetts (the "Bank") (the Bank and the Company shall be
hereinafter collectively referred to as the "Employers") and Carol E. Correia,
an individual presently serving in the position of Vice President and Clerk of
the Bank and Secretary of the Company (the "Executive").
WHEREAS, the Employers wish to provide the Executive with certain
severance benefits under certain conditions as set forth herein.
NOW, THEREFORE, in consideration of services performed and to be
performed in the future as well as of the mutual promises and covenants herein
contained, it is agreed as follows:
1. Purpose. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Employers, the Employers are
willing to provide, subject to the terms of this Agreement, certain severance
benefits to protect the Executive from the consequences of a Terminating Event
(as defined in Section 3) occurring subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to
have occurred in either of the following events:
(i) if there has occurred a change in control which the Company
would be required to report in response to Item 6(e) of Schedule 14A of the
Rules and Regulations of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if
such regulation is no longer in effect, any regulations promulgated by the
Securities and Exchange Commission pursuant to the 1934 Act which are intended
to serve similar purposes; or
(ii) when any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly,
of securities of the Company or the Bank representing twenty-five percent (25%)
or more of the total number of votes that may be cast for the election of
directors of the Company or the Bank (other than in the case of the Bank, the
Company's ownership of the capital stock of the Bank); or
(iii) during any period of thirty consecutive months (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors of the
Company, and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason, including without limitation as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board of Directors of the Company; or
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(v) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean
(a) termination by either of the Employers of the employment of the
Executive with either of the Employers for any reason other than (i) death, (ii)
deliberate dishonesty of the Executive with respect to either of the Employers
or any subsidiary or affiliate thereof, or (iii) conviction of the Executive of
a crime involving moral turpitude, or
(b) resignation of the Executive from the employ of either of
the Employers, subsequent to the occurrence of any of the following events:
(i) a significant change in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by the
Executive immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to such
Change in Control; or
(iii) a reduction in the Executive's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time; or
(iv) the relocation of either of the Employers' offices at which
the Executive is principally employed immediately prior to the date of the
Change in Control to a location more than 25 miles from New Bedford,
Massachusetts, or either of the Employers' requiring the Executive to be based
anywhere other than the Employers' offices at such location; or
(v) the failure by either of the Employers to pay to
the Executive any portion of his current compensation or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred compensation program of either of the Employers within seven (7) days
of the date such compensation is due; or
(vi) the failure by either of the Employers to continue in effect
any material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by either of the
Employers to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of the
Change in Control; or
(vii) the failure by either of the Employers to continue to provide
the Executive with benefits substantially similar to those available to the
Executive under any of either of the Employers life insurance, medical, health
and accident, or disability plans or any other material benefit plans in which
the Executive was participating at the time of the Change in Control, the taking
of any action by either of the Employers which would directly or indirectly
materially reduce any of such benefits, or the failure by either of the
Employers to provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service with either of
the Employers in accordance with their normal vacation policy in effect at the
time of the Change in Control; or
(viii) the failure of the Employers to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement.
4. Severance Payment. Subject to the provisions of Section 5 below, in
the event a Terminating Event occurs within three (3) years after a Change in
Control, the Employers shall pay to the Executive an aggregate amount equal to
(x) three times the "base amount" (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) applicable to the
Executive, less (y) One Dollar ($1.00), payable in one lump-sum payment on the
date of such termination or resignation.
5. Limitation on Benefits.
(a) It is the intention of the Executive and of the Employers
that no payments by the Employers to or for the benefit of the Executive under
this Agreement when combined with any other payments under any other agreement
or plan pursuant to which the Executive is entitled to receive payments or
benefits shall be non-deductible to the Employers by reason of the operation of
Section 280G of the Code relating to parachute payments. Accordingly, and
notwithstanding any other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G, any such payments
exceed the amount which can be deducted by the Employers, the payments made
pursuant to this Agreement shall be reduced to the maximum amount which can be
deducted by the Employers. To the extent that payments exceeding such maximum
deductible amount have been made pursuant to this Agreement to or for the
benefit of the Executive, such excess payments shall be refunded to the
Employers with interest thereon at the applicable Federal Rate determined under
Section 1274(d) of the Code, compounded annually, or at such other rate as may
be required in order that no such payments shall be non-deductible to the
Employers by reason of the operation of said Section 280G. To the extent that
there is more than one method of reducing the payments to bring them within the
limitations of said Section 280G, the Executive shall determine which method
shall be followed, provided that if the Executive fails to make such
determination within forty-five days after the Employers have sent the Executive
written notice of the need for such reduction, the Employers may determine the
method of such reduction in its sole discretion.
(b) If any dispute between the Employers and the Executive as to
any of the amounts to be determined under this Section 5, or the method of
calculating such amounts, cannot be resolved by the Employers and the Executive,
either the Employers or the Executive after giving three days written notice to
the other, may refer the dispute to a partner in the Boston office of a firm of
independent certified public accountants selected jointly by the Employers and
the Executive. The determination of such partner as to the amount to be
determined under Section 5(a) and the method of calculating such amounts shall
be final and binding on both the Employers and the Executive. The Employers
shall pay, as they are incurred, the costs of any such determination.
6. Employment Status. This Agreement is not an agreement for
the employment of the Executive and shall confer no rights on the Executive
except as herein expressly provided.
7. Term. This Agreement shall take effect on the day first above
written, and shall terminate upon the earlier of (a) the termination by the
Employers of the employment of the Executive because of death, deliberate
dishonesty of the Executive with respect to either of the Employers or any
subsidiary or affiliate thereof, or conviction of the Executive of a crime
involving moral turpitude, (b) the resignation or termination of the Executive
for any reason prior to a Change in Control, or (c) the resignation of the
Executive after a Change in Control for any reason other than the occurrence of
any of the events enumerated in Section 3(b)(i)-(viii) of this Agreement.
8. Withholding. All payments made by either of the Employers
under this Agreement shall be net of any tax or other amounts required to be
withheld by either of the Employers under applicable law.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the City of Boston in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 9. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of the Executive's
rights under this Agreement, the Employers shall pay, as they are incurred, the
Executive's reasonable attorneys' fees and other reasonable costs and expenses
in connection with the enforcement of said rights (including the enforcement of
any arbitration award in court) regardless of the final outcome, unless and to
the extent the arbitrators shall determine that under the circumstances recovery
by the Executive of all or a part of any such fees and costs and expenses would
be unjust. This arbitration provision shall not be used for matters of the type
referred to in Section 5(b), except to settle the selection of the accounting
partner described in said Section in the event that the Employers and the
Executive cannot agree on the selection.
10. Assignment. Neither the Employers nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be binding upon the Employers and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the payment by
the Employers of all payments due to the Executive under this Agreement, the
Employers shall make such payments to the Executive's beneficiary designated in
writing to the Employers prior to his death (or to his estate, if the Executive
fails to make such designation).
11. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Bank, at its main office, attention of the
Clerk or, in the case of the Company, at its main office, attention of the
Secretary.
14. Election of Remedies. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Executive of any employment agreement between the Employers and
the Executive or a breach of any of the Executive's obligations as an employee
of the Employers. Nothing in this Agreement shall be construed to limit the
rights of the Executive under any employment agreement he may then have with the
Employers.
15. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by a duly authorized
representative of each of the Employers.
16. Allocation of Obligations Between Employers. The
obligations of the Employers under this Agreement are intended to be the
joint and several obligations of the Bank and the Company and the Employers
shall, as between themselves, allocate these obligations in a manner agreed
upon by them.
17. Governing Law. This is a Massachusetts contract and shall
be construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
18. Special Provisions Relating to Regulatory Matters.
Notwithstanding anything to the contrary elsewhere herein contained:
(a) If the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) of the Federal Deposit Insurance Act or Section 12A of Chapter
167 of the Massachusetts General Laws, the Employers' obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(1) or (2) of the Federal Deposit Insurance Act and/or Section 12A
of Chapter 167 of the Massachusetts General laws, all obligations of the
Employers under this Agreement shall terminate as of the effective date of the
order.
(c) All obligations under this Agreement shall be terminated,
(i) in the event that the Federal Deposit Insurance Corporation (the "FDIC") is
appointed as a conservator or receiver of the Bank pursuant to the provisions of
Section 11 of the Federal Deposit Insurance Act, as amended, or (ii) in the
event that the Commissioner of Banks, Commonwealth of Massachusetts, takes
possession of the Bank under the provisions of Section 22 of Massachusetts
General Laws, Chapter 167.
(d) No payments will be made under this Agreement if such
payments are prohibited by the FDIC either by regulation or order. To the extent
that the Bank is prohibited from paying the amounts but the Company would be
able to pay, the payments will be made by the Company.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employers, by their duly authorized officers, and by the
Executive, as of the date first above written.
ATTEST NBB BANCORP, INC.
/s/ Irving J. Goss By: /s/ Robert McCarter
- - --------------------------- -----------------------------
Chairman, President and Chief
Executive Officer
ATTEST: NEW BEDFORD INSTITUTION FOR
SAVINGS
/s/ Irving J. Goss By: /s/ Robert McCarter
- - --------------------------- -----------------------------
Chairman, President and Chief
Executive Officer
WITNESS:
/s/ Irving J. Goss By: /s/ Carol E. Correia
- - -------------------------- -----------------------------
Name: Carol E. Correia
78255.c1
