<PAGE> 1
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-61757
PROSPECTUS
3,500,000 SHARES
PEOPLES HERITAGE FINANCIAL GROUP, INC.
COMMON STOCK
This Prospectus covers 3,500,000 shares of Common Stock, par value $0.01
per share (the "Common Stock"), which may be offered and issued by Peoples
Heritage Financial Group, Inc. (the "Company"), a Maine corporation, from time
to time in connection with the merger with or acquisition by the Company or its
subsidiaries of the assets or securities of financial institutions and
businesses in which bank holding companies and their subsidiaries can engage.
The consideration for any such acquisitions may consist of Common Stock, cash,
notes or other evidences of debt, convertible or exchangeable securities,
assumptions of liabilities or a combination thereof.
It is expected that the terms of acquisitions involving the issuance of
securities covered by this Prospectus will be determined by direct negotiations
with the owners or controlling persons of the businesses or assets to be merged
with or acquired by the Company, or in the case of entities that are more widely
held, through exchange offers to stockholders or documents soliciting the
approval of statutory mergers, consolidations or sales of assets. The Company
anticipates that the Common Stock issued in any such acquisition will be valued
at a price reasonably related to the market value of the Common Stock either at
the time of the agreement on the terms of an acquisition or at the time of
delivery of the Common Stock.
The Company does not expect that an underwriting discount or commission
will be paid by the Company in connection with issuances of Common Stock
pursuant to this Prospectus. However, finders' fees, brokers' commissions or
financial advisory fees may be paid from time to time in connection with
specific acquisitions, and such fees may be paid through the issuance of Common
Stock covered by this Prospectus. Any person receiving any such fee may be
deemed to be an underwriter within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
The Common Stock is traded on the Nasdaq Stock Market's National Market
under the symbol "PHBK." On August 25, 1998, the last sale price of the Common
Stock as reported on the Nasdaq Stock Market's National Market was $18.75.
SEE "RISK FACTORS" BEGINNING ON PAGE FOUR FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE INVESTORS IN THE
COMMON STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY OR INSTRUMENTALITY.
The date of this Prospectus is August 26, 1998.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy material and other
information can be inspected and copied at the office of the Commission located
at 450 Fifth Street, N.W., Washington, D.C. 20549 or at its regional offices,
located at Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and
Seven World Trade Center, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a Web site on the Internet that contains reports, proxy statements,
information statements and other information filed electronically by the Company
with the Commission. The address of the site is http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-4 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act, with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement
or the exhibits thereto. For further information, reference is made to such
Registration Statement and exhibits. A copy of the Registration Statement on
file with the Commission may be obtained from the Commission's principal office
in Washington, D.C. upon payment of the fees prescribed by the Commission or
through the Commission's Internet Web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1997;
2. Quarterly Report on Form 10-Q for the three months ended March 31 and
June 30, 1998;
3. Current Reports on Form 8-K filed by the Company on April 22, April
28, July 20, as amended on July 24, and July 23, 1998;
4. The description of the Common Stock which is contained in the
Registration Statement on Form S-4 filed by the Company on December
31, 1997.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
made hereby shall
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be deemed to be incorporated by reference into this Prospectus and to be a part
hereof. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes any such statement. Any
such statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any of the foregoing documents incorporated
herein by reference (other than the exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Written or oral requests should be directed to Peoples Heritage Financial Group,
Inc., P.O. Box 9540, One Portland Square, Portland, Maine 04112-9540, Attention:
Brian Arsenault (telephone no. (207) 761-8517).
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RISK FACTORS
Prospective investors should consider carefully the following factors in
addition to the other information included or incorporated by reference in this
Prospectus before making an investment in the Common Stock. Certain statements
contained or incorporated by reference herein are not based on historical facts
and are "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These forward-looking
statements, which are based on various assumptions (some of which are beyond the
Company's control), may be identified by reference to a future period(s) or by
the use of forward-looking terminology, such as "anticipate," "believe,"
"commitment," "consider," "continue," "could," "encourage," "estimate,"
"expect," "intend," "may," "plan," "present," "propose," "prospect," "will,"
future or conditional verb tenses, similar terms, variations on such terms or
negatives of such terms. Although the Company believes that the anticipated
results or other expectations reflected in such forward-looking statements are
based on reasonable assumptions, it can give no assurance that those results or
expectations will be attained. Actual results could differ materially from those
indicated in such statements due to risks, uncertainties and changes with
respect to a variety of factors, including, but not limited to, those described
below and other factors generally affecting the banking industry. Some, but not
all, of these risks are summarized below as well as in the Company's reports and
filings with the Commission, including its periodic reports under the Exchange
Act. The Company does not undertake, and specifically disclaims any obligation,
to publicly release the results of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
Risks Related to Certain Lending Activities
The Company's lending activities include loans secured by existing
multi-family residential and commercial real estate. In addition, from time to
time the Company originates loans for the construction of multi-family
residential real estate and land acquisition and development loans. Multi-family
residential, commercial real estate and construction lending generally is
considered to involve a higher degree of risk than single-family residential
lending due to a variety of factors, including generally larger loan balances,
the dependency on successful completion or operation of the project for
repayment, the difficulties in estimating construction costs and loan terms
which often do not require full amortization of the loan over its term and,
instead, provide for a balloon payment at stated maturity. There can be no
assurance that the Company's multi-family residential, commercial real estate
and construction lending activities will not be adversely affected by these and
the other risks related to such activities.
The Company's lending activities also include commercial business loans and
leases to small to medium businesses, which generally are secured by various
equipment, machinery and other corporate assets, and a wide variety of consumer
loans, including home improvement loans, home equity loans, education loans and
loans secured by automobiles, boats, mobile homes, recreational vehicles and
other personal property. Although
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commercial business loans and leases and consumer loans generally have shorter
terms and higher interests rates than mortgage loans, they generally involve
more risk than mortgage loans because of the nature of, or in certain cases the
absence of, the collateral which secures such loans.
Effects of Changes in Interests Rates
The Company's operating results depend to a large extent on its net
interest income, which is the difference between the interest income earned on
its interest-earning assets and the interest expense incurred in connection with
its interest-bearing liabilities. Changes in the general level of interest rates
can affect the Company's net interest income by affecting the spread between the
Company's interest-earning assets and interest-bearing liabilities, as well as,
among other things, the ability of the Company to originate loans; the value of
the Company's interest-earning assets and its ability to realize gains from the
sale of such assets; the average life of the Company's interest-earning assets;
the value of the Company's mortgage servicing rights; and the Company's ability
to obtain deposits in competition with other available investment alternatives.
Interests rates are highly sensitive to many factors, including governmental
monetary policies, domestic and international economic and political conditions
and other factors beyond the control of the Company. Although management
believes that the estimated maturities of the Company's interest-earning assets
currently are well balanced in relation to the estimated maturities of its
interest-bearing liabilities (which involves various estimates as to how changes
in the general level of interest rates will impact such assets and liabilities),
there can be no assurance that the profitability of the Company would not be
adversely affected during any period of changes in interest rates.
Dependence upon Economic Conditions
The Company's profitability is primarily dependent on the profitability of
its banking subsidiaries, which derive substantially all of their loans,
deposits and other business from Maine, New Hampshire and north-central
Massachusetts. The banking industry in northern New England is affected by
general economic conditions such as inflation, recession, unemployment and other
factors beyond the Company's control. During the late 1980s and early 1990s,
severely depressed real estate prices materially and adversely affected the
northern New England economies, causing a severe recession and significant
unemployment in the region. Although these economies have improved considerably
more recently, there can be no assurance that the Company will be able to
withstand adverse economic changes in the northern New England economies should
they occur, or that adverse developments in general economic conditions in the
national economy will not adversely affect the Company's financial condition or
results of operations. Accordingly, the Company will remain subject to risks
associated with prolonged declines in either local or national economies.
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Restrictions on Paying Dividends
The Company's ability to pay dividends to its shareholders depends to a
large extent upon the dividends the Company receives from its banking
subsidiaries. Dividends paid by the Company's banking subsidiaries are subject
to restrictions under various federal and state banking laws. In addition, the
Company and each of its banking subsidiaries must maintain certain capital
levels, which may restrict the ability of such banking subsidiaries to pay
dividends to the Company and the Company to pay dividends to its shareholders.
Preemptive Rights Denied and Dilution
The Company's Amended and Restated Articles of Incorporation, as amended
(the "Articles"), do not provide shareholders with a preemptive right to
subscribe for additional shares of Common Stock upon any increase thereof. Thus,
upon the issuance of any additional shares of Common Stock or other voting
securities of the Company or securities convertible into Common Stock or other
voting securities of the Company, persons who receive shares of Common Stock in
transactions with the Company may be unable to maintain their pro rata voting or
ownership interest in the Company.
Anti-Takeover Provisions
The Articles authorize the Board of Directors of the Company to issue
shares of preferred stock of the Company ("Preferred Stock") without shareholder
approval and upon such terms as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions, financings and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a controlling interest
in the Company.
The Articles and the Bylaws of the Company contain a number of other
provisions which may be deemed to have the effect of discouraging or delaying
attempts to gain control of the Company, including provisions in the Articles:
(i) classifying the Board of Directors of the Company into three classes to
serve for three years with one class being elected annually; (ii) authorizing
the Board of Directors of the Company to fix the size of the Board between three
and 25 directors; (iii) authorizing directors to fill vacancies in the Board;
(iv) increasing the vote for removal of directors by shareholders; (v)
increasing the amount of stock required to be held by shareholders seeking to
call a special meeting of shareholders; and (vi) requiring an increased vote of
shareholders to approve certain business combinations unless certain price and
procedural requirements are met or the Board of Directors of the Company
approves the business combination in the manner provided therein. The provisions
in the Bylaws of the Company include specific conditions under which (i) persons
may be nominated for election as directors of the Company at an annual
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meeting of shareholders; and (ii) business may be transacted at an annual
meeting of shareholders.
In addition to the foregoing, the Company has adopted a shareholder rights
plan which generally would cause substantial dilution to a person or group of
persons that acquires 20% or more of the outstanding Common Stock if a
Triggering Event (as defined) thereafter occurs without the rights issued
pursuant to such plan having been redeemed by the Board of Directors of the
Company. Sections 611-A and 910 of the Maine Business Corporation Act also may
have anti-takeover effects.
The foregoing provisions and instruments may discourage potential proxy
contests and other takeover attempts, particularly those which have not been
negotiated with the Board of Directors of the Company. Accordingly, holders of
Common Stock may be deprived of an opportunity to sell their shares of Common
Stock at a substantial premium over the market price of such shares. In
addition, federal law also requires the approval of the Federal Reserve Board
prior to the acquisition of "control" of a bank holding company.
Governmental Regulation
The Company and its subsidiaries are subject to extensive federal and state
governmental supervision and regulation, which are intended primarily for the
protection of depositors. In addition, the Company and its subsidiaries are
subject to changes in federal and state laws, as well as changes in regulations,
governmental policies and accounting principles. The effects of any such
potential changes cannot be predicted but could adversely affect the business
and operations of the Company and its subsidiaries in the future.
Competition
The Company and its subsidiaries are subject to vigorous competition in all
aspects and areas of their business from banks and other financial institutions,
including savings and loan associations, savings banks, finance companies,
credit unions and other providers of financial services, such as money market
mutual funds, brokerage firms, consumer finance companies and insurance
companies. The Company also competes with non-financial institutions, including
retail stores that maintain their own credit programs and governmental agencies
that make available low cost or guaranteed loans to certain borrowers. Certain
of the Company's competitors are larger financial institutions with
substantially greater resources, lending limits, larger branch systems and a
wider array of commercial banking services.
The Company generally has been able to compete effectively with other
financial institutions by emphasizing customer service, including local
decision-making, by establishing long-term customer relationships and building
customer loyalty and by providing products and services designed to address the
specific needs of its customers. No assurance can be
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given, however, that the Company will continue to be able to compete effectively
with other financial institutions in the future.
The financial services industry is likely to become even more competitive
as further technological advances enable more companies to provide financial
services. These technical advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.
Year 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. If not corrected, many computer
applications could fail or create erroneous results by or at the Year 2000. The
Company has implemented a year 2000 committee to execute a plan of compliance.
The Company believes that, with modifications to existing software already
completed or contemplated in the near future, the Year 2000 problem will not
pose significant operational problems for the Company's computer systems. The
Company expects to be Year 2000 compliant by the end of 1998 and that expenses
incurred in connection with such compliance will not exceed $1.7 million, of
which $858,000 had been incurred as of June 30, 1998. There can be no assurance
that Year 2000 issues will not have a material adverse effect on the Company's
business, financial condition or results of operations.
Acquisitions
Acquisitions have been, and are expected to continue to be, an important
part of the expansion of the Company's business. As of June 30, 1998, the
Company has completed three acquisitions which have been accounted for under the
pooling-of-interests method and six acquisitions accounted for under the
purchase method since January 1, 1994. PHFG continually evaluates acquisition
opportunities and frequently conducts due diligence in connection with possible
acquisitions. As a result, acquisition discussions and, in some cases,
negotiations frequently take place and future acquisitions involving cash, debt
or equity securities can be expected. Acquisitions typically involve the payment
of a premium over book and market values, and therefore, some dilution of PHFG's
book value and net income per common share may occur in connection with any
future transactions.
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THE COMPANY
The Company is a multi-bank and financial services holding company which is
incorporated under the laws of the State of Maine. The Company conducts business
from its executive offices in Portland, Maine and, as of June 30, 1998, 191
banking offices located throughout Maine, New Hampshire and northern
Massachusetts. At June 30, 1998, the Company had consolidated assets of $9.8
billion and consolidated shareholders' equity of $723.5 million. Based on total
assets at June 30, 1998, the Company is the largest independent bank holding
company headquartered in northern New England and the fifth largest independent
bank holding company headquartered in New England.
The Company offers a broad range of commercial and consumer banking
services and products and trust and investment advisory services through three
wholly-owned banking subsidiaries: Peoples Heritage Bank, Bank of New Hampshire
and Family Bank, FSB. Peoples Heritage Bank is a Maine-chartered bank, which
operates offices throughout Maine and, through subsidiaries, engages in mortgage
banking, financial planning, equipment leasing, securities brokerage and
insurance brokerage activities. At June 30, 1998, Peoples Heritage Bank had
consolidated assets of $4.0 billion and consolidated shareholder's equity of
$304.5 million. Bank of New Hampshire is a New Hampshire-chartered commercial
bank which operates offices throughout New Hampshire. At June 30, 1998, Bank of
New Hampshire had consolidated assets of $4.3 billion and consolidated
shareholder's equity of $323.7 million. Family Bank, FSB is a
federally-chartered savings bank which operates offices in the Merrimack Valley
area of Greater Haverhill and Greater Lowell, Massachusetts and in southern New
Hampshire. At June 30, 1998, Family Bank, FSB had consolidated assets of $1.6
billion and consolidated shareholder's equity of $138.0 million.
The executive offices of the Company are located at One Portland Square,
Portland, Maine 04112-9540, and its telephone number is (207) 761-8500.
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SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Data)
The following selected consolidated financial data for the five years ended
December 31, 1997 is derived in part from the audited consolidated financial
statements of the Company which give retroactive effect to the Company's
acquisition of CFX Corporation under the pooling-of-interests method of
accounting on April 10, 1998. The following selected consolidated financial data
at June 30, 1998 and for the six months ended June 30, 1998 and 1997 is derived
from unaudited consolidated financial statements of the Company, which include
all adjustments, consisting of normal recurring accruals, which the Company
considers necessary for a fair presentation of the financial position and
results of operations at such date and for such periods. Operating results for
the six months ended June 30, 1998 are not necessarily indicative of the results
that may be expected for any other interim period or the entire year ending
December 31, 1998. The selected consolidated financial data set forth below
should be read in conjunction with, and is qualified in its entirety by,
consolidated financial statements of the Company, including the related notes,
incorporated herein by reference. See "Available Information" and "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
December 31,
June 30, --------------------------------------------------------------------------
BALANCE SHEET DATA: 1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total assets $9,768,079 $9,668,242 $7,767,655 $6,168,281 $5,673,436 $5,494,810
Debt and equity securities, net 1,614,254 1,830,942 1,564,647 1,307,767 1,305,269 1,356,368
Total loans and leases, net(1) 6,301,529 6,434,238 5,161,179 4,024,307 3,740,024 3,420,416
Goodwill and other intangibles 122,324 127,416 80,884 32,676 31,189 33,879
Deposits 6,851,183 6,747,419 5,936,430 4,834,969 4,426,847 4,457,219
Borrowings 1,970,537 1,982,190 1,042,312 674,694 670,829 450,637
Shareholders' equity 723,457 720,783 676,847 586,500 515,423 495,522
Nonperforming assets 66,778 69,427 62,266 67,394 89,295 145,651
Book value per share 8.27 8.23 7.71 7.24 6.45 6.25
Tangible book value per share 6.87 6.79 6.78 6.84 6.08 5.83
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
--------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA: 1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
Interest and dividend income $357,649 $300,845 $641,751 $509,477 $454,657 $383,393 $369,388
Interest expense 174,992 135,315 297,275 230,182 202,760 159,656 165,306
-------- -------- -------- -------- -------- -------- --------
Net interest income 182,657 165,530 344,476 279,295 251,897 223,737 204,082
Provision for loan and lease losses 5,981 1,962 4,548 5,185 8,044 6,996 28,077
-------- -------- -------- -------- -------- -------- --------
Net interest income
after provision for loan and lease
losses 176,676 163,568 339,928 274,110 243,853 216,741 176,005
Net securities gains 2,050 778 2,697 3,287 2,499 401 1,183
Other noninterest income 49,789 35,218 79,783 57,423 46,656 41,625 42,871
Noninterest expense (excluding
special charges) 140,564 123,346 261,965 209,716 188,573 186,287 181,071
Special charges(2) 35,374 -- 18,591 9,627 4,958 559 300
-------- -------- -------- -------- -------- -------- --------
Income before income
tax expense 52,577 76,218 141,852 115,477 99,477 71,921 38,688
Income tax expense 17,227 26,257 49,517 39,444 33,437 21,136 3,372
-------- -------- -------- -------- -------- -------- --------
Net income $ 35,350 $ 49,961 $ 92,335 $ 76,033 $ 66,040 $ 50,785 $ 35,316
======== ======== ======== ======== ======== ======== ========
Net income per share(3):
Basic $ 0.40 $ 0.57 $ 1.06 $ 0.94 $ 0.82 $ 0.64 $ 0.46
Diluted 0.39 0.56 1.04 0.92 0.80 0.63 0.46
Dividends per share 0.22 0.19 0.46 0.34 0.29 0.18 0.11
</TABLE>
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<TABLE>
<CAPTION>
At or For the
Six Months Ended
June 30, At or For the Year Ended December 31,
----------------- ---------------------------------------------------------
OTHER DATA: 1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets 0.73% 1.27% 1.09% 1.15% 1.13% 0.92% 0.67%
Return on average equity(4) 9.86 14.74 13.29 12.69 12.04 9.97 7.56
Average equity to average
assets(4) 7.44 8.63 8.23 9.05 9.35 9.19 8.83
Interest rate spread(4) 3.58 4.10 3.86 3.98 4.06 3.96 *
Net interest margin(4) 4.13 4.66 4.45 4.56 4.64 4.40 4.21
Tier 1 leverage capital ratio
at end of period 7.16 8.33 7.51 8.56 9.14 8.93 8.77
Dividend payout ratio 51.52 36.26 43.63 38.75 35.69 28.49 24.14
Efficiency ratio(5) 58.52 59.56 59.78 62.28 63.16 70.20 73.32
Nonperforming assets as a percent
of total assets at end of
period 0.68 0.77 0.72 0.80 1.09 1.57 2.65
</TABLE>
- ----------
(1) Does not include loans held for sale.
(2) Special charges consist of merger-related expenses and, in 1997, a $7.2
million pre-tax charge relating to CFX Funding.
(3) Excluding special charges, PHFG's basic income per share would have been
$0.68, $0.57, $1.20, $1.03, $0.86, $0.65 and $0.46 for the six months ended June
30, 1998 and 1997 and the years ended December 31, 1997, 1996, 1995, 1994 and
1993, respectively, and PHFG's diluted income per share would have been $0.67,
$0.56, $1.18, $1.01, $0.85, $0.64 and $0.46 for the same respective periods.
(4) Excludes the effect of unrealized gains or losses on securities available
for sale.
(5) The efficiency ratio represents operating expenses, excluding distributions
on securities of subsidiary trust and special charges, as a percentage of net
interest income and noninterest income, excluding net securities gains.
* Information is not available.
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COMMON STOCK AND DIVIDEND INFORMATION
The Common Stock is traded on the Nasdaq Stock Market's National Market.
The following table sets forth the high and low prices of the Common Stock as
reported on the Nasdaq Stock Market's National Market and the dividends declared
per share of Common Stock for the periods indicated. The prices and dividends
per share have been retroactively adjusted to reflect a two-for-one split of the
Common Stock effective May 18, 1998.
<TABLE>
<CAPTION>
Market Price
--------------------------------------
Dividends Declared
High Low Per Share
----------------- ---------------- ------------------
<S> <C> <C> <C>
1998
- ------------------------------------
First Quarter $24.66 $18.69 $0.11
Second Quarter 26.75 21.56 0.11
Third Quarter (through 26.00 18.00 --
August 25)
1997
- ------------------------------------
First Quarter 16.25 12.94 0.09
Second Quarter 19.00 13.00 0.09
Third Quarter 21.56 18.00 0.095
Fourth Quarter 23.81 18.94 0.105
1996
- ------------------------------------
First Quarter 11.38 9.50 0.08
Second Quarter 11.13 9.69 0.085
Third Quarter 11.81 9.50 0.085
Fourth Quarter 14.31 11.25 0.085
</TABLE>
As of June 30, 1998, there were 87,565,134 shares of Common Stock
outstanding which were held by approximately 12,000 holders of record. Such
number of record holders does not reflect the number of persons or entities
holding stock in nominee name through banks, brokerage firms and other nominees.
The Company has historically paid quarterly dividends on the Common Stock
and currently intends to continue to do so in the foreseeable future. The
Company's ability to pay dividends depends on a number of factors, however,
including restrictions on the ability of its banking subsidiaries to pay
dividends under federal and state banking laws, and as a result there can be no
assurance that dividends will be paid in the future.
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USE OF PROCEEDS
The Common Stock offered hereby will be issued in connection with future
acquisitions of assets or securities of other entities as described herein.
Other than the assets or securities acquired, the Company will not receive any
proceeds upon the issuance of Common Stock in connection therewith or upon the
sale from time to time of such Common Stock by the holders thereof.
PLAN OF DISTRIBUTION
The Company will issue the Common Stock being offered hereby from time to
time in connection with the merger with or the acquisition by the Company or its
subsidiaries of the assets or securities of financial institutions and
businesses in which bank holding companies and their subsidiaries can engage.
The consideration for any such acquisitions may consist of Common Stock, cash,
notes or other evidences of debt, convertible or exchangeable securities,
assumptions of liabilities or a combination thereof.
It is expected that the terms of acquisitions involving the issuance of
securities covered by this Prospectus will be determined by direct negotiations
with the owners or controlling persons of the businesses or assets to be merged
with or acquired by the Company, or in the case of entities that are more widely
held, through exchange offers to stockholders or documents soliciting the
approval of statutory mergers, consolidations or sales of assets. The Company
anticipates that the Common Stock issued in any such acquisition will be valued
at a price reasonably related to the market value of the Common Stock either at
the time of the agreement on the terms of an acquisition or at the time of
delivery of the Common Stock. The aggregate number of shares of Common Stock to
be issued at any time, and the issue price and any other specific terms of any
particular issuance in respect of an acquisition, will be set forth in an
accompanying Prospectus Supplement in each case where registration of the Common
Stock under the Securities Act is required, together with a description of any
arrangement involving an agent or underwriter and any compensation payable under
the terms of such arrangement.
The Company does not expect that an underwriting discount or commission
will be paid by the Company in connection with issuances of Common Stock
pursuant to this Prospectus. However, finders' fees, brokers' commissions or
financial advisory fees may be paid from time to time in connection with
specific acquisitions, and such fees may be paid through the issuance of Common
Stock covered by this Prospectus. Any person receiving any such fee may be
deemed to be an underwriter within the meaning of the Securities Act.
All expenses of the offering of Common Stock by the Company pursuant hereto
will be paid by the Company.
13
<PAGE> 14
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by the law firm of Elias, Matz, Tiernan & Herrick L.L.P.,
Washington, D.C.
EXPERTS
The financial statements and related financial statement schedules of the
Company incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 and the Company's
Current Report on Form 8-K filed on July 23, 1998, and the financial statements
and related financial statement schedules of The Safety Fund Corporation and of
Community Bankshares, Inc. incorporated in this Prospectus by reference from the
Company's Current Report on Form 8-K, filed on April 22, 1998, have been audited
by KPMG Peat Marwick LLP, independent certified public accountants, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon its authority
as experts in accounting and auditing.
The financial statements and related financial statement schedules of CFX
Corporation incorporated in this Prospectus by reference from the Company's
Current Report on Form 8-K, filed on April 22, 1998, have been audited by Wolf &
Company, P.C., independent certified public accountants, as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given upon its authority as experts in
accounting and auditing.
The financial statements and related financial statement schedules of
Portsmouth Bank Shares, Inc. incorporated in this Prospectus by reference from
the Company's Current Report on Form 8-K, filed on April 22, 1998, have been
audited by Shatswell, MacLeod & Company, P.C., independent certified public
accountants, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon its authority as experts in accounting and auditing.
14
<PAGE> 15
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No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information and representation must not be relied upon as
having been authorized by the Company or any other person. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is unlawful to
make such offer in such state. Neither the delivery of this Prospec- tus nor any
sales made hereunder shall, under any circumstances, create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.
TABLE OF CONTENTS
Page
Available Information..................... 2
Incorporation of Certain Documents
by Reference............................ 2
Risk Factors.............................. 4
The Company............................... 9
Selected Consolidated
Financial Data....................... 10
Common Stock and Dividend
Information.......................... 12
Use of Proceeds.......................... 13
Plan of Distribution..................... 13
Legal Matters............................ 14
Experts.................................. 14
3,500,000 Shares
PEOPLES HERITAGE
FINANCIAL GROUP, INC.
Common Stock
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Prospectus
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