<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
.....................................
FORM 10-QSB
(Mark one)
X Quarterly report pursuant to Section 13 or 15 (d) of the Securities
--------- Exchange Act of 1934 for the quarterly period ended
September 30, 1995 or
_________ Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____.
Commission file number 0-17099
------------------------------
HOME PORT BANCORP, INC.
-----------------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 04-3016821
______________________________. ______________________________.
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
104 Pleasant Street
Nantucket, Massachusetts 02554
_____________________________. ____________
(Address of principal executive office) (Zip Code)
(508) 228-0580
_______________________________________________.
(Issuer's telephone number, including area code)
Not applicable
_______________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------- -------.
The number of shares outstanding of each of the registrant's classes of
common stock as of September 30, 1995:
Common Stock $.01 par value 1,841,890
--------------------------- ------------------------.
(Title of Class) (Shares Outstanding)
Transitional Small Business Disclosure Format (check one)
Yes No X
------- -------.
<PAGE>
<TABLE>
<CAPTION>
INDEX
PART I - FINANCIAL INFORMATION Page No.
----------
<S> <C>
Consolidated Balance Sheets at September 30, 1995 and December 3
31, 1994
Consolidated Statements of Income for the three months
and the nine months ended September 30, 1995 and 1994. 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial Condition 8-9
and Results of Operation
PART II - OTHER INFORMATION 10
Signatures 11
</TABLE>
2
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited, in thousands, except share amounts)
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Assets
Cash and due from banks $4,618 $4,603
Federal funds sold 1,680 4,910
------------- ------------
Total cash and cash equivalents 6,298 9,513
------------- ------------
Investment securities (market value
$22,823 and $26,505) 23,214 28,152
Investment securities available for sale
(book value of $5,584 and $1,683) 5,608 1,619
Loans, net of allowance for possible loan
losses of $2,191 and $2,154 120,095 110,205
Loans held for sale 6,611 8,020
Other real estate owned -- 45
Land, buildings and equipment, net 1,203 920
Accrued income receivable 1,065 825
Net deferred tax asset 588 647
Stock in Federal Home bank of Boston, at cost 2,321 1,714
Prepaid expenses and other assets 769 664
------------- ------------
Total assets $169,772 $162,324
============= ============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $118,485 $104,386
Borrowed funds 27,508 33,107
Accrued expenses 1,644 1,461
Dividends Payable -- 4,605
Other liabilities 419 241
------------- ------------
Total liabilities 148,056 143,800
------------- ------------
Stockholders' equity
Preferred stock $.01 par value 2,000,000
shares authorized, none issued -- --
Common stock $.01 par value 10,000,000
shares authorized, 2,325,494 issued at
December 31, 1994 and September 30, 1995 22 22
Additional paid-in capital 17,474 17,474
Retained earnings-restricted 6,603 5,462
Unrealized gain (loss) on securities
available for sale, net of tax 14 (37)
Less:
Treasury stock, at cost (483,604 shares at
December 31, 1994 and September 30, 1995) (4,397) (4,397)
------------- ------------
Total stockholders' equity 19,716 18,524
------------- ------------
Total liabilities and stockholders'
equity $167,772 $162,324
============= ============
</TABLE>
3
<PAGE>
Home Port Bancorp, Inc. and Subsidiaries
Consolidated Statement of Income
(Unaudited, in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest on loans $2,937 $2,302 $8,372 $6,325
Interest on investment securities 405 450 1,219 1,337
Dividends 42 66 121 97
Federal funds sold 45 41 78 88
-------------- -------------- -------------- --------------
Total interest and dividend income 3,429 2,859 9,790 7,847
-------------- -------------- -------------- --------------
Interest expense:
Interest on depositors' accounts 966 827 2,686 2,296
Interest on borrowed funds 555 407 1,816 1,015
-------------- -------------- -------------- --------------
Total interest expense 1,521 1,234 4,502 3,311
-------------- -------------- -------------- --------------
Net interest and dividend income 1,908 1,625 5,288 4,536
Provision for possible loan losses -- -- -- --
-------------- -------------- -------------- --------------
Net interest and dividend income after provision
for possible loan losses 1,908 1,625 5,288 4,536
Non-interest income:
Deposit servicing fees 78 77 232 213
Loan servicing fees 61 39 165 102
Other fees 76 77 245 225
Net gain from sales of mortgage loans 6 1 19 12
Net gain (loss) from sales of securities -- -- (3) 11
-------------- -------------- -------------- --------------
Total non-interest income 221 194 658 563
-------------- -------------- -------------- --------------
Non-interest expense:
Salaries and employee benefits 494 426 1,451 1,184
Building and equipment expenses 109 104 297 260
Loss (gain) on other real estate owned 5 (162) 9 (301)
Deposit insurance fees (4) 53 139 184
Professional fees 66 79 168 199
Other 242 259 640 659
-------------- -------------- -------------- --------------
Total non-interest expense 912 759 2,704 2,185
-------------- -------------- -------------- --------------
Income before income taxes 1,217 1,060 3,242 2,914
Provision for income taxes 450 470 1,273 1,244
-------------- -------------- -------------- --------------
Net income $767 $590 $1,969 $1,670
============== ============== ============== ==============
Earnings per common share $0.42 $0.32 $1.07 $0.91
============== ============== ============== ==============
</TABLE>
4
<PAGE>
Home Port Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
(Unaudited, in thousands) September 30,
1995 1994
--------- ---------
<S> <C> <C>
Net cash flows from operating activities:
Net income $1,969 $1,670
Adjustments to reconcile net income to net cash
provided by operations:
Increase in accrued interest receivable (240) (284)
Net amortization of investment securities 1,023 1,882
Provision for possible loan losses -- --
Other, net 931 431
--------- ---------
Net cash provided by operating activities 3,683 3,699
--------- ---------
Cash flows from investing activities:
Purchases of securities available for sale (4,972) --
Purchases of securities held to maturity -- (7,716)
Proceeds from sales of securities available for sale 726 4,056
Proceeds from maturities of securities available for
sale 257 --
Proceeds from maturities of securities held to
maturity 3,915 2,050
Net increase in loans (9,890) (26,728)
Purchases of land, buildings and equipment (402) (380)
Proceeds from sale of other real estate owned 401 883
--------- ---------
Net cash used for investing activities (9,965) (27,835)
--------- ---------
Cash flows from financing activities:
Net increase in deposits 14,099 16,008
Cash dividends paid (5,433) (827)
Proceeds from stock options exercised -- 254
Net increase (decrease) in borrowed funds (5,599) 9,089
--------- ---------
Net cash provided from financing activities 3,067 24,524
--------- ---------
Net increase (decrease) in cash and cash equivalents (3,215) 388
Cash and cash equivalents at beginning of year 9,513 5,657
--------- ---------
Cash and cash equivalents at end of period $6,298 $6,045
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense $4,490 $3,310
Income taxes $1,122 $ 788
Loans foreclosed and insubstance foreclosures
transferred to other real estate owned $ 365 $ --
</TABLE>
5
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements of Home Port Bancorp, Inc. ("The
Company") and its wholly owned subsidiaries, Nantucket Bank ("the Bank") and
N.B. Securities, Inc. ("a Massachusetts Securities Corporation") have been
prepared in accordance with regulations of the Securities and Exchange
Commission. Certain information, required by generally accepted accounting
principles, has been condensed or omitted pursuant to such rules and
regulations. Inter-company accounts and transactions have been eliminated.
The financial statements for the periods ended September 30, 1995 and 1994 are
unaudited, but include normal recurring adjustments which management considers
necessary for a fair presentation of results. Interim results are not
necessarily indicative of the results to be expected for the entire year. It is
recommended that these statements be read in conjunction with the audited
financial statements for the year end December 31, 1994.
2. INVESTMENT SECURITIES (in thousands)
Investment securities held to maturity consist of the following:
<TABLE>
<CAPTION>
Sept. 30, 1995 December 31, 1994
------------------- -------------------
Book Market Book Market
Value Value Value Value
------------------- -------------------
<S> <C> <C> <C> <C>
United States government and
agency obligations $6,593 $6,519 $8,668 $8,253
State and municipal obligations 853 848 1,479 1,439
Other bonds and notes 6,619 6,546 7,802 7,547
Mortgage-backed securities 9,149 8,910 10,203 9,266
------------------- -------------------
Total held to maturity $23,214 $22,823 $28,152 $26,505
=================== ===================
</TABLE>
Investment securities available for sale consist of the following:
<TABLE>
<CAPTION>
Sept. 30, 1995 December 31, 1994
------------------- -------------------
Book Market Book Market
Value Value Value Value
------------------- -------------------
<S> <C> <C> <C> <C>
United States government and
agency obligations $3,573 $3,582 $1,470 $1,420
State and municipal obligations 668 667 -- --
Other bonds and notes 1,232 1,247 101 100
Marketable equity securities 111 112 112 99
------------------- -------------------
Total available for sale $5,584 $5,608 $1,683 $1,619
=================== ===================
</TABLE>
6
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. LOANS, NET (in thousands)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Mortgage loans:
Residential
Fixed $16,363 $14,737
Adjustable 55,603 55,320
Commercial 33,496 27,404
Residential construction 33,374 25,867
------------------ -----------------
Total principal balances 138,836 123,328
Less: Due to borrowers on uncompleted loans (21,912) (13,464)
Deferred loan origination fees (418) (443)
------------------ -----------------
Total mortgage loans 116,506 109,421
------------------ -----------------
Other loans:
Commercial 6,707 6,048
Second mortgage 1,752 2,027
Home equity 1,518 1,399
Passbook and stock secured 1,300 884
Consumer 1,114 600
------------------ -----------------
Total other loans 12,391 10,958
------------------ -----------------
Less: Allowance for possible loan losses (2,191) (2,154)
------------------ -----------------
Loans, net (A) $126,706 $118,225
================== =================
</TABLE>
The Federal Home Loan Bank has a blanket lien covering residential and
commercial mortgage loans as collateral for the Bank's borrowing from the FHLB.
(A) Includes loans held for sale of $6,611 and $8,020 at September 30, 1995 and
December 31, 1994.
7
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. (CONTINUED)
A summary of the transactions in the allowance for possible loan losses is as
follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended
------------------------ December 31,
1995 1994 1994
---------- ----------- ------------
<S> <C> <C> <C>
Balance at beginning of period $ 2,154 $ 2,093 $ 2,093
Provision charged to operations -- -- --
Recoveries 56 112 102
Net realized losses charged to allowance (19) (28) (41)
---------- ----------- ------------
Balance at beginning of period $ 2,191 $ 2,177 $ 2,154
========== =========== ============
The allowance for possible losses is allocated as follows:
Residential mortgage loans $ 486 $ 454 $ 456
Commercial mortgage loans 1,144 1,132 1,114
Commercial loans 238 254 254
All other loans 323 337 330
---------- ----------- ------------
Total $ 2,191 $ 2,177 $ 2,154
========== =========== ============
</TABLE>
Non-performing loans are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
-------------- -------------
<S> <C> <C>
Loans accounted for on a non-accrual basis $ -- $ 357
Accruing loans 90 days past due $ 15 $ 76
Impaired loans $ -- $ --
Restructured loans $ -- $ 96
</TABLE>
4. COMMITMENTS (in thousands)
In the normal course of business, there are outstanding commitments that are not
reflected in the balance sheet. Firm commitments to originate mortgage loans
were $5,665 at September 30, 1995.
5. INCOME TAXES (in thousands)
The effective rate for the quarter ended September 30, 1995 is 37%, which is
less than the statutory rate of 43% primarily due to a change in the valuation
allowance.
8
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Unaudited Interim Information for September 30, 1995
CONSOLIDATED BALANCE SHEET
--------------------------
Total assets of Home Port Bancorp, Inc. (the "Company") increased $5.4 million
to $167.8 million at September 30, 1995 from $162.3 million at December 31,
1994.
Net loans outstanding (including loans held for sale) were $126.7 million at
September 30, 1995; an increase of $8.5 million from $118.2 million at December
31, 1994.
Total deposits increased by $14.1 million to $118.5 million at September 30,
1995 from $104.4 million at December 31, 1994.
Borrowed funds, consisting of Federal Home Loan Bank advances, totaled $27.5
million at Sept. 30, 1995 a decrease of $5.6 million from the December 31, 1994
total of $33.1 million.
Balance sheet changes were substantially in line with management's expectations
of seasonal variations.
Total stockholders' equity increased by $1.2 million to $19.7 million at
September 30, 1995 from $18.5 million at December 31, 1994. For the nine month
period ended September 30, 1995 net income totaled $2.0 million and cash
dividends declared totaled $.8 million.
RESULTS OF OPERATIONS
---------------------
General
For the quarter ended September 30, 1995, the Company reported net income of
$767 thousand or $0.42 per share compared to net income of $590 thousand or
$0.32 per share for the quarter ended September 30, 1994. The increase in
quarterly earnings is primarily attributable to an increase in net interest and
dividend income of $283 thousand and a reduction of $56 thousand in deposit
insurance expense offset by a reduction of $167 thousand in gains on other real
estate owned.
Net Interest Income
Interest and dividend income increased by $283 thousand or 17.4% to $1.9 million
for the quarter ended September 30, 1995 as compared to the same period in 1994.
The net interest margin and net interest spread were 4.57% and 3.93%,
respectively, for the quarter ended September 30, 1995 compared to 4.17% and
3.88% for the same period in 1994. The increase in the interest margin and
spread was due primarily to repricing of adjustable rate assets.
Return on Equity
Return on equity has increased from 9.22% for the nine months ended September
30, 1994 to 13.77% for the same period in 1995. This improvement is due to
higher earnings combined with a lower equity base resulting from the $4.6
million ($2.50 per share) special dividend declared in the fourth quarter of
1994.
9
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Unaudited Interim Information for September 30, 1995
Provision for Loan Losses
The allowance for loan losses at September 30, 1995 was $2.2 million or
1.71% of total loans. At December 31, 1994 the allowance for loan losses
also totaled $2.2 million or 1.83% of total loans. The Bank believes that
the current level of the allowance for loan losses is adequate and, hence,
has made no provision for possible loan losses during the year ended
December 31, 1994 or the nine months ended September 30, 1995. However, any
unforeseen future economic problems could lead to the Bank experiencing
additional delinquencies requiring additional provisions for possible loan
losses.
Non-performing Loans and Other Real Estate Owned
The Bank's non-performing loans, including accruing loans 90 days past due,
impaired loans and restructured loans, decreased to $15 thousand at September
30, 1995 compared to $529 thousand at December 31,1994. None of these loans were
to affiliated persons. As of September 30, 1995, the Bank had no other real
estate owned compared to $45 thousand at December 31, 1994
Effective January 1, 1995 the Bank adopted Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a Loan"
and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures. Adoption of these statements has not and is not
expected to have a material effect on the Bank's financial condition or results
or operations..
At September 30, 1995 management has identified $332 thousand of loans that,
while currently performing, may pose potential problems due to serious doubts
about the ability of the borrowers to comply with all of their present loan
repayment terms. The Bank believes that its allowance for loan losses is
adequate to absorb any losses that may result from these loans.
Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax return.
The Parent Company is subject to Delaware franchise tax. The Bank and N.B.
Securities Inc. are subject to Massachusetts State income tax. For interim
unaudited financial statements, management calculated the provision for taxes
using an estimated combined Federal income and Massachusetts income tax rate of
40% and made an adjustment decreasing the deferred tax valuation reserve. The
expected tax rate is reviewed and adjusted as necessary on a quarterly basis.
Liquidity and Capital Resources
Substantially all of the Company's funds are generated through its banking
subsidiary, Nantucket Bank. The Bank's sources are customer deposits,
amortization and payoffs of loans, advances from the Federal Home Loan Bank of
Boston, sale of loans in the secondary market, maturities and sales of
securities and positive cash flows generated from operations. As a member of the
Depositors' Insurance Fund, the Bank also has a right to borrow from the
Depositors Insurance Fund for short-term cash needs by pledging certain assets,
although it has never exercised this right. The Bank's liquidity management
program is designed to assure that sufficient funds are available to meet it's
daily needs.
The Bank believes its capital resources, including deposits, scheduled loan
repayments, revenue generated from the sales of loans and securities, unused
borrowing capacity at the Federal Home Loan Bank of Boston, and revenue from
other sources will be adequate to meet its funding commitments.
At September 30, 1995 and December 31, 1994 the Bank's capital ratios were in
excess of the requirements of the Federal Deposit Insurance Corp.
10
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company and its subsidiaries are not involved in any pending
legal proceedings other than those involved 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 the Company 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
---------------------------------------------------
Not applicable.
Item 5. Other Information.
------------------
A dividend of $.15 per common share was declared on July 27, 1995.
The cash dividend was paid on August 24, 1995 to shareholders of
record as of August 17, 1995.
Declaration of dividends by the Board of Directors depends on a
number of factors, including capital requirements, regulatory
limitations, the Company's operating results and financial condition
and general economic conditions.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
a. Exhibits -- None
--------
b. Reports on Form 8-K - No reports on Form 8-K were filed during
-------------------
the quarter ended September 30, 1995.
11
<PAGE>
HOME PORT BANCORP, INC. AND SUBSIDIARIES
----------------------------------------
Signatures
- ----------
In accordance with the requirements of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Home Port Bancorp, Inc.
----------------------------------------
(Registrant)
Date: November 13, 1995 By:
----------------------------------------
William P. Hourihan, Vice President
Date: November 13, 1995
By:
----------------------------------------
John M. Sweeney, Treasurer
(chief financial & accounting officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000832769
<NAME> HOME PORT BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 4,618 4,603
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 1,680 4,910
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 5,608 1,619
<INVESTMENTS-CARRYING> 23,214 28,152
<INVESTMENTS-MARKET> 22,823 26,505
<LOANS> 128,897 120,377
<ALLOWANCE> 2,191 2,154
<TOTAL-ASSETS> 167,772 162,324
<DEPOSITS> 118,485 104,386
<SHORT-TERM> 27,508 33,107
<LIABILITIES-OTHER> 2,063 6,307
<LONG-TERM> 0 0
<COMMON> 22 22
0 0
0 0
<OTHER-SE> 19,694 18,502
<TOTAL-LIABILITIES-AND-EQUITY> 167,772 162,324
<INTEREST-LOAN> 2,937 8,372
<INTEREST-INVEST> 492 1,418
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 3,429 9,790
<INTEREST-DEPOSIT> 966 2,686
<INTEREST-EXPENSE> 1,521 4,502
<INTEREST-INCOME-NET> 1,908 5,288
<LOAN-LOSSES> 0 0
<SECURITIES-GAINS> 0 (3)
<EXPENSE-OTHER> 912 2,704
<INCOME-PRETAX> 1,217 3,242
<INCOME-PRE-EXTRAORDINARY> 1,217 3,242
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 767 1,969
<EPS-PRIMARY> .42 1.07
<EPS-DILUTED> 0 0
<YIELD-ACTUAL> 0 0
<LOANS-NON> 0 357
<LOANS-PAST> 15 76
<LOANS-TROUBLED> 0 96
<LOANS-PROBLEM> 332 0
<ALLOWANCE-OPEN> 0 2,154
<CHARGE-OFFS> 0 19
<RECOVERIES> 0 56
<ALLOWANCE-CLOSE> 0 2,191
<ALLOWANCE-DOMESTIC> 0 2,191
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
