SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
September 30, 1995
Commission File Number 34-0-18162
PEOPLE'S SAVINGS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Connecticut 06-1259026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 Broad Street, New Britain, CT 06053
(Address of principal executive offices) (ZIP Code)
(203) 224-7771
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
2,511,824 shares issued and
outstanding, (including
559,461 shares in treasury)
as of September 30, 1995
Common Stock, par value $1.00 per share
PEOPLE'S SAVINGS FINANCIAL CORP.
Table of Contents
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements (Unaudited)
(a) Condensed Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 3
(b) Condensed Consolidated Statements of Income -
Three months ended September 30, 1995 and 1994;
Nine months ended September 30, 1995 and 1994 4
(c) Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1995 and 1994 5
(d) Financial Highlights 6
(e) Notes to the Condensed Consolidated Financial
Statements - September 30, 1995 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security
Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
PEOPLE'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited) (Note)
<S> <C> <C>
Non-interest bearing
deposits and cash $6,405 $9,538
Federal funds sold
and FHLB overnight deposits 4,249 9,876
Cash and Cash Equivalents 10,654 19,414
Investment securities
Available for sale (at market) 73,005 62,638
Held to maturity (market value:
$65,538 at September 30, 1995
and $66,680 at December 31, 1994) 66,446 71,362
Capital stock of the Federal Home Loan Bank 2,643 2,292
Trading account securities (at market) - 5,461
Loans, net (allowance for loan losses
1995-$1,711; 1994-$1,791) 235,729 226,324
Bank premises and equipment 2,357 2,410
Foreclosed real estate 615 628
Accrued income receivable 4,072 3,646
Goodwill 3,480 3,745
Other assets 4,085 4,169
Total Assets $403,086 $402,089
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing demand deposits $5,670 $4,946
Interest bearing deposits 329,623 316,756
Total deposits 335,293 321,702
Mortgagors' escrow accounts 1,039 2,609
Advances from Federal Home Loan Bank of Boston 19,102 33,450
Accrued expenses 1,186 1,164
Other liabilities 2,300 1,933
Total Liabilities 358,920 360,858
Shareholders' Equity
Common stock, ($1.00 par value),
10,000,000 shares authorized;
2,511,824, and 2,508,324 shares issued and
outstanding at September 30, 1995 and
December 31, 1994, respectively
(including shares in treasury of 559,461
and 519,461 at September 30, 1995 and
December 31, 1994, respectively) 2,512 2,508
Additional paid in capital 21,824 21,792
Retained earnings 26,966 25,751
Unrealized losses on securities
available for sale,
net of taxes 114 (2,291)
Cost of treasury stock (7,250) (6,529)
Total Shareholders' Equity 44,166 41,231
Total Liabilities and Shareholders' Equity $403,086 $402,089
</TABLE>
Note: The statement of condition at December 31, 1994 has been derived
from the audited consolidated financial statements at that date.
See notes to the condensed consolidated financial statements.
<TABLE>
PEOPLE'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
unaudited
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Income:
Loans, including fees $4,773 $4,089 $13,601 $12,029
Investment Securities 2,202 2,161 6,288 6,198
Trading Account - 62 46 157
Short-term Investments 83 48 401 165
Total Interest Income 7,058 6,360 20,336 18,549
Interest Expense:
Interest on deposits 3,457 2,461 9,654 7,157
Interest on advances from Federal
Home Loan Bank of Boston 269 369 986 1,017
Total Interest Expense 3,726 2,830 10,640 8,174
Net Interest Income 3,332 3,530 9,696 10,375
Provision for Loan Losses 30 50 101 129
Net Interest Income after
Provision for Loan Losses 3,302 3,480 9,595 10,246
Other Income:
Service charges and fees 241 221 758 655
Trust fees 299 11 838 20
Net Investment Securities
Gains (Losses) (1) - (70) 750
Trading Account Gains (Losses) - 107 49 (105)
Net Gains (Losses) on Sale of
Mortgages (7) (3) (2) (338)
Other Operating Income 76 56 142 159
Total Other Income 608 392 1,715 1,141
Other Expenses:
Salaries and Benefits 1,150 846 3,297 2,524
Occupancy 225 216 701 634
Furniture and Equipment 224 173 671 509
FDIC Deposit Insurance (17) 177 347 518
Other Real Estate Expenses 146 51 308 147
Other Operating Expenses 603 882 1,840 1,834
Total Other Expenses 2,331 2,345 7,164 6,166
Income Before Income Taxes 1,579 1,527 4,146 5,221
Income Taxes 618 622 1,642 2,124
Net Income $961 $905 $2,504 $3,097
Per Share Data:
Net Income $0.48 $0.45 $1.26 $1.53
Weighted Average Common
Shares Outstanding 1,989,542 2,024,262 1,985,702 2,022,788
Dividends Declared Per Share $0.22 $0.22 $0.66 $0.66
</TABLE>
See notes to condensed consolidated financial statements.
<TABLE>
PEOPLES'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<CAPTION>
Nine months ended
September 30,
1995 1994
<S> <C> <C>
Operating activities
Net Income $2,504 $3,097
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for depreciation 354 260
Accretion and amortization of bond premiums
and discounts, net 35 52
Provision for loan losses 101 129
Amortization of net deferred loan fees (157) (144)
Decrease in trading account securities 5,461 (475)
Loans sold 2,615 8,196
Realized investment securities (gains) losses 70 (750)
Trading account (gains) losses (49) 105
Loan sales (gains) losses 2 338
Writedowns on foreclosed real estate 253 124
Goodwill amortization 265 -
Increase in accrued expenses 22 36
Other items, net 74 (32)
Net cash provided by operating activities 11,445 10,936
Investing activities
Purchases of available-for-sale securities (28,698) (18,239)
Proceeds from sale of available-for-sale
securities 8,370 10,307
Proceeds from maturities of available-for-sale
securities 11,854 6,930
Purchases of held-to-maturity securities (1,265) (32,974)
Proceeds from maturities of held-to-maturity
securities 6,237 6,440
Net increase in loans (12,954) (17,604)
Purchases of premises and equipment, net (301) (772)
Foreclosed real estate sold 748 752
Net cash used by investing activities (15,904) (45,160)
Financing activities
Net increase (decrease) in demand deposits,
NOW accounts, savings accounts, and
mortgagors' escrow accounts (19,661) (840)
Net increase in time deposits 31,682 14,522
Net increase in long term borrowings from
the Federal Home Loan Bank of Boston - 21,500
Net increase (decrease) in short term
borrowings from the Federal Home Loan
Bank of Boston (14,348) (30)
Cash Dividends paid (1,289) (1,317)
Acquisition of treasury stock (721) -
Issuance of Common Stock 36 31
Net cash provided by financing activities (4,301) 33,866
Increase (decrease) in cash and cash equivalents (8,760) (358)
Cash and cash equivalents at January 1 19,414 12,007
Cash and cash equivalents at September 30 10,654 11,649
Noncash investing and financing activities
Increase (decrease) in net unrealized holding gains
(losses) on securities carried at market 4,117 (4,039)
Transfer of loans to foreclosed real estate 988 174
</TABLE>
See notes to condensed consolidated financial statements.
PEOPLE'S SAVINGS FINANCIAL CORP.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
FINANCIAL HIGHLIGHTS September 30, September 30,
($ in thousands,
except per share data) 1995 1994 1995 1994
For the Period
<S> <C> <C> <C> <C>
Interest income $7,058 $6,360 $20,336 $18,549
Interest expense 3,726 2,830 10,640 8,174
Net Interest Income 3,332 3,530 9,696 10,375
Net Income 961 905 2,504 3,097
Per Share Data
Book value $22.62 $20.98 $22.62 $20.98
Net income 0.48 0.45 1.26 1.53
Cash dividends declared 0.22 0.22 0.66 0.66
Selected Financial Ratios
Yield on interest-bearing assets 7.31% 6.85% 7.03% 6.72%
Cost of funds 4.27 3.36 4.06 3.28
Interest rate spread 3.04 3.49 2.97 3.44
Interest rate margin 3.45 3.80 3.35 3.76
Return on average assets 0.96 0.94 0.83 1.08
Return on average equity 8.75 8.51 7.82 9.66
Dividend payout ratio 44.68 48.52 51.43 42.54
At end of period:
Tier 1 leverage ratio of bank subsidiary 9.85 10.80
Tier 1 risk-based ratio of bank subsidiary 19.62 21.79
Total risk-based ratio of bank subsidiary 20.47 22.83
Non-performing assets to total assets 0.32 0.65
Non-performing assets to total loans and OREO 0.54 1.13
Non-performing loans to total loans 0.28 0.53
Allowance for loan losses to total loans 0.72 0.91
Allowance for loan losses to non-performing loans 255.75 171.24
Sep. 30, Dec. 31,
At End of Period 1995 1994
Net loans $235,729 $226,324
Investments 142,094 136,292
Total Assets 403,086 402,089
Deposits 335,293 321,702
Borrowings 19,102 33,450
Shareholders' equity 44,166 41,231
Outstanding shares 1,952,363 1,988,863
</TABLE>
PEOPLE'S SAVINGS FINANCIAL CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
Note A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1995 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1995 For further information, refer to the consolidated
financial statements and footnotes thereto included in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
Certain 1994 amounts have been reclassified to conform with the 1995
presentation. These reclassifications had no impact on net income.
Note B - CHANGES IN ACCOUNTING PRINCIPLES
On January 1, 1995, the Corporation adopted Statement of Financial Accounting
Standards No. 114 "Accounting by Creditors for Impairment of a Loan" and No.
118 "Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures" (SFAS 114 and 118). SFAS No. 114 and 118 requires creditors
to evaluate the collectibility of impaired loans, as defined below, based on
the present value of expected future cash flows discounted at the historical
effective interest rate, except that all collateral-dependent loans are
measured for collectibility of contractual principal and interest based on
fair value of the collateral. As permitted by the statement, smaller-balance
homogeneous loans consisting of residential mortgages and consumer loans are
evaluated for collectibility by the Corporation based on historical loss
experience rather than on an individual loan-by-loan basis. The Corporation
considers a loan to be impaired for SFAS No. 114 and 118 purposes when, based
on current information and events, it is probable that it will be unable to
collect all amounts of contractual interest and principal as scheduled in the
loan agreement. An insignificant delay of under 90 days or a 10% shortfall
in the amount of payment is not an event that, when considered in isolation,
would automatically cause the Corporation to consider a loan to be impaired
for purposes of SFAS No. 114 and 118. The Corporation evaluates all impaired
loans, other than small balance loans, on an individual loan-by-loan basis;
it does not aggregate impaired loans into major risk classifications. Except
for certain restructured loans, impaired loans are loans that are on
nonaccrual status.
When an impaired loan or a portion of an impaired loan is deemed uncollectible,
the portion deemed uncollectible is charged against the allowance for loan
losses and subsequent recoveries, if any, are credited to the allowance.
At September 30, 1995, the recorded investment in loans for which impairment
has been recognized in accordance with SFAS 114 and 118 totaled $20,000,
excluding small-balance homogeneous loans. All of these loans have been
evaluated for impairment using the present values of future cash flows
method. There was no valuation allowance recorded for the impaired loans.
For the quarter ended September 30, 1995 the average balance of impaired
loans was approximately $20,000.
The Corporation generally recognizes interest income on impaired loans on a
cash basis. For the three and nine month periods ended September 30, 1995,
the Corporation recorded no interest on impaired loans.
At September 30, 1995 the Corporation had two restructured loans totaling
$516,000. One of these loans in the amount of approximately $475,000 was
restructured prior to the adoption of SFAS No. 114 and 118 and is therefore
accounted for in accordance with SFAS No. 15 "Accounting by Debtors and
Creditors for Troubled Debt Restructurings" and the other loan is considered
a smaller-balance homogeneous under SFAS No. 114 and 118.
Prior to the adoption of SFAS No. 114 and 118, the allowance for loan losses
related to all loans was based on undiscounted cash flows or the fair value
of the collateral for collateral dependent loans. The adoption of SFAS No.
114 and 118 did not result in any additions to the provision for loan losses.
Note C - SECURITIES
The amortized cost and estimated market values of investment securities for
September 30, 1995 and December 31, 1994 are as follows.
<TABLE>
<CAPTION>
Net
Estimated Gross Gross Unrealized
Amortized Market Unrealized Unrealized Gains/
Cost Value Gains Losses (Losses)
(in thousands),
September 30, 1995
<S> <C> <C> <C> <C> <C>
Available for sale
United States Government
and agency obligations $39,492 $38,767 $63 $788 ($725)
State of Connecticut
taxable obligations 1,251 1,253 2 0 2
Corporate securities 8,131 8,150 42 23 19
Mortgage-backed
securities 12,776 12,992 234 18 216
Total debt securities 61,650 61,162 341 829 (488)
Marketable equity
securities 5,499 5,800 301 0 301
Mutual funds 5,561 6,043 534 52 482
$72,710 $73,005 $1,176 $881 $295
Held to maturity
United States Government
and agency obligations $27,004 $26,820 $42 $226 ($184)
Mortgage-backed securities 39,442 38,718 227 951 (724)
$66,446 $65,538 $269 $1,177 ($908)
</TABLE>
<TABLE>
<CAPTION>
Net
Estimated Gross Gross Unrealized
Amortized Market Unrealized Unrealized Gains/
(in thousands), Cost Value Gains Losses (Losses)
December 31, 1994
<S> <C> <C> <C> <C> <C>
Available for sale
United States Government
and agency obligations $42,488 $39,562 $6 $2,932 ($2,926)
State of Connecticut
taxable obligations 1,252 1,238 0 14 (14)
Corporate securities 11,625 11,241 7 391 (384)
Mortgage-backed securities 4,728 4,714 0 14 (14)
Total debt securities 60,093 56,755 13 3,351 (3,338)
Marketable equity
securities 103 230 129 2 127
Mutual funds 6,364 5,653 0 711 (711)
$66,560 $62,638 $142 $4,064 ($3,922)
Held to maturity
United States Government
and agency obligations $28,378 $26,969 $0 $1,409 ($1,409)
Mortgage-backed securities 42,984 39,711 3 3,276 ($3,273)
$71,362 $66,680 $3 $4,685 ($4,682)
</TABLE>
Note D - LOANS
The following table shows the Corporation's loan distribution at the end of the
nine month period ended September 30, 1995 compared to December 31, 1994.
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
($ in thousands) Balance % of Total Balance % of Total
<S> <C> <C> <C> <C>
Real Estate Loans:
1 to 4 family residential 191,175 80% 187,052 82%
Multifamily (5 or more units) 3,889 2% 3,899 2%
Home equity credit lines 5,158 2% 5,328 2%
Construction and land
development 4,238 2% 3,110 1%
Second mortgages 21,669 9% 20,597 9%
Commercial mortgages 5,678 2% 4,177 2%
Total real estate loans 231,807 97% 224,163 98%
Consumer installment 4,279 2% 3,839 2%
Credit cards 1,392 1% 498 0%
Commercial 462 0% 369 0%
Total loans 237,940 100% 228,869 100%
Less: Loans held for sale 0 0
Allowance for loan
losses 1,711 1,791
Deferred fees 500 754
Net loans 235,729 226,324
</TABLE>
Note E - NON-PERFORMING ASSETS
The following table illustrates the composition of the non-performing assets
as of September 30, 1995 and December 31, 1994.
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
($ dollars in thousands) # of loans Amount # of loans Amount
<S> <C> <C> <C> <C>
Loans past due 90 days
or more:
Residential 10 $544 14 $1,199
Commercial 2 22 0 0
Installment 4 103 5 101
Total non-performing loans 16 669 19 1,300
Foreclosed real estate:
Residential 8 535 4 168
Commercial real estate 1 80 2 460
Total foreclosures 9 615 6 628
Repossessed assets 0 0 0 0
Total non-performing assets $1,284 $1,928
Non-performing assets to total
loans and OREO 0.54% 0.84%
Allowance for loans losses
to non-performing loans 255.75% 137.77%
As a percent of total loans:
Loans past due 90 days or more 0.28% 0.57%
Allowance for loan losses 0.72% 0.78%
</TABLE>
The average balance of impaired loans for the quarter ended September 30,
1995 was approximately $20,000. There are no commitments outstanding to
extend additional credit on impaired loans. At September 30, 1995 the Bank
had two restructured loans totalling $516,000.
Note F - LOAN LOSS RESERVE
The following table summarizes the Corporation's loan loss reserve as of
the nine months ended September 30, 1995 and 1994.
<TABLE>
<CAPTION>
(in thousands) Nine months ended September 30, 1995 1994
<S> <C> <C>
Beginning balance 1,791 2,223
Provision charged to expense 101 129
Net charge-offs 181 328
Ending balance $1,711 $2,024
</TABLE>
The allowance for loan losses is maintained at a level believed adequate by
management to absorb potential losses in the loan portfolio. The adequacy of
the allowance is determined by management's evaluation of known and inherent
risks in the loan portfolio and prevailing economic conditions and the Bank's
loss experience. The allowance is increased by provisions for loan losses
charged against income.
Beginning in 1995, the Corporation adopted Financial Accounting Standards
Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan."
Under the new standard, the 1995 allowance for credit losses related to loans
that are identified for evaluation in accordance with Statement 114 is based
on discounted cash flows using the loan's initial effective interest rate or
the fair value of the collateral for certain collateral dependent loans.
Prior to 1995, the allowance for credit losses related to these loans was
based on undiscounted cash flows or the fair value of the collateral for
collateral dependent loans.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
This section presents management's discussion and analysis of the
consolidated results of operations for People's Savings Financial Corp. (the
"Corporation") and The People's Savings Bank of New Britain (the "Bank") for
the three and nine month periods ended September 30, 1995 and 1994, and its
financial condition as of September 30, 1995. In order to understand this
section in context, it should be read in conjunction with the consolidated
financial statements and notes thereto.
Financial Condition
At September 30, 1995 total assets were $403.09 million, an increase of
$1.00 million (or .2%) from total assets of $402.09 million at December 31,
1994. Changes in assets consisted of an increase in investment securities
and net loans offset by the liquidation of the trading account, and a
decrease in cash and cash equivalents. Total deposits increased by
$13.59 million (or 4.2%) from December 31, 1994, and borrowings from the
Federal Home Loan Bank totalling $14.35 million were repaid. Unrealized
losses on securities available for sale, net of taxes, improved by $2.41
million to a gain of $.114 million at September 30, 1995, from a loss of
$2.29 million at December 31, 1994, primarily due to improvement in the
stock and bond markets. The increase in total deposits was primarily due
to growth in the Bank's newer branches.
RESULTS OF OPERATIONS
Net income for the three month period ended September 30, 1995 was $961,000
as compared to $905,000 for the comparable period in 1994. Net income for
the nine month period ended September 30, 1995 was $2,504,000 as compared
to $3,097,000 for the comparable period in 1994. The increase in income for
the three month period was primarily due to increased trust fees, a
retroactive reduction in FDIC deposit insurance premiums, and lower other
operating expenses. These increases were partially offset by reduced net
interest income, trading account gains during the three month period ended
September 30, 1994, increased other real estate expenses and increased
salaries and benefits, and other expenses. These increases in expenses
relate to the expansion of our Trust Department, the full impact of
the opening of two branches in the second quarter of 1994 and start up
expenses associated with the new Commercial Loan Department. Other operating
expenses for the three month period ended September 30, 1994 were adversely
effected by the settlement of a legal claim against the Bank for
approximately $550,000. The decrease in net income of $593,000 for the nine
month period was attributable to a decrease in net interest income, due to a
reduction in the Corporation's net interest rate spread, and increased other
expenses due to our expansion mentioned above, and a decrease in securities
gains, partially offset by increased other operating income due to increased
trust fee income, and trading account and mortgage sale gains versus losses
for the nine months ended September 30, 1994, increased service charges and
fees and the reduction in FDIC deposit insurance premiums mentions above. The
Bank recorded a one time gain on securities for the three months ended June 30,
1994 which was from the acquisition of The Federal Savings Bank by Midconn
bank. The Bank and the Corporation owned 69,277 shares of Federal Savings
which produced a pre-tax profit of $787,000.
AVERAGE BALANCES, INTEREST, YIELDS AND RATES
The following table presents condensed daily average statements of condition,
which include nonaccrual loans, the components of net interest income and
selected statistical data.
<TABLE>
<CAPTION>
Three months ended
September 30,
(dollars in
thousands)
Annualized Variance
Average Balance Average rate Interest Inc. due to
1995 1994 1995 1994 1995 1994 (dec) Vol. Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $234,518 $220,791 8.14% 7.41% $4,773 $4,089 $684 $264 $420
Investment
securities 151,534 150,844 6.03% 6.02% 2,285 2,271 14 10 4
Total 386,052 371,365 7.31% 6.85% 7,058 6,360 698 274 424
Other assets 15,482 14,489
Total
assets $401,534 $386,124
Deposits $329,520 $308,959 4.20% 3.19% 3,457 2,461 996 173 823
Borrowings 18,968 28,019 5.67% 5.27% 269 369 (100) (131) 31
Total 348,488 336,978 4.27% 3.36% 3,726 2,830 896 42 854
Demand
deposits 4,961 3,700
Other
liabilities 4,123 2,916
Stockholders'
equity 43,962 42,530
Total liabilities
and stockholders'
equity $401,534 $386,124
Net interest
income $3,332 $3,530 ($198) $232($430)
Net interest rate spread 3.04% 3.49%
Net interest rate margin 3.45% 3.80%
</TABLE>
<TABLE>
<CAPTION>
Nine months ended
September 30,
(dollars in
thousands)
Annualized Variance
Average Balance Average rate Interest Inc. due to
1995 1994 1995 1994 1995 1994 (dec) Vol. Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $231,878 $217,749 7.82% 7.37% $13,601 $12,029 $1,572 $805 $767
Investment
securities 153,958 150,594 5.83% 5.77% 6,735 6,520 215 147 68
Total 385,836 368,343 7.03% 6.72% 20,336 18,549 1,787 952 835
Other
assets 15,120 13,288
Total
assets $400,956 $381,631
Deposits $326,586 $305,700 3.94% 3.12% 9,654 7,157 2,497 515 1,982
Borrowings 23,140 26,805 5.68% 5.06% 986 1,017 (31) (310) 279
Total 349,726 332,505 4.06% 3.28% 10,640 8,174 2,466 205 2,261
Demand
deposits 4,977 3,618
Other
liabilities 3,539 2,745
Stockholders'
equity 42,714 42,763
Total
liabilities
and
stock-
holders'
equity $400,956 $381,631
Net interest income $9,696 $10,375 ($679) $747 (1,426)
Net interest rate spread 2.97% 3.44%
Net interest rate margin 3.35% 3.76% Net Interest Income
</TABLE>
The average balances, interest, yields and rates table shows that for the
three month period ended September 30, 1995 compared to the same period in
1994 there was an increase in interest income caused primarily by increased
volume of loans and yield on loans. Interest income for the nine month
period ended September 30, 1995 increased when compared to the same period
last year primarily due to increased volume and yield on loans and to a lesser
extent increased volume and yield on investments. The comparison of interest
expense for the three month period ended September 30, 1995 compared to the
same period in 1994 shows that interest expense increased primarily due to
increased rates on deposits, and to a lesser extent increased volume of
deposits and increased rate on borrowings, partially offset by a decrease in
the volume of borrowings. The comparison of interest expense for the nine
month period ended September 30, 1995 compared to the same period in 1994 shows
that interest expense also increased primarily due to increased rates on
deposits, and to a lesser extent increased volume of deposits and rates on
borrowings, slightly offset by a decrease in the volume of borrowings. This
activity is consistent with the changes in the Corporation's balance sheet
and with changes in interest rates.
Net interest rate spreads decreased during the three month period ended
September 30, 1995 when compared to the same period last year, because the
Bank's yield on earning assets increased less than the rate the Bank pays on
its interest bearing liabilities. The increase in the yield on earning
assets was primarily due to increased yield on loans. The rate the Bank
pays on its interest bearing liabilities increased primarily due to higher
interest rates on the Bank's deposits, which includes a shift in deposits to
higher interestrate certificate of deposits from lower interest rate deposit
accounts, and to a lesser extent rates on borrowings. The net interest rate
spread decreased during the nine month period ended September 30, 1995 when
compared to the same period in 1994 primarily because the yield the Bank
earns on earning assets increased at a lesser rate than the increase in
the rate the Bank pays on interest bearing liabilities. Net interest rate
margins decreased for the three and nine month period ended September 30,
1995 when compared to the same period of 1994, due to the same reasons
mentioned above. Net interest income for the three and nine month periods
ended September 30, 1995 decreased primarily due to the decrease in net
interest rate spread and net interest rate margin.
CAPITAL
The Corporation's and the Bank's Tier 1 leverage capital ratios at September
30, 1995 were 10.07% and 9.85% respectively. The Corporation's and the
Bank's total risk-based capital ratios at September 30, 1995 were 20.89% and
20.47% respectively. The Corporation's and the Bank's Tier 1 risk-based
capital ratios at September 30, 1995 were 20.05% and 19.62%, respectively.
All of the Corporation's and the Bank's ratios as of September 30, 1995 were
well above applicable minimums. As of September 30, 1995, the Corporation
and the Bank fall within the highest capital category of "well capitalized"
under the rules of the Federal Reserve Board and the Federal Deposit
Insurance Corporation.
OTHER INCOME, OTHER EXPENSE, AND TAXES
The following tables detail the significant increases and decreases in other
income for the three and nine month periods ended September 30.
<TABLE>
<CAPTION>
Three Months ended
Other income September 30,
(dollars in thousands) 1995 1994 Inc(dec) %
<S> <C> <C> <C> <C>
Service charges and fees $241 $221 $ 20 9.1%
Trust fees 299 11 288 2,618.2
Net investment securities gains (losses) (1) - (1) (100.0)
Trading account gains (losses) - 107 (107) (100.0)
Net Gains (losses) on sale of mortgages (7) (3) (4) 133.3
Other operating income 76 56 20 35.7
Total other income $608 $ 392 $ 216 55.1 %
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended
Other income September 30,
(dollars in thousands) 1995 1994 Inc(dec) %
<S> <C> <C> <C> <C>
Service charges and fees $758 $655 $103 15.7%
Trust fees 838 20 818 4,090.0
Net investment securities gains (losses) (70) 750 (820) (109.3)
Trading account gains (losses) 49 (105) 154 (146.7)
Net Gains (losses) on sale of mortgages (2) (338) 336 (99.4)
Other operating income 142 159 (17) (10.7)
Total other income $1,715 $1,141 $ 574 50.3%
</TABLE>
Other income for the three month period ended September 30, 1995 increased
by $574,000 as compared to the same period in 1994. The increase was
primarily due to increased trust fees, partially offset by a decrease in
trading account gains. During the first quarter of 1995 the Bank's trading
account was liquidated.
Other income increased for the nine month period ended September 30, 1995,
from the comparable period of 1994. The increase was primarily due to
increased Trust fees due to the acquisition of New Meriden Trust from the
FDIC as well as growth in the amount of trust assets. The increase was also
due to trading account gains and minimal losses on sales of mortgages
compared to losses in 1994 and an increase in service charges and fees. These
increases were partially offset by net investment securities losses compared
to gains in 1994. The 1994 gain on sale of investment securities was due to
the acquisition of Federal Savings Bank by Midconn Bank. The Corporation and
the Bank owned 69,277 shares producing a pre-tax gain of $787,000. The
increase in service charges and fees was due to an increased number of
accounts and to minor fee increases.
The following tables detail the significant increases and decreases in other
expenses for the three and nine month periods ended September 30.
<TABLE>
<CAPTION>
Three Months ended
Other expenses September 30,
(dollars in thousands) 1995 1994 Inc(dec) %
<S> <C> <C> <C> <C>
Salaries and benefits $1,150 $846 $304 35.9%
Occupancy 225 216 9 4.2
Furniture and equipment 224 173 51 29.5
FDIC deposit insurance (17) 177 (194) (109.6)
Other real estate expenses 146 51 95 186.3
Other operating expenses 603 882 (279) (31.6)
Total other expenses $2,331 $2,345 $ (14) (0.6)%
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended
Other expenses September 30,
(dollars in thousands) 1995 1994 Inc(dec) %
<S> <C> <C> <C> <C>
Salaries and benefits $3,297 $2,524 $773 30.6%
Occupancy 701 634 67 10.6
Furniture and equipment 671 509 162 31.8
FDIC deposit insurance 347 518 (171) (33.0)
Other real estate expenses 308 147 161 109.5
Other operating expenses 1,840 1,834 6 0.3
Total other expenses $7,164 $6,166 $998 16.2%
</TABLE>
Non-interest expense decreased for the three month period ended September 30,
1995, from the comparable period of 1994. The decrease is primarily due to a
retroactive reduction in FDIC deposit insurance premiums. The Bank received
a credit of approximately $205,000. The rate the Bank pays for deposit
insurance was changed from $.23 per year for every $100 in deposits to $.04
per year for every $100 in deposits. The Bank will continue to pay the
lower rate until such time that the FDIC changes the rate. Salaries and
benefits, occupancy, and furniture and equipment increased due to the
expansion of our trust department including the purchase of New Meriden Trust
from the FDIC and the opening of a Trust production office in Middletown, CT,
and expenses related to our new Commercial Loan Department. Other real
estate expenses increased when compared to 1994 due some charge-offs
and also due to environmental work at one property. Other operating expenses
decreased for the three month period ended September 30, 1995 when compared
to the same period in 1994, primarily because the 1994 figure included the
settlement of a legal claim by the Bank for approximately $550,000. General
increases in other operating expenses relate to the expansion mentioned above
including amortization of goodwill due to the New Meriden Trust acquisition,
other expenses related to the increased size of the Trust Department. Non-
interest expense increased for the nine month period ended September 30, 1995
as compared to the same period in 1994 due to the same explanations above
including the full impact of opening two new branches in the second quarter
of 1994.
The effective tax rate for the three month period ended September 30, 1995
decreased to 39.1% from 40.7% for the same period in 1994. The effective
tax rate decreased to 39.6% for the nine months ended September 30, 1995 as
compared to 40.7% for the comparable period of 1994. The decrease was
primarily due to an increase in dividend income during the second
and third quarters that qualifies for the Federal dividend received deduction.
PEOPLE'S SAVINGS FINANCIAL CORP.
Part II Other Information
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Corporation or
its subsidiary is a party, or of which any of their property is the subject,
other than ordinary routine litigation in the normal course of business.
Item 2. Changes in Securities
During the second quarter of 1995, there were no changes which would
materially modify the rights of the holders of the Corporation's registered
securities.
Item 3. Defaults Upon Senior Securities
The Corporation and its subsidiary are not in default with respect to the
payment of principal or interest related to any outstanding borrowing.
Item 4. Submission of Matters to a Vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
11.1 Computation of net income per common share.
(B) Reports on Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PEOPLE'S SAVINGS FINANCIAL CORP.
Date: November 13, 1995 By: /s/
Richard S. Mansfield
President and Chief Executive
Officer
Date: November 13, 1995 By: /s/
John G. Medvec
Executive Vice President and
Treasurer
Exhibit 11.1
<TABLE>
<CAPTION>
PEOPLE'S SAVINGS FINANCIAL CORP.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amounts)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income - primary and
fully diluted $961 $905 $2,504 $3,097
Weighted Average Common
Stock and Common Equivalent
Stock
Weighted average common
stock outstanding 1,952 1,996 1,955 1,996
Assumed conversion (as of
the beginning of each
period or upon issuance
during a period) of
stock options outstanding
at the end of each period 38 28 31 27
Weighted average common
stock outstanding -
primary 1,990 2,024 1,986 2,023
Weighted average common
stock outstanding 1,952 1,996 1,955 1,996
Assumed conversion
(as of the beginning of
each period or upon
issuance during
a period) of stock
options outstanding
at the end of each period 38 28 31 27
Weighted average common
stock outstanding
- fully diluted 1,990 2,024 1,986 2,023
Earnings Per Common and
Common Equivalent Share
Primary $0.48 $0.45 $1.26 $1.53
Fully diluted $0.48 $0.45 $1.26 $1.53
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's September 30, 1995 unaudited balance sheet, income statement and
cash flow statement, and notes thereto, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,405,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,249,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 73,005,000
<INVESTMENTS-CARRYING> 66,446,000
<INVESTMENTS-MARKET> 65,538,000
<LOANS> 235,729,000
<ALLOWANCE> 1,711,000
<TOTAL-ASSETS> 403,086,000
<DEPOSITS> 335,293,000
<SHORT-TERM> 19,102,000
<LIABILITIES-OTHER> 4,525,000
<LONG-TERM> 0
<COMMON> 2,512,000
0
0
<OTHER-SE> 41,654,000
<TOTAL-LIABILITIES-AND-EQUITY> 403,086,000
<INTEREST-LOAN> 13,601,000
<INTEREST-INVEST> 6,288,000
<INTEREST-OTHER> 447,000
<INTEREST-TOTAL> 20,336,000
<INTEREST-DEPOSIT> 9,654,000
<INTEREST-EXPENSE> 10,640,000
<INTEREST-INCOME-NET> 9,696,000
<LOAN-LOSSES> 101,000
<SECURITIES-GAINS> (70,000)
<EXPENSE-OTHER> 7,164,000
<INCOME-PRETAX> 4,146,000
<INCOME-PRE-EXTRAORDINARY> 4,146,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,504,000
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
<YIELD-ACTUAL> 3.35
<LOANS-NON> 669,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,791,000
<CHARGE-OFFS> 223,000
<RECOVERIES> 42,000
<ALLOWANCE-CLOSE> 1,711,000
<ALLOWANCE-DOMESTIC> 1,361,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 350,000
</TABLE>
