SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
December 31, 1996 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, Connecticut 06053
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203)224-7771
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of class)
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 twelve 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 ninety days.
X Yes _____ No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Page 1 of 29 pages.
The Exhibit Index is found at page 24.
The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the closing sale price of such stock on February 28,
1997 was $52,066,519.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Outstanding at
Class February 28, 1997
Common Stock, par value $1.00 per share 1,905,863
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in this
Annual Report on Form 10-K as indicated herein.
Part of Form 10-K
Document into which incorporated
1996 Annual Report to Shareholders I and II
Proxy Statement for the 1997 Annual III
Meeting of Stockholders (to be filed
within 120 days of December 31, 1996)
(the "Proxy Statement")
TABLE OF CONTENTS
Page
PART I
Item 1 - Business......................................... 1
Item 2 - Properties....................................... 20
Item 3 - Legal Proceedings................................ 20
Item 4 - Submission of Matters to a Vote of Security
Holders......................................... 21
- Executive Officers of the Registrant............. 21
PART II
Item 5 - Market for Registrant's Common Equity and
Related Stockholder Matters.................... 21
Item 6 - Selected Financial Data......................... 22
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.. 22
Item 8 - Financial Statements and Supplementary Data..... 22
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........ 23
PART III
Item 10 - Directors and Executive Officers of the
Registrant..................................... 23
Item 11 - Executive Compensation.......................... 23
Item 12 - Security Ownership of Certain Beneficial Owner
and Management................................. 23
Item 13 - Certain Relationships and Related Transactions.. 23
PART IV
Item 14 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................ 24
PART I
Item 1 - Business
The principal executive offices of People's Savings Financial Corp. (the
"Company") and of Peoples Savings Bank & Trust (the "Bank") are located at
123 Broad Street, New Britain, Connecticut 06053. The telephone number of the
Company and the Bank is (203)224-7771.
The Company was organized as a corporation under the laws of the State of
Connecticut on February 22, 1989, to operate principally as a bank holding
company for the Bank. The Bank's shareholders approved the acquisition by the
Company of all of the outstanding common stock of the Bank (the "Bank Common
Stock") in exchange for shares of common stock of the Company (the "Company
Common Stock"). The Bank is the principal asset of the Company.
The Bank was originally organized in 1907 as a Connecticut-chartered
mutual savings bank, and converted to a Connecticut-chartered capital stock
savings bank on August 27, 1986. The Bank currently offers general banking
services, including accepting deposits from the general public and lending or
investing those funds and also offers trust services. In addition to its main
office, the Bank operates eight banking branches located in New Britain,
Southington, Newington, Rocky Hill, Plainville, and Meriden, Connecticut.
Principal Market Area
The Bank's principal market encompasses the City of New Britain and the
Towns of Berlin, Newington, Southington, Rocky Hill, Plainville and Meriden.
Although traditionally servicing the banking needs of New Britain's Polish
community, the Bank has expanded its customer base over the past several
years. The Bank intends to continue to focus its marketing efforts in the
next several years on other segments of the New Britain community and upon
residents of other towns in its market area.
The City of New Britain is evolving from a primarily industrial economy
to an industrial-commercial-service economy. The surrounding communities are
largely residential but also have significant industrial and commercial
activities. The transfer of several major manufacturing facilities to other
areas of the country continues to affect adversely the New Britain area labor
market.
Lending and Investment Activities
The Bank provides personalized financial services to its existing customers
and intends to achieve growth by increasing its customer base in New Britain
and by increasing its services to, and expanding its customer base in, the
communities surrounding New Britain. The Bank's principal business consists
of attracting deposits from the public and using such deposits, with other
funds, to make various types of loans and investments. A substantial portion
of the loans and investments originated over the last five years has been on a
short-term or variable-rate basis, although origination of more traditional
fixed-rate mortgage loans increased during the low interest rate environment
in 1993. The Bank has originated more adjustable rate loans with the rise in
interest rates during 1994 through 1996. Many of theses adjustable rate loans
are fixed over a term of 3, 5, 7, or 10 years and then adjust annually after
the fixed period. Fixed rate mortgages and loans are originated with 8
to 30 year maturities. The Bank sold the majority of the 30-year fixed
rate mortgages which it originated during 1994 through 1996 in order to
reduce the Bank's interest rate risk exposure. The Bank's activities in
this regard will vary in degree from time to time depending upon investment
opportunities, economic and rate conditions, liability strategy and the
Bank's efforts to maintain an adequate net interest spread.
Since the conversion to a capital stock savings bank, the Bank has
regulated its efforts to increase future deposit growth based on its assessment
of the profitability of the investment options then available for such funds.
The Bank also seeks to expand existing and develop additional fee-based
services. Current fee-based product lines include mortgage originations,
selling and servicing mortgages (the income from which is not considered a
significant part of the Bank's operations), checking accounts, and Savings Bank
Life Insurance.
During 1993, the Bank also added a Trust Department and an Investment
Services Department to increase fee income. In November 1994, the Bank
purchased the New Meriden Trust Co., a trust company with $179,000,000 in
trust assets from the FDIC. In May, 1995 the Bank opened a trust office
in Middletown, CT. Trust assets grew to $385 million at December 31, 1996.
Average Balance Sheets; Analysis of Net Interest Income; and Analysis of
Changes in Interest Income and Interest Expense
The supplementary information required by Item I of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to average balance sheets; an
analysis of net interest income; and an analysis of increases and decreases in
interest income and expense in terms of changes in volume and interest rates
appears on pages 19 and 20 of the Company's 1996 Annual Report to Shareholders
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and is incorporated by reference herein. Such
information should be read in conjunction with the related financial statements
and notes thereto incorporated by reference herein under Item 8.
Lending Activities
The supplementary information required by Item III.A. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to the composition
of the loan portfolio appears on page 11 of the Company's 1996 Annual Report to
Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and is incorporated by
reference herein. Such information should be read in conjunction with the
related financial statements and notes thereto incorporated by reference
herein under Item 8.
In order to diversify its loan products the Bank established a commercial
loan department to provide traditional commercial loans and Small Business
Administration loans. The void resulting from industry consolidation and
downsizing has created an opportunity for the Bank to respond to the credit
needs of small and medium size business in a timely manner with practical and
effective solutions. The Bank hired a team of experienced commercial lending
officers to build a conservative, high-quality commercial loan portfolio. As of
December 31, 1996, the commercial mortgage portfolio totaled approximately $8.0
million, representing 3.1% of the Bank's total loan portfolio.
The lending activities of the Bank are heavily influenced by economic
trends affecting the availability of funds and by general interest rate levels.
In originating loans, the Bank must compete with other savings banks, savings
and loan associations, commercial banks, mortgage companies, insurance
companies and other financial intermediaries.
Residential Mortgage Loans. The Bank actively solicits residential
mortgage loan applications from existing customers, builders and Realtors.
Almost all of the Bank's residential mortgage loans are made to borrowers who
occupy the properties securing their loans. While the Bank is authorized to
make loans secured by real estate located either within or outside the State of
Connecticut, its policy is to concentrate on loans secured by properties
located within Connecticut, particularly in its primary market area. The Bank
originates residential real estate loans through all nine of its offices. The
Bank's mortgage originations increased by 42% from 1995 to 1996; 1995 was a
historically low volume year. As of December 31, 1996 residential mortgage
loans were 78.0% of the Bank's total loans.
For its own portfolio, the Bank originates adjustable-rate and selected
fixed-rate first mortgage loans secured by residential properties. The Bank
has sold a significant portion of its 30-year and 20-year fixed-rate
mortgage loans originated during 1995 and 1996. Points are charged on all
residential mortgage loans unless the borrower elects to pay a higher
interest rate to offset points.
During 1994 the Bank started offering adjustable-rate loans that are fixed for
the first three, five or seven years and then adjust every year after the fixed
period. In 1995 the Bank started offering adjustable-rate loans that are fixed
for the first ten years and then adjust every year after the fixed period.
Adjustable-rate mortgages carry an interest rate cap which limits the Bank's
ability to vary the rate at the time of adjustment and over the life of the
loan. The annual interest rate cap is 2% and the lifetime cap is 6%, although
the Bank in the past had an adjustable rate mortgage loan program with an 8%
lifetime cap. Interest rate caps limit both increases and decreases in rate.
The Bank bases its adjustable-rate mortgages on indices that are best matched
to the repricing of its liabilities.
Fixed-rate first mortgage loans constituted approximately 34.5% of net
loans as of December 31, 1996, down from 37.3% as of December 31, 1995.
The volume of first mortgage loan originations since 1991 is shown in the
following table:
<TABLE>
<CAPTION>
Year Ended Number of Total Loans
December 31, Loans Originated
<S> <C> <C>
1992 795 81,485,000
1993 721 73,072,000
1994 432 47,237,000
1995 305 35,338,000
1996 419 50,133,000
</TABLE>
Despite the benefits of adjustable-rate mortgages to the Bank's asset/liability
management program, they do pose potential additional risks, primarily because
as interest rates rise, the underlying payments by the borrower rise, thereby
increasing the potential for default. At the same time, the marketability of
the underlying property may be adversely affected by higher interest rates. It
is difficult to quantify the risks resulting from increased costs to the
borrower as a result of periodic repricing of adjustable-rate mortgages. The
risk associated with holding fixed rate mortgages in the Bank's loan portfolio
is that during periods of rising interest rates, their value decreases and the
initial positive spread over the Bank's cost of funds may become negative. The
benefits of holding fixed rate mortgages include a larger initial positive
spread, increased cash flows and the average life of the loans are usually
shorter than the stated maturity.
In its residential real estate lending, the Bank follows the underwriting
requirements of Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation. The Bank lends up to 95% of the appraised value of
owner-occupied property and up to 70% of the value of non-owner-occupied
property. Under a special program for first time home buyers the Bank has lent
up to 97% of the appraised value of the owner-occupied property. Residential
borrowers are required to obtain private mortgage insurance covering any excess
on loans with over 80% loan-to-value ratios. All conventional first mortgages
include "due-on-sale" clauses, which give the lender the right to declare a
loan immediately due and payable in the event the borrower sells or otherwise
disposes of the real property that secures the loan.
Loans Held for Sale. At December 31, 1996, loans held for sale totaled
$1,150,000, with a market value of $1,143,000.
Commercial Loans. As of December 31, 1996, commercial loans totaled
$888,000, compared to $519,000 at December 31, 1995. Commercial loans
constituted 0.3% of the Bank's total loans as of December 31, 1996. The
Bank is authorized to make Small Business Administration (SBA) loans.
The Bank's commercial mortgage loans are directly originated and consist of
loans made on multifamily homes (more than four units) and loans collateralized
by non-residential properties. Commercial mortgage loans collateralized by
non-residential properties as of December 31, 1996 totaled $8.0 million,
compared to $5.9 million as of December 31, 1995. Commercial mortgage loans
collateralized by non-residential properties constituted 3.1% of total loans as
of December 31, 1996. Loans made on multifamily homes constituted 1.4% of
total loans, or $3.6 million, as of December 31, 1996, compared to $3.9
million at December 31, 1995. The Bank lends up to 80% of the appraised
value of commercial property. Generally, the average size of commercial
mortgage loans is approximately $500,000, with the current balance of the
largest loan totaling $720,000.
Construction Loans. As of December 31, 1996, residential construction loans
totaled approximately $4.2 million, or 1.6% of the Bank's total loans, compared
to $3.9 million, or 1.6% of total loans as of December 31, 1995. The Bank's
residential construction loan investments are generally short-term (1-2 years)
and are presently limited to residential properties in Connecticut.
Construction loan applications are underwritten as if they were applications
for permanent financing, obviating the need for a commitment for permanent
financing at the close of the construction period. As of December 31,
1996, commercial construction loans totaled approximately $3.3 million,
or 1.3% of total loans.
Consumer Loans. Connecticut savings banks are authorized by statute to invest
their assets in secured and unsecured consumer loans without limitation.
Connecticut savings banks may also invest their assets, without restriction as
to a percentage of assets, in lines of credit, overdraft loans, and credit card
outstandings. The Bank's consumer loans include home improvement loans,
automobile and boat loans and loans to pay for medical or vacation expenses.
In October of 1994 the Bank started offering its own MasterCard and Visa credit
cards. The Bank originates both fixed and adjustable rate second mortgage
loans for its own portfolio and offers a variable rate pre-approved
consumer line of credit product secured by the equity in the consumer's home.
Total consumer loans (excluding credit card loans) increased from $30.8 million
at December 31, 1995 to $35.7 million at December 31, 1996. Although not
classified as collateral loans, approximately 99% of the Bank's installment
loans are secured by mortgages on real property or security interests in
personal property. Collateral loans, secured by either regular savings
accounts, marketable securities, or certificates of deposit, amounted to
approximately $2.2 million at December 31, 1996 and approximately $1.9 million
at December 31, 1995. Credit card loans totaled $1.2 million at December 31,
1996 as compared to $1.3 million at December 31, 1995.
Interest Rates. Interest rates charged by the Bank on its loans are primarily
determined by the cost of funds to the Bank, competitors' rates and comparable
investment alternatives available to the Bank. Federal law preempts state
usury limits on interest, origination fees and all related charges for
federally related mortgage loans secured by first liens on residential
real property, and no action has been taken by the Connecticut legislature
(as permitted by Federal law) to reimpose such state limits.
The supplementary information required by Item III.B. of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to maturities and sensitivities
of loans to changes in interest rates appears on page 15 and 16 of the
Company's 1996 Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and isincorporated by reference herein. Such information
should be read in conjunction with the related financial statements and
notes thereto incorporated by reference herein under Item 8.
Loan Commitments. The Bank's commitments to make mortgage loans on existing
residential and commercial real property are made for periods of up to 120 days
from the date of commitment. Such commitments are generally made at the market
rate of interest prevailing at the time that the commitment is made to the
customer. The rate on the commitment is guaranteed for a period of 60 days.
Loan Origination Fees and Other Fees. In addition to interest earned on loans,
the Bank receives loan origination fees for originating residential and
commercial mortgage loans. These fees, commonly called "points", are paid by
borrowers from their own funds and are not netted from the face amount of a
mortgage loan. Loan origination fees and certain direct loan origination costs
are deferred and the net amount amortized as an adjustment of the loan's yield
over the life of the loan. Origination fees on loans sold by the Bank are
taken into income currently.
The Bank also receives other fees and charges relating to existing loans, which
include primarily late charges. In connection with its mortgage loan
origination activities, the Bank also receives application fees. These fees do
not constitute a material source of income to the Bank.
Risk Elements in the Loan Portfolio. The Bank's loans are regularly reviewed
by management. If contractually due principal and interest payments on any
loan are not received 15 days after the due date of the overdue payment,
the Bank institutes monitored efforts to restore such loan to current
status. Loans are classified as non-accrual and placed on a cash basis
for purposes of income recognition when the collectibility of interest and
principal becomes uncertain. All loans past due 90 days are treated as
non-accrual loans. Continued unsuccessful collection efforts lead to
initiation of foreclosure or other legal proceedings.
Properties carried as foreclosed real estate have either been acquired through
foreclosure or by deed in lieu of foreclosure, and is carried at the lower of
(1) carrying value of loan, including costs of foreclosure, or (2) estimated
fair value of the real estate acquired less estimated cost to sell. At the
time of foreclosure, the excess, if any, of the loan value over the
estimated fair value of the property acquired is charged to the allowance
for loan losses. Subsequent to the time of foreclosure, reductions in the
carrying value of foreclosed properties due to further declines in fair
value or losses on their sale are recognized through charges to foreclosed
real estate expense. Costs relating to the subsequent development or
improvement of the property are capitalized; and holding costs are charged
to foreclosed real estate expense in the period in which they are incurred.
The supplementary information required by Item III.C. of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to the discussion and
statistical disclosure of non-accrual, past due and restructured loans
appears on pages 12 and 13 of the Company's 1996 Annual Report to
Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and is incorporated by
reference herein. Such information should be read in conjunction with the
related financial statements and notes thereto incorporated by reference
herein under Item 8.
The Company has not made loans to borrowers outside the United States. At
December 31, 1996, there were no concentrations of loans exceeding 10% of total
loans. A concentration of loans is defined as an amount loaned to multiple
borrowers engaged in similar activities which would cause them to be similarly
affected by economic or other conditions.
Potential problem loans are not disclosed as non-accrual, 90 days past due, or
restructured, but are loans which are monitored because of known information
about possible credit problems of borrowers or because they are more than 30
days but less than 90 days past due. Management assesses the potential for
loss on these loans when evaluating the adequacy of the allowance for loan
losses on a regular basis. As of December 31, 1996, monitored loans not
disclosed as non-accrual, 90 days past due, or restructured that were
current totaled $567,000 ($305,000 residential real estate loans, and
$262,000 commercial real estate loans); monitored loans 30 days delinquent
totaled $2,442,000 ($2,101,000 residential real estate loans, $268,000
second mortgage loans, $53,000 commercial real estate loans, and $20,000
installment loans); and monitored loans 60 day's delinquent totaled
$1,183,000 ($1,127,000 residential real estate loans, $33,000 second
mortgage loans, and $23,000 installment loans). Please see People's
Savings Financial's 1996 Annual Report under the section Management's
Discussion an Analysis of Financial Condition and Results of Operation
beginning on page 9 for further discussion.
Summary of Loan Loss Experience
Management's determination as to the adequacy of the allowance for loan losses
takes into account a variety of factors, including (a) management's analysis
of individual loans and the overall risk characteristics of the loan portfolio,
(b) past loan loss experience, (c) the results of the statutorily mandated
examination of the loan portfolio by regulatory agencies and independent
reviews and evaluations of loans by the Loan Committee of the Bank's Board
of Directors, (d) current and expected economic conditions, and (e) other
relevant factors.
The supplementary information required by Items IV.A. and IV.B. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to an analysis of
the allowance for loan losses and an allocation for loan losses by loan
category appears on pages 12 and 13 of the Company's 1996 Annual Report
to Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and is incorporated by
reference herein. Such information should be read in conjunction with
the related financial statements and notes thereto incorporated by
reference herein under Item 8.
Investment Activities
Savings banks chartered in the State of Connecticut have authority to make a
wide range of investments deemed to be prudent by their boards of directors.
Subject to various restrictions, they may own commercial paper, bonds of
government agencies (including states and municipalities), corporate bonds,
mutual fund shares, debt and equity obligations issued by creditworthy entities
(whether traded on public securities exchanges or placed privately for
investment purposes) and interests in real estate located within or outside
Connecticut without limitations as to use.
It has been the Bank's practice to utilize a variety of investment vehicles to
better match deposit maturities. In addition to providing for liquidity
requirements, the Bank maintains investment portfolios to employ funds not
currently required for its various lending activities. Having a portion of
assets in short-term securities has proved beneficial to the Bank during
periods of rapidly rising interest rates. During such periods, as short-
term securities mature, the proceeds can be reinvested in securities at
market rates. In a declining rate environment, loans are likely to have
higher yields than debt securities. Management considers the overall
rate-sensitivity of the Bank's earning assets when investing in securities.
In 1996, Bank investment purchases totaled $118,535,504. The portfolio's
Mortgage Backed sector increased to $119,544,177, or 25% of assets, from 12%
in 1995 with the purchase of $80,203,000 in fixed and adjustable securities.
Mortgage Backed Securities offer yields competitive in the current bond market,
with monthly cashflows of principal and interest making them more appealing
than bonds for liquidity purposes. The current weighted average life of the
entire Mortgage Backed portfolio is 7 years. In addition, $31,516,929 of
Federal Agency bonds were purchased increasing that portfolio to 59,387,551, or
12% of assets, proportionate in composition to 1995. A majority of the
purchases consisted of higher yielding bonds with 3 to 5 year maturities and
call options. The Bank is compensated for call options by a higher yield.
The supplementary information required by Item II.A. of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to the maturity and composition
of the Bank's investment portfolio appears on pages 10 and 11 of the Company's
1996 Annual Report to Shareholders under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations", and is
incorporated by reference herein. Such information should be read in
conjunction with the related financial statements and notes thereto
incorporated by reference herein under Item 8.
At December 31, 1996, the Bank had invested approximately $15.6 million, or
3.2% of its assets, in marketable preferred and common stocks and mutual
funds. This portion of the Bank's portfolio generates dividend income and
also may produce capital gains and losses. Dividends received by the
Bank are entitled to the 70% dividends-received deduction on federal
income taxes.
The Bank had net gains from the sale of equity securities of $7,000 in 1996.
The Bank sold no equity securities during 1995. In the event of a decline in
the market for equity securities, the value of the Bank's equity portfolio,
and hence its capital, may be reduced. During the past five years, the
largest amount that the Bank had invested at any one time in the equity
securities of a single company was $730,000. The investment in this
company was sold in 1994. See "Federal Reserve System Regulation" below
for further discussion relating to this investment.
The Federal Deposit Insurance Corporation Improvement Act of 1991, which is
discussed in detail below under the caption "Regulation and Supervision",
generally limits the equity investments of state non-member banks to
investments which are permissible for a national bank. An insured state
bank is also prohibited from engaging as principal in any type of activity
that is not permissible for a national bank, unless the Federal Deposit
Insurance Corporation (the "FDIC") determines that the activity would not
pose a significant risk to the insurance fund and the bank is in compliance
with applicable capital standards. As of December 19, 1992, a subsidiary
of a state bank may not engage as principal in an activity which is not
permissible for a subsidiary of a national bank, unless the same conditions
are met. See "FDIC Regulation" below for further discussion relating to
these investment and activities limitations.
Deposits and Other Sources of Funds
Deposits. Deposits have traditionally been the Bank's major source of funds,
and will continue to be a major source of funds in the foreseeable future.
However, the Bank does borrow from the Federal Home Loan Bank and may rely on
borrowings form the FHLB in the future (if available), and repurchase
agreements, as long as interest rates are favorable. See "Borrowing" below.
The Bank also derives funds from loan amortizations, loan prepayments, interest
and dividend income and sales of assets deemed appropriate by Bank management.
The Bank offers a wide variety of retail deposit accounts designed to attract
both short- and long-term funds. Time deposits were the primary source of new
funds for the Bank during 1996 due to customer preference and the rate
structure of the Bank's deposit products, and represent the largest
component of deposits (representing 63.6% of total deposits at December
31, 1996). Certificates of deposit currently offered by the Bank have
maturities that range from 91 days to five years. The Bank also offers
tax-deferred retirement savings programs (IRA accounts and Simplified
Employee Pension Plans) and other types of plans for its customers. In
determining the rate of interest to pay on deposits, the Bank considers
its cash flow requirements, rates paid by competitors and the Bank's
income and growth objectives.
Management expects competition for deposits in the Bank's market area to
continue for the foreseeable future. As of December 31, 1996, the aggregate
amount of savings accounts at the Bank was $105.4 million and the interest rate
paid on such accounts was 2.0%.
The Bank's deposit marketing strategy includes continually monitoring rates to
insure competitiveness while providing a high level of service at all of the
branch offices. Branch employees participate in sales training programs. The
Bank has been able to attract reasonable deposit growth without having to match
the most competitive rates being offered in its market area.
Substantially all of the Bank's depositors are residents of the Bank's market
area and contiguous communities. The Bank has not solicited deposits outside
Connecticut, nor has it solicited deposits through deposit brokers.
The supplementary information required by Item V.A. of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to average amounts of, and
average rates paid on, deposits appears on page 14 of the Company's 1996 Annual
Report to Shareholders under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations", and is incorporated by
reference herein. Such information should be read in conjunction with the
related financial statements and notes thereto incorporated by reference herein
under Item 8.
The decrease in average savings deposits from 1995 to 1996 was due to customer
preference and the rate structure of deposit products. The Bank believes that
its high capital ratios and financial strength have attracted new deposit
customers. The increase in average time deposits from 1995 to 1996 was the
result of customer preference and the rate structure of deposit products. The
overall increase in average rates paid on certificates of deposit from 1995 to
1996 is consistent with CD rates in the Bank's market area.
The supplementary information required by Item V.D. of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to the maturity distributions of
time certificates of deposit issued in amounts of $100,000 or more appears on
page 14 of the Company's 1996 Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and is incorporated by reference herein. Such information should
be read in conjunction with the related financial statements and notes thereto
incorporated by reference herein under Item 8.
Borrowing. The Bank has been a member of the Federal Home Loan Bank ("FHLB")
of Boston since 1980, and as a member may borrow from the FHLB to secure
additional funds. At December 31, 1996, the Bank had outstanding $49.8 million
in loans from the FHLB of Boston, an increase of $30.8 million from $19.0
million outstanding at December 31, 1995. The primary reason for the increase
was borrowing to fund investment securities purchases. Borrowing from the FHLB
of Boston may be at interest rates and under terms and conditions which vary
from time to time.
The Bank also has access to a pre-approved line of credit with the FHLB of
Boston of $8,042,000, and has sufficient qualified collateral to borrow up to
an additional $233 million. This arrangement allows the Bank to obtain
advances from the FHLB of Boston rather than relying on commercial bank
lines of credit. The Bank's interest expense on advances was $1,513,000,
$1,253,000, and $1,455,000, for the years ended December 31, 1996, 1995
and 1994, respectively.
The Bank also has repurchase agreement lines totaling $70 million, of which it
had drawn $21.5 million. The $21.5 million was drawn in order to purchase
investment securities. At December 31, 1996 the Bank had $48.5 million in
unused repurchase agreement lines with various brokers.
Competition
The Bank's most direct competition for deposits has historically come from
other thrift institutions and commercial banks located in its principal market
area, many of which have greater resources than the Bank. There are numerous
other banks, credit unions and financial institutions located in the City of
New Britain and surrounding areas that also compete with the Bank. The Bank
faces significant additional competition for investors' funds from short-
term money market funds of securities firms and other financial institutions
and from other corporate and government securities yielding higher interest
rates than those paid by the Bank.
This increased competition has, and is expected to continue to have, an effect
on the Bank's cost of funds. However, the Bank has not experienced and does
not expect to experience any substantial adverse effect on the stability of
its deposit base as a result of increased competition. The Bank competes for
deposits by offering depositors a high degree of personal service, convenient
locations and hours, and other services. The Bank does not rely upon any
individual or entity for a material portion of its deposits, nor has it obtained
any deposits through deposit brokers. A substantial portion of the Bank's
customer and deposit base traditionally has been and continues to be the large
Polish community in New Britain.
The Bank's competition for real estate loans comes principally from mortgage
banking companies, other thrift institutions, commercial banks, insurance
companies and other institutional lenders. The Bank competes for loan
originations primarily through the interest rates and loan fees it charges and
the efficiency and quality of services it provides borrowers, real estate
brokers and builders. Factors that affect competition include, among other
things, the general availability of lendable funds and credit, general and
local economic conditions, current interest rate levels, and volatility in
the mortgage markets.
Competition is expected to increase as a result of legislation adopted in
recent years at the Federal and State of Connecticut levels which effectively
provide, subject to minimal limitations, for full interstate banking and
branching. As a result of this legislation and increasingly aggressive merger
activity in the Company's market area, competition from larger institutions
with resources much greater than the Company's, is expected to continue into
the future.
Certain legislative and regulatory proposals that could affect the Company and
the Bank and the banking business in general are pending, or may be introduced,
before the United States Congress, the Connecticut General Assembly, and
various governmental agencies. These proposals include measures that may
further alter the structure, regulation, powers, and competitive relationship
of financial institutions and that may subject the Company and the Bank to
increased regulation, disclosure, and reporting requirements. In addition,
the various banking regulatory agencies frequently propose rules and
regulations to implement and enforce existing legislation. It cannot be
predicted whether or in what form any legislation or regulations will be
enacted or the extent to which the business of the Company and the Bank
will be affected thereby.
Employees
As of December 31, 1996, the Company and the Bank employed 139 employees, 114
of whom are full-time, including 31 officers. Management considers the Bank's
relations with its employees to be good. The Bank's employees are not
represented by any collective bargaining group.
REGULATION AND SUPERVISION
Connecticut Regulation
As a state-chartered capital stock savings bank, the Bank is subject to
applicable provisions of Connecticut law and the regulations adopted thereunder
by the Connecticut Banking Commissioner (the "Commissioner"). The Commissioner
administers Connecticut banking laws, which contain comprehensive provisions
for the regulation of savings banks. The Bank derives its lending and
investment powers from these laws, and is subject to periodic examination
by and reporting to the Commissioner.
Savings banks in Connecticut are empowered by statute to conduct a general
banking business and to exercise all incidental powers necessary thereto.
Subject to limitations expressed in the statutes, permissible activities
include taking savings and time deposits, including NOW checking accounts,
paying interest on such deposits and accounts, accepting demand deposits,
the sale of annuities and, ususally through a subsidiary, the sale of
securities products, making loans on residential and other real estate,
making consumer and commercial loans, exercising trust powers, investing,
with certain limitations, in equity securities and debt obligations of
banks and corporations, and issuing credit cards. In addition, savings
banks may engage in certain other enumerated activities, including the
establishment of an insurance department to sell life insurance and
annuities. Connecticut savings banks, in general, have powers identical
to those enjoyed by Connecticut commercial banks.
The Bank is prohibited by Connecticut banking law from paying dividends, except
from its net profits. Net profits are defined as the remainder of all earnings
from current operations. The total of all dividends declared by the Bank in
any calendar year may not, unless specifically approved by the Commissioner,
exceed the total of its net profits of that year combined with its retained
net profits of the preceding two years. These provisions limit the amount
of dividends payable to stockholders of the Company, since dividends
received from the Bank are the primary source of funds for the Company to
pay dividends. As of December 31, 1996, approximately $2,529,000 was
available for payment of dividends by the Bank to the Company.
Under Connecticut banking law, no person may acquire the beneficial ownership
of more than 10%, or 25% or more in certain cases, of any class of voting
securities of a bank chartered by the State of Connecticut or having its
principal office in Connecticut or a bank holding company thereof unless the
Commissioner approves such acquisition.
Full statewide branching is available to all Connecticut depository
institutions. This legislation expands the branching opportunities of the Bank
to other towns while allowing virtually unrestricted branching expansion by
other institutions into New Britain.
See "Competition" above for a discussion of Connecticut interstate banking
statutes.
FDIC Regulation
The Bank's deposit accounts are insured by the FDIC, up to a maximum of
$100,000 per insured depositor. The FDIC issues regulations, conducts periodic
examinations, requires the filing of reports and generally supervises the
operations of its insured banks. The approval of the FDIC is required prior to
any merger or consolidation or the establishment or relocation of an office
facility. This supervision and regulation is intended primarily for the
protection of depositors. Any insured bank which does not operate in
accordance with or conform to FDIC regulations, policies and directives
may be sanctioned for noncompliance. Under FDIC regulations, the Bank is
a member of the Bank Insurance Fund ("BIF") and is required to pay annual
insurance premiums, currently 0.00% of its deposits. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 (the "Improvement
Act"), the FDIC has adopted regulations establishing a risk-based
assessment system for insurance premiums. Under this system, a depository
institution's semi-annual assessment will fall within a range of 0.00% to
0.27% of domestic deposits, based in part on the probability that the
deposit insurance fund will incur a loss with respect to that institution.
In setting assessments for a bank, the FDIC is required to take into
account the revenue needs of the insurance fund and to set the assessments
in a manner that will be sufficient to maintain the insurance
fund's required reserve ratio. Insured depository institutions are
required to file with the FDIC certified statements containing all
information required by the FDIC for the determination of the semi-annual
assessment. Each institution has been or will be notified of its risk
classification based on its capital ratios. The FDIC has the authority
to assess penalties against an institution that fails to make an accurate
certified statement. These provisions of the Improvement Act have not
affected the Bank's assessment. Under this system, the Bank, as a well
capitalized institution, is required currently to pay annual insurance
premiums of 0.00% of its deposits.
The FDIC also requires FDIC-insured, state-chartered banks that are not members
of the Federal Reserve System to meet certain minimum capital requirements.
The FDIC amended its minimum requirements for capital as a percentage of total
assets to define capital in a manner consistent with the risk-based capital
categories described below and to require a minimum leverage standard of 3
percent Tier 1 (or core) capital to total assets (as defined in FDIC
regulations) for the most highly rated banks that are not anticipating or
experiencing any significant growth. All other state banks that are not
members of the Federal Reserve System would be required to meet a minimum
leverage ratio that is at least 100 to 200 basis points above this
minimum -- that is, an absolute minimum leverage ratio of not less than 4
percent for those banks that are not highly rated or that are anticipating
or experiencing significant growth. "Tier 1 capital" is generally defined
as common stockholders' equity, minority interests in consolidated
subsidiaries and non-cumulative perpetual preferred stock. Tier 1 capital
generally excludes goodwill and other intangibles and investments in
subsidiaries that the FDIC determines should be deducted from capital. As
of December 31, 1996, the Bank's leverage ratio was approximately 9.50%,
exceeding the FDIC requirements.
The FDIC has also adopted supplementary capital regulations based on
international risk-based capital standards. The other United States bank
regulatory agencies have also adopted similar guidelines based on these
international standards. The guidelines, as adopted, supplement the minimum
leverage ratios described in the immediately preceding paragraph. The
guidelines set forth (i) a definition of "capital" for risk-based capital
purposes; (ii) a system for calculating risk-weighted assets by assigning
assets and certain off-balance sheet items to broad risk categories; and
(iii) a schedule, including transitional arrangements during a phase-in
period, for achieving a minimum supervisory ratio of capital to risk-
weighted assets. In general, the risk-weighting imposes "zero percent"
risk-weighting for cash; balances due from Federal Reserve banks; direct
claims on (including securities), and the portions of claims
unconditionally guaranteed by, the United States treasury and United
States government agencies; and gold bullion; "twenty percent" for cash
items in the process of collection; all claims on, and portions of claims
guaranteed by, United States depository institutions, United States
government agencies and United States government-sponsored agencies;
general obligation claims on, and the portions of claims that are guaranteed
by, the full faith and credit of states or other political subdivisions of the
United States; and the portions of claims that are collateralized by securities
issued or guaranteed by the United States treasury, governmental agencies or
government-sponsored agencies; "fifty percent" for loans fully secured by first
liens on one to four family residential properties written in accordance with
prudent underwriting standards and certain privately issued mortgage-backed
securities; and "one hundred percent" risk-weighting for assets not included
in one of the other categories, including fixed assets, premises, other real
estate owned and equity investments. Basically, the higher percentage of
riskier assets an institution has, the more capital it must have to satisfy the
risk-based guidelines; the lower the risk, the lower the required capital. The
guidelines do not address other bank "risk" areas, such as interest rate,
liquidity, funding and market risks, the quality and level of earnings,
investment or loan portfolio concentrations, the quality of loans and
investments, the effectiveness of loan and investment policies and management's
ability to monitor and control financial and operating risks. The current
minimum risk-based ratio is 8%. The Bank's total risk-based ratio as of
December 31, 1996 was 18.46%. The Bank does not believe that the
implementation of the risk-based guidelines has had or will have a material
adverse effect on its prospective business or require capital-raising
efforts in the foreseeable future. In January 1995, the risk-based capital
standards were amended to require analysis of the Bank's and Company's
concentration of credit risks and certain risks from non-traditional
activities in assessing the institution's overall capital adequacy.
The Improvement Act increased the supervisory powers of the FDIC and the other
federal regulatory agencies with regard to undercapitalized depository
institutions, and changed the capital rules applicable to the Company and the
Bank. As of December 19, 1992, banking regulators adopted regulations which
define five capital categories of institutions: institutions that are well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized. The purpose of these
categories is to allow federal regulatory agencies to monitor undercapitalized
institutions more closely in order to take appropriate and prompt regulatory
action to minimize the potential for significant loss to the deposit insurance
fund. Institutions in the first two categories will operate with few
restrictions. Institutions in the other three categories may be required to
raise additional capital, curtail growth, limit interest rates paid, divest
subsidiaries and limit executive compensation. Regulators are also empowered
to remove top management and call for new elections of directors. The
Improvement Act also allows for the appointment of a conservator or receiver of
an insured depository institution if the institution is undercapitalized and
either has no reasonable prospect of becoming adequately capitalized, fails to
become adequately capitalized as required, or fails to submit or materially
implement a capital plan. In addition, the Improvement Act requires a holding
company of a failing institution to guarantee that the institution will comply
with a capital restoration plan to the extent of 5% of the institution's total
assets or the amount needed to achieve the required minimum capital levels.
See page 17 of the Company's 1996 Annual Report to Shareholders under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Capital". The Bank is currently categorized as a
"well capitalized" institution under the Improvement Act.
After notice and hearing, FDIC insurance of deposits may be terminated by the
FDIC upon a finding by the FDIC that the insured institution has engaged in
unsafe or unsound practices or is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule or order of,
or conditions imposed by, the FDIC. Neither the Company nor the Bank is aware
of any practice, condition or violation that might lead to termination of its
deposit insurance.
The Improvement Act also generally limits the activities and equity investments
of FDIC-insured, state-chartered banks to those that are permissible for
national banks. These restrictions became effective on December 19, 1992,
although the restrictions dealing with equity investments became effective upon
enactment of the Improvement Act on December 19, 1991. In October 1992, the
FDIC issued final regulations to implement the restrictions on equity
investments and indicated its intention to propose regulations addressing the
activities limitations at a later date. Under the regulations dealing with
equity investments, an insured state bank generally may not acquire or retain
any equity investment of a type, or in an amount, that is not permissible for
a national bank. In addition, an insured state bank (i) that is located in a
state which authorized as of September 30, 1991 investment in common or
preferred stock listed on a national securities exchange ("listed stock") or
shares of a registered investment company ("registered shares"), and (ii) which
during the period beginning September 30, 1990 through November 26, 1991
("measurement period") made or maintained investments in listed stocks and
registered shares, may retain whatever shares that were lawfully acquired or
held prior to December 19, 1991 and continue to acquire listed stock and
registered shares, provided that the bank does not convert its charter to
another form or undergo one of four types of specified transactions which
generally deal with changes in control. In order to acquire or retain any
listed stock or registered shares, however, the bank must file a one-time
notice with the FDIC which meets specified requirements and which sets
forth the bank's intention to acquire and retain stocks or shares, and the
FDIC must determine that acquiring or retaining the listed stocks or
registered shares will not pose a significant risk to the deposit insurance
fund of which the bank is a member. The Bank filed a notice of intention
to invest in listed stocks and registered shares with the FDIC on
December 11, 1992. On March 15, 1993, the FDIC granted its approval to
the Bank to continue to hold or acquire listed stocks and registered
shares, subject to the following conditions: (a) the maximum
investment in listed stocks and registered shares may not exceed 100% of the
Bank's Tier 1 capital; (b) the Bank must follow reasonable procedures
limiting concentrations in listed stocks and registered shares so as to
provide for diversification of risk; and (c) the FDIC may alter, suspend
or withdraw its approval should any development warrant such action. At
December 31, 1996, the Bank held $.2 million of listed stocks and
registered shares.
The Community Reinvestment Act of 1977 ("CRA") was enacted to encourage every
financial institution to help meet the credit needs of its entire community,
including low and moderate-income neighborhoods, consistent with the
institution's safe and sound operation. Under CRA, state and federal
regulators are required, when examining financial institutions and when
considering applications for approval of certain merger, acquisition or
other transactions, to take into account the institution's record in
helping to meet the credit needs of its entire community, including low
and moderate-income neighborhoods. In reviewing an institution's CRA
record for this purpose, state and federal regulators will consider reports
of regulatory examination, comments received from interested members of
the public or community groups, and the description of the institution's
CRA activities in its publicly available CRA statement, supplemented, as
necessary, by the institution. The Federal Reserve Board has the power to
disapprove proposed merger or acquisition transactions involving
banking organizations that are deemed by the Federal Reserve Board to have
unsatisfactory examination records of CRA compliance. Following its most
recent CRA examination as of August 24, 1995, the Bank received a
"Satisfactory" rating regarding its compliance with CRA.
Federal Reserve System Regulation
Federal Reserve Board regulations require the Bank to maintain reserves against
its transaction accounts and non-personal time deposits. These regulations
generally require that reserves of 3% be maintained against transaction
accounts (other than non-personal time deposits and Eurocurrency liabilities)
totaling $54.0 million or less (except that $4.2 million in the transaction
accounts is exempt from the reserve requirement) and a reserve of 10% be
maintained against that portion of total transaction accounts in excess of
$54.0 million. These amounts and percentages are subject to further
adjustment by the Federal Reserve Board. The Bank also has authority to
borrow from the Federal Reserve Bank of Boston "discount window."
The Federal Reserve Board's capital adequacy guidelines for bank holding
companies are similar to the FDIC leverage ratio requirements described above.
This standard establishes a minimum level of Tier 1 capital to total assets of
3% for all bank holding companies with consolidated assets of $150 million or
more. Except with respect to the most highly-rated institutions, this standard
requires bank holding companies to maintain an additional cushion of 100 to 200
basis points depending upon the institution's financial condition and risk
profile. Additionally, the Federal Reserve Board has adopted risk-based
capital guidelines, similar to those adopted by the FDIC as described
above, that are applicable to all bank holding companies. Management
believes that the Company currently is, and expects to continue to be, in
full compliance with applicable capital requirements.
The Company is subject to regulation by the Federal Reserve Board as a
registered bank holding company. The Bank Holding Company Act of 1956, as
amended (the "BHCA"), under which the Company is registered, limits the types
of companies that the Company may acquire or organize and the activities in
which it or they may engage. In general, the Company and its subsidiaries are
prohibited from engaging in or acquiring direct control of any company engaged
in non-banking activities unless such activities are so closely related to
banking or managing or controlling banks or savings associations as to be a
proper incident thereto. Subject to various limitations, the Federal Reserve
Board has determined by regulation a number of activities that qualify without
the need for specific FRB approval. The Company believes that neither it nor
the Bank is engaged in any activities which would be prohibited under the BHCA.
Under the BHCA, the Company is required to obtain the prior approval of the
Board of Governors of the Federal Reserve System to acquire, with certain
exceptions, more than 5% of the outstanding voting stock of any bank, to
acquire all or substantially all of the assets of a bank or to merge or
consolidate with another bank holding company.
Under the BHCA, the Company, the Bank and any other subsidiaries are prohibited
from engaging in certain tying arrangements in connection with any extension of
credit or provision of any property or services. The Bank is also subject to
certain restrictions imposed by the Federal Reserve Act on issuing any
extension of credit to the Company or any of its subsidiaries, or making
any investments in the stock or other securities thereof, and on the taking
of such stock or securities as collateral for loans to any borrower.
The Company is required under the BHCA to file an annual report of its
operations with the Federal Reserve Board, and it and the Bank and any other
subsidiaries are subject to examination by the Federal Reserve Board. In
addition, the Company, as a bank holding company, is required to register with,
submit reports to and be examined by the Commissioner under the Connecticut
Bank Holding Company and Bank Acquisition Act.
Effect of Government Policy
Banking is a business that has historically depended primarily on interest rate
differentials. In general, the difference between the interest rates received
by the Bank on loans to its customers and securities held in the Bank's
portfolio and the interest rate paid by the Bank on its deposits and its other
borrowings will comprise the major portion of the Bank's earnings. The value
and yields of its assets and the rates paid on its liabilities are sensitive to
changes in prevailing market rates of interest. Thus, the earnings and growth
of the Bank will be influenced by general economic conditions, the monetary and
fiscal policies of the federal government, and policies of regulatory agencies,
particularly the Federal Reserve Board, which implement national monetary
policy. The nature and impact of any future changes in monetary policies is
beyond the control of the Bank and cannot be predicted.
The FDIC is required to conduct annual FDIC examinations of all insured
depository institutions unless they are well or adequately capitalized, not
less than $250 million in assets, and have an "outstanding" composite
condition (or "good" if a bank has less than $100 million in assets); such
institutions may be examined every eighteen months. The Improvement Act
also requires each insured depository institution to submit a publicly
available annual audit report to its federal regulators. The report is
required to be prepared in accordance with generally accepted accounting
principles and to contain any information that federal regulators may
require. The report must contain management's statement of its
responsibilities for preparing financial statements, establishing and
maintaining internal controls, complying with banking laws and regulations
and assessing the institution's results in these areas during the past year.
The institution's independent public accountants must also attest to, and
report separately on, management's statement. The federal regulatory
agencies are also required to adopt regulations requiring each insured
depository institution to have an independent audit made of its financial
statements. These audited financial statements will be included in
the institution's annual reports. The Company and the Bank have always
had an annual independent audit.
As discussed above, the Improvement Act allows the regulatory agencies to take
prompt regulatory action for institutions falling into one of the lower three
of five capital categories (see "FDIC Regulation") and restricts an
institution's ability to accept brokered deposits unless the institution is
well capitalized. Restrictions on loans to insiders are also strengthened
under the Improvement Act. Total aggregate loans to all insiders
(including directors and executive officers) and their related interests
are generally restricted to the amount of a bank's unimpaired capital and
surplus. Unimpaired capital and surplus is defined by regulation to mean
the sum of (1) the bank's total equity capital as reported on the bank's
most recent consolidated report of condition, (2) any subordinated notes
and debentures approved as an addition to the bank's capital structure by
the appropriate federal banking agency, and (3) any valuation reserves
created by charges to the bank's income as reported on its most recent
consolidated report of condition. The Federal Reserve Board may, by
regulation, make the restrictions on aggregate loans to insiders more
stringent. In addition, certain restrictions on types and amounts of loans
that can be made to executive officers of financial institutions have
been added to federal regulations in addition to the existing restrictions
in state law on loans to executive officers. Loans to individual
directors, executive officers, principal shareholders and their related
interests also may not exceed specified percentages of the Bank's
unimpaired capital and surplus (generally, 15% for loans not "fully
secured", and 10% additional for loans that are "fully secured", with
certain limited exceptions). Because the level of the Bank's loans to
insiders is significantly below the amount permitted under the
Improvement Act, the Company does not expect these regulations to adversely
impact the Company or the Bank.
The Improvement Act has also resulted in federal regulatory agencies adopting
regulations setting forth safety and soundness standards relating to internal
controls, information systems and internal audit systems; loan documentation;
credit underwriting; interest rate exposure; asset growth; and officers and
employees compensation, fees and benefits. The Bank and the Company do not
expect these regulations will materially adversely affect them.
The regulations establish a standard for the ratio of classified assets to
total capital and loan loss allowances at no greater than 100%; and an
earnings/capital standard which provides that a bank's capital will be
sufficient if the bank's last four quarters of earnings history, projected over
the next four quarters, would leave the bank with capital meeting the
applicable minimum capital requirements. If the FDIC were to find that
the Bank violated either of the standards, the Bank would be required to
submit a compliance plan, which must be approved by the FDIC, describing
the steps it would take to cure the deficiency. However, the Company and
the Bank currently comply with and expect to continue to comply with these
standards.
The present bank regulatory scheme has undergone and continues to undergo
significant change, both as it affects the banking industry itself and as it
affects competition between banks and non-banking financial institutions.
There have been significant regulatory changes in the bank merger and
acquisition area, in the products and services banks can offer, and in the
non-banking activities in which bank holding companies can engage. Banks
are now actively competing with other types of depository institutions and
with non-bank financial institutions, such as money market funds, brokerage
firms, insurance companies, and other financial services enterprises. It
is not possible at this time to assess what impact these changes in the
regulatory scheme will ultimately have on the Bank.
Item 2 - Properties
In addition to the main office of the Company and the Bank, located at
123 Broad Street, New Britain, Connecticut, the Bank has eight banking branches
located in New Britain, Southington, Newington, Rocky Hill, Plainville, and
Meriden, Connecticut. The Bank also maintains a trust office in Middletown,
Connecticut as well as in the Lafayette Square and the Meriden branch offices.
The following table sets forth certain information regarding the Bank's banking
offices.
<TABLE>
<CAPTION>
Owned Lease
or Expiration
Office Location Leased Date
<S> <C> <C> <C>
Main Office 123 Broad Street Owned N/A
New Britain, CT 06050
Farmington Avenue 553 Farmington Avenue Owned N/A
New Britain, CT 06050
Columbus Plaza 150 Columbus Boulevard Leased October 1999
New Britain, CT 06050
Lafayette Square 450 Main Street Leased July 2001
New Britain, CT 06050
Southington Office 405 Queen Street Leased August 2002
Southington, CT 06489
Newington Office 36 Fenn Road Leased January 2003
Newington, CT 06111
Rocky Hill Office 2270 Silas Deane Highway Owned N/A
Rocky Hill, CT 06067
Plainville Office 275C New Britain Avenue Leased June 2004
Plainville, CT 06062
Middletown Trust 49 Main Street Leased April 1998
Office Middletown, CT 06457
Meriden Office 834 Broad Street Leased November 2000
Meriden, CT 06450
</TABLE>
Total lease payments for all of the Bank's leased offices for 1995 amounted to
$468,211.
Item 3 - Legal Proceedings
There are no pending legal proceedings to which the Company or the Bank is a
party, other than ordinary routine litigation in the normal course of
business. No such proceeding is material to the Company or the Bank.
Item 4 - Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1996, no matter was submitted to a vote of
shareholders of the Company.
Executive Officers of the Registrant
The following persons are the executive officers of the Company:
Richard S. Mansfield, age 56, has been the President and Chief Executive
Officer and a director of the Company since its incorporation in February 1989.
Mr. Mansfield has been President and Chief Executive Officer and a director of
the Bank since 1986 and was Executive Vice President and Vice President in
charge of mortgage lending at the Bank since 1980. Mr. Mansfield's 1996
employment agreement with the Bank provides for a term of three years with
automatic one year renewals each January 1st, unless either party gives written
notice of his or its intention not to extend the agreement.
John G. Medvec, age 49, has been the Executive Vice President and Treasurer of
the Company since its incorporation in February 1989. Mr. Medvec has been
Executive Vice President and Treasurer of the Bank since 1986 and has served in
various executive positions with the Bank since 1971. Mr. Medvec's 1996
employment agreement with the Bank provides for a term of three years with
automatic one year renewals each January 1st, unless either party gives written
notice of his or its intention not to extend the agreement.
There is no relationship by blood, marriage or adoption between any executive
officer or director of the Company and any other executive officer or director
of the Company.
PART II
Item 5 - Market for Registrant's Common Equity and Related Stockholder
Matters
As of February 28, 1997, the Company had 1,905,863 shares of Common Stock
issued and outstanding and approximately 1,312 shareholders of record. The
Company's stock is traded over-the-counter and is quoted on The NASDAQ
National Market under the symbol "PBNB".
The market price information regarding the Company Common Stock and the
information relating to the payment of dividends required by Item 5 appears on
pages 46 and 47 of the Company's 1996 Annual Report to Shareholders under the
captions "Common Stock Information" and "Dividend Policy", and is incorporated
herein by reference. Dividends are paid by the Company from its assets, which
are mainly provided by dividends from the Bank. However, certain restrictions
exist regarding the ability of the Bank to transfer funds to the Company in the
form of cash dividends, loans or advances and such restrictions may materially
limit the Company's ability to pay dividends to its shareholders.
Connecticut capital stock savings banks, such as the Bank, may not declare cash
dividends in excess of "net profits". "Net profits" are statutorily defined as
"the remainder of all earnings from current operations." In addition, the
total of all cash dividends declared in any calendar year may not, without
the specific approval of the Commissioner, exceed the total of its net
profits of that year combined with its retained net profits of the
preceding two years.
The present intention of the Board of Directors of the Company is to continue
the practice of declaring and paying cash dividends on a quarterly basis.
However, the payment and size of any future Company dividend will depend on the
future earnings of the Company and the Bank.
Item 6 - Selected Financial Data
The information required by Item 6 appears on page 1 of the Company's 1996
Annual Report to Shareholders under the caption "Selected Financial
Highlights", and is incorporated by reference herein.
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by Item 7 appears on pages 9 through 22 of the
Company's 1996 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
is incorporated by reference herein. See Note 18 "Recent Accounting
Pronouncements" on page 44 of the Company's 1996 Annual Report to Shareholders
and the caption notes to the Consolidated Financial Statements contained
therein.
Item 8 - Financial Statements and Supplementary Data
The information required by Item 8 is indexed in Item 14 of this Annual Report
on Form 10-K, and portions thereof appearing on pages 23 through 46 of the
Company's 1996 Annual Report to Shareholders are incorporated by reference
herein.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10 - Directors and Executive Officers of the Registrant
The information required by Item 10 relating to the identification of directors
and executive officers of the Company and their business experience appears on
pages 3 through 14 of the Company's definitive Proxy Statement dated March 21,
1997 under the caption "Election of a Class of Directors (Proposal 1) -
Information on Nominees and Directors", and in Part I of this Annual Report on
Form 10-K under the caption "Executive Officers of the Registrant", and is
incorporated by reference herein.
Item 11 - Executive Compensation
The information required by Item 11 relating to the compensation paid and
benefits provided to directors and executive officers of the Company appears on
pages 8 through 14 of the Company's definitive Proxy Statement under the
captions "Election of a Class of Directors (Proposal 1) - Compensation of
Directors" and "Election of a Class of Directors (Proposal 1) - Compensation of
Executive Officers", and is incorporated by reference herein.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 relating to the ownership of the Company's
securities by certain beneficial owners and management appears on pages 2
through 7 of the Company's definitive Proxy Statement under the captions
"Principal Stockholders", "Election of a Class of Directors (Proposal 1) -
Information on Nominees and Directors" and "Election of a Class of Directors
(Proposal 1) - Ownership of Shares by Directors and Officers", and is
incorporated by reference herein.
Item 13 - Certain Relationships and Related Transactions
The information required by Item 13 relating to transactions between the
Company and management, directors and certain beneficial owners of the
Company's securities appears on pages 12 through 15 of the Company's
definitive Proxy Statement under the caption "Transactions with Management
and Others", and is incorporated by reference herein.
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents, filed as part of this report, are included
herein or are incorporated by reference from the indicated pages of
the Company's 1996 Annual Report to Shareholders:
1. Financial Statements:
Page(s) in
Annual Report
Report of Independent Auditors 23
Consolidated Balance Sheets 24
Consolidated Statements of Income 25
Consolidated Statements of Stockholders' Equity 26
Consolidated Statements of Cash Flows 27
Notes to Consolidated Financial Statements 28-46
2. Financial Statement Schedules:
All Schedules not required or inapplicable have been omitted.
3. Exhibits:
Exhibit No. Description
3.1 Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-4
(No. 33-27219) filed on February 23, 1989).
4 Instruments Defining the Rights of Security Holders are
filed as Exhibits 3.1 and 3.2.
*10.6 Pension Plan of The People's Savings Bank of New Britain,
as amended (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-4 (No. 33-27219)
filed on February 23, 1989).
*10.9 Change of Control Agreement, dated as of September 23,
1991, between the Bank and Edward E. Bohnwagner, III
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.10 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Walter D. Blogoslawski, as amended
January 1, 1987 (incorporated by reference to Exhibit 10.10 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.11 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Matthew P. Duksa, as amended January 1,
1987 and January 20, 1987 (incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.12 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Stanley P. Filewicz, as amended
January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.13 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Robert A. Gryboski, M.D., as amended
January 1, 1987, January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.14 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Edward Januszewski, as amended January 1,
1987 and January 20, 1987 (incorporated by reference to
Exhibit 10.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.15 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Roland L. LeClerc, as amended January 1,
1987, January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.15 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.16 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Walter J. Liss, as amended January 1, 1987
and February 10, 1989 (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.17 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Henry R. Poplaski, as amended January 1,
1987, January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.17 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.18 Directors' Voluntary Deferral Agreement, dated January 20,
1987, between the Bank and Anthony R. Puskarz, Jr.
(incorporated by reference to Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991)
*10.19 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Eugene M. Rosol, as amended January 1,
1987 and January 20, 1987 (incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.20 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Chester S. Sledzik, as amended January 1,
1987, January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.20 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.21 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Robert A. Story, as amended January 1,
1987, January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.22 Directors' Voluntary Deferral Agreement, dated January 1, 1985,
between the Bank and Joseph A. Welna, as amended January 1,
1987, January 20, 1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.22 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
*10.23 People's Savings Financial Corp. Dividend Reinvestment Plan and
Stock Purchase Plan (incorporated by reference to Exhibit 10.23
to the Company's Annual Report on Form 10-K for this fiscal
year ended December 31, 1992).
*10.24 People's Savings Financial Corp. Savings and Investment Plan
(incorporated by reference to Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993).
*10.25 Change of Control Agreement, dated as of January 17, 1995,
between the Bank and Daniel Hurley (incorporated by reference
to Exhibit 10.25 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994).
*10.26 Change of Control Agreement, dated as of January 17, 1995,
between the Bank and Earl Young (incorporated by reference to
Exhibit 10.26 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994).
*10.27 The People's Savings Financial Corp. 1995 Stock
Option and Incentive Plan for Outside
Directors (incorporated by reference to
Exhibit A to the Company's Proxy Statement for the
1995 Annual meeting of Stockholders).
*10.28 The People's Savings Financial Corp. 1995
Stock Option and Incentive Plan (for
Employees) (incorporated by reference to
Exhibit B to the Company's Proxy Statement for
the 1995 Annual meeting of Stockholders).
*10.29 Employment Agreement dated November 19, 1996 between
the Bank and Richard S. Mansfield.
*10.30 Employment Agreement dated November 19, 1996 between the Bank
and John G. Medvec.
*10.31 Employment Agreement dated November 19, 1996 between the Bank
and Teresa Sasinski.
*10.32 Change of Control Agreement, dated as of
November 19, 1996 between the Bank and
Richard S. Mansfield.
*10.33 Change of Control Agreement, dated as of
November 19, 1996 between the Bank and John
G. Medvec.
*10.34 Change of Control Agreement, dated as of
November 19, 1996 between the Bank and
Teresa Sasinski.
11 Statement Concerning Computation of Per Share Earnings
13 Annual Report to Shareholders for the Year Ended
December 31, 1996 (previously filed)
21 Subsidiaries of the Registrant
24 Consent of Independent Accountants
25 Power of Attorney
27 Financial Data Schedule
*Management contracts or compensatory plans, contracts or
arrangements.
(b) Reports on Form 8-K. No report on Form 8-K was filed during the fourth
quarter of 1996.
(c) The exhibits required by Item 601 of Regulation S-K are filed as a
separate part of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ Richard S. Mansfield
Richard S. Mansfield
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/ Richard S. Mansfield President and Chief March 18, 1997
Richard S. Mansfield Executive Officer
(Principal Executive
Officer)
/s/ John G. Medvec Executive Vice March 18, 1997
John G. Medvec President and
Treasurer (Principal
Financial Officer
and Principal
Accounting Officer)
* Director March 18, 1997
Joseph A. Welna
* Director March 18, 1997
Robert A. Gryboski
* Director March 18, 1997
Walter J. Liss
* Director March 18, 1997
Robert A. Story
* Director March 18, 1997
Walter D. Blogoslawski
* Director March 18, 1997
Stanley P. Filewicz
* Director March 18, 1997
Roland L. LeClerc
* Director March 18, 1997
Chester S. Sledzik
* Director March 18, 1997
Henry Poplaski
* Director March 18, 1997
A. Richard Puskarz, Jr.
By /s/ John G. Medvec
John G. Medvec
Attorney-in-Fact
EXHIBIT INDEX
Exhibit Page
Number Description Number
3.1 Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
3.2 Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-4
(No. 33-27219) filed on February 23, 1989).
4 Instruments Defining the Rights of Security
Holders are filed as Exhibits 3.1 and 3.2.
*10.6 Pension Plan of The People's Savings Bank of
New Britain, as amended (incorporated by
reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-4
(No. 33-27219) filed on February 23, 1989).
*10.9 Change of Control Agreement, dated as of
September 23, 1991, between the Bank and
Edward E. Bohnwagner, III (incorporated by
reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.10 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Walter D.
Blogoslawski, as amended January 1, 1987
(incorporated by reference to Exhibit 10.10 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.11 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and
Matthew P. Duksa, as amended January 1, 1987
and January 20, 1987 (incorporated by reference
to Exhibit 10.11 to the Company's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1991).
*10.12 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and
Stanley P. Filewicz, as amended January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.12 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.13 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Robert A.
Gryboski, M.D., as amended January 1, 1987,
January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.13 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.14 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Edward
Januszewski, as amended January 1, 1987 and
January 20, 1987 (incorporated by reference to
Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1991).
*10.15 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Roland L.
LeClerc, as amended January 1, 1987,
January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.15 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.16 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Walter J.
Liss, as amended January 1, 1987 and
February 10, 1989 (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1991).
*10.17 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Henry R.
Poplaski, as amended January 1, 1987,
January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.17 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.18 Directors' Voluntary Deferral Agreement, dated
January 20, 1987, between the Bank and
Anthony R. Puskarz, Jr. (incorporated by
reference to Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.19 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Eugene M.
Rosol, as amended January 1, 1987 and
January 20, 1987 (incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1991).
*10.20 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and
Chester S. Sledzik, as amended January 1, 1987,
January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.20 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.21 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Robert A.
Story, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.22 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Joseph A.
Welna, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.22 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
*10.23 People's Savings Financial Corp. Dividend
Reinvestment Plan and Stock Purchase Plan
(incorporated by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992).
*10.24 People's Savings Financial Corp. Savings and
Investment Plan (incorporated by reference to
Exhibit 10.24 to the Company's Annual Report
on Form 10-K for the fiscal year ended December
31, 1993).
*10.25 Change of Control Agreement, dated as of
January 17, 1995, between the Bank and Daniel
Hurley (incorporated by reference to Exhibit
10.25 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
1994).
*10.26 Change of Control Agreement, dated as of
January 17, 1995, between the Bank and Earl
Young (incorporated by reference to Exhibit
10.26 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
1994).
*10.27 The People's Savings Financial Corp. 1995 Stock
Option and Incentive Plan for Outside Directors.
Incentive Plan for Outside Directors
(incorporated by reference to Exhibit A to the
Company's Proxy Statement for the 1995 Annual
meeting of Stockholders).
*10.28 The People's Savings Financial Corp. 1995 Stock
Option and Incentive Plan for Outside Directors.
Incentive Plan (for Employees), (incorporated
by reference to Exhibit B to the Company's
Proxy Statement for the 1995 Annual meeting of
Stockholders).
*10.29 Employment Agreement dated November 19, 1996
between the Bank and Richard S. Mansfield.
*10.30 Employment Agreement dated November 19, 1996
between the Bank and John G. Medvec.
*10.31 Employment Agreement dated November 19, 1996
between the Bank and Teresa Sasinski.
*10.32 Change of Control Agreement dated as of
November 19, 1996 between the Bank and Richard
S. Mansfield.
*10.33 Change of Control Agreement dated as of
November 19, 1996 between the Bank and John G.
Medvec.
*10.32 Change of Control Agreement dated as of
November 19, 1996 between the Bank and Teresa
Sasinski.
11 Statement Concerning Computation of Per Share
Earnings
13 Annual Report to Shareholders for the Year Ended
December 31, 1996 (previously filed)
21 Subsidiaries of the Registrant
24 Consent of Independent Auditors
25 Power of Attorney
27 Financial Data Schedule
____________________
* Management contracts or compensatory plans, contracts or
arrangements.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of October,
1996, by and between The People's Savings Bank of New Britain, a Connecticut
savings bank with its principal office and place of business in New Britain,
Connecticut ("Employer") and Richard S. Mansfield, a resident of Wolcott,
Connecticut ("Employee").
W I T N E S S E T H
WHEREAS, Employee and Employer are parties to an Employment Agreement
dated as of August 1, 1986 (the "Prior Agreement") which, among other things,
provides certain benefits to Employee upon a change in control of Employer;
and
WHEREAS, Employee and Employer have entered into a Change in Control
Agreement dated as of the date hereof (the "Change in Control Agreement"),
the provisions of which are intended to supersede the change in control
provisions in the Prior Agreement; and
WHEREAS, Employee and Employer desire to amend and restate the Prior
Agreement, upon the terms and conditions set forth herein, to delete from the
Prior Agreement such change in control provisions and to make clear the terms
under which Employee desires to remain in the employ of Employer, and under
which the Employer desires to continue to employ Employee.
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto, intending to be legally bound, do
hereby mutually covenant and agree as follows:
1. Employment.
Employer hereby agrees to employ Employee as President and Chief
Executive Officer of Employer for the Term of Employment, as defined in
Section 2.1, and Employee accepts said employment and agrees to serve in such
capacity upon the terms and conditions hereinafter set forth.
2. Definitions.
2.1 "Term of Employment" shall mean the period commencing with the date
hereof and ending on December 31, 1999. The Term of Employment shall
automatically be extended on each January 1 hereafter by adding an additional
year to the then remaining period of employment without further notice or
action of the parties; provided that either party may serve written notice to
the other at least three (3) months prior to any such January 1 of its desire
that the period of employment not be further automatically extended as
provided herein, in which event there shall thereafter be no such further
automatic extensions of the Term of Employment.
Notwithstanding the foregoing, the Term of Employment shall end one (1)
day after the occurrence of any of the following events:
(a) Employee's termination for "Cause" (as defined in Section
2.3);
(b) unilateral termination of Employee's employment by Employee
other than as permitted under Section 5.2;
(c) unilateral termination of Employee's employment by Employer
prior to a Change of Control as defined in a Change in Control
Agreement;
(d) the death of Employee; or
(e) the "permanent disability" of Employee (as defined in Section
2.2);
(f) Payment in full to Employee of the "Severance Amount" as
provided for in the Change in Control Agreement.
2.2 Employee's "permanent disability," as this phrase is used
throughout this Agreement, shall mean Employee's disability as defined under
the long-term disability insurance policy of Employer as in effect from time
to time.
2.3 "Cause," as this term is used throughout this Agreement, shall
mean:
(a) Employee's failure to be available to work on a full-time
basis in the position set forth in Section 1 hereof other than
as a result of a permanent disability, if such failure shall
not have been cured by Employee within thirty (30) days after
receipt from Employer of written notice of a claimed breach by
Employee; or
(b) willful material misconduct by Employee, including, but not
limited to, the commission by Employee of a felony or the
perpetration by Employee of a common law fraud upon Employer,
in the case of (a) or (b) above, as determined in good faith by a vote of at
least 75% of the members of Employer's Board of Directors.
2.4 A "Person" shall include natural person, corporation, or other
entity. When two (2) or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding,
or disposing of Employer common stock, such partnership, syndicate, or group
shall be considered a Person. Beneficial ownership shall be determined under
the then current provisions of Securities Exchange Act of 1934 Rule 13d-3, 17
C.F.R. Section 240.13d-3.
3. Duties of Employment.
Employee agrees that, so long as he shall be employed by Employer,
Employee shall perform all duties assigned or delegated to him under the By-
Laws of Employer or from time to time by the Board of Directors of Employer
consistent with his position as a senior executive officer of Employer, and
shall perform all acts and services customarily associated with such
position, devoting his full time, best efforts and attention to the
advancement of the interests and business of Employer. Employee shall not be
engaged in or concerned with any other duties or pursuits which are
competitive or inconsistent with the interests and business of Employer. It
is understood that Employee may have directorships which may, from time to
time, require minor portions of his time, but which shall not interfere or be
inconsistent with his duties hereunder.
4. Compensation.
During the Term of Employment, Employer shall pay to Employee as
compensation for the services to be rendered by him hereunder the following:
(a) Employer shall pay to Employee a base salary at the rate of
$171,252.00 per year, or such larger sum as the Board of Directors of
Employer may from time to time determine (the "Base Rate"). Such
compensation shall be payable in accordance with normal payroll practices of
Employer.
(b) In addition, Employee shall receive an annual increase in the
Base Rate at each normal pay adjustment date during such Term of Employment,
but no later than one (1) year from the date of Employee's last increase and
annually thereafter during such Term of Employment, of not less than the
percentage increase in the cost-of-living since Employee's last pay
adjustment, as measured by the Consumer Price Index-All Urban Consumers of
the U.S. Bureau of Labor Statistics, except that no such increase shall be
made at any time during which a salary freeze applicable to all executive
employees of Employer generally may be in effect.
(c) Employer shall provide life insurance on the life of Employee
in an amount equal to twice the Base Rate, payable to a beneficiary selected
by Employee, and shall provide comprehensive health insurance and Major
Medical coverage for Employee comparable to such coverage provided for
officers of Employer generally. Employer shall also provide Employee with
long-term disability insurance coverage. Employee shall be eligible to
participate in the pension plan of Employer in accordance with the terms
thereof.
(d) Except as otherwise set forth herein, if Employee should be
prevented from performing his duties by reason of illness or incapacity or
for any other cause for an aggregate of six months in any one year, then
Employer shall not be obligated to pay Employee any salary or bonus for any
period of absence (except for absence during paid vacation as provided
herein) in excess of the aggregate of six months in any such year.
5. Termination of Employment.
5.1 If Employee's employment is unilaterally terminated by Employer
during the Term of Employment, for any reason other than the reasons provided
in Section 2.3 hereof, Employee shall be entitled to receive, and Employer
shall be obligated to pay to Employee, the following amounts:
(a) severance pay in an amount equal to the salary compensation of
Employee defined in Sections 4(a) and 4(b) hereof for an additional twelve
(12) months at the then current rate, from which shall be subtracted only the
amount, if any, payable to Employee under any then effective severance pay
plan of Employer (which, for purposes hereof, shall not include any amount
payable to Employee pursuant to the Change in Control Agreement), the
foregoing net amount to be paid in cash in the month next following
Employee's termination of employment.
(b) an amount equal to the aggregate amounts that Employer would
have contributed on behalf of Employee under Employer's Deferred Profit
Sharing Plan, if any such plan shall be in effect, for an additional twelve
(12) months had Employee continued in the employ of Employer for such
additional twelve (12) months and made contributions under said plan at a
rate, as a percentage of salary, equal to the average rate at which Employee
had made contributions to said plan in the period, not exceeding three (3)
fiscal years of Employer, preceding Employee's termination;
(c) supplemental pension benefits equal to the difference between
(i) the annual pension benefit that would have been payable to Employee under
the Retirement Plan of Employer (the "Plan") if Employee had been continued
in the employ of Employer for an additional twelve (12) months and had
received compensation at least equal to that specified in Section 4 of this
Agreement until such time and (ii) the annual pension benefit actually
payable to Employee under the Plan, such supplemental pension benefits to be
payable at the same time and in the same manner as benefits under the Plan;
(d) to the extent that any form of compensation previously granted
to Employee, such as, by way of example only, restricted stock or performance
share awards, shall not be fully vested or shall require additional service
as an employee at the time of the termination of Employee's employment,
Employee shall be credited with additional service for an additional twelve
(12) months;
(e) for an additional twelve (12) months, Employee shall also
continue to participate in all life, health, disability and similar insurance
plans and programs of Employer to the extent that such continued
participation is possible under the general terms and provisions of such
plans and programs, with Employer and Employee paying the same portion of the
cost of each such plan or program as existed at the time of Employee's
termination. In the event that Employee's continued participation in any
group plans and programs is not permitted, then in lieu thereof, Employer
shall acquire, with the same cost sharing, individual insurance policies
providing comparable coverage for Employee; provided that Employer shall not
be obligated to pay for any such individual coverage more than three (3)
times Employer's cost of such group coverage; and provided further, if any
such individual coverage is unavailable, then Employer shall pay to Employee
for such additional twelve (12) month period an amount equal to the sum of
the average annual contributions, payments, credits, or allocations made by
Employer for such insurance on Employee's behalf over the three (3) fiscal
years of Employer preceding the termination of his employment; and
(f) Employee shall continue to receive for an additional twelve
(12) months such perquisites as he was receiving at the time of the
termination of his employment.
5.2 Employee shall have the right during the Term of Employment, at his
sole option, by thirty (30) days' advance written notice to the Board of
Directors of Employer, to terminate his services hereunder upon the
occurrence of any action by Employer which (i) significantly reduces
Employee's job responsibilities, (ii) results in a significant worsening of
Employee's work conditions, or (iii) requires a relocation by Employee to a
place of work outside of New Britain, Connecticut. Termination of Employee's
services under this Section 5.2 shall be deemed a unilateral, involuntary
termination of employment by Employer and shall be governed by the provisions
of Section 5.1 hereof. Subject to the provisions of Section 7, Employee
shall have no further obligation under this Agreement.
5.3 Employee shall have no duty to mitigate damages in the event of a
termination under the terms of Sections 5.1 or 5.2 or in the event of his
permanent disability under Section 5.4, and if he voluntarily obtains other
employment (including self-employment), any compensation or profits received
or accrued, directly or indirectly, from such other employment shall not
reduce or otherwise affect the obligations of Employer to make payments
hereunder.
5.4 If the employment of Employee shall terminate during the Term of
Employment by reason of the permanent disability of Employee, all payments
that would have been due to Employee under this Agreement had he remained in
the employ of Employer for an additional twelve (12) months reduced by the
amount of disability insurance payments made to Employee under any policy or
plan maintained by Employer, shall continue to be made to him for an
additional twelve (12) months, or until he shall no longer be considered
permanently disabled under Section 2.2, if earlier. If Employee shall die
following a termination of his employment under Section 5.1 or 5.2, or
following a termination during the Term of Employment by reason of the
permanent disability of Employee, all payments that would have been due to
Employee under this Agreement had he lived for a period of twelve (12) months
following the termination of his employment shall be made instead to such
beneficiary as Employee shall have designated in writing. To the extent that
neither Employee nor his designee shall live for such twelve (12) month
period following the termination of Employee's employment, after the death of
the second of them to die, said payments shall be made to the estate of such
person. If Employee shall die without a beneficiary designation in effect,
said payments shall be made to Employee's estate.
5.5 If the employment of Employee shall terminate at a time other than
during the Term of Employment, or if said employment shall terminate for any
of the reasons provided in Section 2.3 hereof, or if Employee shall
unilaterally terminate his employment other than as permitted under Section
5.2, all payments that would have been due to Employee under this Agreement
on or after the date of such termination shall cease, and Employer shall have
no further obligations under this Agreement other than for amounts accrued
but not paid as of the date of such termination.
6. Other Benefits
6.1 During the Term of Employment while actively employed, Employee
shall be entitled to and shall be included in any employee welfare or pension
benefit plan or program of Employer available generally to the employees of
Employer to the extent that he is eligible to participate under the general
provisions of such plans.
6.2 During the Term of Employment while actively employed, Employee
shall be entitled each year to a vacation of at least four (4) weeks, and
during such time his compensation shall be paid in full. The period of
vacation selected each year shall be with the approval of the Employer.
Vacation time which is not taken by the Employee in any year may be deferred
and taken in the first quarter of the following year or, at the option of the
Employer, shall be purchased by the Employer at a per diem rate calculated on
the basis of Employee's then base salary.
7. Confidential Information
Employee understands that in the course of his employment by Employer,
Employee will receive confidential information concerning the business or
purposes of Employer, and which Employer desires to protect. Employee agrees
that he will not at any time during or after the Term of Employment reveal to
anyone outside Employer or use for his own benefit any such information that
has been designated as confidential by Employer or understood by Employee to
be confidential without specific written authorization by Employer. Employee
further agrees not to use any such confidential information or trade secrets
in competing with Employer at any time during or after his employment by
Employer.
8. Covenants by Employee Not to Compete With Employer
(a) Upon termination of Employee's employment by Employer for any
reason (other than a termination pursuant to Sections 5.1 or 5.2 of this
Agreement), Employee covenants and agrees that he will not at any time during
the period of one (1) year from and after such termination directly or
indirectly in any manner or under any circumstances or conditions whatsoever
be or become interested, as an individual, partner, principal, agent, clerk,
employee, stockholder, officer, director, trustee, or in any other capacity
whatsoever, except as a nominal owner of stock of a public corporation, in
any other business similar to the business of Employer or in any way in
competition with the business of Employer within any of the City of New
Britain and the Towns of Berlin, Meriden, Newington, Rocky Hill, Southington
and Plainville, all in the State of Connecticut.
For purposes of this section (a), "Employer" shall be limited to the
People's Savings Bank of New Britain, and the "business of Employer" shall be
limited to its business as a Connecticut savings bank, and any other lines of
business developed or entered into by it, its holding company Peoples Savings
Financial Corp., or any subsidiary of the foregoing, during the term of this
Agreement, but shall not include lines of business of any successor or
affiliated corporation in which Employee is not directly involved.
(b) Employee hereby acknowledges that his services are unique and
extraordinary, and are not readily replaceable, and hereby expressly agrees
that Employer in enforcing the covenants contained in this Section, in
addition to any other remedies provided for herein or otherwise available at
law, shall be entitled in any court of equity having jurisdiction to an
injunction restraining him in the event of a breach, actual or threatened, of
the agreements and covenants contained in this Paragraph.
(c) The parties hereto believe that the restrictive covenants of this
Section are reasonable. However, if at any time it shall be determined by
any court of competent jurisdiction that this Section or any portion of it,
as written, is unenforceable because the restrictions are unreasonable, the
parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make such
restrictions reasonable in the determination of such court, and said
covenants, as so modified, shall be enforceable between the parties to the
same extent as if such amendments had been made prior to the date of any
alleged breach of said covenants.
9. Termination Upon Change of Control.
Notwithstanding anything contained herein to the contrary, this
Agreement shall terminate and be of no further force and effect upon the
payment in full to Employee of the "Severance Amount" as provided for in the
Change in Control Agreement.
10. Notices.
All notices under this Agreement shall be in writing and shall be deemed
effective when delivered in person to Employee or to the Secretary of
Employer, or if mailed, postage prepaid, registered or certified mail,
addressed, in the case of Employee, to his last known address as carried on
the personnel records of Employer, and, in the case of Employer, to the
corporate headquarters, attention of the Secretary, or to such other address
as the party to be notified may specify by notice to the other party.
11. Successors and Assigns
The rights and obligations of Employer under this Agreement shall inure
to the benefit of and shall be binding upon the successors and assigns of
Employer, including, without limitation, any corporation, individual or other
person or entity which may acquire all or substantially all of the assets and
business of Employer, or of any division of Employer for which Employee has
primary management responsibility, or with or into which Employer may be
consolidated or merged or any surviving corporation in any merger involving
Employer. All references in this Agreement to Employer shall be deemed to
include all such successors and assigns and, upon the occurrence of any event
giving rise to any Person becoming a successor or assign bound hereunder by
the Agreement, Employer shall be thereby relieved of any further obligation
or liability under this Agreement, except for any amounts due and payable to
Employee under the provisions hereof immediately prior to the occurrence of
such event.
12. Arbitration.
Any dispute which may arise between the parties hereto shall be
submitted to binding arbitration in accordance with the Rules of the American
Arbitration Association; provided that any such dispute shall first be
submitted to Employer's Board of Directors in an effort to resolve such
dispute without resort to arbitration. In any dispute which is submitted to
arbitration, the attorney's fees of the prevailing party shall be paid by the
other party.
13. Severability
If any of the terms or conditions of this Agreement shall be declared
void or unenforceable by any court or administrative body of competent
jurisdiction, such term or condition shall be deemed severable from the
remainder of this Agreement, and the other terms and conditions of this
Agreement shall continue to be valid and enforceable.
14. Construction.
This Agreement shall be construed under the laws of the State of
Connecticut. Words of masculine gender mean and include correlative words of
the feminine gender. Section headings are for convenience only and shall not
be considered a part of the terms and provisions of the Agreement.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by
a duly authorized officer and Employee has hereunto set his hand, this ____
day of October, 1996.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By
Its
RICHARD S. MANSFIELD
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of
October, 1996, by and between The People's Savings Bank of New Britain, a
Connecticut savings bank with its principal office and place of business in
New Britain, Connecticut ("Employer") and John G. Medvec, a resident of
Newington, Connecticut ("Employee").
W I T N E S S E T H
WHEREAS, Employee and Employer are parties to an Employment Agreement
dated as of August 1, 1986 (the "Prior Agreement") which, among other
things, provides certain benefits to Employee upon a change in control of
Employer; and
WHEREAS, Employee and Employer have entered into a Change in Control
Agreement dated as of the date hereof (the "Change in Control Agreement"),
the provisions of which are intended to supersede the change in control
provisions in the Prior Agreement; and
WHEREAS, Employee and Employer desire to amend and restate the Prior
Agreement, upon the terms and conditions set forth herein, to delete from
the Prior Agreement such change in control provisions and to make clear the
terms under which Employee desires to remain in the employ of Employer, and
under which the Employer desires to continue to employ Employee.
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto, intending to be legally
bound, do hereby mutually covenant and agree as follows:
1. Employment.
Employer hereby agrees to employ Employee as Executive Vice President
and Treasurer of Employer for the Term of Employment, as defined in Section
2.1, and Employee accepts said employment and agrees to serve in such
capacity upon the terms and conditions hereinafter set forth.
2. Definitions.
2.1 "Term of Employment" shall mean the period commencing with the
date hereof and ending on December 31, 1999. The Term of Employment shall
automatically be extended on each January 1 hereafter by adding an
additional year to the then remaining period of employment without further
notice or action of the parties; provided that either party may serve
written notice to the other at least three (3) months prior to any such
January 1 of its desire that the period of employment not be further
automatically extended as provided herein, in which event there shall
thereafter be no such further automatic extensions of the Term of
Employment.
Notwithstanding the foregoing, the Term of Employment shall end one
(1) day after the occurrence of any of the following events:
(a) Employee's termination for "Cause" (as defined in Section
2.3);
(b) unilateral termination of Employee's employment by Employee
other than as permitted under Section 5.2;
(c) unilateral termination of Employee's employment by Employer
prior to a Change of Control as defined in a Change in
Control Agreement;
(d) the death of Employee; or
(e) the "permanent disability" of Employee (as defined in
Section 2.2);
(f) Payment in full to Employee of the "Severance Amount" as
provided for in the Change in Control Agreement.
2.2 Employee's "permanent disability," as this phrase is used
throughout this Agreement, shall mean Employee's disability as defined
under the long-term disability insurance policy of Employer as in effect
from time to time.
2.3 "Cause," as this term is used throughout this Agreement, shall
mean:
(a) Employee's failure to be available to work on a full-time
basis in the position set forth in Section 1 hereof other
than as a result of a permanent disability, if such failure
shall not have been cured by Employee within thirty (30)
days after receipt from Employer of written notice of a
claimed breach by Employee; or
(b) willful material misconduct by Employee, including, but not
limited to, the commission by Employee of a felony or the
perpetration by Employee of a common law fraud upon
Employer,
in the case of (a) or (b) above, as determined in good faith by a vote of
at least 75% of the members of Employer's Board of Directors.
2.4 A "Person" shall include natural person, corporation, or other
entity. When two (2) or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding, or disposing of Employer common stock, such partnership,
syndicate, or group shall be considered a Person. Beneficial ownership
shall be determined under the then current provisions of Securities
Exchange Act of 1934 Rule 13d-3, 17 C.F.R. Section 240.13d-3.
3. Duties of Employment.
Employee agrees that, so long as he shall be employed by Employer,
Employee shall perform all duties assigned or delegated to him under the
By-Laws of Employer or from time to time by the Board of Directors of
Employer consistent with his position as a senior executive officer of
Employer, and shall perform all acts and services customarily associated
with such position, devoting his full time, best efforts and attention to
the advancement of the interests and business of Employer. Employee shall
not be engaged in or concerned with any other duties or pursuits which are
competitive or inconsistent with the interests and business of Employer.
It is understood that Employee may have directorships which may, from time
to time, require minor portions of his time, but which shall not interfere
or be inconsistent with his duties hereunder.
4. Compensation.
During the Term of Employment, Employer shall pay to Employee as
compensation for the services to be rendered by him hereunder the
following:
(a) Employer shall pay to Employee a base salary at the rate of
$129,012.00 per year, or such larger sum as the Board of Directors of
Employer may from time to time determine (the "Base Rate"). Such
compensation shall be payable in accordance with normal payroll practices
of Employer.
(b) In addition, Employee shall receive an annual increase in
the Base Rate at each normal pay adjustment date during such Term of
Employment, but no later than one (1) year from the date of Employee's last
increase and annually thereafter during such Term of Employment, of not
less than the percentage increase in the cost-of-living since Employee's
last pay adjustment, as measured by the Consumer Price Index-All Urban
Consumers of the U.S. Bureau of Labor Statistics, except that no such
increase shall be made at any time during which a salary freeze applicable
to all executive employees of Employer generally may be in effect.
(c) Employer shall provide life insurance on the life of
Employee in an amount equal to twice the Base Rate, payable to a
beneficiary selected by Employee, and shall provide comprehensive health
insurance and Major Medical coverage for Employee comparable to such
coverage provided for officers of Employer generally. Employer shall also
provide Employee with long-term disability insurance coverage. Employee
shall be eligible to participate in the pension plan of Employer in
accordance with the terms thereof.
(d) Except as otherwise set forth herein, if Employee should be
prevented from performing his duties by reason of illness or incapacity or
for any other cause for an aggregate of six months in any one year, then
Employer shall not be obligated to pay Employee any salary or bonus for any
period of absence (except for absence during paid vacation as provided
herein) in excess of the aggregate of six months in any such year.
5. Termination of Employment.
5.1 If Employee's employment is unilaterally terminated by Employer
during the Term of Employment, for any reason other than the reasons
provided in Section 2.3 hereof, Employee shall be entitled to receive, and
Employer shall be obligated to pay to Employee, the following amounts:
(a) severance pay in an amount equal to the salary compensation
of Employee defined in Sections 4(a) and 4(b) hereof for an additional
twelve (12) months at the then current rate, from which shall be subtracted
only the amount, if any, payable to Employee under any then effective
severance pay plan of Employer (which, for purposes hereof, shall not
include any amount payable to Employee pursuant to the Change in Control
Agreement), the foregoing net amount to be paid in cash in the month next
following Employee's termination of employment.
(b) an amount equal to the aggregate amounts that Employer would
have contributed on behalf of Employee under Employer's Deferred Profit
Sharing Plan, if any such plan shall be in effect, for an additional twelve
(12) months had Employee continued in the employ of Employer for such
additional twelve (12) months and made contributions under said plan at a
rate, as a percentage of salary, equal to the average rate at which
Employee had made contributions to said plan in the period, not exceeding
three (3) fiscal years of Employer, preceding Employee's termination;
(c) supplemental pension benefits equal to the difference
between (i) the annual pension benefit that would have been payable to
Employee under the Retirement Plan of Employer (the "Plan") if Employee had
been continued in the employ of Employer for an additional twelve (12)
months and had received compensation at least equal to that specified in
Section 4 of this Agreement until such time and (ii) the annual pension
benefit actually payable to Employee under the Plan, such supplemental
pension benefits to be payable at the same time and in the same manner as
benefits under the Plan;
(d) to the extent that any form of compensation previously
granted to Employee, such as, by way of example only, restricted stock or
performance share awards, shall not be fully vested or shall require
additional service as an employee at the time of the termination of
Employee's employment, Employee shall be credited with additional service
for an additional twelve (12) months;
(e) for an additional twelve (12) months, Employee shall also
continue to participate in all life, health, disability and similar
insurance plans and programs of Employer to the extent that such continued
participation is possible under the general terms and provisions of such
plans and programs, with Employer and Employee paying the same portion of
the cost of each such plan or program as existed at the time of Employee's
termination. In the event that Employee's continued participation in any
group plans and programs is not permitted, then in lieu thereof, Employer
shall acquire, with the same cost sharing, individual insurance policies
providing comparable coverage for Employee; provided that Employer shall
not be obligated to pay for any such individual coverage more than three
(3) times Employer's cost of such group coverage; and provided further, if
any such individual coverage is unavailable, then Employer shall pay to
Employee for such additional twelve (12) month period an amount equal to
the sum of the average annual contributions, payments, credits, or
allocations made by Employer for such insurance on Employee's behalf over
the three (3) fiscal years of Employer preceding the termination of his
employment; and
(f) Employee shall continue to receive for an additional twelve
(12) months such perquisites as he was receiving at the time of the
termination of his employment.
5.2 Employee shall have the right during the Term of Employment, at
his sole option, by thirty (30) days' advance written notice to the Board
of Directors of Employer, to terminate his services hereunder upon the
occurrence of any action by Employer which (i) significantly reduces
Employee's job responsibilities, (ii) results in a significant worsening of
Employee's work conditions, or (iii) requires a relocation by Employee to a
place of work outside of New Britain, Connecticut. Termination of
Employee's services under this Section 5.2 shall be deemed a unilateral,
involuntary termination of employment by Employer and shall be governed by
the provisions of Section 5.1 hereof. Subject to the provisions of Section
7, Employee shall have no further obligation under this Agreement.
5.3 Employee shall have no duty to mitigate damages in the event of a
termination under the terms of Sections 5.1 or 5.2 or in the event of his
permanent disability under Section 5.4, and if he voluntarily obtains other
employment (including self-employment), any compensation or profits
received or accrued, directly or indirectly, from such other employment
shall not reduce or otherwise affect the obligations of Employer to make
payments hereunder.
5.4 If the employment of Employee shall terminate during the Term of
Employment by reason of the permanent disability of Employee, all payments
that would have been due to Employee under this Agreement had he remained
in the employ of Employer for an additional twelve (12) months reduced by
the amount of disability insurance payments made to Employee under any
policy or plan maintained by Employer, shall continue to be made to him for
an additional twelve (12) months, or until he shall no longer be considered
permanently disabled under Section 2.2, if earlier. If Employee shall die
following a termination of his employment under Section 5.1 or 5.2, or
following a termination during the Term of Employment by reason of the
permanent disability of Employee, all payments that would have been due to
Employee under this Agreement had he lived for a period of twelve (12)
months following the termination of his employment shall be made instead to
such beneficiary as Employee shall have designated in writing. To the
extent that neither Employee nor his designee shall live for such twelve
(12) month period following the termination of Employee's employment, after
the death of the second of them to die, said payments shall be made to the
estate of such person. If Employee shall die without a beneficiary
designation in effect, said payments shall be made to Employee's estate.
5.5 If the employment of Employee shall terminate at a time other
than during the Term of Employment, or if said employment shall terminate
for any of the reasons provided in Section 2.3 hereof, or if Employee shall
unilaterally terminate his employment other than as permitted under Section
5.2, all payments that would have been due to Employee under this Agreement
on or after the date of such termination shall cease, and Employer shall
have no further obligations under this Agreement other than for amounts
accrued but not paid as of the date of such termination.
6. Other Benefits
6.1 During the Term of Employment while actively employed, Employee
shall be entitled to and shall be included in any employee welfare or
pension benefit plan or program of Employer available generally to the
employees of Employer to the extent that he is eligible to participate
under the general provisions of such plans.
6.2 During the Term of Employment while actively employed, Employee
shall be entitled each year to a vacation of at least four (4) weeks, and
during such time his compensation shall be paid in full. The period of
vacation selected each year shall be with the approval of the Employer.
Vacation time which is not taken by the Employee in any year may be
deferred and taken in the first quarter of the following year or, at the
option of the Employer, shall be purchased by the Employer at a per diem
rate calculated on the basis of Employee's then base salary.
7. Confidential Information
Employee understands that in the course of his employment by Employer,
Employee will receive confidential information concerning the business or
purposes of Employer, and which Employer desires to protect. Employee
agrees that he will not at any time during or after the Term of Employment
reveal to anyone outside Employer or use for his own benefit any such
information that has been designated as confidential by Employer or
understood by Employee to be confidential without specific written
authorization by Employer. Employee further agrees not to use any such
confidential information or trade secrets in competing with Employer at any
time during or after his employment by Employer.
8. Covenants by Employee Not to Compete With Employer
(a) Upon termination of Employee's employment by Employer for
any reason (other than a termination pursuant to Sections 5.1 or 5.2 of
this Agreement), Employee covenants and agrees that he will not at any time
during the period of one (1) year from and after such termination directly
or indirectly in any manner or under any circumstances or conditions
whatsoever be or become interested, as an individual, partner, principal,
agent, clerk, employee, stockholder, officer, director, trustee, or in any
other capacity whatsoever, except as a nominal owner of stock of a public
corporation, in any other business similar to the business of Employer or
in any way in competition with the business of Employer within any of the
City of New Britain and the Towns of Berlin, Meriden, Newington, Rocky
Hill, Southington and Plainville, all in the State of Connecticut.
For purposes of this section (a), "Employer" shall be limited to the
People's Savings Bank of New Britain, and the "business of Employer" shall
be limited to its business as a Connecticut savings bank, and any other
lines of business developed or entered into by it, its holding company
Peoples Savings Financial Corp., or any subsidiary of the foregoing, during
the term of this Agreement, but shall not include lines of business of any
successor or affiliated corporation in which Employee is not directly
involved.
(b) Employee hereby acknowledges that his services are unique and
extraordinary, and are not readily replaceable, and hereby expressly agrees
that Employer in enforcing the covenants contained in this Section, in
addition to any other remedies provided for herein or otherwise available
at law, shall be entitled in any court of equity having jurisdiction to an
injunction restraining him in the event of a breach, actual or threatened,
of the agreements and covenants contained in this Paragraph.
(c) The parties hereto believe that the restrictive covenants of this
Section are reasonable. However, if at any time it shall be determined by
any court of competent jurisdiction that this Section or any portion of it,
as written, is unenforceable because the restrictions are unreasonable, the
parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make
such restrictions reasonable in the determination of such court, and said
covenants, as so modified, shall be enforceable between the parties to the
same extent as if such amendments had been made prior to the date of any
alleged breach of said covenants.
9. Termination Upon Change of Control.
Notwithstanding anything contained herein to the contrary, this
Agreement shall terminate and be of no further force and effect upon the
payment in full to Employee of the "Severance Amount" as provided for in
the Change in Control Agreement.
10. Notices.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or to the Secretary
of Employer, or if mailed, postage prepaid, registered or certified mail,
addressed, in the case of Employee, to his last known address as carried on
the personnel records of Employer, and, in the case of Employer, to the
corporate headquarters, attention of the Secretary, or to such other
address as the party to be notified may specify by notice to the other
party.
11. Successors and Assigns
The rights and obligations of Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and
assigns of Employer, including, without limitation, any corporation,
individual or other person or entity which may acquire all or substantially
all of the assets and business of Employer, or of any division of Employer
for which Employee has primary management responsibility, or with or into
which Employer may be consolidated or merged or any surviving corporation
in any merger involving Employer. All references in this Agreement to
Employer shall be deemed to include all such successors and assigns and,
upon the occurrence of any event giving rise to any Person becoming a
successor or assign bound hereunder by the Agreement, Employer shall be
thereby relieved of any further obligation or liability under this
Agreement, except for any amounts due and payable to Employee under the
provisions hereof immediately prior to the occurrence of such event.
12. Arbitration.
Any dispute which may arise between the parties hereto shall be
submitted to binding arbitration in accordance with the Rules of the
American Arbitration Association; provided that any such dispute shall
first be submitted to Employer's Board of Directors in an effort to resolve
such dispute without resort to arbitration. In any dispute which is
submitted to arbitration, the attorney's fees of the prevailing party shall
be paid by the other party.
13. Severability
If any of the terms or conditions of this Agreement shall be declared
void or unenforceable by any court or administrative body of competent
jurisdiction, such term or condition shall be deemed severable from the
remainder of this Agreement, and the other terms and conditions of this
Agreement shall continue to be valid and enforceable.
14. Construction.
This Agreement shall be construed under the laws of the State of
Connecticut. Words of masculine gender mean and include correlative words
of the feminine gender. Section headings are for convenience only and
shall not be considered a part of the terms and provisions of the
Agreement.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed
by a duly authorized officer and Employee has hereunto set his hand, this
____ day of October, 1996.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By
Its
JOHN G. MEDVEC
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of
__________, 1996, by and between The People's Savings Bank of New Britain,
a Connecticut savings bank with its principal office and place of business
in New Britain, Connecticut ("Employer") and Teresa Sasinski, a resident of
Kensington, Connecticut ("Employee").
W I T N E S S E T H
WHEREAS, Employee has been and continues to be employed by Employer in
a management capacity; and
WHEREAS, Employer desires to secure the services of Employee on the
terms set forth herein; and
WHEREAS, Employee is willing to enter into this Agreement on said
terms and thereby to continue to work for Employer pursuant to said terms;
and
WHEREAS, Employee and Employer have entered into a Change of Control
Agreement as of the date hereof (the "Change of Control Agreement") the
provisions of which are intended to be in addition to, and not in conflict
with, this Agreement.
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto, intending to be legally
bound, do hereby mutually covenant and agree as follows:
1. Employment.
Employer hereby agrees to employ Employee as Senior Vice President and
Corporate Secretary of Employer for the Term of Employment, as defined in
Section 2.1, and Employee accepts said employment and agrees to serve in
such capacity upon the terms and conditions hereinafter set forth.
2. Definitions.
2.1 "Term of Employment" shall mean the period commencing with the
date hereof and ending on December 31, 1999. The Term of Employment shall
automatically be extended on each January 1 hereafter by adding an
additional year to the then remaining period of employment without further
notice or action of the parties; provided that either party may serve
written notice to the other at least three (3) months prior to any such
January 1 of its desire that the period of employment not be further
automatically extended as provided herein, in which event there shall
thereafter be no such further automatic extensions of the Term of
Employment.
Notwithstanding the foregoing, the Term of Employment shall end one
(1) day after the occurrence of any of the following events:
(a) Employee's termination for "Cause" (as defined in Section
2.3);
(b) unilateral termination of Employee's employment by Employee
other than as permitted under Section 5.2;
(c) unilateral termination of Employee's employment by Employer
prior to a Change of Control as defined in a Change in
Control Agreement;
(d) the death of Employee; or
(e) the "permanent disability" of Employee (as defined in
Section 2.2);
(f) Payment in full to Employee of the "Severance Amount" as
provided for in the Change in Control Agreement.
2.2 Employee's "permanent disability," as this phrase is used
throughout this Agreement, shall mean Employee's disability as defined
under the long-term disability insurance policy of Employer as in effect
from time to time.
2.3 "Cause," as this term is used throughout this Agreement, shall
mean:
(a) Employee's failure to be available to work on a full-time
basis in the position set forth in Section 1 hereof other
than as a result of a permanent disability, if such failure
shall not have been cured by Employee within thirty (30)
days after receipt from Employer of written notice of a
claimed breach by Employee; or
(b) willful material misconduct by Employee, including, but not
limited to, the commission by Employee of a felony or the
perpetration by Employee of a common law fraud upon
Employer,
in the case of (a) or (b) above, as determined in good faith by a vote of
at least 75% of the members of Employer's Board of Directors.
2.4 A "Person" shall include natural person, corporation, or other
entity. When two (2) or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding, or disposing of Employer common stock, such partnership,
syndicate, or group shall be considered a Person. Beneficial ownership
shall be determined under the then current provisions of Securities
Exchange Act of 1934 Rule 13d-3, 17 C.F.R. Section 240.13d-3.
3. Duties of Employment.
Employee agrees that, so long as she shall be employed by Employer,
Employee shall perform all duties assigned or delegated to her under the
By-Laws of Employer or from time to time by the Board of Directors of
Employer consistent with her position as a senior executive officer of
Employer, and shall perform all acts and services customarily associated
with such position, devoting her full time, best efforts and attention to
the advancement of the interests and business of Employer. Employee shall
not be engaged in or concerned with any other duties or pursuits which are
competitive or inconsistent with the interests and business of Employer.
It is understood that Employee may have directorships which may, from time
to time, require minor portions of her time, but which shall not interfere
or be inconsistent with her duties hereunder.
4. Compensation.
During the Term of Employment, Employer shall pay to Employee as
compensation for the services to be rendered by her hereunder the
following:
(a) Employer shall pay to Employee a base salary at the rate of
$77,000 per year, or such larger sum as the Board of Directors of Employer
may from time to time determine (the "Base Rate"). Such compensation shall
be payable in accordance with normal payroll practices of Employer.
(b) In addition, Employee shall receive an annual increase in
the Base Rate at each normal pay adjustment date during such Term of
Employment, but no later than one (1) year from the date of Employee's last
increase and annually thereafter during such Term of Employment, of not
less than the percentage increase in the cost-of-living since Employee's
last pay adjustment, as measured by the Consumer Price Index-All Urban
Consumers of the U.S. Bureau of Labor Statistics, except that no such
increase shall be made at any time during which a salary freeze applicable
to all executive employees of Employer generally may be in effect.
(c) Employer shall provide life insurance on the life of
Employee in an amount equal to twice the Base Rate, payable to a
beneficiary selected by Employee, and shall provide comprehensive health
insurance and Major Medical coverage for Employee comparable to such
coverage provided for officers of Employer generally. Employer shall also
provide Employee with long-term disability insurance coverage. Employee
shall be eligible to participate in the pension plan of Employer in
accordance with the terms thereof.
(d) Except as otherwise set forth herein, if Employee should be
prevented from performing her duties by reason of illness or incapacity or
for any other cause for an aggregate of six months in any one year, then
Employer shall not be obligated to pay Employee any salary or bonus for any
period of absence (except for absence during paid vacation as provided
herein) in excess of the aggregate of six months in any such year.
5. Termination of Employment.
5.1 If Employee's employment is unilaterally terminated by Employer
during the Term of Employment, for any reason other than the reasons
provided in Section 2.3 hereof, Employee shall be entitled to receive, and
Employer shall be obligated to pay to Employee, the following amounts:
(a) severance pay in an amount equal to the salary compensation
of Employee defined in Sections 4(a) and 4(b) hereof for an additional
twelve (12) months at the then current rate, from which shall be subtracted
only the amount, if any, payable to Employee under any then effective
severance pay plan of Employer (which, for purposes hereof, shall not
include any amount payable to Employee pursuant to the Change in Control
Agreement), the foregoing net amount to be paid in cash in the month next
following Employee's termination of employment.
(b) an amount equal to the aggregate amounts that Employer would
have contributed on behalf of Employee under Employer's Deferred Profit
Sharing Plan, if any such plan shall be in effect, for an additional twelve
(12) months had Employee continued in the employ of Employer for such
additional twelve (12) months and made contributions under said plan at a
rate, as a percentage of salary, equal to the average rate at which
Employee had made contributions to said plan in the period, not exceeding
three (3) fiscal years of Employer, preceding Employee's termination;
(c) supplemental pension benefits equal to the difference
between (i) the annual pension benefit that would have been payable to
Employee under the Retirement Plan of Employer (the "Plan") if Employee had
been continued in the employ of Employer for an additional twelve (12)
months and had received compensation at least equal to that specified in
Section 4 of this Agreement until such time and (ii) the annual pension
benefit actually payable to Employee under the Plan, such supplemental
pension benefits to be payable at the same time and in the same manner as
benefits under the Plan;
(d) to the extent that any form of compensation previously
granted to Employee, such as, by way of example only, restricted stock or
performance share awards, shall not be fully vested or shall require
additional service as an employee at the time of the termination of
Employee's employment, Employee shall be credited with additional service
for an additional twelve (12) months;
(e) for an additional twelve (12) months, Employee shall also
continue to participate in all life, health, disability and similar
insurance plans and programs of Employer to the extent that such continued
participation is possible under the general terms and provisions of such
plans and programs, with Employer and Employee paying the same portion of
the cost of each such plan or program as existed at the time of Employee's
termination. In the event that Employee's continued participation in any
group plans and programs is not permitted, then in lieu thereof, Employer
shall acquire, with the same cost sharing, individual insurance policies
providing comparable coverage for Employee; provided that Employer shall
not be obligated to pay for any such individual coverage more than three
(3) times Employer's cost of such group coverage; and provided further, if
any such individual coverage is unavailable, then Employer shall pay to
Employee for such additional twelve (12) month period an amount equal to
the sum of the average annual contributions, payments, credits, or
allocations made by Employer for such insurance on Employee's behalf over
the three (3) fiscal years of Employer preceding the termination of her
employment; and
(f) Employee shall continue to receive for an additional twelve
(12) months such perquisites as she was receiving at the time of the
termination of her employment.
5.2 Employee shall have the right during the Term of Employment, at
her sole option, by thirty (30) days' advance written notice to the Board
of Directors of Employer, to terminate her services hereunder upon the
occurrence of any action by Employer which (i) significantly reduces
Employee's job responsibilities, (ii) results in a significant worsening of
Employee's work conditions, or (iii) requires a relocation by Employee to a
place of work outside of New Britain, Connecticut. Termination of
Employee's services under this Section 5.2 shall be deemed a unilateral,
involuntary termination of employment by Employer and shall be governed by
the provisions of Section 5.1 hereof. Subject to the provisions of Section
7, Employee shall have no further obligation under this Agreement.
5.3 Employee shall have no duty to mitigate damages in the event of a
termination under the terms of Sections 5.1 or 5.2 or in the event of her
permanent disability under Section 5.4, and if she voluntarily obtains
other employment (including self-employment), any compensation or profits
received or accrued, directly or indirectly, from such other employment
shall not reduce or otherwise affect the obligations of Employer to make
payments hereunder.
5.4 If the employment of Employee shall terminate during the Term of
Employment by reason of the permanent disability of Employee, all payments
that would have been due to Employee under this Agreement had she remained
in the employ of Employer for an additional twelve (12) months reduced by
the amount of disability insurance payments made to Employee under any
policy or plan maintained by Employer, shall continue to be made to her for
an additional twelve (12) months, or until she shall no longer be
considered permanently disabled under Section 2.2, if earlier. If Employee
shall die following a termination of her employment under Section 5.1 or
5.2, or following a termination during the Term of Employment by reason of
the permanent disability of Employee, all payments that would have been due
to Employee under this Agreement had she lived for a period of twelve (12)
months following the termination of her employment shall be made instead to
such beneficiary as Employee shall have designated in writing. To the
extent that neither Employee nor her designee shall live for such twelve
(12) month period following the termination of Employee's employment, after
the death of the second of them to die, said payments shall be made to the
estate of such person. If Employee shall die without a beneficiary
designation in effect, said payments shall be made to Employee's estate.
5.5 If the employment of Employee shall terminate at a time other
than during the Term of Employment, or if said employment shall terminate
for any of the reasons provided in Section 2.3 hereof, or if Employee shall
unilaterally terminate her employment other than as permitted under Section
5.2, all payments that would have been due to Employee under this Agreement
on or after the date of such termination shall cease, and Employer shall
have no further obligations under this Agreement other than for amounts
accrued but not paid as of the date of such termination.
6. Other Benefits
6.1 During the Term of Employment while actively employed, Employee
shall be entitled to and shall be included in any employee welfare or
pension benefit plan or program of Employer available generally to the
employees of Employer to the extent that she is eligible to participate
under the general provisions of such plans.
6.2 During the Term of Employment while actively employed, Employee
shall be entitled each year to a vacation of at least four (4) weeks, and
during such time her compensation shall be paid in full. The period of
vacation selected each year shall be with the approval of the Employer.
Vacation time which is not taken by the Employee in any year may be
deferred and taken in the first quarter of the following year or, at the
option of the Employer, shall be purchased by the Employer at a per diem
rate calculated on the basis of Employee's then base salary.
7. Confidential Information
Employee understands that in the course of her employment by Employer,
Employee will receive confidential information concerning the business or
purposes of Employer, and which Employer desires to protect. Employee
agrees that she will not at any time during or after the Term of Employment
reveal to anyone outside Employer or use for her own benefit any such
information that has been designated as confidential by Employer or
understood by Employee to be confidential without specific written
authorization by Employer. Employee further agrees not to use any such
confidential information or trade secrets in competing with Employer at any
time during or after her employment by Employer.
8. Covenants by Employee Not to Compete With Employer
(a) Upon termination of Employee's employment by Employer for
any reason (other than a termination pursuant to Sections 5.1 or 5.2 of
this Agreement), Employee covenants and agrees that she will not at any
time during the period of one (1) year from and after such termination
directly or indirectly in any manner or under any circumstances or
conditions whatsoever be or become interested, as an individual, partner,
principal, agent, clerk, employee, stockholder, officer, director, trustee,
or in any other capacity whatsoever, except as a nominal owner of stock of
a public corporation, in any other business similar to the business of
Employer or in any way in competition with the business of Employer within
any of the City of New Britain and the Towns of Berlin, Meriden, Newington,
Rocky Hill, Southington and Plainville, all in the State of Connecticut.
For purposes of this section (a), "Employer" shall be limited to the
People's Savings Bank of New Britain, and the "business of Employer" shall
be limited to its business as a Connecticut savings bank, and any other
lines of business developed or entered into by it, its holding company
Peoples Savings Financial Corp., or any subsidiary of the foregoing, during
the term of this Agreement, but shall not include lines of business of any
successor or affiliated corporation in which Employee is not directly
involved.
(b) Employee hereby acknowledges that her services are unique and
extraordinary, and are not readily replaceable, and hereby expressly agrees
that Employer in enforcing the covenants contained in this Section, in
addition to any other remedies provided for herein or otherwise available
at law, shall be entitled in any court of equity having jurisdiction to an
injunction restraining her in the event of a breach, actual or threatened,
of the agreements and covenants contained in this Paragraph.
(c) The parties hereto believe that the restrictive covenants of this
Section are reasonable. However, if at any time it shall be determined by
any court of competent jurisdiction that this Section or any portion of it,
as written, is unenforceable because the restrictions are unreasonable, the
parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make
such restrictions reasonable in the determination of such court, and said
covenants, as so modified, shall be enforceable between the parties to the
same extent as if such amendments had been made prior to the date of any
alleged breach of said covenants.
9. Termination Upon Change of Control.
Notwithstanding anything contained herein to the contrary, this
Agreement shall terminate and be of no further force and effect upon the
payment in full to Employee of the "Severance Amount" as provided for in
the Change in Control Agreement.
10. Notices.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or to the President
of Employer, or if mailed, postage prepaid, registered or certified mail,
addressed, in the case of Employee, to her last known address as carried on
the personnel records of Employer, and, in the case of Employer, to the
corporate headquarters, attention of the Secretary, or to such other
address as the party to be notified may specify by notice to the other
party.
11. Successors and Assigns
The rights and obligations of Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and
assigns of Employer, including, without limitation, any corporation,
individual or other person or entity which may acquire all or substantially
all of the assets and business of Employer, or of any division of Employer
for which Employee has primary management responsibility, or with or into
which Employer may be consolidated or merged or any surviving corporation
in any merger involving Employer. All references in this Agreement to
Employer shall be deemed to include all such successors and assigns and,
upon the occurrence of any event giving rise to any Person becoming a
successor or assign bound hereunder by the Agreement, Employer shall be
thereby relieved of any further obligation or liability under this
Agreement, except for any amounts due and payable to Employee under the
provisions hereof immediately prior to the occurrence of such event.
12. Arbitration.
Any dispute which may arise between the parties hereto shall be
submitted to binding arbitration in accordance with the Rules of the
American Arbitration Association; provided that any such dispute shall
first be submitted to Employer's Board of Directors in an effort to resolve
such dispute without resort to arbitration. In any dispute which is
submitted to arbitration, the attorney's fees of the prevailing party shall
be paid by the other party.
13. Severability
If any of the terms or conditions of this Agreement shall be declared
void or unenforceable by any court or administrative body of competent
jurisdiction, such term or condition shall be deemed severable from the
remainder of this Agreement, and the other terms and conditions of this
Agreement shall continue to be valid and enforceable.
14. Construction.
This Agreement shall be construed under the laws of the State of
Connecticut. Words of masculine gender mean and include correlative words
of the feminine gender. Section headings are for convenience only and
shall not be considered a part of the terms and provisions of the
Agreement.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed
by a duly authorized officer and Employee has hereunto set her hand, this
____ day of __________, 1996.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By
Its
TERESA SASINSKI
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October
, 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a
banking corporation organized and existing by virtue of the laws of the
State of Connecticut (the "Bank"), and RICHARD S. MANSFIELD (the
"Executive").
WHEREAS, the Executive is currently rendering services to the Bank
pursuant to an Employment Agreement dated August 1, 1986 containing "change
in control" provisions, as amended and restated by an Amended and Restated
Employment Agreement dated as of the date hereof which does not contain
"change in control" provisions (the "Employment Agreement");
WHEREAS, the Bank considers the performance and dedication of its
management team to be significant for its overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Bank and
its sole shareholder, People's Savings Financial Corp. (the "Company");
WHEREAS, the banking industry is a dynamic one with independent public
institutions subject to unexpected changes in ownership;
WHEREAS, the performance by the Executive of services to the Bank may
be negatively affected by his uncertainty over the possibility of a change
in ownership of the Bank or the Company and the possible affect thereof on
his employment with the Bank; and
WHEREAS, the Bank wishes to additionally mitigate the fears of the
Executive regarding a potential ownership change, so as to avoid any
negative effect on his performance of services to the Bank, and in that
interest the Bank desires to afford certain additional protections to the
Executive upon the occurrence of certain events as specified herein.
NOW, THEREFORE, to further the above recited corporate objective, and
for other good and valuable consideration, the receipt and adequacy of
which each party hereby acknowledges, the Bank and the Executive agree as
follows:
1. (a) If, at any time while the Executive is a full-time officer of the
Bank or the Company, there is a "Change of Control" of the Bank or the
Company, the Executive shall be entitled to receive a severance
payment (the "Severance Amount") in consideration of services
previously rendered to the Bank. The Severance Amount shall be made
as a lump sum cash payment and shall be equal to three (3) times the
greater of the following: (A) the Executive's compensation from the
Bank and the Company (the "Compensation") for services rendered for
the last full calendar year immediately preceding the Change of
Control, or (B) the Executive's average annual Compensation with
respect to the three (3) most recent calendar years ending before the
date on which the Change of Control occurs. Compensation as described
above shall include the amount of base salary and bonus, if any, paid
to the Executive for services rendered for the time period in question
pursuant to the Employment Agreement, including any and all of said
amounts as may have been deferred by the Executive under Bank deferral
plans, if any, and shall include long-term compensation which, by its
terms, is accelerated upon a Change of Control or, if not, shall by
this Agreement be so accelerated and determined as the present value
(determined at the discount rate provided in Section 280G(d)(4) of the
Internal Revenue Code of 1986, as amended, or its successor provision)
of any cash or non-cash long-term incentive compensation (whether in
the form of performance units or otherwise) previously awarded to the
Executive but not yet paid, measured at the time of award with the
assumption that the award would be 100% earned over the performance
period. In addition to the above, Executive shall receive or be paid
(1) an amount equal to the aggregate amounts that Bank would have
contributed on behalf of Executive under Executive's Deferred
Profit Sharing or 401-K Plan, if any such plan shall be in effect
upon the Change of Control, for an additional three-year period
from the Change of Control (plus estimated earnings thereon) as
if Executive had continued in the employ of Bank for that period
and made contributions under said plan at a rate, as a percentage
of salary, equal to the average rate at which Executive had made
contributions to said plan in the period, not exceeding three (3)
fiscal years of Bank, preceding the Change of Control;
(2) supplemental pension benefits equal to the difference between (i)
the annual pension benefit that would have been payable to
Executive under the Retirement Plan of Bank (the "Plan") if
Executive had been continued in the employ of Bank for an
additional three-year period from the Change of Control and had
received compensation at least equal to that determined pursuant
to Paragraph 1(a) above, and (ii) the annual pension benefit
actually payable to Executive under the Plan, such supplemental
pension benefits to be payable at the same time and in the same
manner as benefits under the Plan; and
(3) for a period of three years following the Change of Control,
Executive shall also continue to participate in all life, health,
disability and similar insurance plans and programs of Bank to
the extent that such continued participation is possible under
the general terms and provisions of such plans and programs, with
Bank and Executive paying the same portion of the cost of each
such plan or program as existed at the time of Executive's
termination. In the event that Executive's continued
participation in any group plans and programs is not permitted,
then in lieu thereof, Bank shall acquire, with the same cost
sharing, individual insurance policies providing comparable
coverage for Executive; provided that Bank shall not be obligated
to pay for any such individual coverage more than three (3) times
Bank's cost of such group coverage; and provided further, if any
such individual coverage is unavailable, then Bank shall pay to
Executive annually for such remaining three year period an amount
equal to the sum of the average annual contributions, payments,
credits, or allocations made by Bank for such insurance on
Executive's behalf over the three (3) fiscal years of Bank
preceding the Change of Control, which amount shall be pro-rated
for any fraction of a year. The foregoing subparagraphs (1), (2)
and (3) shall also be considered part of the "Severance Amount"
for the purposes of this Agreement.
(b) It is expressly understood and agreed that payment of the
Severance Amount may include amounts which are deemed to be "excess
parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended. In that event, the Bank agrees to pay Executive an
additional cash payment (the "Additional Payment") in the amount of
the excise tax imposed pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended, on the Executive for that portion of
the Severance Amount which is deemed to be an excess parachute payment
(if any). The Additional Payment shall be determined and paid once
upon the determination of the Severance Amount under Paragraph 1(a)
above.
(c) Payment of the Severance Amount and Additional Payment under this
Section 1 shall be paid in full by Bank, Company and/or its or their
successors or assigns within ninety (90) days following the date of
the Change of Control and shall not be reduced by any compensation
which the Executive may receive from the Bank or the Company or from
other employment with another employer should Executive's employment
with the Bank or the Company terminate.
(d) "Change of Control" shall be deemed to have occurred if:
(1) a Person (as defined below) directly or indirectly or acting
through one (1) or more other persons owns, controls, or has
power to vote ten percent (10%) or more of the voting common
stock of the Company, or a Person other than the Company
directly or indirectly or acting through one (1) or more
other persons owns, controls, or has the power to vote ten
percent (10%) or more of the voting common stock of the
Bank; or
(2) a Person acquires or agrees to acquire all or substantially
all of the assets and business of the Bank or the Company;
or
(3) a Person controls in any manner the election of a majority
of the directors of the Company or a Person other than the
Company controls in any manner the election of a majority of
the directors of the Bank; or
(4) the Board of Directors of the Company determines that a
Person directly or indirectly exercises a controlling
influence over the management or policies of Company.
Notwithstanding the foregoing, a "Change-in-Control" shall not be
deemed to have occurred if (i) a majority of the directors of the
Company or the Bank, as applicable, in office prior to the events
described in (a), (b) or (c) above shall so vote not later than thirty
(30) days following the event and (ii) the Employee shall so agree in
writing.
A "Person" shall include a natural person, corporation, or other
entity. When two or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of Bank capital stock, such partnership,
syndicate or group shall be considered a Person. Beneficial ownership
shall be determined under the then current provisions of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d-
3, or their successor provision(s). The filing of a Form 13D or 13G
by a Person shall not in and of itself be deemed a Change of Control.
(e) If, after a Change of Control of the Bank or the Company, the
Executive incurs any fees and expenses of counsel to enforce this
Agreement, the Bank agrees to pay such fees and expenses to the
Executive. The Executive's choice of counsel and his/her decision to
retain counsel shall be in his/her discretion, provided any such fees
and expenses must be reasonable.
(f) Notwithstanding any other provision of this Agreement or of any
other agreement, understanding or compensation plan, the Bank shall
not be obligated to pay any amounts the payment of which violate
restrictions imposed, or which may in the future be imposed, on such
payments by the Bank pursuant to Section 18(k)(1) of the Federal
Deposit Insurance Act, or any regulations or orders which are or may
be promulgated thereunder; nor shall any payments be made which would
constitute an "unsafe or unsound banking practice" pursuant to 12
U.S.C. Section 1818(b).
(g) The calculation of the Severance Amount shall be performed by the
Bank's independent auditing firm at the time of Change of Control, or
such other qualified party in the Bank's discretion; provided that, if
the Severance Amount so determined is later challenged successfully by
the Executive, by court decision or negotiation with the Bank, the
Bank shall be additionally liable for all costs and expenses incurred
by the Executive in that challenge, including reasonable attorney
fees.
(h) This Agreement shall survive and continue for as long as the
Executive is a full-time officer of the Bank or the Company.
(i) This Agreement does not constitute an agreement for the
employment of the Executive and shall not give the Executive any right
to be retained in the service or employ of the Bank or the Company.
2. This Agreement contains the entire agreement between the parties with
respect to the subject matter herein, and there are no other repre-
sentations, warranties, conditions or agreements relating to the
subject matter of this Agreement.
3. This Agreement may not be changed orally but only by an agreement in
writing duly executed on behalf of the party against which enforcement
of any waiver, change, modification, consent or discharge is sought.
4. This Agreement shall be binding upon and inure to the benefit of the
Bank, Company and the Executive and their respective successors,
assigns, heirs and legal representatives. Without otherwise limiting
the foregoing, "Bank" and "Company" as used herein shall refer to any
successor institution whether by merger, consolidation, acquisition or
otherwise.
5. Each of the parties agrees to execute all further instruments and
documents and to take all further action as the other party may
reasonably request in order to effectuate the terms and purposes of
this Agreement.
6. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same instrument.
7. This Agreement shall be construed pursuant to and in accordance with
the laws of the State of Connecticut.
8. If any term or provision of this Agreement is held or deemed to be
invalid or unenforceable, in whole or in part, by a court of competent
jurisdiction, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By_____________________________________
Name:
Title:
EXECUTIVE
__________________________________
Richard S. Mansfield
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October
, 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a
banking corporation organized and existing by virtue of the laws of the
State of Connecticut (the "Bank"), and JOHN G. MEDVEC (the "Executive").
WHEREAS, the Executive is currently rendering services to the Bank
pursuant to an Employment Agreement dated August 1, 1986 containing "change
in control" provisions, as amended and restated by an Amended and Restated
Employment Agreement dated as of the date hereof which does not contain
"change in control" provisions (the "Employment Agreement");
WHEREAS, the Bank considers the performance and dedication of its
management team to be significant for its overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Bank and
its sole shareholder, People's Savings Financial Corp. (the "Company");
WHEREAS, the banking industry is a dynamic one with independent public
institutions subject to unexpected changes in ownership;
WHEREAS, the performance by the Executive of services to the Bank may
be negatively affected by his uncertainty over the possibility of a change
in ownership of the Bank or the Company and the possible affect thereof on
his employment with the Bank; and
WHEREAS, the Bank wishes to additionally mitigate the fears of the
Executive regarding a potential ownership change, so as to avoid any
negative effect on his performance of services to the Bank, and in that
interest the Bank desires to afford certain additional protections to the
Executive upon the occurrence of certain events as specified herein.
NOW, THEREFORE, to further the above recited corporate objective, and
for other good and valuable consideration, the receipt and adequacy of
which each party hereby acknowledges, the Bank and the Executive agree as
follows:
1. (a) If, at any time while the Executive is a full-time officer of the
Bank or the Company, there is a "Change of Control" of the Bank or the
Company, the Executive shall be entitled to receive a severance
payment (the "Severance Amount") in consideration of services
previously rendered to the Bank. The Severance Amount shall be made
as a lump sum cash payment and shall be equal to three (3) times the
greater of the following: (A) the Executive's compensation from the
Bank and the Company (the "Compensation") for services rendered for
the last full calendar year immediately preceding the Change of
Control, or (B) the Executive's average annual Compensation with
respect to the three (3) most recent calendar years ending before the
date on which the Change of Control occurs. Compensation as described
above shall include the amount of base salary and bonus, if any, paid
to the Executive for services rendered for the time period in question
pursuant to the Employment Agreement, including any and all of said
amounts as may have been deferred by the Executive under Bank deferral
plans, if any, and shall include long-term compensation which, by its
terms, is accelerated upon a Change of Control or, if not, shall by
this Agreement be so accelerated and determined as the present value
(determined at the discount rate provided in Section 280G(d)(4) of the
Internal Revenue Code of 1986, as amended, or its successor provision)
of any cash or non-cash long-term incentive compensation (whether in
the form of performance units or otherwise) previously awarded to the
Executive but not yet paid, measured at the time of award with the
assumption that the award would be 100% earned over the performance
period. In addition to the above, Executive shall receive or be paid
(1) an amount equal to the aggregate amounts that Bank would have
contributed on behalf of Executive under Executive's Deferred
Profit Sharing or 401-K Plan, if any such plan shall be in effect
upon the Change of Control, for an additional three-year period
from the Change of Control (plus estimated earnings thereon) as
if Executive had continued in the employ of Bank for that period
and made contributions under said plan at a rate, as a percentage
of salary, equal to the average rate at which Executive had made
contributions to said plan in the period, not exceeding three (3)
fiscal years of Bank, preceding the Change of Control;
(2) supplemental pension benefits equal to the difference between (i)
the annual pension benefit that would have been payable to
Executive under the Retirement Plan of Bank (the "Plan") if
Executive had been continued in the employ of Bank for an
additional three-year period from the Change of Control and had
received compensation at least equal to that determined pursuant
to Paragraph 1(a) above, and (ii) the annual pension benefit
actually payable to Executive under the Plan, such supplemental
pension benefits to be payable at the same time and in the same
manner as benefits under the Plan; and
(3) for a period of three years following the Change of Control,
Executive shall also continue to participate in all life, health,
disability and similar insurance plans and programs of Bank to
the extent that such continued participation is possible under
the general terms and provisions of such plans and programs, with
Bank and Executive paying the same portion of the cost of each
such plan or program as existed at the time of Executive's
termination. In the event that Executive's continued
participation in any group plans and programs is not permitted,
then in lieu thereof, Bank shall acquire, with the same cost
sharing, individual insurance policies providing comparable
coverage for Executive; provided that Bank shall not be obligated
to pay for any such individual coverage more than three (3) times
Bank's cost of such group coverage; and provided further, if any
such individual coverage is unavailable, then Bank shall pay to
Executive annually for such remaining three year period an amount
equal to the sum of the average annual contributions, payments,
credits, or allocations made by Bank for such insurance on
Executive's behalf over the three (3) fiscal years of Bank
preceding the Change of Control, which amount shall be pro-rated
for any fraction of a year. The foregoing subparagraphs (1), (2)
and (3) shall also be considered part of the "Severance Amount"
for the purposes of this Agreement.
(b) It is expressly understood and agreed that payment of the
Severance Amount may include amounts which are deemed to be "excess
parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended. In that event, the Bank agrees to pay Executive an
additional cash payment (the "Additional Payment") in the amount of
the excise tax imposed pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended, on the Executive for that portion of
the Severance Amount which is deemed to be an excess parachute payment
(if any). The Additional Payment shall be determined and paid once
upon the determination of the Severance Amount under Paragraph 1(a)
above.
(c) Payment of the Severance Amount and Additional Payment under this
Section 1 shall be paid in full by Bank, Company and/or its or their
successors or assigns within ninety (90) days following the date of
the Change of Control and shall not be reduced by any compensation
which the Executive may receive from the Bank or the Company or from
other employment with another employer should Executive's employment
with the Bank or the Company terminate.
(d) "Change of Control" shall be deemed to have occurred if:
(1) a Person (as defined below) directly or indirectly or acting
through one (1) or more other persons owns, controls, or has
power to vote ten percent (10%) or more of the voting common
stock of the Company, or a Person other than the Company
directly or indirectly or acting through one (1) or more
other persons owns, controls, or has the power to vote ten
percent (10%) or more of the voting common stock of the
Bank; or
(2) a Person acquires or agrees to acquire all or substantially
all of the assets and business of the Bank or the Company;
or
(3) a Person controls in any manner the election of a majority
of the directors of the Company or a Person other than the
Company controls in any manner the election of a majority of
the directors of the Bank; or
(4) the Board of Directors of the Company determines that a
Person directly or indirectly exercises a controlling
influence over the management or policies of Company.
Notwithstanding the foregoing, a "Change-in-Control" shall not be
deemed to have occurred if (i) a majority of the directors of the
Company or the Bank, as applicable, in office prior to the events
described in (a), (b) or (c) above shall so vote not later than thirty
(30) days following the event and (ii) the Employee shall so agree in
writing.
A "Person" shall include a natural person, corporation, or other
entity. When two or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of Bank capital stock, such partnership,
syndicate or group shall be considered a Person. Beneficial ownership
shall be determined under the then current provisions of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d-
3, or their successor provision(s). The filing of a Form 13D or 13G
by a Person shall not in and of itself be deemed a Change of Control.
(e) If, after a Change of Control of the Bank or the Company, the
Executive incurs any fees and expenses of counsel to enforce this
Agreement, the Bank agrees to pay such fees and expenses to the
Executive. The Executive's choice of counsel and his/her decision to
retain counsel shall be in his/her discretion, provided any such fees
and expenses must be reasonable.
(f) Notwithstanding any other provision of this Agreement or of any
other agreement, understanding or compensation plan, the Bank shall
not be obligated to pay any amounts the payment of which violate
restrictions imposed, or which may in the future be imposed, on such
payments by the Bank pursuant to Section 18(k)(1) of the Federal
Deposit Insurance Act, or any regulations or orders which are or may
be promulgated thereunder; nor shall any payments be made which would
constitute an "unsafe or unsound banking practice" pursuant to 12
U.S.C. Section 1818(b).
(g) The calculation of the Severance Amount shall be performed by the
Bank's independent auditing firm at the time of Change of Control, or
such other qualified party in the Bank's discretion; provided that, if
the Severance Amount so determined is later challenged successfully by
the Executive, by court decision or negotiation with the Bank, the
Bank shall be additionally liable for all costs and expenses incurred
by the Executive in that challenge, including reasonable attorney
fees.
(h) This Agreement shall survive and continue for as long as the
Executive is a full-time officer of the Bank or the Company.
(i) This Agreement does not constitute an agreement for the
employment of the Executive and shall not give the Executive any right
to be retained in the service or employ of the Bank or the Company.
2. This Agreement contains the entire agreement between the parties with
respect to the subject matter herein, and there are no other repre-
sentations, warranties, conditions or agreements relating to the
subject matter of this Agreement.
3. This Agreement may not be changed orally but only by an agreement in
writing duly executed on behalf of the party against which enforcement
of any waiver, change, modification, consent or discharge is sought.
4. This Agreement shall be binding upon and inure to the benefit of the
Bank, Company and the Executive and their respective successors,
assigns, heirs and legal representatives. Without otherwise limiting
the foregoing, "Bank" and "Company" as used herein shall refer to any
successor institution whether by merger, consolidation, acquisition or
otherwise.
5. Each of the parties agrees to execute all further instruments and
documents and to take all further action as the other party may
reasonably request in order to effectuate the terms and purposes of
this Agreement.
6. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same instrument.
7. This Agreement shall be construed pursuant to and in accordance with
the laws of the State of Connecticut.
8. If any term or provision of this Agreement is held or deemed to be
invalid or unenforceable, in whole or in part, by a court of competent
jurisdiction, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By_____________________________________
Name:
Title:
EXECUTIVE
__________________________________
John G. Medvec
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October
, 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a
banking corporation organized and existing by virtue of the laws of the
State of Connecticut (the "Bank"), and TERESA SASINSKI (the "Executive").
WHEREAS, the Executive is currently rendering services to the Bank
pursuant to an at will employment relationship, but also under a Change in
Control Agreement dated September 18, 1991;
WHEREAS, the Bank considers the performance and dedication of its
management team to be significant for its overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Bank and
its sole shareholder, People's Savings Financial Corp. (the "Company");
WHEREAS, the banking industry is a dynamic one with independent public
institutions subject to unexpected changes in ownership;
WHEREAS, the performance by the Executive of services to the Bank may
be negatively affected by his uncertainty over the possibility of a change
in ownership of the Bank or the Company and the possible affect thereof on
his employment with the Bank; and
WHEREAS, the Bank wishes to additionally mitigate the fears of the
Executive regarding a potential ownership change, so as to avoid any
negative effect on his performance of services to the Bank, and in that
interest the Bank desires to afford certain additional protections to the
Executive upon the occurrence of certain events as specified herein.
NOW, THEREFORE, to further the above recited corporate objective, and
for other good and valuable consideration, the receipt and adequacy of
which each party hereby acknowledges, the Bank and the Executive agree as
follows:
1. (a) If, at any time while the Executive is a full-time officer of the
Bank or the Company, there is a "Change of Control" of the Bank or the
Company, the Executive shall be entitled to receive a severance
payment (the "Severance Amount") in consideration of services
previously rendered to the Bank. The Severance Amount shall be made
as a lump sum cash payment and shall be equal to three (3) times the
greater of the following: (A) the Executive's compensation from the
Bank and the Company (the "Compensation") for services rendered for
the last full calendar year immediately preceding the Change of
Control, or (B) the Executive's average annual Compensation with
respect to the three (3) most recent calendar years ending before the
date on which the Change of Control occurs. Compensation as described
above shall include the amount of base salary and bonus, if any, paid
to the Executive for services rendered for the time period in question
pursuant to the Employment Agreement, including any and all of said
amounts as may have been deferred by the Executive under Bank deferral
plans, if any, and shall include long-term compensation which, by its
terms, is accelerated upon a Change of Control or, if not, shall by
this Agreement be so accelerated and determined as the present value
(determined at the discount rate provided in Section 280G(d)(4) of the
Internal Revenue Code of 1986, as amended, or its successor provision)
of any cash or non-cash long-term incentive compensation (whether in
the form of performance units or otherwise) previously awarded to the
Executive but not yet paid, measured at the time of award with the
assumption that the award would be 100% earned over the performance
period. In addition to the above, Executive shall receive or be paid
(1) an amount equal to the aggregate amounts that Bank would have
contributed on behalf of Executive under Executive's Deferred
Profit Sharing or 401-K Plan, if any such plan shall be in effect
upon the Change of Control, for an additional three-year period
from the Change of Control (plus estimated earnings thereon) as
if Executive had continued in the employ of Bank for that period
and made contributions under said plan at a rate, as a percentage
of salary, equal to the average rate at which Executive had made
contributions to said plan in the period, not exceeding three (3)
fiscal years of Bank, preceding the Change of Control;
(2) supplemental pension benefits equal to the difference between (i)
the annual pension benefit that would have been payable to
Executive under the Retirement Plan of Bank (the "Plan") if
Executive had been continued in the employ of Bank for an
additional three-year period from the Change of Control and had
received compensation at least equal to that determined pursuant
to Paragraph 1(a) above, and (ii) the annual pension benefit
actually payable to Executive under the Plan, such supplemental
pension benefits to be payable at the same time and in the same
manner as benefits under the Plan; and
(3) for a period of three years following the Change of Control,
Executive shall also continue to participate in all life, health,
disability and similar insurance plans and programs of Bank to
the extent that such continued participation is possible under
the general terms and provisions of such plans and programs, with
Bank and Executive paying the same portion of the cost of each
such plan or program as existed at the time of Executive's
termination. In the event that Executive's continued
participation in any group plans and programs is not permitted,
then in lieu thereof, Bank shall acquire, with the same cost
sharing, individual insurance policies providing comparable
coverage for Executive; provided that Bank shall not be obligated
to pay for any such individual coverage more than three (3) times
Bank's cost of such group coverage; and provided further, if any
such individual coverage is unavailable, then Bank shall pay to
Executive annually for such remaining three year period an amount
equal to the sum of the average annual contributions, payments,
credits, or allocations made by Bank for such insurance on
Executive's behalf over the three (3) fiscal years of Bank
preceding the Change of Control, which amount shall be pro-rated
for any fraction of a year. The foregoing subparagraphs (1), (2)
and (3) shall also be considered part of the "Severance Amount"
for the purposes of this Agreement.
(b) It is expressly understood and agreed that payment of the
Severance Amount may include amounts which are deemed to be "excess
parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended. In that event, the Bank agrees to pay Executive an
additional cash payment (the "Additional Payment") in the amount of
the excise tax imposed pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended, on the Executive for that portion of
the Severance Amount which is deemed to be an excess parachute payment
(if any). The Additional Payment shall be determined and paid once
upon the determination of the Severance Amount under Paragraph 1(a)
above.
(c) Payment of the Severance Amount and Additional Payment under this
Section 1 shall be paid in full by Bank, Company and/or its or their
successors or assigns within ninety (90) days following the date of
the Change of Control and shall not be reduced by any compensation
which the Executive may receive from the Bank or the Company or from
other employment with another employer should Executive's employment
with the Bank or the Company terminate.
(d) "Change of Control" shall be deemed to have occurred if:
(1) a Person (as defined below) directly or indirectly or acting
through one (1) or more other persons owns, controls, or has
power to vote ten percent (10%) or more of the voting common
stock of the Company, or a Person other than the Company
directly or indirectly or acting through one (1) or more
other persons owns, controls, or has the power to vote ten
percent (10%) or more of the voting common stock of the
Bank; or
(2) a Person acquires or agrees to acquire all or substantially
all of the assets and business of the Bank or the Company;
or
(3) a Person controls in any manner the election of a majority
of the directors of the Company or a Person other than the
Company controls in any manner the election of a majority of
the directors of the Bank; or
(4) the Board of Directors of the Company determines that a
Person directly or indirectly exercises a controlling
influence over the management or policies of Company.
Notwithstanding the foregoing, a "Change-in-Control" shall not be
deemed to have occurred if (i) a majority of the directors of the
Company or the Bank, as applicable, in office prior to the events
described in (a), (b) or (c) above shall so vote not later than thirty
(30) days following the event and (ii) the Employee shall so agree in
writing.
A "Person" shall include a natural person, corporation, or other
entity. When two or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of Bank capital stock, such partnership,
syndicate or group shall be considered a Person. Beneficial ownership
shall be determined under the then current provisions of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d-
3, or their successor provision(s). The filing of a Form 13D or 13G
by a Person shall not in and of itself be deemed a Change of Control.
(e) If, after a Change of Control of the Bank or the Company, the
Executive incurs any fees and expenses of counsel to enforce this
Agreement, the Bank agrees to pay such fees and expenses to the
Executive. The Executive's choice of counsel and his/her decision to
retain counsel shall be in his/her discretion, provided any such fees
and expenses must be reasonable.
(f) Notwithstanding any other provision of this Agreement or of any
other agreement, understanding or compensation plan, the Bank shall
not be obligated to pay any amounts the payment of which violate
restrictions imposed, or which may in the future be imposed, on such
payments by the Bank pursuant to Section 18(k)(1) of the Federal
Deposit Insurance Act, or any regulations or orders which are or may
be promulgated thereunder; nor shall any payments be made which would
constitute an "unsafe or unsound banking practice" pursuant to 12
U.S.C. Section 1818(b).
(g) The calculation of the Severance Amount shall be performed by the
Bank's independent auditing firm at the time of Change of Control, or
such other qualified party in the Bank's discretion; provided that, if
the Severance Amount so determined is later challenged successfully by
the Executive, by court decision or negotiation with the Bank, the
Bank shall be additionally liable for all costs and expenses incurred
by the Executive in that challenge, including reasonable attorney
fees.
(h) This Agreement shall survive and continue for as long as the
Executive is a full-time officer of the Bank or the Company.
(i) This Agreement does not constitute an agreement for the
employment of the Executive and shall not give the Executive any right
to be retained in the service or employ of the Bank or the Company.
2. This Agreement contains the entire agreement between the parties with
respect to the subject matter herein, and there are no other repre-
sentations, warranties, conditions or agreements relating to the
subject matter of this Agreement.
3. This Agreement may not be changed orally but only by an agreement in
writing duly executed on behalf of the party against which enforcement
of any waiver, change, modification, consent or discharge is sought.
4. This Agreement shall be binding upon and inure to the benefit of the
Bank, Company and the Executive and their respective successors,
assigns, heirs and legal representatives. Without otherwise limiting
the foregoing, "Bank" and "Company" as used herein shall refer to any
successor institution whether by merger, consolidation, acquisition or
otherwise.
5. Each of the parties agrees to execute all further instruments and
documents and to take all further action as the other party may
reasonably request in order to effectuate the terms and purposes of
this Agreement.
6. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same instrument.
7. This Agreement shall be construed pursuant to and in accordance with
the laws of the State of Connecticut.
8. If any term or provision of this Agreement is held or deemed to be
invalid or unenforceable, in whole or in part, by a court of competent
jurisdiction, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN
By_____________________________________
Name:
Title:
EXECUTIVE
__________________________________
Teresa Sasinski
<TABLE>
<CAPTION>
People's Savings Financial Corp.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amounts)
Year ended December 31,
<S> <C> <C> <C>
1996 1995 1994
Net income - primary and fully diluted $4,014 $3,389 $3,565
Weighted Average Common Stock and Common
Equivalent Stock
Weighted average common stock outstanding 1,910 1,954 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 45 33 26
Weighted average common stock outstanding
- primary 1,955 1,987 2,022
Weighted average common stock outstanding 1,910 1,954 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 65 35 26
Weighted average common stock outstanding
- fully diluted 1,975 1,989 2,022
Earnings Per Common and Common Equivalent Share
Primary $2.05 $1.71 $1.76
Fully diluted $2.03 $1.70 $1.76
</TABLE>
Subsidiaries of the Registrant
Peoples Savings Bank & Trust
123 Broad Street
New Britain, CT 06053
People's Savings Financial Services, Inc.
123 Broad Street
New Britain, CT 06053
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statements
of People's Savings Financial Corp. and Subsidiary (the "Corporation") on
Form S-8 (File Nos. 33-55936) and 33-55940) of our report dated January 21,
1997, on our audit of the consolidated financial statements of the
Corporation as of December 31, 1996 and 1995, and for the years ended
December 31, 1996, 1995, and 1994, which is incorporated by reference in this
Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand
Hartford, Connecticut
March 18, 1997
POWER OF ATTORNEY
We the undersigned officers and directors of People's Savings Financial
Corp., hereby severally constitute Richard S. Mansfield, and John G. Medvec
and each of them singly, our true and lawful attorneys with full power of
substitution, to sign for us and in our names in the capacities indicated
below, the Annual Report on Form 10-K of People's Savings Financial Corp. for
the fiscal year ended December 31, 1996, and generally to do all such things
in our name and behalf in our capacities as officers and directors to enable
People's Savings Financial Corp. to comply with the provisions of the
Securities Exchange Act of 1934, as amended, all requirements of the
Securities and Exchange Commissioner, and all requirements of any other
applicable law of regulation, hereby ratifying and confirming our signatures
as they may be signed by our said attorneys, or any of them, to said Annual
Report.
Signature Title Date
/s/Richard S. Mansfield President & Chief Executive March 18, 1997
Officer
/s/John G. Medvec Executive Vice President March 18, 1997
/s/Joseph A. Welna Chairman of the Board March 18, 1997
and Director
/s/Robert A. Gryboski Director March 18, 1997
/s/Walter J. Liss Director March 18, 1997
/s/Robert A. Story Director March 18, 1997
/s/Walter D. Blogoslawski Director March 18, 1997
Stanley P. Filewicz Director March 18, 1997
/s/Roland L. LeClerc Director March 18, 1997
Chester S. Sledzik Director March 18, 1997
/s/Henry Poplaski Director March 18, 1997
/s/A. Richard Puskarz Director March 18, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's December 31, 1996 audited balance sheet, income statement and cash
flow statement, and notes threto, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,113,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,509,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 171,667,000
<INVESTMENTS-CARRYING> 28,513,000
<INVESTMENTS-MARKET> 28,015,000
<LOANS> 258,833,000
<ALLOWANCE> 1,577,000
<TOTAL-ASSETS> 482,394,000
<DEPOSITS> 358,060,000
<SHORT-TERM> 71,250,000
<LIABILITIES-OTHER> 6,883,000
<LONG-TERM> 0
0
0
<COMMON> 2,543,000
<OTHER-SE> 43,658,000
<TOTAL-LIABILITIES-AND-EQUITY> 482,394,000
<INTEREST-LOAN> 19,557,000
<INTEREST-INVEST> 10,479,000
<INTEREST-OTHER> 485,000
<INTEREST-TOTAL> 30,521,000
<INTEREST-DEPOSIT> 14,436,000
<INTEREST-EXPENSE> 16,428,000
<INTEREST-INCOME-NET> 14,093,000
<LOAN-LOSSES> 938,000
<SECURITIES-GAINS> (20,000)
<EXPENSE-OTHER> 9,814,000
<INCOME-PRETAX> 5,996,000
<INCOME-PRE-EXTRAORDINARY> 5,996,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,014,000
<EPS-PRIMARY> 2.05
<EPS-DILUTED> 2.03
<YIELD-ACTUAL> 3.41
<LOANS-NON> 1,549,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,578,000
<CHARGE-OFFS> 998,000
<RECOVERIES> 59,000
<ALLOWANCE-CLOSE> 1,577,000
<ALLOWANCE-DOMESTIC> 1,327,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 250,000
</TABLE>
