<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 1996
------------------
Commission File Number 0-17859
-------
NEW HAMPSHIRE THRIFT
BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
State of Delaware 02-0430695
(State of Incorporation) (IRS Employer I.D. Number)
New London, New Hampshire 03257
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 603-526-2116
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ---
The number of shares outstanding of each of the issuer's classes of common
stock, $.01 par value per share, as of October 29, 1996 was 1,704,982.
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1 Financial Statements:
Consolidated Statements of Financial Condition - 1
September 30, 1996 and December 31, 1995
Consolidated Statements of Operations - 2
For the Three Months Ended September 30, 1996 and 1995
and the Nine Months Ended September 30, 1996 and 1995
Consolidated Statements of Changes In Shareholders' Equity - 3
For the Three Months Ended September 30, 1996 and 1995
and the Nine Months Ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows - 4
For the Nine Months Ended September 30, 1996 and 1995
Notes To Consolidated Financial Statements - 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations - 13
PART II. OTHER INFORMATION 18
Item 1 Legal Proceedings 18
Item 2 Changes in Securities 18
Item 3 Defaults Upon Senior Securities 18
Item 4 Submission of Matters to a Vote of Common 18
Shareholders
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
<PAGE>
Part I. Item I. NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,400,783 $ 7,544,297
Federal funds sold 65,000 3,449,000
Federal Home Loan Bank term deposit 4,000,000 -
Securities held to maturity 368,054 393,054
Securities available for sale 24,901,876 25,718,260
Other investments 2,307,557 2,303,285
Loans held for sale 467,163 3,095,971
Loans receivable, net 214,288,694 205,073,080
Accrued interest receivable 1,367,442 1,433,882
Bank premises and equipment, net 5,741,409 5,955,394
Real estate owned and property acquired in
settlement of loans 936,605 984,185
Non-earning assets 1,067,319 297,172
Other assets 1,104,582 1,968,497
------------ ------------
Total assets $264,016,484 $258,216,077
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $206,606,176 $199,970,921
Repurchase agreements 4,802,328 9,552,825
Federal funds purchased 166,000 -
Advances from Federal Home Loan Bank 29,626,169 26,936,168
Accrued expense and other liabilities 3,615,210 2,212,158
------------- ------------
Total liabilities 244,815,883 238,672,072
------------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value - -
Common stock, $.01 par value, 1,698,136 shares
outstanding as of September 30, 1996 and 1,689,503
as of December 31, 1995 21,473 21,473
Paid-in capital 13,187,360 13,160,382
Retained earnings 8,624,982 8,673,504
Unrealized gain (loss) on securities available for sale (262,036) 97,594
------------ -------------
21,571,779 21,952,953
Treasury stock, at cost, 449,146 shares as of
September 30, 1996 and 457,779 as of December 31, 1995 (2,371,178) (2,408,948)
------------ ------------
Total shareholders' equity 19,200,601 19,544,005
------------ ------------
Total liabilities and shareholders' equity $264,016,484 $258,216,077
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
3
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1996 and 1995
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C>
Interest income
Interest on loans $ 4,247,487 $ 4,121,559 $ 12,491,469 $ 11,708,722
Interest and dividends on investments 483,977 371,444 1,437,520 1,134,455
----------- ----------- ------------ ------------
Total interest income 4,731,464 4,493,003 13,928,989 12,843,177
----------- ----------- ------------ ------------
Interest expense
Interest paid to depositors 2,178,739 2,083,963 6,377,724 5,937,224
Interest on advances and other borrowed money 444,645 369,774 1,300,465 1,068,580
----------- ----------- ------------ ------------
Total interest expense 2,623,384 2,453,737 7,678,189 7,005,804
----------- ----------- ------------ ------------
Net interest income 2,108,080 2,039,266 6,250,800 5,837,373
Provision for loan losses, net 276,541 247,924 1,020,732 827,924
----------- ----------- ------------ ------------
Net interest income after provision for
loan losses 1,831,539 1,791,342 5,230,068 5,009,449
----------- ----------- ------------ ------------
Non-interest income
Customer service fees 275,217 232,697 838,979 704,190
Loan origination fees 23,845 12,726 65,907 44,792
Net gain (loss) on sale of securities and
bank property 19,378 (53,070) 279,251 (31,493)
Rental income 56,281 53,250 167,673 164,104
Brokerage service income 29,480 21,473 137,117 80,950
Other income 539 18,139 2,505 34,374
----------- ----------- ------------ ------------
Total other operating income 404,740 285,215 1,491,432 996,917
----------- ----------- ------------ ------------
Other operating expenses
Salaries and employee benefits 823,212 740,903 2,382,117 2,266,819
Occupancy expenses 279,155 277,342 934,157 880,808
Advertising and promotion 53,063 32,930 117,808 132,846
Depositors insurance 113,306 108,745 341,081 328,510
Special FDIC assessment 995,000 - 995,000 -
Outside services 90,844 87,793 273,225 249,235
Other expenses 243,507 274,725 803,691 926,928
----------- ----------- ------------ ------------
Total other operating expenses 2,598,087 1,522,438 5,847,079 4,785,146
----------- ----------- ------------ ------------
Income (loss) before provision for income taxes (361,808) 554,119 874,421 1,221,220
Provision for (benefit from) income taxes (119,000) 183,000 289,000 403,000
----------- ----------- ------------ ------------
Net income (loss) $ (242,808) $ 371,119 $ 585,421 $ 818,220
=========== =========== ============ ============
Earnings (loss) per common share $ (.14) $ .22 $ .34 $ .48
=========== =========== ============ ============
Dividends declared per common share $ .125 $ .125 $ .375 $ .375
=========== =========== ============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
4
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months Ended September 30, 1996 and 1995
and the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
COMMON STOCK
Balance, beginning and end of period $ 21,473 $ 21,473 $ 21,473 $ 21,473
============ ============ ============ ============
PAID-IN CAPITAL
Balance, beginning of period $13,167,570 $13,105,304 $13,160,382 $13,103,404
Change during the period 19,790 (96,168) 26,978 (94,268)
------------ ------------ ------------ ------------
Balance, end of period $13,187,360 $13,009,136 $13,187,360 $13,009,136
============ ============ ============ ============
RETAINED EARNINGS
Balance, beginning of period $ 9,079,266 $ 8,297,372 $ 8,673,504 $ 8,268,094
Net income (242,808) 371,119 585,421 818,220
Cash dividends paid (211,476) (210,402) (633,943) (628,225)
------------ ------------ ------------ ------------
Balance, end of period $ 8,624,982 $ 8,458,089 $ 8,624,982 $ 8,458,089
============ ============ ============ ============
UNREALIZED GAIN (LOSS) ON SECURITIES
AVAILABLE FOR SALE
Balance, beginning of period $ (394,297) $ (141,791) $ 97,594 $ (728,667)
Adjustment to fair value 199,261 21,526 (546,630) 306,002
Effect of change in deferred taxes (67,000) 21,000 187,000 323,400
------------ ------------ ------------ ------------
Balance, end of period $ (262,036) $ (99,265) $ (262,036) $ (99,265)
============ ============ ============ ============
TREASURY STOCK
Balance, beginning of period $(2,398,885) $(2,408,770) $(2,408,948) $(2,411,430)
Exercise of stock options (6,333
shares at September 30, 1996 and
28,226 shares at September 30, 1995) 27,707 120,829 37,770 123,489
------------ ------------ ------------ ------------
Balance, end of period $ (2,371,178) $ (2,287,941) $ (2,371,178) $ (2,287,941)
============= ============= ============= =============
</TABLE>
The accompanying note to consolidated financial statements
are an integral part of these statements.
5
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 585,421 $ 818,220
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 338,969 323,134
Loans originated for sale (10,891,780) (10,120,144)
Proceeds from sale of loans 10,847,663 10,115,225
Loss from sale of loans 44,117 4,919
Loss from sale of debt securities available for sale 667 4,199
Loss from sale of equity securities available for sale 10,000 7,772
(Gain) loss from sale of bank premises and equipment (253,497) 14,603
Provision for loan losses 1,020,732 827,924
Provision for deferred taxes - (64,200)
(Increase) decrease in accrued interest and other assets 967,492 (739,385)
Decrease in deferred loan fees (62,841) (91,174)
Increase in accrued expenses and other liabilities 1,614,130 1,559,536
------------ -------------
Net cash provided by operating activities 4,221,073 2,660,629
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (201,487) (484,867)
Proceeds from sale of bank premises and equipment 330,000 84,050
Proceeds from sale of debt securities available for sale 2,459,886 2,889,616
Proceeds from sale of equity securities available for sale 300,000 448,414
Principal reductions on securities held to maturity 25,000 25,000
Purchase of securities available for sale (5,040,209) (4,530,270)
Purchase of Federal Home Loan Bank term deposit (4,000,000) -
Purchase of Federal Home Loan Bank Stock - (247,000)
Maturities of securities available for sale 2,498,000 1,300,000
Net increase in loans to customers (7,544,697) (15,963,068)
(Increase) decrease in non-earning assets (770,147) 1,191,970
Decrease in real estate owned 47,580 120,466
------------ ------------
Net cash used in investing activities (11,896,074) (15,165,689)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits and repurchase agreements 1,884,758 4,603,900
Increase in advances from Federal Home Loan Bank 2,861,001 7,348,361
Net change in other borrowed money (29,077) (28,496)
Dividends paid (633,943) (628,225)
Exercise of stock options 64,748 29,221
------------ ------------
Net cash provided by financing activities 4,147,487 11,324,761
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,527,514) (1,180,299)
CASH AND CASH EQUIVALENTS, beginning of period 10,993,297 8,253,588
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 7,465,783 $ 7,073,289
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposit accounts $ 6,385,103 $ 5,884,438
Interest on advances and other borrowed money 1,300,756 1,006,568
------------ ------------
Total interest paid $ 7,685,859 $ 6,891,006
============ ============
Income taxes, net $ 264,332 $ 297,162
============ ============
Supplemental disclosure of noncash investing and financing activities:
Transfers from loans to real estate acquired through foreclosure $ 200,000 $ 280,000
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
6
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and December 31, 1995
1. Summary of significant accounting policies:
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of New Hampshire Thrift Bancshares, Inc. (NHTB or Company, a
unitary holding company), Lake Sunapee Bank, fsb (LSB), Lake Sunapee Group,
Inc. (LSGI), and Lake Sunapee Financial Services Corp. (LSFSC). LSB is owned
by the holding company and the other entities are wholly-owned subsidiaries
of LSB. All significant intercompany accounts and transactions have been
eliminated. The financial statements include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the results
of operations for the three months and the nine months ended September 30,
1996 and 1995.
EARNINGS PER SHARE - Earnings per share are calculated using the weighted
average number of shares outstanding at the end of the period plus common
stock equivalents, as appropriate, resulting from the granting of incentive
stock options. Common stock equivalents are determined using the treasury
method. Common stock equivalents are included in the computation of earnings
per share if they have a dilutive effect. As of September 30, 1996 and 1995,
there was a dilutive effect from stock options. The number of shares used in
computing earnings per share was 1,708,097 and 1,694,091 for the periods
ended September 30, 1996 and 1995, respectively.
CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, the Bank
considers federal funds sold and due from banks to be cash equivalents.
TREASURY STOCK - Treasury Stock is accounted for at cost when purchased.
Sales of Treasury Stock are on a first in first out basis at cost. Any gain
on the sale of Treasury Stock is recorded to Paid-in Capital.
MORTGAGE SERVICING RIGHTS - Effective January 1, 1996, Lake Sunapee Bank,
fsb recorded as a separate asset the rights to service mortgage loans for
others according to FAS No. 122 "Accounting for Mortgage Servicing Rights."
The accounting standard is effective for loans sold after December 31, 1995.
The mortgage servicing rights (MSR's) are valued at the lower of cost or
market on an aggregate basis. The MSR's are amortized on a straight-line
basis over the anticipated life of the related loans.
7
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and December 31, 1995
2. Securities
The amortized cost and appropriate market value of securities are
summarized as follows:
<TABLE>
<CAPTION>
September 30, 1996
-------------------------------------------------
Gross Gross
Fair Unrealized Unrealized Amortized
Value Gain Loss Cost
----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Held to Maturity:
Bonds and notes -
Municipal bonds $ 368,054 $ - $ - $ 368,054
-------------------------------------------------
Total held to maturity 368,054 - - 368,054
-------------------------------------------------
Available for Sale:
Bonds and notes -
U. S. Treasury Notes 12,817,028 19,002 151,861 12,949,887
U. S. Government, including agencies 3,211,059 16,042 54,713 3,249,731
Other bonds and debentures 7,618,261 14,770 126,954 7,730,445
-------------------------------------------------
23,646,348 49,815 333,529 23,930,062
Equity securities 1,255,528 26,200 140,522 1,369,850
-------------------------------------------------
Total available for sale 24,901,876 76,015 474,051 25,299,912
-------------------------------------------------
Investments at cost:
Federal Home Loan Bank Stock 1,861,000 - - 1,861,000
Other securities 446,557 - - 446,557
-------------------------------------------------
Total investments at cost 2,307,557 - - 2,307,557
-------------------------------------------------
Total securities $27,577,487 $76,015 $474,051 $27,975,523
=================================================
December 31, 1995
-------------------------------------------------
Gross Gross
Fair Unrealized Unrealized Amortized
Value Gain Loss Cost
-------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity:
Bonds and notes -
Municipal bonds $ 393,054 $ - $ - $ 393,054
-------------------------------------------------
Total held to maturity 393,054 - - 393,054
-------------------------------------------------
Available for Sale:
Bonds and notes -
U. S. Treasury Notes 12,139,529 147,900 3,166 11,994,795
U. S. Government, including agencies 2,724,130 33,249 40 2,690,921
Other bonds and debentures 9,352,476 104,119 38,416 9,286,773
-------------------------------------------------
24,216,135 285,268 41,622 23,972,489
Equity securities 1,502,125 11,750 106,800 1,597,175
-------------------------------------------------
Total available for sale 25,718,260 297,018 148,422 25,569,664
-------------------------------------------------
Investments at cost:
Federal Home Loan Bank Stock 1,861,000 - - 1,861,000
Other securities 442,285 - - 442,285
-------------------------------------------------
Total investments at cost 2,303,285 - - 2,303,285
-------------------------------------------------
Total securities $28,414,599 $297,018 $148,422 $28,266,003
=================================================
</TABLE>
8
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
3. Loans
Loans consisted of the following as of:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Real estate loans -
Conventional $ 183,010,796 $ 175,130,966
Construction 1,739,060 2,456,763
-------------- --------------
184,749,856 177,587,729
Less: Unadvanced portion 1,409,864 1,434,258
-------------- --------------
Total real estate loans 183,339,992 176,153,471
Collateral loans 21,823,329 19,524,706
Consumer loans 4,557,459 5,025,818
Commercial and municipal loans 7,821,466 9,301,028
Other loans 305,943 671,302
-------------- --------------
Total loans 217,848,188 210,676,325
Less: Reserve for loan losses 1,705,811 1,828,060
Deferred loan origination fees 319,201 382,042
Non-earning assets 1,067,319 297,172
-------------- --------------
Net loans $ 214,755,857 $ 208,169,051
============== ==============
</TABLE>
A summary of activity in the reserve for loan loss account consisted of the
following as of:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
BALANCE, beginning of period $ 1,828,060 $ 2,752,885
-------------- --------------
Loans charged-off:
Real estate loans -
Conventional 412,773 141,541
Construction 649,274 1,014,670
Collateral and consumer loans 19,328 25,568
Commercial and municipal loans 75,424 913,441
-------------- --------------
Total charged-off loans 1,156,799 2,095,220
-------------- --------------
Recoveries:
Real estate loans -
Conventional 5,163 3,300
Collateral and consumer loans 7,845 2,099
Commercial and municipal loans 810 1,286
-------------- --------------
Total recoveries 13,818 6,685
-------------- --------------
Charged-off loans, net of recoveries 1,142,981 2,088,535
-------------- --------------
Provision for loan losses charged to income 1,020,732 1,163,710
-------------- --------------
BALANCE, end of period $ 1,705,811 $ 1,828,060
============== ==============
Ratio of net charged-off loans during the period
to average loans outstanding during the period 0.53% 1.02%
============== ==============
</TABLE>
9
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
3. Loans (continued):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Non-earning assets $ 1,069,400 $ 297,172
Amount of interest income which would have been earned 65,295 55,864
Amount of interest income that was included in net income 12,876 13,553
Troubled debt restructured 477,258 445,417
In addition to non-earning assets, non-accrual
loans included the following amount of delinquent loans 427,941 1,144,293
Effect of FASB No. 66:
Loans reclassified to real estate owned $ 364,354 $ 370,672
Interest income reduced by 19,604 23,063
Impaired loans:
Average recorded investment in impaired loans $ 704,508 $ 934,829
Investment in impaired loans, end of period 491,670 1,452,049
Portion of valuation allowance allocated to impaired loans 49,727 654,663
Net balance of impaired loans 441,943 797,386
Interest income recognized on impaired loans 25,972 102,449
Interest income on impaired loans on cash basis 23,081 97,401
</TABLE>
There are no impaired loans which do not have a valuation allowance assigned to
them.
Interest income on impaired loans is recognized using the accrual basis
accounting method when the impaired loan is less than 90 days past due and has
not been reclassified to non-accrual status. Interest income on impaired loans
over 90 days past due and on loans placed on non-accrual status is recognized on
the cash basis method. Cash receipts on impaired loans are recorded as both
interest income and a reduction in the impaired loan balance consistent with the
terms of the underlying contractual agreement. The net balance of impaired loans
represents the aggregate fair value or present value of expected cash flows on
individual loans identified as impaired. A loan becomes impaired when it is
probable all amounts due on the loan will not be received. A loan is placed on
non-accrual status when it is likely interest income will not be received. Non-
accrual loans are reviewed for possible impairment. Impaired loans are written-
down or charged-off when it has been determined the asset has such little value
that it no longer warrants remaining on the books. The decision to charge-off is
made on a case-by-case basis.
The Bank had no extensions of credit to affiliated parties in excess of 5% of
shareholders' equity at any time during the nine months ended September 30,
1996.
Mortgage servicing rights - As of September 30, 1996, the fair value of MSR's
was $97,551. The significant assumptions used to estimate fair value included a
prepayment risk based on current market pricing information, a discount rate of
1% above the U. S. Treasury bond rate, and industry averages for other
significant assumptions. MSR's capitalized were reduced by $4,878 of
amortization during the quarter. For purposes of evaluating and measuring
impairment of MSR's, the Company stratifies the underlying loans by maturity and
by interest rate. As of September 30, 1996, the Company stratified its loans by
maturity into 15 and 30 year loans and stratified loans in each of the maturity
categories by every one-half percent change in interest rates. There is no
impairment to the value of the MSR's recorded during the quarter ended September
30, 1996.
10
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
4. Deposits:
Deposit accounts consisted of the following as of :
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Checking Accounts (non-interest bearing) $ 9,696,433 $ 10,934,512
NOW Accounts 25,901,496 26,014,007
Ever-Ready Money Market 11,358,743 13,971,617
Regular Savings Accounts 9,585,042 11,363,366
Treasury Savings Accounts 47,471,109 44,388,408
Club Deposits 426,455 87,779
Time Deposits:
$100,000 and over 13,163,594 11,924,585
Other Time Deposits 89,003,304 81,286,647
--------------- ---------------
$206,606,176 $199,970,921
--------------- ---------------
</TABLE>
REPURCHASE AGREEMENTS - As of September 30, 1996, sixteen repurchase agreements
were outstanding. Repurchase agreements are secured by U. S. Treasury Notes held
by a third party in safekeeping with a fair value of $12,746,404. The maturities
of the repurchase agreements are from October 1, 1996 to September 26, 1997 on
the anniversary date of the repurchase agreement.
5. Advances from Federal Home Loan Bank:
Advances from the Federal Home Loan Bank consisted of loans, at various
interest rates ranging from 4.87% to 7.32%, maturing as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------------- --------------
<S> <C> <C>
1996 (4.87% - 6.78%) $ 9,452,146 $ 6,762,143
1997 (4.87% - 7.32%) 7,927,707 7,927,707
1998 (4.87% - 5.82%) 7,166,033 7,166,033
1999 (5.78%) 56,084 56,085
2000 and after (5.42% - 5.78%) 5,024,200 5,024,200
--------------- --------------
$29,626,169 $26,936,168
=============== ==============
</TABLE>
These advances are secured by Federal Home Loan Bank Stock (Note 2) and
unspecified first mortgage loans. The Bank is able to borrow up to an additional
$50,000,000 of Federal Home Loan Bank advances.
In addition to the above advances, the Bank has credit available up to
$5,167,000 under a revolving loan agreement with the Federal Home Loan Bank. As
of September 30, 1996, $166,000 had been borrowed against this line of credit.
Interest is payable monthly as funds are borrowed.
11
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
6. Shareholders' Equity:
On May 22, 1986, Lake Sunapee Bank, fsb received approval from the Federal
Home Loan Bank Board and converted from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank. Net proceeds of
the conversion (after deducting applicable costs of conversion) were
$11,889,397.
At the time of conversion, the Bank established a liquidation account in an
amount of $4,292,510 (equal to the Bank's net worth as of the date of the
latest financial statement included in the final offering circular used in
connection with the conversion). The liquidation account will be
maintained for the benefit of eligible account holders who maintain their
deposit accounts in the Bank after conversion. In the event of a complete
liquidation of the Bank subsequent to conversion (and only in such event),
each eligible account holder will be entitled to receive a liquidation
distribution from the liquidation account before any liquidation
distribution may be made with respect to capital stock. The amount of the
liquidation account is reduced to the extent that the balance of eligible
deposit accounts are reduced on any year-end closing date subsequent to the
conversion.
The Bank may not declare or pay a cash dividend on or purchase any of its
stock if the effect would be to reduce the net worth of the Bank below
either the amount of the liquidation account or the net worth requirements
of the Office of Thrift Supervision.
DIVIDENDS - The Board of Directors, at their October meeting, declared a
cash dividend of $0.125 per share payable October 28, 1996.
7. Stock Options:
On January 3, 1995, 30,000 options were granted from previously forfeited
shares of the 1986 plan at an exercise price of $9.00 per share, the fair
market value on that date. As of September 30, 1996, 57,880 of previously
forfeited shares remained available for grant and options to purchase
30,000 shares were available for exercise under the 1986 plan. At the
Annual Meeting held on April 15, 1987, the shareholders approved the
adoption of the "1987 Stock Option Plan." As of September 30, 1996, 27,666
of previously forfeited shares remained available for grant and options to
purchase 23,957 shares were available for exercise under the 1987 plan. On
January 2, 1996, 49,900 options were granted and made available from
previously ungranted and forfeited shares of the 1987 plan at an exercise
price of $10.125 per share, the fair market value on that date. As of
September 30, 1996, none of these options had been exercised. At the
Annual meeting held on April 10, 1996, the shareholders approved the
adoption of the "1996 Stock Option Plan." Under this plan, an amount equal
to 10% of the issued and outstanding common stock of the Company has been
reserved for future issuance. No options were granted in the three month
period ended September 30, 1996 and 1995.
12
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
7. Stock Options (continued): A summary of the Company's stock option plans as
of September 30, 1996 and 1995 and changes during the nine months ended is
presented below:
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Options Price Options Price
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Outstanding, beginning of 62,590 $ 8.22 32,590 $ 7.50
year
Granted 49,900 10.125 30,000 9.00
Exercised - - - -
Forfeited - - - -
Expired - - - -
---------- ----------- -------- ----------
Outstanding, end of period 112,490 $ 9.06 62,590 $ 8.22
---------- ----------- -------- ----------
Exercisable, end of period 112,490 62,590
---------- --------
</TABLE>
The exercise price of each option equals the market price of the Company's stock
on the date of grant, and an option's maximum term is 10 years. The range of
exercise prices is $7.50 to $10.125 and $7.50 to $9.00 as of September 30, 1996
and 1995, respectively.
The weighted-average fair value of the options granted during the nine months
ended September 30, 1996 and 1995 was $1.77 and $1.56, respectively.
The Company applies APB Opinion 25 and related Interpretations in accounting for
its stock option plans. Accordingly, no compensation cost has been recognized
for its stock options. Had compensation costs for the Company plans been
determined based on the fair value at the grant dates consistent with the method
of FASB Statement 123, the Company's net income and earnings per share would
have been reduced to the proforma amounts indicated below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------------------ -----------------------
<S> <C> <C> <C> <C> <C>
Net income (loss): As reported $ (242,808) $ 371,119 $ 585,421 $ 818,220
Pro forma $ (242,808) $ 371,119 $ 531,544 $ 789,672
Primary earnings (loss) per share: As reported $ (0.14) $ 0.22 $ 0.34 $ 0.49
Pro forma $ (0.14) $ 0.22 $ 0.31 $ 0.47
Fully diluted earnings (loss) per share: As reported $ (0.14) $ 0.22 $ 0.34 $ 0.48
Pro forma $ (0.14) $ 0.22 $ 0.31 $ 0.47
</TABLE>
The fair value of each option is estimated on the date of grant using the Black-
Scholes option pricing model using the following weighted-average assumptions:
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Weighted risk-free interest rate 6.71% 6.67%
Weighted expected life 9.25 years 8.75 years
Weighted expected volatility 17.33% 17.33%
Weighted expected dividend yield 5.0% per year 5.0% per year
</TABLE>
No modifications have been made to the terms of the option agreements.
13
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
September 30, 1996 and December 31, 1995
8. Commitments and Contingencies:
In the normal course of business, LSB has outstanding various commitments
and contingent liabilities, such as legal claims, which are not reflected
in the financial statements. Management does not anticipate any material
loss as a result of these transactions.
As of September 30, 1996, LSB has entered into commitments to fund loans
totaling approximately $6.5 million. The majority of these loans will have
adjustable rates.
9. Treasury Stock:
On April 3, 1990, NHTB announced a Stock Repurchase Program to buy back, on
the open market, up to a total of 5% of its outstanding common stock or
107,364 shares. On July 11, 1990, NHTB completed its Stock Repurchase
Program whereby 107,364 shares were repurchased at an average price of
$4.37 per share. On August 9, 1990, NHTB announced a second buy back
program to buy back, on the open market, up to 10%, or 203,992 shares of
its total outstanding common stock. On June 11, 1991, a third buy back was
announced to cover an additional 10% of the then outstanding stock or
183,592 shares. On July 15, 1993, NHTB announced another buy back program
whereby the company intends to repurchase, on the open market, 10%, or
165,233 shares of its outstanding common stock. As of September 30, 1996,
NHTB had repurchased a total of 539,148 shares at an average price of $4.98
for all programs while 121,033 shares remained to be purchased from the
1993 buy back program.
10. Authorized Shares of Stock:
The authorized, issued and outstanding stock was as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Preferred stock:
Authorized shares 2,500,000 2,500,000
Issued shares - -
Outstanding shares - -
Common stock:
Authorized shares 5,000,000 5,000,000
Issued shares 2,147,282 2,147,282
Outstanding shares 1,698,136 1,689,503
</TABLE>
14
<PAGE>
PART I. ITEM II.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
New Hampshire Thrift Bancshares, Inc. (The Company ), a Delaware
holding company organized on July 5, 1989, is the parent company of Lake Sunapee
Bank, fsb (The Bank), a federally chartered savings bank. The Bank was
originally chartered by the State of New Hampshire in 1868 as the Newport
Savings Bank. On December 1, 1980, the Bank became the first bank in the
United States to convert from a state chartered mutual savings bank to a
federally-chartered mutual savings bank. In 1981, the Bank changed its name to
Lake Sunapee Savings Bank, fsb, and in 1994, changed its name to Lake Sunapee
Bank, fsb. The Bank is a member of the Federal Deposit Insurance Corporation
(FDIC) and its deposits are insured through the Savings Association Insurance
Fund (SAIF). The Bank is regulated by the Office of Thrift Supervision (OTS).
The Company's profitability is derived from its only subsidiary, Lake
Sunapee Bank, fsb. The Bank's earnings in turn are generated from the net
income from the yield on its loan and investment portfolios less the cost of its
deposit accounts and borrowings. These core revenues are supplemented by loan
origination fees, retail banking service fees, gains on the sale of investment
securities, and brokerage fees. The Bank passes its earnings to the Company to
the extent allowed by OTS regulations. Current regulations enable the Bank to
pay to the Company the higher of an amount equal to seventy-five per cent of
the Bank's prior four quarter earnings or up to fifty per cent of excess
capital plus total current year earnings. As of September 30, 1996, the
Company had capital of $1,507,748 which the Company plans to use to
continue its annual dividend payout of $0.50 per share. The Bank's regulatory
c ore capital position of $17,840,565 results in core capital of 6.75%.
On September 30, 1996, the President signed the omnibus appropriations
bill into law. Included in this legislation was the recapitalization of the
Savings Association Insurance Fund (SAIF). SAIF is the fund to which the Bank
pays deposit insurance assessments. The passage of this legislation required
the Bank to incur a one-time, after-tax expense of approximately $660,000 in
order to cover its portion of the one-time contribution to the SAIF fund. This
one-time payment will be offset by expected, annual, after-tax expense savings
in deposit insurance premiums of approximately $200,000.
Further proposed legislation provides for the merger of the BIF and
SAIF in 1999. Such merger will be conditioned upon the prior elimination of
the thrift charter. Congressional leaders have also agreed that Congress
should consider and act upon separate legislation to eliminate the thrift
charter as early as 1997. If adopted, such legislation would require that the
Bank, as a federal savings association, convert to a bank charter. Such a
requirement to convert to a bank charter could render the Bank ineligible to
use Section 593 of the Internal Revenue Code thereby losing the favorable tax
treatment for its bad debt reserves and have all or part of its existing bad
debt reserves recaptured into income. However, passage of the Small Business
Job Protection Act of 1996 (the Jobs Bill), exempts all thrifts from recapture
of their pre-1988 bad debt reserves while at the same time repeals Section 593
as a bad debt reserve method for thrifts. Any thrift, whether it changes to a
bank charter or not, will be exempt from recapture of its pre-1988 bad debt
reserves commencing with its first taxable year beginning after December 31,
1995. This means even the portion of the pre-1988 reserves that reflect the
experience method of accounting will not be recaptured.
On July 29, 1996, the Company announced that the Bank had entered into
a definitive agreement to acquire Landmark Bank, located in Lebanon, NH. This
agreement provides that Landmark Bank shareholders may elect to receive $12.00
in cash per share, or to exchange their shares for New Hampshire Thrift
Bancshares, Inc. shares, with a total consideration of sixty per cent in stock
and forty per cent in cash. The total transaction value is $5,676,000.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
On a proforma basis, the combined banking operation as of September
30, 1996, reflected total assets of $316 million, deposits of $254 million,
capital of $22.5 million, and a total of 12 branches located in Sullivan,
Merrimack, Grafton, and Hillsborough counties. This transaction is expected to
be accretive to earnings in 1997.
This acquisition is subject to shareholder approval by both New
Hampshire Thrift Bancshares and Landmark Bank. Approval of applicable
regulatory authorities and the satisfaction of certain other customary
conditions will be required.
FINANCIAL CONDITION
During the first nine months of 1996, total assets increased by
$5,800,407, or 2.25% to $264,016,484. The decrease in federal funds
sold and loans held for sale was offset by an increase in investment securities
and loans held in portfolio. In addition, the decrease in the Bank's deposits
held under repurchase agreements was offset by an increase in deposits and
advances from the Federal Home Loan Bank.
Total investments (at fair value) including term deposits increased by
$3,162,888, or 11.13%. Sales and maturities of securities were approximately
$5.3 million while purchases amounted to approximately $9 million. The
purchase of a Federal Home Loan Bank term deposit accounted for $4,000,000 of
the purchases. On October 1, 1996, the Federal Home Loan Bank of Boston term
deposit matured.
Real estate loans held in portfolio increased $9,215,614, or 4.50%
from year-end. During the nine months ended September 30, 1996, proceeds from
the sale of loans amounted to $10,847,663. Total sold loans were approximately
$49 million as of September 30, 1996. The Bank from time-to-time sells fixed-
rate loans into the secondary market and retains the servicing on these loans in
order to build fee income. The selling of fixed-rate loans reduces interest
rate risk and creates liquidity.
Real estate owned totaled $936,605 and accounted for 38.50% of non-
performing assets at September 30, 1996, compared to $984,185, or 40.58% at
year-end 1995. Continuing to be included in the real estate owned amount is a
real estate development loan, Blye Hill Landing in Newbury, NH, with a book
value of $572,828 at September 30, 1996. At September 30, 1996, the Bank had
recorded no properties as in-substance foreclosures.
Non-performing assets amounted to $2,433,949, or .92% of assets at
September 30, 1996, compared to $2,425,647, or .94% at year-end 1995. The
Bank includes all loans 90 days past due, all real estate owned, and non-
interest-earning assets as non-performing assets. Impaired loans totaled
$441,943 and $807,867 at September 30, 1996 and December 31, 1995, respectively.
As of September 30, 1996, the Bank charged-off $1,156,799 of loans which had
been previously reserved for.
Deposits increased $6,635,255 for the first nine months of 1996, after
a decline of $1.5 million in the first quarter, as customers shifted deposits
into longer-term instruments. Certificates of deposits increased $8,955,666 as
the Bank priced its one-year certificates comparable to the one-year Treasury.
In addition to deposits, the Bank funded the growth in loans with advances from
the Federal Home Loan Bank of Boston (FHLBB). Advances increased $2,690,001
million to $29,626,169 during the nine months ended September 30, 1996.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain a 5.00% ratio of long-term liquid
assets to net withdrawable funds. At September 30, 1996, the Bank's percentage
of 10.87% exceeded regulatory requirements.
The Bank's sources of funds come from net deposit inflows, loan
amortizations, and advances from the FHLBB. At September 30, 1996, the Bank had
approximately $50 million in additional borrowing capacity available from the
FHLBB. The Bank expects to be able to fund loan commitments of approximately
$6.5 million by utilizing the FHLBB advance program, in the event deposit
inflows are not sufficient to cover funding needs.
As of September 30, 1996, net cash inflows from operating activities
amounted to $4,221,073 compared to $2,660,629 for the same period in 1995. Net
cash inflows from financing activities were $4,147,487 compared to $11 ,324,761
for 1995. This change was due to a $4,745,759 increase in deposits, repurchase
agreements, and Federal Home Loan Bank advances as compared to an increase of
$11,952,261 for the same period in 1995. The net cash inflows from operating
activities, when added to the net cash inflows from financing activities were
not sufficient, by $3,527,514, to cover the investing cash outflow needs of
$11,896,074. The Bank utilized its beginning cash position to cover the balance
of its investing activity needs. Cash and cash equivalents, therefore, declined
to $7,465,783 as of September 30, 1996. Investing activity needs included the
purchase of $9,040,209 of investment securities and a net increase in loans to
customers of $7,544,697.
At September 30, 1996, the Company's capital amounted to $19,200,601,
or 7.27% of total assets, compared to $19,544,005, or 7.57% of total assets at
year-end 1995. The change of $343,404 is attributed to net income of $585,421,
dividends paid of $633,943, a change in the unrealized loss on securities
available for sale of $359,630, and a change of $64,748 in paid-in capital and
treasury stock due to the exercise of stock options. An increase in interest
rates during the first nine months of 1996 resulted in a drop in bond values.
This increased the unrealized loss on securities available for sale.
As part of the Financial Institution Reform, Recovery, and Enforcement
Act of 1989 (FIRREA), banks are required to maintain core, leverage, and total
risk-based capital of 3.00%, 3.00%, and 8.00%, respectively. As of September
30, 1996, the Bank's core, leverage and total risk-based capital ratios were
6.75%, 6.75%, and 12.46%, respectively, well in excess of the regulators'
requirements.
The Company's book value per share was $11.31 at September 30, 1996,
versus $11.57 at December 31, 1995. The decrease was primarily attributable to
the change in the unrealized loss on securities available for sale.
INTEREST RATE SENSITIVITY
The Bank's one-year interest sensitive gap at September 30, 1996, was
approximately negative seven percent, compared to the December 31, 1995, gap
position of approximately negative seven percent. The Bank continues to offer
adjustable rate mortgages which reprice at one, three, and five year intervals.
In addition, from time-to-time, the Bank sells fixed rate mortgages into the
secondary market in order to minimize interest rate risk. As of September 30,
1996, adjustable rate mortgages amounted to approximately 83% of total loans.
The strategy of matching rate-sensitive assets with similar
liabilities stabilizes profitability during periods of interest rate
fluctuations. The Bank's gap, of approximately negative seven percent at
September 30, 1996, means earnings would increase if interest rates trended
downward. The opposite would occur if interest rates were to rise. Management
feels that maintaining the gap within ten points of the parity line provides
adequate
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
protection against severe interest rate swings. In an effort to maintain the
gap within ten points of parity, the Bank utilizes the Federal Home Loan Bank
advance program to control the repricing of liabilities.
OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995
Operating results for the third quarter in 1996 were $(242,808), or
$(0.14) per share as compared to $371,119, or $0.22 per share for the same
period in 1995, a decrease of $613,927, or 165.43%. Included in these results
is the non-recurring after-tax item of $660,000, as discussed on page 13.
Excluding the effects of this one-time special assessment, net income for the
quarter would have been $423,842, or $0.25 per share, an increase of 14.21% over
the same period in 1995.
Net interest income increased by $68,814, or 3.37% due to an
increase in loan volume and upward adjustments to the Bank's variable rate
loans.
Total non-interest income increased $ 119,525 , or 41.91%. The
change was due primarily to the change in the net gain (loss) on sale of
securities and bank properties of $72,448.
Due to the special one-time FDIC assessment of $995,000 (before
taxes), operating expenses increased $1,075,649. Excluding this one-time
charge, operating expenses increased by $80,649, or 5.30%. This one-
time payment will be offset by expected annual savings in deposit insurance
premiums of approximately $325,000. The Bank expects future operating expenses
to increase at approximately the rate of inflation.
NET INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Net income for the nine months end ed September 30, 1996, was
$585,421, or $0.34 per share compared to $818,220, or $0.48 per share at
September 30, 1995. The reason for the decrease is explained above. Excluding
the special assessment, net income for the nine months ended September 30, 1996,
would have been $1,232,071, or $0.74 per share, an increase of 50.58%. The
increase is attributable to an increase in net interest income and other
operating income while operating expense (excluding the special assessment)
increased slightly by 1.40% for the first nine months of 1996.
RESERVE FOR LOAN LOSSES
The Bank considers many factors in determining the level of loan loss
reserves. These factors include the risk and size characteristics of loans,
prior years' loss experience, the levels of delinquencies, the prevailing
economic conditions, the number of foreclosures, unemployment rates, interest
rates, and the value of collateral securing loans. Additionally, the Bank's
commercial loan officers review the financial condition of commercial loan
facilities and inventories. The Bank also has an internal audit and compliance
program whereby all loans are reviewed and classified to determine appropriate
loan loss reserve levels. Results of the audit and compliance programs are
reported directly to the Audit Committee of the Company's Board of Directors.
The reserve for loan losses at September 30, 1996, was $1,705,811
including $80,517 in specific reserves for loans classified as loss, compared
to $1,828,060, including $628,060 in specific reserves, at year-end 1995. The
reserve for loan loss allowance represented 0.78% of total loans at
September 30,
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
1996, compared to 0.87% at December 31, 1995. The allowance for loan losses
as a percentage of non-performing assets was 70.08% at September 30, 1996,
compared to 75.36% at December 31, 1995.
Loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention do not result from trends or uncertainties which
the Bank expects will materially impact future operating results, liquidity, or
capital resources.
Total classified loans, excluding special mention, as of September
30, 1996, were $6,311,501 compared to $6,049,066 at December 31, 1995.
Of these amounts, $2,433,949 and $2,425,647, respectively, are included
in non-performing assets.
The Financial Accounting Standards Board has issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan." The Statement became
effective for the Bank as of January 1, 1995. Note 3 to the Financial Reports
presents a discussion relative to impaired loans.
The following table shows the Bank's breakdown of non-performing loans (dollars
in thousands):
<TABLE>
<CAPTION>
9-30-96 12-31-95
----------------- ----------------
<S> <C> <C> <C> <C>
90 days delinquent /(1)/ $ 428 0.16% $ 1,144 0.44%
Non-earning assets/ (2)/ 1,069 0.41% 297 0.12%
Real estate owned 937 0.35% 984 0.38%
-------- ----- ------- -----
Total non-performing assets $ 2,434 0.92% $ 2,425 0.94%
======== ===== ======= =====
Impaired loans $ 442 0.17% $ 808 0.31%
======== ===== ======= =====
</TABLE>
(1) All loans 90 days or more delinquent are placed on a non-accruing status
(2) Loans considered to be uncollectible, pending foreclosure, or in bankruptcy
proceeding are placed on a non-earning status
The following table sets forth the allocation of the loan loss valuation
allowance and the percentage of loans in each category to total loans:
<TABLE>
<CAPTION>
9-30-96 12-31-95
------------------- -----------------
<S> <C> <C> <C> <C>
Real estate loans -
Conventional $ 1,410,990 83% $ 687,547 83%
Construction - 1% 201,257 n/m
Collateral and Consumer 17,781 12% 8,067 12%
Commercial and Municipal 227,313 4% 276,526 4%
Impaired Loans 49,727 - 654,663 1%
------------ ---- ------------ ----
Valuation allowance $ 1,705,811 100% $ 1,828,060 100%
============ ==== =========== ====
Valuation allowance as a
percentage of total loans 0.78% 0.87%
============ ===========
</TABLE>
As of September 30, 1996, there were no other loans not included in
the table or discussed above where known information about the possible credit
problems of borrowers caused management to have doubts as to the ability of the
borrowers to comply with present loan repayment terms and which may result in
disclosure of such loans in the future.
19
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There is no material litigation pending in which the Company or its
subsidiaries is a party or which the property of the Company or its
subsidiaries is subject.
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Common Shareholders
------------------------------------------------------
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
A.) Exhibits:
None
B.) Reports on Form 8-K:
None
20
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
-------------------------------------
(Registrant)
Date: November 13, 1996 /s/ Stephen W. Ensign
----------------------------- -------------------------------------
Stephen W. Ensign
President and Chief Executive Officer
Date: November 13, 1996 /s/ Stephen R. Theroux
----------------------------- --------------------------------------
Stephen R. Theroux
Executive Vice President and
Chief Financial Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,400,783
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 65,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,901,876
<INVESTMENTS-CARRYING> 368,054
<INVESTMENTS-MARKET> 368,054
<LOANS> 217,848,188
<ALLOWANCE> 1,705,811
<TOTAL-ASSETS> 264,016,484
<DEPOSITS> 206,606,176
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,610,210
<LONG-TERM> 0
0
0
<COMMON> 21,473
<OTHER-SE> 19,179,128
<TOTAL-LIABILITIES-AND-EQUITY> 19,200,601
<INTEREST-LOAN> 12,491,469
<INTEREST-INVEST> 1,437,520
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 13,928,989
<INTEREST-DEPOSIT> 6,377,724
<INTEREST-EXPENSE> 7,678,189
<INTEREST-INCOME-NET> 6,250,800
<LOAN-LOSSES> 1,020,732
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,847,079
<INCOME-PRETAX> 874,421
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 585,421
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
<YIELD-ACTUAL> 0
<LOANS-NON> 1,069,400
<LOANS-PAST> 0
<LOANS-TROUBLED> 477,258
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,828,060
<CHARGE-OFFS> 1,156,799
<RECOVERIES> 13,818
<ALLOWANCE-CLOSE> 1,705,811
<ALLOWANCE-DOMESTIC> 1,705,811
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
