SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934.
For the Quarter ended: September 30, 1997 Commission File No. 0-18096
MID-COAST BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 01-0454232
- -------------------------------------------------------------------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.)
1768 Atlantic Highway, PO Box 589
Waldoboro, Maine 04572
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207) 832-7521
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 registrant's classes
of common stock, as of September 30, 1997, is 232,991.
Page 1 of 15.
MID-COAST BANCORP, INC.
Index
PART I FINANCIAL INFORMATION Page
----
Item 1: Consolidated Balance Sheets of Mid-Coast Bancorp, Inc.
(Unaudited) at September 30, 1997 and March 31, 1997 3
Consolidated Statements of Income of Mid-Coast Bancorp, Inc.
(Unaudited), Three Months and Six Months Ended September 30,
1997 and 1996 5
Consolidated Statement of Changes in Stockholders' Equity of
Mid-Coast Bancorp, Inc. (Unaudited) for the period April 1,
1996 to September 30, 1997 6
Consolidated Statements of Cash Flows of Mid-Coast Bancorp,
Inc. (Unaudited), for the Six Months Ended September 30,
1997 and 1996 7
Notes to the Consolidated Financial Statements (Unaudited) 8
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II OTHER INFORMATION 14
SIGNATURES 15
MID-COAST BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
September 30, 1997 March 31, 1997
------------------ --------------
<S> <C> <C>
Cash and due from banks $ 1,117,193 $ 1,156,227
Interest bearing deposits 111,511 104,683
Federal funds sold 3,825,000 1,875,000
-------------------------------
Cash and cash equivalents 5,053,704 3,135,910
Time deposits 1,089,000 1,089,000
Investments available for sale, at market 2,458,718 2,440,662
Held to maturity investment securities
(Market value of $942,369 at September 30, 1997
and $911,125 at March 31, 1997) 949,391 949,109
Loans held for sale 0 65,000
Loans 50,223,342 49,394,455
Less: Allowance for loan losses 321,918 295,457
Deferred loan fees 103,335 119,966
-------------------------------
49,798,089 48,979,032
Bank premises and equipment, net 1,541,863 1,580,290
Other assets:
Accrued interest receivable:
Loans 240,042 244,474
Time deposits/investments 48,848 59,430
Deferred income taxes 94,100 98,000
Prepaid expenses and other assets 199,520 192,638
Real estate owned 0 91,823
-------------------------------
Total other assets 582,510 686,365
-------------------------------
Total assets $61,473,275 $58,925,368
===============================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
MID-COAST BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
September 30, 1997 March 31, 1997
------------------ --------------
<S> <C> <C>
Liabilities:
Deposits:
Demand deposits $ 2,130,492 $ 2,346,730
NOW accounts 4,130,051 3,460,858
Savings 5,513,443 5,693,545
Money market deposit accounts 5,121,216 5,119,733
Certificates of deposit 27,609,389 25,559,832
-------------------------------
Total deposits 44,504,591 42,180,698
Advances from the Federal Home Loan Bank 11,440,000 11,440,000
Accrued expenses and other liabilities 251,335 229,125
-------------------------------
Total liabilities 56,195,926 53,849,823
Stockholders' equity:
Preferred stock, $1 par value, 500,000
shares authorized; none issued
or outstanding 0 0
Common stock, $1 par value, 1,500,000
shares authorized; 232,991
shares issued and outstanding, 232,991 231,439
(231,439 at March 31, 1997)
Paid-in capital 1,483,909 1,469,769
Unrealized gains on available for sale securities,
net of taxes 7,433 0
Retained earnings 3,553,016 3,374,337
-------------------------------
Total stockholders' equity 5,277,349 5,075,545
-------------------------------
Total liabilities and stockholders' equity $61,473,275 $58,925,368
===============================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
MID-COAST BANCORP, INC
CONSOLIDATION STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------ ------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $1,120,283 $1,027,753 $2,213,600 $2,039,118
Interest on investment sec. 50,655 65,950 102,858 120,405
Interest on mortgage backed sec. 0 12,627 0 20,329
Other 51,518 30,729 85,769 81,647
-----------------------------------------------------
Total interest income 1,222,456 1,137,059 2,402,227 2,261,499
Interest expense:
Interest on deposits 482,762 485,647 954,006 976,936
Interest on borrowed money 170,718 117,938 332,124 222,485
-----------------------------------------------------
Total interest expense 653,480 603,585 1,286,130 1,199,421
-----------------------------------------------------
Net interest income 568,976 533,474 1,116,097 1,062,078
Provision for losses on loans 15,000 21,000 32,000 51,000
-----------------------------------------------------
Net interest income after
provision for loan losses 553,976 512,474 1,084,097 1,011,078
Other income:
Loan service and other loan fees 11,260 9,408 23,042 21,915
Gain on loans sold\held for sale 16,132 8,258 17,482 16,826
Other 50,592 34,600 103,309 77,429
-----------------------------------------------------
Total other income 77,984 52,266 143,833 116,170
Other expenses:
Compensation of directors, officers
and staff 189,762 155,762 363,597 322,528
Building occupancy 9,795 9,115 20,751 19,551
Repairs and maintenance 7,228 8,476 18,299 17,794
Depreciation and amortization 42,278 15,566 91,399 31,112
Advertising 10,296 10,288 20,791 19,275
Insurance and bonds 18,597 276,441 37,221 311,680
Legal, audit and examinations 16,042 15,655 33,313 29,383
Taxes (other than income) 12,292 11,487 25,491 24,803
Employee benefits 24,597 23,389 50,070 44,931
Data processing 16,284 41,049 27,247 69,081
Other 97,077 80,823 178,895 157,221
Real Estate Owned 0 7,990 2,776 9,041
-----------------------------------------------------
Total other expenses 444,248 656,041 869,850 1,056,400
Income\(loss) before income taxes 187,712 (91,301) 358,080 70,848
Income taxes 61,357 (16,917) 119,207 37,083
-----------------------------------------------------
Net income\(loss) $ 126,355 $ (74,384) $ 238,873 $ 33,765
=====================================================
Earnings per share $ 0.54 $ (0.32) $ 1.03 $ 0.15
=====================================================
</TABLE>
See accompanying notes
MID-COAST BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
For the Period April 1, 1996 to September 30, 1997
<TABLE>
<CAPTION>
Unrealized
gains/losses
on available for Total
Common Paid-in sale securities, Retained Stockholders'
stock capital net of taxes earnings equity
------ ------- ---------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1996 $229,031 $1,448,282 0 $3,248,764 $4,926,077
Issuance of 1,055 shares
of common stock upon
exercise of options 1,055 9,173 0 0 10,228
Net income 0 0 0 33,765 33,765
Dividends declared
($.25 per share) 0 0 0 (57,365) (57,365)
-----------------------------------------------------------------------
Balance, September 30, 1996 230,086 1,457,455 0 3,225,164 4,912,705
Issuance of 1,353 shares
of common stock upon
exercise of options 1,353 12,314 0 0 13,667
Net Income 0 0 0 209,010 209,010
Dividends declared
($.26 per share) 0 0 0 (59,837) (59,837)
-----------------------------------------------------------------------
Balance, March 31, 1997 231,439 1,469,769 0 3,374,337 5,075,545
Issuance of 1,552 shares
of common stock upon
exercise of options 1,552 14,140 0 0 15,692
Net change in market value of
investments available for sale,
net of taxes 0 0 7,433 0 7,433
Net Income 0 0 0 238,873 238,873
Cash dividends declared
($.26 per share) 0 0 0 (60,194) (60,194)
-----------------------------------------------------------------------
Balance, September 30, 1997 $232,991 $1,483,909 $7,433 $3,553,016 $5,277,349
=======================================================================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
MID-COAST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30
--------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 238,873 $ 33,765
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation, amortization, and accretion 47,667 5,376
Provisions for losses on loans 32,000 51,000
Gain on sale of loans (17,482) (16,826)
Deferred fees 792 6,837
Loss on sale of real estate owned 2,151 (629)
Loans originated for sale (1,091,567) (681,790)
Proceeds from sales of loans 1,174,049 1,133,695
Increase/decrease in other assets 8,132 (41,631)
Change in income taxes payable 27,323 21,459
Increase/decrease in other liabilities (5,113) 297,315
--------------------------
Net cash provided by operating activities 416,825 808,571
Cash flows from investing activities:
Loan originations and repayments, net (834,426) (3,286,744)
Net decrease in time deposits 0 1,186,000
Investment and mortgage-backed securities:
Purchases (517,469) (2,070,948)
Proceeds from sales, maturities and repayments 510,000 1,579,966
Purchases of property and equipment (26,199) (111,488)
Proceeds from sale of real estate owned 89,672 81,525
--------------------------
Net cash used by investing activities (778,422) (2,621,689)
Cash flows from financing activities:
Net increase\(decrease) in certificates of deposit 2,049,557 (938,196)
Net increase\(decrease) in demand, NOW, savings
and money market deposit accounts 274,336 1,771,192
FHLB advances 2,000,000 4,050,000
FHLB advances paid (2,000,000) (3,575,000)
Dividends paid in cash (60,194) (57,365)
Sale of common stock 15,692 10,228
--------------------------
Net cash provided by financing activities 2,279,391 1,260,859
--------------------------
Net increase (decrease) in cash and cash equivalents 1,917,794 (552,259)
Cash and cash equivalents, at beginning of period 3,135,910 2,728,051
--------------------------
Cash and cash equivalents, at end of period $ 5,053,704 $ 2,175,792
==========================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
MID-COAST BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
1. Financial Statements
--------------------
The accompanying consolidated financial statements include the
accounts of Mid-Coast Bancorp, Inc. (the "Company") and its wholly-
owned subsidiary, The Waldoboro Bank, F.S.B. (the "Bank"). The
accounts of the Bank include its wholly-owned subsidiary, The First
Waldoboro Corporation. Such consolidated financial statements are
unaudited. However, in the opinion of management, all adjustments
necessary for a fair presentation of the consolidated financial
statements have been included, and all such adjustments are of a
normal and recurring nature.
Amounts presented in the consolidated financial statements as of March
31, 1997 were derived from audited consolidated financial statements.
2. Insurance Fund Resolution
-------------------------
The disparity between the Savings Association Insurance Fund (SAIF)
and Bank Insurance Fund (BIF) was resolved by Congress, by requiring,
Banks insured by the SAIF to pay a one time assessment to recapitalize
SAIF, effective September 30, 1996. Accordingly a one-time charge of
$241,299 is reflected in the balance sheet and statement of operations
as of and for the period ended September 30,1996.
3. Dividends Paid
--------------
The Board of Directors of Mid-Coast Bancorp, Inc. declared a cash
dividend of $.26 for each share of common stock, which is payable on
December 31, 1997 to shareholders of record on December 1, 1997.
4. Investments Available For Sale
------------------------------
If significant, unrealized gains and losses, net of tax, on securities
available for sale are reported as a net amount in a separate
component of stockholders' equity until realized. If a decline in
market value is considered other than temporary, the loss is charged
to net securities gains (losses).
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The financial condition and results of operations of Mid-Coast
Bancorp, Inc. (the "Holding Company") essentially reflect the operation of
its subsidiary The Waldoboro Bank, F.S.B. (the "Bank" or "Waldoboro"). The
Holding Company's results of operations in recent years reflect the Bank's
efforts to restructure its balance sheet in response to the fundamental
changes that have occurred in the regulatory, economic and competitive
environment in which savings institutions operate. Like most savings
institutions, Waldoboro's earnings are primarily dependent upon its net
interest income, which is determined by (i) the difference (known as the
interest rate spread) between yields on interest-earning assets and rates
paid on interest-bearing liabilities and (ii) the relative amounts of
interest-earning assets and interest-bearing liabilities outstanding.
The Bank and the entire savings institution industry are significantly
affected by prevailing economic conditions as well as government policies
and regulations concerning, among other things, monetary and fiscal affairs,
housing and financial institutions. Deposit flows are influenced by a
number of factors including interest rates on money market funds and other
competing investments, account maturities and levels of personal income and
savings. Lending activities are influenced by, among other things, the
demand for and supply of housing, conditions in the construction industry
and the availability and cost of funds, and loan refinancing in response to
declining interest rates. Sources of funds for lending activities include
deposits, loan payments, proceeds from sales of loans and investments,
investment returns and borrowings.
Due to the relative interest rate sensitivity of the Bank's assets and
liabilities, the cost of funds to the Bank (principally interest on deposits
and borrowings) does not reprice as fast as the yield on its assets
(principally interest received on loans and investments). Accordingly,
sharp increases or decreases in the general level of interest rates will
have a significant impact on the Bank's interest rate spreads in the short
term.
Financial Condition
Total assets increased $2,547,907 or 4.32% between March 31, 1997 and
September 30, 1997. Of this amount Federal Funds sold increased $1,950,000
or 104%,primarily due to the banks cash needs in an unsuccessful bid attempt
to purchase branches within its market area. Time Deposits and investment
securities remained stable. Loans increased slightly to $50,223,342.
Total liabilities increased $2,346,103 or 4.36% between March 31,
1997, and September 30, 1997. Increases in NOW Accounts and Certificates of
Deposit of $669,193 or 19.34% and $2,049,557 or 8.02%, respectively, were
partially offset by decreases in Demand deposits of $216,238 or 9.21% and
Savings of $180,102 or 3.16%. Advances from the Federal Home Loan Bank
remained unchanged.
The allowance for loan losses amounted to $321,918 at September 30,
1997, compared to $295,457 at March 31, 1997. The increase in allowance for
loan losses is primarily due to the current periodic provision for loan
losses. At September 30, 1997 the Bank's allowance for loan losses as a
percentage of total loans and allowance for loan losses as a percentage of
non-performing loans was 0.64% and 95.44% respectively.
At September 30, 1997 and March 31, 1997 loans contractually past due
90 days or more amounted to $337,296 and $145,466 or 0.67% and 0.29 % of
loans outstanding, respectively at such dates. Non-accrual of interest on
these loans totaled $24,352 at September 30, 1997 as compared with $9,852 at
March 31, 1997. Since September 30, 1997 loans contractually past due 90
days or more has been reduced to $280,745. Non-accrual of interest since
September 30, 1997 has been reduced to $21,304. This total is represented
by six loans and management does not believe these loans materially affect
the overall quality of the Bank's loan portfolio.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 and 1996
Net Income
Mid-Coast recorded net income for the three months ended September 30,
1997 of $126,355 or 0.54 cents per share. This compares with a net loss of
$74,384 or $0.32 cents per share for the same period in the previous fiscal
year. The disparity between the Savings Association Insurance Fund (SAIF)
and Bank Insurance Fund (BIF) was resolved by Congress, by requiring banks
insured by the SAIF to pay a one time assessment to recapitalize SAIF,
effective September 30, 1996. Accordingly a one-time charge of $241,299 is
reflected in the balance sheet and statement of operations as of and for the
period ended September 30, 1996.
Interest Income
Interest income increased $85,397 or 7.51% for the three months ended
September 30, 1997, primarily due to increases in the average balances of
mortgage, commercial and consumer loans, of $2.4 million or 7.05%, $2.0
million or 27.91% and $160,386 or 3.61% respectively. The increase in
Commercial loans is primarily related to management's continued efforts to
increase its presence in the mid-coast market. Consumer loans consist of
home equity, installment loans, share loans and student loans.
Miscellaneous other interest income increased $20,789 or 67.65% primarily as
a result of an increase in the volume of Federal funds sold. These
increases were partially off set by decreases in balances of investment
securities and mortgage backed securities.
Interest Expense
Total interest expense for the three month period ended September 30,
1997 increased $49,895 or 8.27%, compared to the same period in the previous
fiscal year. This increase is primarily the result of an increase of $3.5
million in advances from the Federal Home Loan Bank used to partially fund
increased loan demand. This increase is partially offset by a decrease in
the average cost of funds on borrowings of 7 basis points for the current
period compared to the period ended September 30, 1996. The strategy of the
Bank regarding deposits continues to focus on reducing the average cost of
funds through a combination of Certificate of Deposit "specials" and
increasing transaction account deposits. This strategy has reduced the
average cost of funds on deposits by 16 basis points for the current period
as compared to the period ended September 30, 1996.
Net Interest Income
Net interest income, before provisions for loan losses, increased
$35,502 or 6.65% for the quarter ended September 30, 1997 as compared to the
same quarter in the previous fiscal year. This increase is primarily the
result of average balance increases in mortgage, commercial and consumer
loans.
Provisions for Losses on Loans
The allowance for loan losses is established through a provision for
loan losses based on management's evaluation of the risk inherent in its
loan portfolio and the general economy. Such evaluation considers numerous
factors including general economic conditions, loan portfolio compositions,
prior loss experience, the estimated fair value of the underlying collateral
and other factors that warrant recognition in providing for an adequate loan
loss allowance. The decrease in the Bank's provision for losses on loans is
based upon management's belief that the total provision for losses on loans
represents adequate reserves commensurate with moderate risks associated
with the loan portfolio.
Non Interest Income
Total non-interest income for the three month period ended September
30, 1997 increased $25,718 or 49.21% as a result of increased fees and
charges related to NOW accounts and overdraft fees and the sale of loans to
the secondary market.
Other Expenses
Total other expenses for the three month period ended September 30,
1997 decreased $211,793 or 32.28% compared to the previous fiscal year, the
decrease is primarily due to the one time assessment paid to recapitalize
the SAIF Fund. Other Expenses increased $29,506 or 7.11% without the
$241,299 SAIF assessment. The increase in other expenses resulted from
increases in compensation, the addition of an employee, depreciation and
amortization related to the Banks computer conversion and modest increases
in miscellaneous other expenses consisting of shareholder services,
utilities, postage, and office supplies, which are partially offset by
decreases in data processing.
Six Months Ended September 30, 1997 and 1996
Net Income
Mid-Coast reported net income of $238,873 or $1.03 cents per share for
the six months ended September 30, 1997, compared to $33,765 or $0.15 cents
per share for the six months ended September 30, 1996. During the period,
the Bank recorded an increase in net interest income, before provision for
losses on loans, of $54,019 or 5.09%,and an increase in total non interest
income of $27,663 or 23.81%. Total other expenses decreased $186,550 or
17.66% primarily due to the SAIF assessment. Total other expenses would have
increased $54,749 or 6.72%, compared to the period ended September 30, 1996,
without the SAIF assessment.
Interest Income
Total interest income for the six months ended September 30, 1997
increased $140,728 or 6.22% as compared to the same period in the previous
fiscal year. Interest on loans increased $174,482 or 8.56% primarily due to
increases in the average balances of mortgage, commercial and consumer
loans. Interest on investment securities and mortgage backed securities
decreased $37,876 or 26.91%, primarily due to the sale of securities, and
the resulting lower volume of interest earning investments.
Interest Expense
Total interest expense for the six month period ended September 30,
1997 increased $86,709 or 7.23%. Interest expense on borrowed money
increased $109,639 or 49.28% and interest on deposits decreased $22,930 or
2.35%. Interest expense on borrowed money increased primarily due to an
increase of $3.5 million in advances used to partially fund increased loan
demand. The Bank's strategy remains focused on reducing the average cost of
funds on deposits and borrowings. This is accomplished through a
combination of increased transaction account balances, Certificate of
Deposit "specials" and borrowings at rate more favorable than these
available in the market place. This strategy has reduced the average cost
of funds on borrowings and deposits by 7 basis points and 16 basis points,
respectively, compared to the same period in the previous fiscal year.
Net Interest Income
Total net interest income for the six months ended September 30, 1997
increased $54,019 or 5.09%. This increase is primarily the result of
increases in the average balances of mortgage, commercial and consumer loans
which is partially offset by increased interest expense resulting from
Federal Home Loan Bank advances.
Provisions for Losses on Loans
The Banks provision for losses on loans for the six month period ended
September 30, 1997 decreased to $32,000 as compared to $51,000 in the
previous fiscal year. The provision is deemed appropriate given the risks
associated with the Bank's loan portfolio.
Non-Interest Income
Non-interest income for the six months ended September 30, 1997
increased $27,663 or 23.81%, compared to the same period in the previous
fiscal year. Increases occurred in all categories of Non-Interest income,
with miscellaneous income increasing $25,880 or 33.42%. Miscellaneous
income is the result of increased fees and charges particularly related to
NOW accounts and overdraft fees.
Other Expenses
Other expenses for the six month period ended September 30, 1997
decreased $186,550 or 17.66% as compared to the same period in the previous
fiscal year. The decrease in other expenses is primarily related to the
payment of SAIF assessment. Other expenses increased $54,749 or 6.72%
without the SAIF assessment as compared to the previous year. This increase
in other expenses resulted from increases in compensation, the addition of
an employee, depreciation and amortization related to the computer
conversion and modest increases in other expenses consisting of shareholder
services, utilities, postage, and office supplies, which are partially
offset by decreases in data processing.
Insurance of Deposits
The Bank's deposits are insured up to applicable limits under the SAIF
as administered by the FDIC under the Federal Deposit Insurance Act
("FDIA"). The assessments paid by depository institutions for the insurance
of deposits are determined on a risk-based assessment system pursuant to
which each institution is assigned to one of nine categories. For the first
three quarters of 1996, SAIF-insured institutions paid deposit insurance
assessments at annual rates that ranged from 0.23% of deposits for the least
risky institutions to 0.315% of deposits for the most risky institutions.
In contrast, the least risky institutions insured under the Bank Insurance
Fund ("BIF") paid deposit insurance assessments at the annual minimum of
$2,000, and the other BIF-insured institutions paid assessments at rates
that ranged from 0.03% to 0.27% of deposits.
On September 30, 1996, the Deposit Insurance Funds Act of 1996 (the
"Funds Act") was enacted into law to address, among other things, the
disparity in the deposit insurance assessment rates imposed on BIF-insured
and on SAIF-insured institutions. The Funds Act amended the FDIA in several
ways to recapitalize the SAIF and to reduce the disparity to the assessment
rates for the BIF and the SAIF. To recapitalize the SAIF, the Funds Act
authorized the FDIC to impose a special assessment on all institutions with
SAIF-assessable deposits in the amount necessary to recapitalize the SAIF.
As implemented by the FDIC, the special assessment was fixed at 0.657% of an
institution's SAIF-assessable deposits, and the special assessment was paid
on November 27, 1996. The special assessment was based on the amount of
SAIF-assessable deposits held at March 31, 1995, as adjusted under the Funds
Act. For the Bank, the special assessment on the deposits held on March 31,
1995, was $241,299 (before giving effect to any tax benefits), and was
charged to expense in the quarter ended September 30, 1996.
The Funds Act also provides that the FDIC cannot assess regular
insurance assessments for an insurance fund unless required to maintain or
to achieve the designated reserve ratio of 1.25%, except on those of its
member institutions that are not classified as "well capitalized" or that
have been found to have "moderately severe" or "unsatisfactory" financial,
operation or compliance weaknesses. The Bank has not been so classified by
the FDIC or the OTS. In view of the recapitalization of the SAIF, the FDIC
reduced the annual assessment rates for SAIF-assessable deposits for periods
beginning on October 1, 1996. For the last quarter of 1996, the reduced
annual assessment rates ranged from 0.18% to 0.27% of deposits. Beginning
with January 1, 1997, the annual assessment rates are the same for both BIF-
insured and SAIF-insured institutions, with the annual assessment rates
ranging from 0.0% to 0.27% of deposits.
In addition, the Funds Act expanded the assessment base for the
payments on the bonds ("FICO bonds") issued in the late 1980s by the
Financing Corporation to recapitalize the now defunct Federal Savings and
Loan Insurance Corporation. Beginning January 1, 1997, the deposits of both
BIF-and SAIF-insured institutions will be assessed for the payments on the
FICO bonds. Until December 31, 1999, or such earlier date on which the last
savings association ceases to exist, the rate of assessment for BIF-
assessable deposits will be one-fifth of the rate imposed on SAIF-assessable
deposits. The FDIC has reported that, for the semiannual period beginning
on January 1, 1997, the rate of assessments for the payments on the FICO
bonds will be 0.013% for BIF-assessable deposits and 0.0648% for SAIF-
assessable deposits.
The Funds Act also provides for the merger of the BIF and SAIF on
January 1, 1999, with such merger being conditioned upon the prior
elimination of the thrift charter. The Funds Act required the Secretary of
the Treasury to conduct a study of relevant factors with respect to the
development of a common charter for all insured depository institutions and
the abolition of separate charters for banks and thrifts and to report the
Secretary's conclusions and the findings to the Congress. The Secretary of
the Treasury has recommended that the separate charter for thrifts be
eliminated only if other legislation is adopted that permits bank holding
companies to engage in certain non-financial activities. Absent legislation
permitting such non-financial activity, the Secretary of the Treasury
recommended retention of the thrift charter. The Secretary of the Treasury
also recommended the merger of the BIF and SAIF irrespective of whether the
thrift charter is eliminated. Other proposed legislation has been
introduced in Congress that would require thrift institutions to convert to
bank charters.
An insured institution is subject to periodic examination, and
regulators may revalue the assets of an institution, based upon appraisals,
and require establishment of specific reserves in amounts equal to the
difference between such revaluation and the book value of the assets. SAIF
insurance of deposits may be terminated by the FDIC, after notice and
hearing, upon a finding by the FDIC that a savings institution has engaged
in an unsafe or unsound practice, or is in unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule,
order or condition imposed by the OTS or the FDIC. Management of the Bank
is not aware of any practice, condition or violation that might lead to
termination of its deposit insurance.
Liquidity and Capital Resources
On September 30, 1997, the Holding Company's stockholders' equity was
$5,277,349 or 8.58% of total assets compared to $5,075,545 or 8.61% at March
31, 1997.
The Office of Thrift Supervision ("OTS") requires savings institutions
such as Waldoboro to maintain a specified ratio of cash and short-term
investment securities to new withdrawal deposits and borrowings with
maturities of one year or less. This minimum liquidity ratio, currently 5%,
may vary from time to time, depending upon general economic conditions and
deposit flows. As a part of its asset/liability management program,
Waldoboro has historically maintained liquidity in excess of regulatory
requirements to better match its short-term liabilities. At September 30,
1997, Waldoboro's liquidity ratio was approximately 17.02% compared to
14.67% at September 30, 1996.
The minimum capital standards set by the OTS have three components:
(1) tangible capital; (2) leverage ratio or "core" capital; and (3) risk-
based capital. The tangible capital requirement is 1.5% and the leverage
ratio or "core" capital requirement is 3% of an institution's adjusted total
assets. The risk-based capital requirement is 8% of risk-weighted assets.
The amount of an institution's risk-weighted assets is determined by
assigning a "risk-weighted" value to each of the institution's assets.
Under the regulations, the "risk-weighted" of a particular type of assets
depends upon the degree of credit risk which is deemed to be associated with
that type of asset.
At September 30, 1997, Waldoboro had tangible capital of $5,124,000 or
8.33% of adjusted total assets, which exceeds the minimum required tangible
capital and leverage ratio or "core" capital requirements. Waldoboro had
risk-based capital of $5,446,000 or 14.96% of risk-weighted assets at
September 30, 1997.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
There was no material litigation pending to which the Registrant was a
party or to which the property of the Registrant was subject during the
quarter ended September 30, 1997.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
Item 5. Other Information.
------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits required by Item 601 of Regulation S-K.
(10) Trust Agreement between Mid-Coast Bancorp, Inc. and
Merrill Merchants Bank for the Recognition and Retention Plan
of Mid-Coast Bancorp, Inc.
(b) Reports on Form 8-K.
(27) Financial Data Schedule*
* Submitted only with filing in electronic format.
SIGNATURES
In accordance with the requirements of The Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MID-COAST BANCORP, INC.
Date /s/ Wesley E. Richardson
------------------------ ------------------------------------
(Signature)
Wesley E. Richardson
President and Treasurer
Trust Agreement
---------------
between
Mid-Coast Bancorp, Inc.
and
Merrill Merchants Bank
for the
Recognition and Retention Plan
of Mid-Coast Bancorp, Inc.
______________________________________
Entered into as of October __, 1997
TABLE OF CONTENTS
Page
Article I
Trust Fund
Section 1.1 Trust Fund 1
Section 1.2 Collection of Contributions 2
Section 1.3 Non-diversion of Funds 2
Article II
Investment and Administration
Section 2.1 In General 2
Section 2.2 Liquidity 3
Section 2.3 Trustee's Administrative Authority 3
Section 2.4 Investment Decisions 5
Section 2.5 Exercise of Voting Rights with Respect to Shares 5
Section 2.6 Response to Tender Offers and Similar Events 6
Article III
Trustee and Committee
Section 3.1 Committee 6
Section 3.2 Trustee's Reliance 7
Section 3.3 Legal Counsel 7
Section 3.4 Liability under the Plan 7
Section 3.5 Indemnification 7
Article IV
Distributions from the Trust Fund
Section 4.1 In General 8
Section 4.2 Direction by the Committee 8
Section 4.3 Method of Payment 8
Article V
Trustee's Accounts
Section 5.1 Accounts 9
Section 5.2 Valuation of Trust Fund 9
Section 5.3 Reports to the Committee 9
Section 5.4 Right of Judicial Settlement 10
Section 5.5 Enforcement of Agreement 10
Article VI
Taxes; Compensation of Trustee
Section 6.1 Taxes 10
Section 6.2 Compensation of Trustee; Expenses 10
Article VII
Resignation and Removal of Trustee
Section 7.1 Resignation or Removal of Trustee 11
Section 7.2 Appointment of Successor 11
Section 7.3 Succession 11
Section 7.4 Successor Bound by Agreement 12
Article VIII
Amendment and Termination
Section 8.1 Amendment and Termination 12
Article IX
Miscellaneous
Section 9.1 Binding Effect; Assignability 12
Section 9.2 Governing Law 13
Section 9.3 Notices 13
Section 9.4 Severability 14
Section 9.5 Waiver 14
Section 9.6 Non-Alienation 14
Section 9.7 Compliance with Securities Laws 14
Section 9.8 Headings 14
Section 9.9 Construction of Language 14
Section 9.10 Counterparts 15
TRUST AGREEMENT
---------------
for the
Recognition and Retention Plan
of Mid-Coast Bancorp, Inc.
_________________________________
This Agreement ("Agreement") is made as of October __, 1997, by and
between Mid-Coast Bancorp, Inc., a business corporation organized under the
laws of the State of Delaware and having its executive offices at 1768
Atlantic Highway, Box 589, Waldoboro, Maine 04572 ("Company"), and Merrill
Merchants Bank, a corporation organized under the laws of the United States
of America and having an office at 201 Main Street, Bangor, Maine 04401
("Trustee").
W i t n e s s e t h :
---------------------
Whereas, the Company has, by action of its Board of Directors, adopted
the Recognition and Retention Plan of Mid-Coast Bancorp, Inc. (the "Plan")
to promote the growth and profitability of the Company and to provide
eligible directors, certain key officers and employees of the Company
("Participants") with an incentive to achieve corporate objectives, to
attract and retain directors, key officers and employees of outstanding
competence and to provide such directors, officers and employees with an
equity interest in the Company; and
Whereas, the Company has, in accordance with the terms of the Plan,
appointed a Compensation Committee ("Committee") to administer the Plan; and
Whereas, the Plan contemplates the establishment and continuance of a
trust so long as the Plan remains in effect, to which contributions will be
made from time to time, to be accepted, invested and maintained in
accordance with this Agreement;
Now, Therefore, in consideration of the premises and the mutual
covenants contained herein, the Company and the Trustee hereby agree as
follows:
Article I
---------
Trust Fund
----------
Section 1.1 Trust Fund.
-----------
The Company hereby establishes with the Trustee a trust, pursuant to
the Plan, in which shall be deposited such common stock, par value $1.00 per
share, of Mid-Coast Bancorp, Inc. ("Shares") and such sums of money as shall
from time to time be paid or delivered to or deposited with the Trustee by
or with the approval of the Company in accordance with terms of the Plan.
All such Shares and all such sums of money, all investments and
reinvestments thereof and all earnings, appreciation and additions allocable
thereto, less losses, depreciation and expenses allocable thereto and any
payments made therefrom as authorized under the Plan or this Agreement shall
constitute the "Trust Fund." The Trust Fund shall be held, managed and
administered by the Trustee, IN TRUST, and dealt with in accordance with the
provisions of this Agreement and in accordance with any funding policy or
guidelines established under the Plan that are communicated in writing to
the Trustee.
Section 1.2 Collection of Contributions.
----------------------------
The Trustee shall have no authority over and shall have no
responsibility for the collection of any contributions to the Trust Fund
required under the Plan, nor shall it have any authority to bring any action
or proceeding to enforce the collection of any such amount or to make
inquiry as to whether any such contributions received by it were properly
collected or computed in accordance with the terms of the Plan.
Section 1.3 Non-diversion of Funds.
-----------------------
No part of the Trust Fund other than such part as may be used to
defray expenses and taxes properly charged to the Trust Fund under the Plan
or this Agreement shall be used for or diverted to purposes other than for
the exclusive benefit of Participants and their beneficiaries prior to the
satisfaction of all of the Company's liabilities under the Plan.
Article II
----------
Investment and Administration
-----------------------------
Section 2.1 In General.
-----------
The Trust Fund shall be held by the Trustee and shall be invested and
reinvested as hereinafter provided in this Article II, without distinction
between principal and income and without regard to the restrictions of the
laws of the State of Maine, or of any other jurisdiction, relating to the
investment of trust funds. The Trust Fund shall be invested pursuant to
directions given in accordance with section 2.4.
Section 2.2 Liquidity.
----------
Notwithstanding any provisions of this Article II to the contrary, the
Trustee, in its sole discretion or as the Committee shall request, may
retain uninvested cash or cash balances, and sell, to provide cash or cash
balances, such investments in whatever portion of the Trust Fund that it may
deem advisable. Pending investment, the Trustee, in its sole discretion,
may temporarily invest any funds held or received by it for investment in
any savings account, time or other interest bearing deposit or in any other
interest bearing obligation of any one or more savings banks, savings and
loan associations, banks and other financial institutions, including the
Trustee and any subsidiary of the Company, in interest bearing debt
obligations of any private or governmental entity having a term to maturity
of one year or less, and in any regulated investment company, common trust
fund or other pooled investment fund, whether or not sponsored or managed by
the Trustee or an affiliate thereof, the investments of which consist
primarily of such accounts and obligations.
Section 2.3 Trustee's Administrative Authority.
-----------------------------------
(a) In addition to and not by way of limitation of any other powers
conferred upon the Trustee by law or by other provisions of this Agreement,
but subject to the provisions of section 1.3 and this Article II, the
Trustee is authorized and empowered:
(i) to sell, exchange, convey, transfer or dispose of and also
to grant options with respect to any property, whether real or
personal, at any time held by it, and any sale may be made by private
contract or by public auction, and for cash or upon credit, or partly
for cash and partly upon credit, and no person dealing with the
Trustee shall be bound to see to the application of the purchase money
or to inquire into the validity, expediency or propriety of any such
sale or other disposition;
(ii) to retain, manage, operate, repair and rehabilitate and to
mortgage or lease for any period any real estate held by it and, in
its discretion, cause to be formed any corporation or trust to hold
title to any such real property;
(iii) unless otherwise agreed to and subject to section 2.5, to
vote in person or by proxy on any stocks, bonds, or other securities
held by it, to exercise any options appurtenant to any stocks, bonds
or other securities for the conversion thereof into other stocks,
bonds or securities, or to exercise any rights to subscribe for
additional stocks, bonds or other securities and to make any and all
necessary payment therefor and to enter into any voting trust;
(iv) with respect to any investment, to join in, dissent from,
or oppose any action or inaction of any corporation, or of the
directors, officers or stockholders of any corporation, including,
without limitation, any reorganization, recapitalization,
consolidation, liquidation, sale or merger;
(v) to settle, adjust, compromise, or submit to arbitration any
claims, debts or damages due or owing to or from the Trust Fund; and
(vi) to deposit any property with any protective,
reorganization or similar committee, to delegate power thereto and to
pay and agree to pay part of its expenses and compensation and any
assessments levied with respect to any property so deposited.
In exercising such powers with respect to any portion of the Trust
Fund that is invested in the discretion of the Trustee pursuant to section
2.2, the Trustee shall act in its discretion.
(b) In addition to and not by way of limitation of any other powers
conferred upon the Trustee by law or other provisions of this Agreement, the
Trustee is authorized and empowered, in its discretion:
(i) to commence or defend suits or legal proceedings, and to
represent the Trust Fund in all suits or legal proceedings in any
court or before any other body or tribunal;
(ii) to register securities in its name or in the name of any
nominee or nominees with or without indication of the capacity in
which the securities shall be held, or to hold securities in bearer
form, but the books and records of the Trustee shall at all times show
that such investments are part of the Trust Fund;
(iii) to borrow or raise moneys for the purposes of the Trust
Fund from any lender, except the Trustee in its individual capacity,
and for any sum so borrowed to issue its promissory note as Trustee
and to secure the repayment thereof by pledging all or any part of the
Trust Fund, and no person lending money to the Trustee shall be bound
to see the application of the money loaned or to inquire into the
validity, expediency or propriety of any such borrowing;
(iv) to make distributions in cash or in Shares upon the
direction of the Committee;
(v) to employ such agents, counsel and accountants as the
Trustee shall deem advisable and to pay their reasonable expenses and
compensation;
(vi) to make, execute, acknowledge, and deliver any and all
deeds, leases, assignments and instruments; and
(vii) generally to do all acts which the Trustee may deem
necessary or desirable for the administration and protection of the
Trust Fund.
Section 2.4 Investment Decisions.
---------------------
The Trustee shall invest and reinvest the Trust Fund in accordance
with the directions of the Committee. The Trustee shall be under no duty or
obligation to review any investment to be acquired, held or disposed of
pursuant to directions of the Committee nor to make any recommendation with
respect to the disposition or continued retention of any such investment.
The Trustee shall have no liability or responsibility for its actions or
inaction pursuant to the direction of, or its failure to act in the absence
of directions from, the Committee. The Company hereby agrees to indemnify
the Trustee and hold it harmless from and defend it against any claim or
liability which may be asserted against the Trustee by reason of any action
or inaction by it pursuant to a direction by the Committee or failing to act
in the absence of any such direction. To the extent that the Committee does
not furnish directions as to the investment of any portion of the Trust Fund
that is subject to its direction, the Trustee shall invest and reinvest the
Trust Fund (a) in Shares and (b) to the extent that it is not practicable to
invest and reinvest the Trust Fund in Shares, in any savings account, time
or other interest bearing deposit or in any other interest bearing
obligation of any one or more savings banks, savings and loan associations,
banks and other financial institutions, including the Trustee and any
subsidiary of the Company, in interest bearing debt obligations of any
private or governmental entity having a term to maturity of one year or
less, and in any regulated investment company, common trust fund or other
pooled investment fund, whether or not sponsored or managed by the Trustee
or an affiliate thereof, the investments of which consist primarily of such
accounts and obligations.
Section 2.5 Exercise of Voting Rights with Respect to Shares.
-------------------------------------------------
(a) Except to the extent provided in section 2.5(b), the Committee
shall direct the Trustee as to the manner of exercise of voting rights
appurtenant to Shares held in the Trust Fund. The Trustee shall act in
accordance with the directions that it receives from the Committee for each
matter as to which voting rights are to be exercised and shall refrain from
exercising the voting rights appurtenant to Shares held in the Trust Fund in
the absence of such directions. The Trustee shall have no discretion over
or responsibility or liability for its actions taken in accordance with such
directions, or for its failure to exercise such voting rights in the absence
of such directions.
(b) Notwithstanding section 2.5(a), if and to the extent requested in
writing by the Committee, the Trustee shall solicit and accept directly from
Participants directions as to the manner of exercise of any voting rights in
connection with Shares held in the Trust Fund. In such event, the Trustee
shall act in accordance with the directions that it receives from each
Participant for each matter as to which voting rights are to be exercised
and shall refrain from exercising such voting rights in the absence of
directions as to how to exercise such voting rights. The Trustee shall have
no discretion over or responsibility or liability for its actions taken in
accordance with such directions, or for its failure to exercise such voting
rights in the absence of such directions.
Section 2.6 Response to Tender Offers and Similar Events.
---------------------------------------------
(a) Except to the extent provided in section 2.6(b), the Committee
shall direct the Trustee as to the manner of exercise of any rights to
tender Shares held in the Trust Fund or otherwise act in response to any
tender offer with respect to Shares or any other offer to purchase,
exchange, redeem or otherwise transfer such Shares. The Trustee shall act
in accordance with the directions that it receives from the Committee for
each matter as to which such rights are to be exercised and shall refrain
from taking any action in response to such an offer in the absence of such
directions. The Trustee shall have no discretion over or responsibility or
liability for its actions taken in accordance with such directions, or for
its failure to exercise such rights in the absence of such directions.
(b) Notwithstanding section 2.6(a), if and to the extent requested in
writing by the Committee, the Trustee shall solicit and accept directly from
Participants directions as to the manner of exercise of any rights to tender
Shares held in the Trust Fund or otherwise act in response to any tender
offer with respect to such Shares or any other offer to purchase, exchange,
redeem or otherwise transfer such Shares. In such event, the Trustee shall
act in accordance with the directions that it receives from each Participant
for each matter as to which rights are to be exercised and shall refrain
from taking any actions in response to such an offer in the absence of such
directions. The Trustee shall have no discretion over or responsibility or
liability for its actions taken in accordance with such directions, or for
its failure to exercise such rights in the absence of such directions.
Article III
-----------
Trustee and Committee
---------------------
Section 3.1 Committee.
----------
The Company shall certify to the Trustee the names and specimen
signatures of the members of the Committee appointed by the Company to
administer the Plan and give directions to the Trustee. Such certification
shall include directions as to the number of signatures required for any
communication or direction to the Trustee. The Company shall promptly give
notice to the Trustee of changes in the identity of the membership of the
Committee. The Committee may also certify to the Trustee the name of any
person, together with a specimen signature of any such person, authorized to
act for it in relation to the Trustee. The Committee shall promptly give
notice to the Trustee of any change in any person authorized to act on
behalf of it. For all purposes under this Agreement, until any such notice
is received by the Trustee, the Trustee shall be fully protected in assuming
that the membership of the Committee and the authority of any person
certified to act in its behalf remain unchanged.
Section 3.2 Trustee's Reliance.
-------------------
The Trustee may rely and act upon any certificate, notice or direction
of the Committee, or of a person authorized to act on its behalf, or of the
Company which the Trustee believes to be genuine and to have been signed by
the person or persons duly authorized to sign such certificate, notice, or
direction.
Section 3.3 Legal Counsel.
--------------
The Trustee may consult with legal counsel (who may be counsel to the
Company) concerning any question which may arise under this Agreement, and
the opinion of such counsel shall be full and complete protection with
respect to any action taken, or omitted, by the Trustee hereunder in good
faith in accordance with the opinion of such counsel.
Section 3.4 Liability under the Plan.
-------------------------
The duties and obligations of the Trustee shall be limited to those
expressly set forth in this Agreement, notwithstanding any reference herein
to the Plan. The Trustee shall not be obliged to take or defend any action
or participate in or proceed with any suit or legal or administrative
proceeding which might subject it to substantial cost or expense or
liability unless first indemnified by the Company in an amount and by
security satisfactory to it against all losses, costs, damages and expenses
which may result therefrom or be occasioned thereby.
Section 3.5 Indemnification.
----------------
The Company shall pay and shall protect, indemnify and save harmless
the Trustee and its officers, employees and agents from and against any and
all losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs and expenses (including reasonable
attorneys' fees and expenses) of any nature arising from or relating to any
action or any failure to act by the Trustee, its officers, employees and
agents with respect to the transactions contemplated by this Trust
Agreement, including any claim made by the Company or its successors that
this Trust Agreement is invalid or ultra vires, except to the extent that
any such loss, liability, action, suit, judgment, demand, damage, cost or
expense is the result of the negligence of the Trustee (determined by
reference to customary trust company standards) or willful misconduct of the
Trustee, its officers, employees or agents.
Article IV
----------
Distributions from the Trust Fund
---------------------------------
Section 4.1 In General.
-----------
The Trustee shall make distributions from the Trust Fund in such
amounts, at such times, and to such persons as the Committee may, from time
to time, direct.
Section 4.2 Direction by the Committee.
---------------------------
(a) A direction by the Committee to make a distribution from the
Trust Fund shall:
(i) be made in writing;
(ii) specify the amount of the payment or the number of Shares
to be distributed, the date such payment is to be made, the person to
whom payment is to be made, and the address to which the payment is to
be sent; and
(iii) be deemed to certify to the Trustee that such direction
and any payment pursuant thereto are authorized under the terms of the
Plan.
(b) The Trustee shall be entitled to rely conclusively on the
Committee's certification of its authority to direct a payment without
independent investigation. The Trustee shall have no liability to any
person with respect to payments made in accordance with the provisions of
this Article IV.
Section 4.3 Method of Payment.
------------------
Payments of money by the Trustee may be made by its check payable to
the order of the payee designated by the Committee and mailed to the payee
in care of the Company. Distributions of Shares shall be made by causing
the Company, or its transfer agent, to issue to the distributee a stock
certificate evidencing ownership of the designated number of Shares. To the
extent that any distribution of Shares to any person requires the
registration of such Shares under the securities or blue sky laws of the
United States or any state, or otherwise requires any governmental
approvals, the Company shall undertake to complete such registration or
obtain such approvals at its sole expense.
Article V
---------
Trustee's Accounts
------------------
Section 5.1 Accounts.
---------
The Trustee shall keep accurate and detailed accounts of all
investments, reinvestments, receipts and disbursements, and other
transactions hereunder, and all such accounts and the books and records
relating thereto shall be open to inspection at all reasonable times by the
Company or the Committee or persons designated by them. The Trustee may
rely and act upon any direction by the Committee with respect to the
allocation of Shares in accordance with section 3.2.
Section 5.2 Valuation of Trust Fund.
------------------------
The Trustee shall value or cause to be valued the Trust Fund as of the
last business day of each fiscal year of the Company ("Valuation Date"), and
shall report to the Committee the value of the Trust Fund as of such date,
within a reasonable time after the first day of the month next succeeding
each Valuation Date.
Section 5.3 Reports to the Committee.
-------------------------
(a) Within seventy-five (75) days following the last day of each
fiscal year of the trust, and within seventy-five (75) days following the
effective date of the resignation or removal of the Trustee as provided in
section 7.1, the Trustee shall render to the Committee a written account
setting forth all investments, receipts, disbursements and other
transactions affecting the Trust Fund, which account shall be mailed to the
Committee.
(b) The Committee shall notify the Trustee in writing of any
objection or exception to an account so rendered not later than sixty (60)
days following the date on which the Account was mailed to the Committee,
whereupon the Committee and the Trustee shall cooperate in resolving such
objection or exception.
(c) If the Committee has not communicated in writing to the Trustee
within sixty (60) days following the mailing of the account to the Committee
any exception or objection to the account, the account shall become an
account stated at the end of such sixty (60) day period.
(d) Whenever an account shall have become an account stated as
aforesaid, such account shall be deemed to be finally settled and shall be
conclusive upon the Trustee, the Company and all persons having or claiming
to have any interest in the Trust Fund or under the Plan, and the Trustee
shall be fully and completely discharged and released to the same extent as
if the account had been settled and allowed by a judgment or decree of a
court of competent jurisdiction in an action or proceeding in which the
Trustee, the Company, and all persons having or claiming to have any
interest in the Trust Fund or under the Plan were parties.
Section 5.4 Right of Judicial Settlement.
-----------------------------
Notwithstanding the provisions of section 5.3, the Trustee, the
Committee, and the Company, or any of them, shall have the right to apply at
any time to a court of competent jurisdiction for the judicial settlement of
the Trustee's account. In any such case, it shall be necessary to join as
parties thereto only the Trustee, the Committee and the Company; and any
judgment or decree which may be entered therein shall be conclusive upon all
persons having or claiming to have any interest in the Trust Fund or under
the Plan.
Section 5.5 Enforcement of Agreement.
-------------------------
To protect the Trust Fund from expenses which might otherwise be
incurred, the Company and the Committee shall have authority, either jointly
or severally, to enforce this Agreement on behalf of all persons claiming
any interest in the Trust Fund or under the Plan, and no other person may
institute or maintain any action or proceeding against the Trustee or the
Trust Fund in the absence of written authority from the Committee or a
judgment of a court of competent jurisdiction that in refusing authority the
Committee acted fraudulently or in bad faith.
Article VI
----------
Taxes; Compensation of Trustee
------------------------------
Section 6.1 Taxes.
------
Any taxes that may be imposed upon the Trust Fund or the income
therefrom shall be deducted from and charged against the Trust Fund.
Section 6.2 Compensation of Trustee; Expenses.
----------------------------------
The Trustee shall receive for its services hereunder such compensation
as may be agreed upon in writing from time to time by the Company and the
Trustee and shall be reimbursed for its reasonable expenses, including
counsel fees, incurred in the performance of its duties hereunder. The
Trustee shall deduct from and charge against the Trust Fund such
compensation and all such expenses unless previously paid by the Company.
Any such deduction and charge shall be applied first to any assets of the
Trust Fund that have not been allocated to any employee under the terms of
the Plan, and second, if and to the extent necessary proportionately to the
assets allocated to employees under the terms of the Plan.
Article VII
-----------
Resignation and Removal of Trustee
----------------------------------
Section 7.1 Resignation or Removal of Trustee.
----------------------------------
The Trustee may resign as trustee hereunder at any time by giving
sixty (60) days prior written notice to the Company. The Company may remove
the Trustee as trustee hereunder at any time by giving the Trustee prior
written notice of such removal, which shall include notice of the
appointment of a successor trustee. Such removal shall take effect not
earlier than sixty (60) days following receipt of such notice by the Trustee
unless otherwise agreed upon by the Trustee and the Company.
Section 7.2 Appointment of Successor.
-------------------------
In the event of the resignation or removal of the Trustee, a successor
trustee shall be appointed by the Company. Except as is otherwise provided
in section 7.l, such appointment shall take effect upon delivery to the
Trustee of an instrument so appointing the successor and an instrument of
acceptance executed by such successor, both of which instruments shall be
duly acknowledged before a notary public. If within sixty (60) days after
notice of resignation shall have been given by the Trustee a successor shall
not have been appointed as aforesaid, the Trustee may apply to any court of
competent jurisdiction for the appointment of such successor.
Section 7.3 Succession.
-----------
(a) Upon the appointment of a successor, the Trustee shall transfer
and deliver the Trust Fund to such successor; provided, however, that the
Trustee may reserve such sum of money as it shall in its sole discretion
deem advisable for payment of its fees and all expenses in connection with
the settlement of its account, and any balance of such reserve remaining
after the payment of such charges shall be paid over to the successor
trustee. If such reserve shall be insufficient to pay such charges, the
Trustee shall be entitled to recover the amount of any deficiency from the
Company, from the successor trustee, or from both.
(b) Upon the completion of the succession and the rendering of its
final accounts, the Trustee shall have no further responsibilities
whatsoever under this Agreement.
Section 7.4 Successor Bound by Agreement.
-----------------------------
All the provisions of this Agreement shall apply to any successor
trustee with the same force and effect as if such successor had been
originally named herein as the trustee hereunder.
Article VIII
------------
Amendment and Termination
-------------------------
Section 8.1 Amendment and Termination.
--------------------------
(a) The Company may, at any time and from time to time, by instrument
in writing executed pursuant to authorization of its Board of Directors, (i)
amend in whole or in part any or all of the provisions of this Agreement, or
(ii) terminate this Agreement and the trust created hereby; provided,
however, that no amendment which affects the rights, duties or
responsibilities of the Trustee may be made without the Trustee's consent.
(b) Any such amendment shall become effective upon receipt by the
Trustee of the instrument of amendment and endorsement thereon by the
Trustee of its consent thereto, if such consent is required. Any such
termination shall become effective upon the receipt by the Trustee of the
instrument of termination; thereafter the Trustee, upon the direction of the
Committee, shall liquidate the Trust Fund to the extent required for
distribution and, after the final account of the Trustee has been approved
or settled, shall distribute any Shares (and any related dividends or other
related proceeds) allocated to Participants to such Participants and shall
distribute the remaining balance of the Trust Fund in its hands to the
Company.
Article IX
----------
Miscellaneous
-------------
Section 9.1 Binding Effect; Assignability.
------------------------------
This Agreement shall be binding upon, and the powers granted to the
Company and the Trustee, respectively, shall be exercisable by the
respective successors and assigns of the Company and the Trustee. Any
corporation which shall, by merger, consolidation, purchase, or otherwise,
succeed to substantially all the trust business of the Trustee shall, upon
such succession and without any appointment or other action by the Company,
be and become successor trustee hereunder.
Section 9.2 Governing Law.
--------------
The Plan shall be construed and enforced in accordance with the laws
of the State of Maine without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by
the federal laws of the United States of America.
Section 9.3 Notices.
--------
Any communication requested or permitted to be given under this
Agreement, including any notice, direction, designation, certification,
order, instruction, or objection shall be in writing and signed by the
person authorized under the Plan to give the communication. The person
receiving such a communication shall be fully protected in acting in
accordance therewith. Any notice required or permitted to be given to a
party hereunder shall be deemed given if in writing and hand delivered or
mailed, postage prepaid, certified mail, return receipt requested, to such
party at the following address or at such other address as such party may by
notice specify:
If to the Company:
Mid-Coast Bancorp, Inc.
1768 Atlantic Highway
Box 589
Waldoboro, Maine 04572
Attention: Corporate Secretary
-------------------
If to the Trustee:
Merrill Merchants Bank
P.O. Box 925
Bangor, Maine 04402-0925
Attention: Mr. George H. Moore, Jr.
Senior Vice President, Trust and Investment Services
----------------------------------------------------
Section 9.4 Severability.
-------------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remaining provisions.
Section 9.5 Waiver.
-------
Failure of any party to insist at any time or times upon strict
compliance with any provision of this Agreement shall not be a waiver of
such provision at such time or any later time unless in a writing designated
as a waiver and signed by or on behalf of the party against whom enforcement
of the waiver is sought.
Section 9.6 Non-Alienation.
---------------
No interest, right or claim in or to any part of the Trust Fund or any
payment therefrom shall be assignable, transferable or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind, and the Trustee and the
Committee shall not recognize any attempt to assign, transfer, sell,
mortgage, pledge, hypothecate, commute, or anticipate the same, except to
the extent required by law.
Section 9.7 Compliance with Securities Laws.
--------------------------------
In the event that the Plan or any portion thereof, or any interest
therein, by virtue of investments made in Shares, shall be deemed to be a
"security" for purposes of the Securities Act of 1933, the Securities
Exchange Act of 1934 or any other federal or state law, for which there is
no exemption from the registration, reporting, blue sky or other
requirements applicable to securities under such laws, the Company shall, at
its sole cost and expense, take all such actions as are necessary or
appropriate to comply with the requirements of such laws. The Company
hereby agrees to indemnify the Trustee and hold it harmless from and against
any claim or liability, including any and all fees, costs and expenses
arising from the registration and continuing registration of the Plan, any
portion thereof or any interest therein, which may be asserted against the
Trustee by reason of any determination that the Plan or any portion thereof,
or any interest therein, constitutes such a security.
Section 9.8 Headings.
---------
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings
and the text of the Agreement, the text shall control.
Section 9.9 Construction of Language.
-------------------------
Whenever appropriate in this Agreement, words used in the singular may
be read in the plural; words used in the plural may be read in the singular;
and words importing the masculine gender shall be deemed equally to refer to
the female gender or the neuter. Any reference to a section number shall
refer to a section of this Agreement, unless otherwise indicated.
Section 9.10 Counterparts.
-------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute
one and the same instrument.
In Witness Whereof, the Company and the Trustee, respectively, have
caused this Agreement to be executed in their corporate names and their
corporate seals to be hereunto affixed and duly attested, all as of the date
first above written.
Mid-Coast Bancorp, Inc.
By _________________________________
Name:
Title:
ATTEST:
___________________________________
Secretary
[Seal]
Merrill Merchants Bank
By _________________________________
Name:
Title:
ATTEST:
___________________________________
Secretary
[Seal]
STATE OF MAINE )
: ss.:
COUNTY OF )
On this ____ day of ___________________, 1997, before me personally
came ______________________, to me known, who, being by me duly sworn, did
depose and say that (s)he resides at ___________________________________;
that (s)he is the ______________________________ of Mid-Coast Bancorp, Inc.,
the business corporation described in and which executed the foregoing
instrument; that (s)he knows the seal of said business corporation; that the
seal affixed to said instrument is such business corporation's seal; that it
was so affixed by order of the Board of Directors of said business
corporation; and that (s)he signed his(her) name thereto by like order.
__________________________________
Notary Public
STATE OF MAINE )
: ss.:
COUNTY OF )
On this _____ day of _____, 1997, before me personally came
________________, to me known, who, being by me duly sworn, did depose and
say that (s)he resides at _________________________; that (s)he is the
________________________ of Merrill Merchants Bank, the banking corporation
described in and which executed the foregoing instrument; that (s)he knows
the seal of said banking corporation; that the seal affixed to said
instrument is such seal; that it was so affixed by order of the Board of
Directors of said banking corporation; and that (s)he signed his(her) name
thereto by like order.
Notary Public
__________________________________
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 1,117,193
<INT-BEARING-DEPOSITS> 111,511
<FED-FUNDS-SOLD> 3,825,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,458,718
<INVESTMENTS-CARRYING> 949,391
<INVESTMENTS-MARKET> 942,369
<LOANS> 50,223,342
<ALLOWANCE> 321,918
<TOTAL-ASSETS> 61,473,275
<DEPOSITS> 44,504,591
<SHORT-TERM> 0
<LIABILITIES-OTHER> 251,335
<LONG-TERM> 11,440,000
0
0
<COMMON> 232,991
<OTHER-SE> 5,044,358
<TOTAL-LIABILITIES-AND-EQUITY> 61,473,275
<INTEREST-LOAN> 1,120,283
<INTEREST-INVEST> 50,655
<INTEREST-OTHER> 51,518
<INTEREST-TOTAL> 1,222,456
<INTEREST-DEPOSIT> 482,762
<INTEREST-EXPENSE> 653,480
<INTEREST-INCOME-NET> 568,976
<LOAN-LOSSES> 15,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 444,248
<INCOME-PRETAX> 187,712
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,355
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
<YIELD-ACTUAL> 4.18
<LOANS-NON> 337,296
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 307,918
<CHARGE-OFFS> 1,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 321,918
<ALLOWANCE-DOMESTIC> 321,918
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>