As filed with the Securities and Exchange Commission on April 14 ,1997
Registration Statement No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SLADE'S FERRY BANCORP
(Exact name of registrant as specified in its charter)
Massachusetts 6711 04-3061936
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
100 Slade's Ferry Avenue
P.O. Box 390
Somerset, Massachusetts 02726
(508) 675-2121
(Address, including ZIP code, and telephone number, including
area code of registrant's principal executive officer)
PETER G. COLLIAS, Esquire
45 North Main Street
P.O. Box 2519
Fall River, Massachusetts 02722
(508) 675-7894
(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
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With copies to:
THOMAS H. TUCKER, Esquire
McGowan, Engel, Tucker, Garrett & Schultz
125 High Street
Boston, Massachusetts 02110
(617) 951-9980
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Approximate date of commencement of proposed sale to the public. As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
<TABLE>
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CALCULATION OF REGISTRATION FEE
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Proposed
Proposed maximum
Title of each class maximum aggregate Amount of
of securities Amount to be offering price offering registration
to be registered registered per unit (1) price(1) fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 550,000 shares $9.50 $5,225,000 $1,583.33
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<FN>
<F1> Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
</FN>
</TABLE>
"The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine."
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Subject To Completion, Dated April 14, 1997
PROSPECTUS 325,000 SHARES OF COMMON STOCK
SLADE'S FERRY BANCORP
(Formerly Weetamoe Bancorp)
Holding Company for Slade's Ferry Bank
Slade's Ferry Bancorp (formerly Weetamoe Bancorp) (The "Company") is
hereby offering 325,000 shares of its Common Stock, par value $.01 per share
("Common Stock"). All of the shares offered hereby are being sold by the
Company. The Company, at its option, may offer up to an additional 225,000
shares of Common Stock, thereby increasing the amount of Common Stock
offered to 550,000 shares. Assuming that all of the Common Stock offered
hereby is sold in the initial offering and the optional offering, the
Company will receive approximately $5,225,000. The Company will contribute
60% of such proceeds to the Bank to increase the Capital of the Bank. The
minimum purchase is 100 shares and the maximum purchase is 10,000 shares by
any one purchaser.
The Company's shares are listed in the "pink sheets" of the over-the-
counter market on a "work out bid" basis (quoted prices are negotiable
rather than firm). On April 10, 1997, the average of the bid and ask prices
of the Common Shares quoted by A.G. Edwards & Sons, Inc., the market maker
for the stock, was $9.375.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE MASSACHUSETTS COMMISSIONER OF BANKS,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY STATE SECURITIES COMMISSION
OR ANY OTHER GOVERNMENT AGENCY OR OFFICIAL, NOR HAVE ANY OF THE FOREGOING
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriters
Commissions &
Price to Public(1) Expenses Proceeds to Company (2)
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<S> <C> <C> <C>
Total Initial Offering, 325,000 shs $ None $
Total Maximum Offering, 550,000 shs $ None $
<FN>
<F1> The public offering price will be established at the time the
registered statement is ready to become effective and is expected to
conform with the market price of the stock at that time.
<F2> Before deducting expenses payable by the Company estimated at $40,000
including the following estimated costs: registration fees $1,583.33,
printing $10,000, legal fees $20,000, and accounting fees $5,000.
</FN>
</TABLE>
The Common Stock is being offered by the Company and is not the
subject of any underwriting agreement. (See "Plan of Distribution".) It is
expected that delivery of the Shares of Common Stock will be made as soon as
possible after the termination date of the offering. (See "The Offering.")
Subject to Completion
"Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State."
The date of this Prospectus is __________, 1997
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, DC (the "Commission") a Registration Statement under the
Securities Act of 1933 (the "Securities Act") with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portion of
which have been omitted pursuant to the rules and regulations of the
Commission. Statements contained in this Prospectus as to the content of
any contract or other document are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each statement being
qualified in all respects by such reference. Such information is available
for inspection at the principal office of the Commission in Washington, DC.
Copies of the material contained in the Registration Statement may be
obtained from the Commission upon payment of the fees prescribed by its
rules and regulations.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, files reports,
proxy statements, and other information with the Commission. The
Registration Statement and the exhibits thereto filed by the Company with
the Commission, as well as the reports, proxy statements, and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices at 75 Park Place, New York, New York 10007,
and Room 1204, 219 South Dearborn Street, Chicago, Illinois 69804. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W. Washington, D.C. 20549, at prescribed
rates.
The Company furnishes to its Stockholders, after the end of each
fiscal year, an annual report containing audited financial statements, with
an opinion expressed by an independent certified public accountant and
furnishes to its Stockholders quarterly reports containing unaudited
financial statements and such other information as it may deem appropriate.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is
not authorized or in which the person making such offer is not qualified to
do so, or an offer or solicitation to anyone to whom it is unlawful to make
such offer or solicitation.
NOTICE TO FLORIDA RESIDENTS
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA
SECURITIES ACT. ALL FLORIDA RESIDENTS MAY HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE HEREUNDER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF
CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER OR AN AGENT OF THE
ISSUER OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THE PRIVILEGE IS
COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
The Shares offered hereby represent an equity investment in the
Company, are not deposits, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or any other Government Agency.
TABLE OF CONTENTS
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Page
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1. Available Information
2. Prospectus Summary 1
3. Risk Factors 5
4. Use of Proceeds 6
5. The Offering and Plan of Distribution 7
6. Description of Business 8
7. Properties 11
8. Regulation and Supervision 12
9. Legal Proceedings 14
10. Selected Statistical Information 15
11. Management's Discussion and Analysis 32
12. Directors and Executive Officers 40
13. Security Ownership of Certain Beneficial Owners and Management 42
14. Executive Compensation 44
15. Certain Relationships and Related Transactions 46
16. Capital Stock 46
17. Indemnification 48
18. Legal Opinions 49
19. Experts 49
20. Index to Financial Statements 50
</TABLE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by reference to
the more detailed information contained elsewhere in this Prospectus and
should be read together therewith.
The Company
The Company was incorporated under the laws of the State of
Massachusetts in June 1989 as Weetamoe Bancorp for the purpose of becoming a
bank holding company for Slade's Ferry Trust Company. The Company's
acquisition of the Bank was completed on April 1, 1990. In December 1996,
upon approval of its stockholders, the name Weetamoe Bancorp was changed to
Slade's Ferry Bancorp. The Company is subject to the regulation of the
Federal Reserve Board.
The Bank is a state chartered trust company incorporated under the
laws of the Commonwealth of Massachusetts in 1959. It is a commercial bank
whose deposits are insured by the Federal Deposit Insurance Corporation
("FDIC"). The Bank is regulated and examined by the Massachusetts
Commissioner of Banks and the FDIC.
In 1996, the Bank acquired, through a cash purchase, the National Bank
of Fairhaven, a financial institution located in Fairhaven, Massachusetts
with assets of approximately $65 Million.
The Bank's major customer base is derived from Bristol County,
Massachusetts and abutting towns located in the state of Rhode Island. It
is a retail bank that provides multiple deposit products and a wide range of
banking services to the communities located in the southeastern
Massachusetts area. The Bank provides installment, residential and
commercial mortgages, commercial lending, and services the public with ten
banking facilities, including its main office in Somerset. There are two
branches in Fall River, two in Swansea, a Seekonk facility, a branch located
in North Somerset, and as a result of the acquisition, a large facility in
Fairhaven, and a branch facility in New Bedford, Massachusetts. In
addition, the Bank also has a small facility located at Somerset High School
which predominately services students.
The executive offices of the Company and the Bank are located at 100
Slade's Ferry Avenue, PO Box 390, Somerset, Massachusetts, 02726, telephone
(508) 675-2121.
The Offering
Securities Offered Initial: 325,000 shares of Common Stock $.01 par
value Optional: 225,000 shares of Common Stock
$.01 par value Maximum: 550,000 shares of Common
Stock $.01 par value
Offering Price The offering price of $ per share is
based on the most recent average of the bid and
ask price of the Company's Common Stock on the
over the counter market. ($9.375 on April 10,
1997)
Shares Authorized and Issued
Authorized 5,000,000 shares of Common Stock
Issued and outstanding 2,797,474(1)
prior to offering
Common Stock Offered Initial 325,000
Optional 225,000
Outstanding after sale Assuming 325,000 shares are sold under the
Initial Offering and 225,000 shares are sold
under the Optional Offering, total outstanding
shares after issue - 3,347,474
Method of Purchasing Shares A Purchase Order form must be received by the
Company with payment in full by the Expiration
Date. Payment is to be made to Slade's Ferry
Bancorp.
Minimum-Maximum Order The minimum order is 100 shares and the maximum
order is 10,000 shares by any one purchaser.
Expiration Date The Company will accept Purchase Orders up until
5:00 pm Massachusetts time, on May 31, 1997,
subject to extension at the option of the
Company to a date no later than June 15, 1997.
Amendments; Termination The Company reserves the right to amend the
terms and conditions of the offering or to
terminate the offering prior to delivery of the
shares of Common Stock.
(1) An additional 100,000 shares of Common Stock have been set aside for
the Company's Dividend Reinvestment Plan; and an additional 250,000
shares of Common Stock have been set aside for the Company's Stock
Option Plan.
Fractional Shares No fractional shares will be offered
Use of Proceeds The Company intends to use the proceeds of the
public offering to increase the capital of the
Bank and to assist in meeting the requirements
of a "well capitalized" bank, by contributing
60% to the bank. The remaining 40% will remain
at the Holding Company and be invested into
debt securities issued by the U. S. Treasury
and other U. S. government corporations and
agencies until such time as the growth of the
Bank should need additional capital, or the
possibility of acquiring another financial
institution should avail itself.
Oversubscription The Company will honor purchase requests based
on order of payments received up to the 325,000
shares offered in the Initial Offering and if
the Company offers the additional shares, it
will honor these shares based on order of
payments received.
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five
years.
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Year Ended December 31
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1996 1995 1994 1993 1992
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(Dollars in Thousands Except per Share Data)
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EARNINGS DATA
Interest Income $ 19,495 $ 16,541 $ 13,546 $ 13,247 $ 13,691
Interest Expense 9,078 7,764 4,944 5,214 6,838
Net Interest Income 10,417 8,777 8,602 8,033 6,853
Provision for Loan Losses 400 550 645 1,455 1,072
Noninterest Income 1,305 1,056 1,099 1,226 1,102
Noninterest Expense 7,380 6,632 6,701 5,853 5,299
Income Before Income Taxes 3,942 2,651 2,355 1,951 1,584
Income Taxes 1,564 1,005 888 723 495
FASB 109 Adjustment --- --- --- 40 ---
Net Income 2,378 1,646 1,467 1,268 1,089
PER SHARE DATA (1)
Net Income $ 0.860 $ 0.601 $ 0.567 $ 0.494 $ 0.462
Cash Dividends Declared $ 0.240 $ 0.174 $ 0.158 $ 0.096 $ 0.097
Book Value (pre SFAS 115)(2) $ 7.117 $ 6.800 $ 9.959 $ 9.742 $ 9.058
Book Value (incl. SFAS 115)(2) $ 7.116 $ 6.811 $ 9.023 $ 9.904 ---
Avg. Shs. Outstanding 2,764,887 2,738,250 2,587,816 2,568,909 2,354,550
BALANCE SHEET DATA
Assets $ 291,342 $ 233,422 $ 193,909 $ 196,476 $ 189,157
Loans 198,986 151,094 136,191 126,078 126,935
Unearned Income 643 527 403 313 294
Allowance for Possible
Loan Losses 3,354 2,498 2,306 1,954 1,967
Loans, Net 194,935 148,069 133,482 123,811 124,674
Goodwill 3,307 --- --- --- ---
Investments 57,732 58,757 43,537 50,187 42,647
Deposits 267,791 214,221 177,315 179,567 173,106
Stockholders' Equity 19,847 17,827 14,848 15,380 13,970
FINANCIAL RATIOS
Net Yield on Earning
Assets (3) 4.44% 4.36% 4.78% 4.59% 4.23%
Interest Rate Spread (3) 3.72 3.72 4.33 4.19 3.76
Net Income as a Percentage
of Average Assets 0.94 0.75 0.75 0.66 0.61
Average Equity 12.69 9.99 9.71 8.68 8.88
Dividend Payout Ratio 27.95 29.03 27.93 19.55 21.09
Average Equity to Average Assets 7.40 7.55 7.71 7.64 6.87
<FN>
<F1> Earnings per share are computed based on the average number of shares
of common stock outstanding during the year. On January 15, 1992, the
Company declared a 2 for 1 stock split in the form of a stock dividend
mailed to stockholders on January 24, 1992. On January 19, 1994, the
Company declared a 5% stock dividend mailed to stockholders on February
1, 1994. On February 24, 1995, the Company declared a 5% stock
dividend mailed to stockholders on March 1, 1995 and on March 13, 1995,
the Company announced a 3 for 2 stock split mailed to stockholders on
April 18, 1995. On January 8, 1996, the Company declared a 5% stock
dividend mailed to stockholders on January 31, 1996. Per share data
has been restated to reflect the effect of the stock splits and the
stock dividends.
<F2> On December 31, 1993, the Company adopted the provision of SFAS No. 115
whereby unrecognized gains or losses in securities classified as
Available-for-Sale are reflected in Stockholders' Equity as a separate
component. Stockholders' Equity included unrecognized gains, net of
taxes of $251,792 in 1993; unrecognized losses, net of taxes, of
$1,540,384 in 1994; unrecognized gains net of taxes, of $33,022 in
1995; and unrecognized losses net of taxes of $2,628 in 1996. This
calculation uses actual shares outstanding at the end of each year.
<F3> Calculated on fully taxable equivalent basis.
</FN>
</TABLE>
RISK FACTORS
The shares offered hereby represent an equity investment in the
Company, are not deposits, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or any other government agency. In
addition to the other information set forth herein, an investment in the
shares offered hereby involves a degree of various risks that should be
considered before making a decision to purchase such shares.
Limited Market for Shares
The brokerage firm of A. G. Edwards & Sons, Inc. has since 1992 acted
as a market maker in the Company's Common Stock which is listed in the "pink
sheets" of the over-the-counter market. However, only a limited trading
market exists at present for the shares and there is no certainty that an
active trading market will develop after the offering. The Company may in
the future seek to qualify or list the shares on the NASDAQ market or an
exchange to facilitate such trading, but is under no obligation to do so.
Dependence Upon the Bank
The Company is dependent upon the Bank which began operations on
September 30, 1959.
Dividends
Although the Company, and previously the Bank, has paid dividends
since 1961, no assurance can be given as to the amount, if any, or timing of
future dividends. (See "Description of Business" and "Capital Stock-
Dividends".)
Anti-Takeover Provisions
Maintaining the independence of the Bank and defending against abusive
takeover tactics is an important objective of the Company. In order to
serve this objective, the Articles of Organization and Bylaws of the Company
contain certain provisions designed to protect the Company (and consequently
the Bank) against a hostile takeover attempt. These provisions are
complicated and the following description is intended as a brief summary
only.
Article VI(D)(1) of the Company's Articles of Organization provides
for a staggered Board of Directors so that approximately one-third of the
directors will be elected each year. This provision is intended to prevent
a hostile acquiror who acquires a bare majority of the Company's Common
Stock from taking over the Company by electing a whole new Board of
Directors. Article VII of the Company's Bylaws requires an 80% stockholder
vote to approve a "business combination" (including an acquisition or
merger) with an "interested person" (principally a 20% acquisition or more
stockholder) unless approved by a two-thirds vote of the Board of Directors
with the required stockholder vote increased to 90% if the price to be paid
to stockholders in the business combination is less than a "Fair Price"
(defined to mean the highest price paid by the proposed acquiror in buying
other Company shares). The purpose of these provisions is to encourage a
prospective acquiror to negotiate with the Company's Board of Directors and
offer a fair price to all stockholders and to deter hostile takeover
attempts and squeezing out minority shareholders at a lower price than paid
to other stockholders. The Company is also subject to Massachusetts laws
regulating takeovers -- See General Laws Ch. 110D. Presently, the directors
and executive officers of the Company and the Bank own 20.01% of the
corporate stock of the Company.
Competition
The banking business in the market area served by the Bank is highly
competitive. The Bank actively competes with other banks and financial
institutions, including large commercial banks, mutual and stock savings
banks, state and federally chartered credit unions, and Federal Savings and
Loans for deposits and loans.
Government Regulation and Supervision
The Company and the Bank are subject to extensive governmental
regulation and supervision. (See "Regulation and Supervision.") Compliance
with such regulation and supervision involves substantial costs to the
Company and the Bank and can restrict the Company's and Bank's activities.
Underwriting
The Shares are offered exclusively by the Company and are not subject
to any underwriting agreement assuring the sale of the shares offered.
Capitalization
The Bank is required by law and regulations to maintain minimum levels
of capital relative to the amount and type of its assets. Prior to the
acquisition of the National Bank of Fairhaven and its parent holding
company, Fairbank, Inc. in 1996, the Bank was classified as "well
capitalized" by virtue of its capital ratios. As a result of the
acquisition for cash in 1996 of National Bank of Fairhaven, the Bank's
capital ratios at year end 1996 had declined to a classification of
"adequately capitalized."
USE OF PROCEEDS
Assuming that all the Common Stock offered hereby is sold, including
the additional offering of 225,000 shares, the Company will receive
approximately $5,225,000. The Company will infuse 60% of such funds into
the Bank to increase the capital of the Bank and to assist in meeting the
requirements of a "well capitalized" bank. The remaining 40% will be
retained by the Company for use in future acquisitions or other permissible
activities of a holding company. Such funds will in the meantime be
invested in debt securities issued by the U. S. Treasury and other U. S.
government corporations and agencies. There are, however, no discussions
occurring nor any plans dealing with branch expansions or acquisitions at
the present time.
If only the initial offering of 325,000 shares is sold, the Company's
net proceeds (after expenses) of approximately $3,000,000 will all be
infused into the Bank to increase its capital.
THE OFFERING AND PLAN OF DISTRIBUTION
General
The Company is offering 325,000 shares of Common Stock, $.01 par value
("Common Stock"), and, at the Company's option, may offer an additional
225,000 shares of Common Stock. The shares are being offered at a price of
$ per share, which is based on the average of the bid and ask
prices of the Company's Common Stock on the over-the-counter market
on as quoted by A. G. Edwards & Sons, Inc., the
market maker for the stock. The shares of Common Stock offered hereby are
being offered exclusively by the Company without the services of an
underwriter. The Company is making its initial offering of 325,000 shares
to depositors of the Bank, current stockholders of the Company, and members
of the general public.
The Company has 5,000,000 shares of Common Stock $.01 par value
authorized. As of March 31, 1997 the current number of shares issued and
outstanding was 2,797,474. Assuming all the shares hereby being offered for
sale in the Initial Offering and the additional 225,000 shares being offered
under the Optional Offering are sold, the total shares of Common Stock
issued and outstanding, will be approximately 3,347,474. Of the remaining
1,652,526 shares authorized but unissued, 100,000 shares have been set aside
for the Dividend Reinvestment Plan and 250,000 shares set aside for the
Company's Stock Option Plan.
Method of Purchasing Stock; Expiration Date
Once the Registration Statement, of which this Prospectus is a part,
has been declared effective by the Securities & Exchange Commission ("SEC"),
Buy Orders will be accepted by the Company in the order payment is received.
In the event the total Buy Orders exceed the 325,000 shares included in the
Original Offering and the 225,000 shares included in the Optional Offering,
shares will be allocated based on order in which payments are received.
A Buy Order form must be received by the Company, with payment in full,
by May 31, 1997 (the "Expiration Date"), subject to extension at the option of
the Company to a date not later than June 15, 1997. Payment is to be made to
Slade's Ferry Bancorp. Order forms and payments must be received by the
Company before 5:00 pm Eastern Time on the Expiration Date. Payment for the
shares must be made in United States Dollars by check or money order payable
to the order of Slade's Ferry Bancorp. The method of delivery of a Buy Order
form is at the risk of the buyer.
The minimum purchase is 100 shares and the maximum purchase is 10,000
shares by any one purchaser. No fractional shares will be issued.
Insufficient funds received for a minimum purchase of shares, or excessive
funds received beyond that required for the maximum purchase of shares, or
excessive funds for a round number of shares will be returned without
interest to the purchaser.
Amendments and Waivers; Termination
The Company reserves the right to extend the Expiration Date to a date
no later than June 15, 1997, and to amend the terms and conditions of the
Offering. All questions as to the validity, form, eligibility (including
time of receipt and record ownership) and acceptance of any order form shall
be determined by the Company, in its sole discretion, and its determination
shall be final and binding. The Company reserves the right to reject any
order if such order is not in accordance with the terms of the Offering or
not in proper form, or if the acceptance thereof or the issuance of shares
of Common Stock pursuant thereto could be deemed unlawful. The Company also
reserves the right to waive any deficiency or irregularity with respect to
any order form.
Any change to the terms of the Offering will require a resolicitation
of all offerees with an appropriately updated prospectus. In such event,
offerees will be requested to reaffirm, amend or rescind any previously
submitted Order Form within a specified period of time. In the event of no
response or a negative response, any funds previously submitted will be
promptly returned, as will any excess funds in the event an amended response
requires less funds than previously submitted.
The Company expressly reserves the right, in its sole discretion, at
any time prior to delivery of the shares of Common Stock offered hereby, to
terminate the Offering by giving public notice thereof to all purchasers.
If the Offering is so terminated, all funds received from purchasers will be
promptly refunded without interest.
Buy Orders Exceeding Offering
If in the event the total buy orders exceed the 325,000 shares
included in the Original Offering and the 225,000 shares included in the
Optional Offering, requests will be honored based on the order of payments
received. Any excess funds will be promptly returned without interest.
Delivery of Stock Certificates
Certificates representing shares of Common Stock purchased and issued,
together with any refunds of any oversubscribed shares without interest,
will be mailed as soon as practical after the Expiration Date. The Company
will place all proceeds of the Offering into an escrow account until such
funds are distributed to the Company or refunded to purchaser at the
completion or termination of the Offering. No interest will be paid to
purchasers on funds delivered to the Company pursuant to the Offering. The
shares of Common Stock purchased pursuant to this Offering will be issued
and sold as of the Expiration Date.
DESCRIPTION OF BUSINESS
Business of Slade's Ferry Bancorp
Slade's Ferry Bancorp ("the Company") is a business corporation that
was organized under the laws of the Commonwealth of Massachusetts on June
13, 1989 as Weetamoe Bancorp. The name Weetamoe Bancorp was changed to
Slade's Ferry Bancorp effective January 1, 1997. The office of Slade's
Ferry Bancorp is located at the office of the Bank at 100 Slade's Ferry
Avenue, Somerset, Massachusetts, 02726, and its telephone number is the same
as the Bank's: (508)675-2121.
The Company was organized for the purpose of becoming the holding
company of the Bank. The Company's acquisition of the Bank was completed on
April 1, 1990. The Bank (Slade's Ferry Trust Company) is a wholly-owned
subsidiary of Slade's Ferry Bancorp.
Competition
The primary business of Slade's Ferry Bancorp is the ongoing business
of the Bank. The competitive conditions to be faced by Slade's Ferry
Bancorp will be the same as those faced by the Bank. It is likely that, as
a holding company, it may compete with other holding companies engaged in
bank-related activities. Thus, the Company will face competition in
undertaking to acquire other banks, financial institutions or companies
engaged in bank-related activities, and in operating subsequent to any such
acquisitions.
While the Company investigates opportunities to acquire other banks or
bank facilities when they occur and may in the future acquire other banks,
financial institutions, or bank facilities, it is not currently engaged in
any such acquisition other than the recently completed acquisition of the
National Bank of Fairhaven, Fairhaven, Massachusetts.
Employees
At present there are three employees of the Bank and the Company whose
compensation is paid by the Company. Although the Company has no current
plans to do so, if the Company should acquire other financial institutions
or pursue other lines of business, it may at such time hire additional
employees.
Business of Slade's Ferry Trust Company
On September 30, 1959, the Slade's Ferry Trust Company opened for
business as a state chartered trust company incorporated under the laws of
the Commonwealth of Massachusetts and as a member of the Federal Deposit
Insurance Corporation (FDIC). The founders were a group of individuals from
Somerset, Swansea, Fall River and Seekonk, Massachusetts who recognized the
need for a local bank committed to personalized services.
During the past three years, the Bank has grown from eight banking
facilities with 92 full-time and 43 part-time employees and assets of $196
Million as of December 31, 1993 to ten banking facilities with 128 full-time
and 50 part-time employees and assets of $291 Million as of December 31,
1996. Through its acquisition of the National Bank of Fairhaven in 1996, it
not only added two banking facilities and increased its assets by $58
Million but also expanded its geographic market area to the New Bedford and
Fairhaven region of Massachusetts.
The Bank currently services numerous communities in Southeastern
Massachusetts and contiguous areas of Rhode Island through its ten
facilities in Fall River, Somerset, Swansea, Seekonk, New Bedford and
Fairhaven.
The Bank's major customer base consists of over 27,500 personal
savings, checking and money market accounts and 7,360 personal certificates
of deposit and individual retirement accounts. Its commercial base consists
of over 3,300 checking, money market, corporate, and certificate of deposit
accounts.
The Bank does not have any major target accounts, nor does it derive a
material portion of its deposits from any single depositor. It is a retail
bank that services the needs of the local communities, and its loans are not
concentrated within any single industry or group of related industries that
would have any possible adverse effect on the business of the Bank. The
Bank's business is not seasonal and its loan demand is well diversified. As
of December 31, 1996, commitments under standby letters of credit aggregate
approximately $1,176,936.
The Bank's acquisition of Fairbank, Inc. and its subsidiary, the
National Bank of Fairhaven in 1996 was accomplished by a cash outlay by the
Bank of $8,558,800 to the stockholders of Fairbank, Inc. without any
issuance of Company stock. Fairbank, Inc. was simultaneously dissolved and
the National Bank of Fairhaven merged into the Bank.
Services
The Bank engages actively in a broad range of banking activities,
including demand, savings, time deposits, related personal and commercial
checking account services, real estate mortgages, commercial and installment
lending, payroll services, money orders, travelers checks, Visa, Mastercard,
safe deposit rentals, automatic teller machines and cash management
services. The Bank offers a full range of commercial, installment, student,
and real estate loans. The service area of the Bank is approximately 300
square miles, including the southern geographic area of Bristol County,
Massachusetts and extends over to the towns of Tiverton, Warren, Bristol and
Barrington in the state of Rhode Island.
Competition
The banking business in the market area served by the Bank is highly
competitive. The Bank actively competes with other banks, financial
institutions, and credit unions, including major banks and bank holding
companies which have numerous offices and affiliates operating over wide
geographic areas. The Bank competes for deposits, loans, and other business
with these institutions.
Many of the major commercial banks, or other affiliates in the service
areas of the Bank, offer services such as international banking, and
investment and trust services which are not offered directly by the Bank.
PROPERTIES
The main office of the Bank is located at 100 Slade's Ferry Avenue,
Somerset, Massachusetts at the junctions of U. S. Route 6, 138, and 103.
The Bank has nine additional branches located in Fairhaven, Fall River, New
Bedford, Seekonk, Somerset and Swansea, Massachusetts. As of December 31,
1996, the following Bank properties are owned either directly by the Bank or
through its subsidiary, the Slade's Ferry Realty Trust:
<TABLE>
<CAPTION>
Square
Branch Location Footage
- ------ -------- -------
<S> <C> <C>
Main Office 100 Slade's Ferry Avenue, Somerset, MA 37,000
North Somerset 2722 County Street, Somerset, MA 3,025
Linden Street 244-253 Linden Street, Fall River, MA 1,750
Brayton Avenue 855 Brayton Avenue, Fall River, MA 3,325
North Swansea 2388 G.A.R. Highway, Swansea, MA 2,960
Seekonk 1400 Fall River Avenue, Seekonk, MA 2,300
Fairhaven 75 Huttleston Avenue, Fairhaven, MA 13,000
</TABLE>
Offices listed below are leased properties which indicate the applicable
lease expiration date:
<TABLE>
<CAPTION>
Square
Branch Location Footage
- ------ -------- -------
<S> <C> <C>
Swansea Mall Route 118, Swansea, MA 2,250
(expires 2003)
Brayton Avenue 16 Stevens Street, Fall River, MA 549
Drive Up Annex (expires 2000)
Walgreen Drug Store 835 Pleasant Street, New Bedford, MA 835
(expires 2004)
</TABLE>
The main office building contains approximately 42,000 square feet of
usable space, of which the Bank occupies approximately 37,000 square feet
and the remainder is rented to local businesses as warehouse and office
space. The Bank also has a school banking facility located in the Somerset
High School, Grandview Avenue, Somerset, Massachusetts that consists of 200
square feet, which provides basic banking services to students and school
staff. The Seekonk office is an 8,800 square foot building, of which the
Bank is utilizing 2,300 square feet and leasing out the remainder.
On May 15, 1996, Slade's Ferry Bancorp and its subsidiary, Slade's
Ferry Trust Company, entered into a merger agreement with Fairbank, Inc. and
its wholly owned subsidiary, the National Bank of Fairhaven. The agreement
provided that Slade's Ferry Trust Company acquire Fairbank Inc. and its
wholly owned subsidiary, the National Bank of Fairhaven, by a cash outlay
paid by Slade's Ferry Trust Company of $8,558,800 to stockholders of
Fairbank, Inc. without any issuance of Slade's Ferry Bancorp stock.
The cash payment resulted in a premium paid above the book value of
Fairbank, Inc. of $3.4 Million, which is classified as Goodwill. Included
in Goodwill are the net adjustments of book values to market values of
loans, investments, buildings and equipment, deposits, notes payable and
deferred tax adjustments. Goodwill is to be amortized over a fifteen year
period.
The Bank intends to continue to grow and actively service its market
area.
REGULATION AND SUPERVISION
The following summaries of statutes and regulations affecting banks
and bank holding companies do not purport to be complete. Such summaries
are qualified in their entirety by reference to such statutes and
regulations.
Holding Company Regulations
Under the Federal Bank Holding Company Act ("BHCA"), the prior
approval of the Federal Reserve Board ("FRB") is required before a
corporation may acquire control of a bank. FRB approval must also be
obtained before a bank holding company acquires all or substantially all of
the assets of a bank, or merges or consolidates with another bank holding
company. In considering any applications for approval of an acquisition or
merger, the FRB is required to consider the financial and managerial
resources of the companies and banks concerned, and the convenience and
needs of the communities to be served.
As a registered bank holding company, the Company is required to file
with the FRB annual and periodic reports and such other additional
information as the Board may require. The Company and its subsidiaries are
also subject to continuing regulation, supervision and examinations by the
FRB.
A bank holding company, with certain exceptions, may not acquire more
than 5% of the voting shares of any company that is not a bank and may not
engage, directly or through subsidiaries, in any activity other than
banking, managing or controlling banks, or furnishing services to or
performing services for its subsidiaries, without prior approval of the FRB.
The FRB is authorized to approve the ownership by a bank holding company of
voting shares of any company whose activities the FRB determines to be so
closely related to banking or managing or controlling banks as to be a
proper incident thereof. Under the FRB's current regulations, and subject
to certain restrictions and limitations specified therein, bank holding
companies and their subsidiaries may be permitted by the FRB to engage in
such non-banking activities as: (1) making, acquiring, or servicing loans or
other extensions of credit such as would be made by a mortgage, finance,
credit card, or factoring company; (2) operating an industrial bank or
industrial loan company; (3) performing the function of a trust company; (4)
acting as an investment or financial advisor; (5) leasing real or personal
property or acting as an agent or broker in leasing such property or acting
as an agent or broker in leasing property in certain situations; (6) making
investments to promote community welfare; (7) providing certain data
processing and transmission services; (8) acting as principal, agent or
broker with respect to insurance directly related to extensions of credit by
the bank holding company or its subsidiaries, and engaging in certain other
insurance activities subject to specified conditions and limitations; (9)
providing courier services for checks and certain other instrument exchanges
among banks, and for audit and accounting media of a banking or financial
nature; (10) providing management consulting advice, under specified
conditions, to banks not affiliated with the bank holding company; (11)
issuing and selling retail money orders having a face value of not more than
$1,000, and travelers checks, and selling U. S. Savings Bonds; (12)
performing appraisals of real and personal property; (13) arranging
commercial real estate equity financing under certain circumstances; (14)
providing securities brokerage services as agent for the accounts of
customers; (15) underwriting and dealing in certain government obligations
and money market instruments; (16) providing foreign exchange advisory and
transactional services; (17) acting as a futures commission merchant in
specified capacities, or providing investment advice as a futures commission
merchant or commodity trading advisor with respect to certain financial
futures contracts and options; (18) providing consumer financial counseling
services; (19) providing tax planning and preparation services; (20)
providing check guaranty services to subscribing merchants; (21) operating a
collection agency; and (22) operating a credit bureau. In addition, a bank
holding company may file an application for FRB approval to engage, directly
or through subsidiaries, in other nonbank activities that the holding
company reasonably believes are so closely related to banking as to be a
proper incident thereto.
In addition, pursuant to the Bank Export Services Act of 1982, a bank
holding company may invest up to 5% of its consolidated capital and surplus
in shares of an export trading company unless such investment is disapproved
by the FRB after notice as provided in that Act.
As a bank holding company, the Company will be required to give the
FRB prior written notice of any purchase or redemption of its outstanding
equity securities if the gross consideration for the purchase or redemption,
when combined with the net consideration paid for all such purchases or
redemptions during the preceding 12 months, is equal to 10% or more of
Bancorp's consolidated net worth. The FRB may disapprove such a purchase or
redemption if it determines that the proposal would violate any law,
regulation, FRB order, directive, or any condition imposed by, or written
agreement with, the FRB.
The status of the Company as a registered bank holding company under
the BHCA does not exempt it from certain federal and state laws and
regulations applicable to corporations generally, including, without
limitation, certain provisions of the federal securities laws.
Under Massachusetts law, Board of Bank Incorporation approval is
required before any company may become a bank holding company by directly or
indirectly owning, controlling or holding the power to vote 25% or more of
the voting stock of two or more banks. Further, such approval is required
prior to a bank holding company's (i) acquiring voting stock of another bank
institution if, as a result of the acquisition, such acquirer would,
directly or indirectly, own or control more than 5% of the voting stock of
such institution, or (ii) engaging in certain other transactions. The
Company is not considered a bank holding company under Massachusetts law
since it does not control two or more banks. The activities of the Company,
however, will be limited under Massachusetts law to activities described
above, which would be permissible for a bank holding company registered
under the BHCA. In addition, the acquisition by the Company of 25% or more
of the voting stock or the power to elect a majority of the directors of
another commercial bank, savings bank, cooperative bank, or savings and loan
association would subject the company to regulation as a bank holding
company under applicable Massachusetts law and would require the approval of
the Massachusetts Board of Bank Incorporation.
Bank Regulations
As a Massachusetts-chartered, FDIC-insured trust company, the Bank is
subject to regulation and supervision by the Commissioner of Banks, the FDIC
and the FRB.
The Massachusetts statutes and regulations govern, among other things,
investment powers, deposit activities, borrowings, maintenance of surplus
and reserve accounts, distribution of earnings, and payment of dividends.
The Bank is also subject to state regulatory provisions covering such
matters as issuance of capital stock, branching, and mergers and
acquisitions.
Deposit accounts at the Bank are insured by the FDIC, generally up to
a maximum of $100,000 per insured depositor. As an insurer of deposits of
certain thrift institutions and commercial banks, the FDIC issues
regulations, conducts examinations, requires the filing of reports, and
generally supervises the operations of institutions to which it provides
deposit insurance. The approval of the FDIC is required prior to any merger
or consolidation with another financial institution, or the establishment or
relocation of an office facility. This supervision is intended primarily
for the protection of depositors.
As an FDIC-insured bank, the Bank is subject to certain FDIC
requirements designed to maintain the safety and soundness of individual
banks and the banking system. The FDIC periodically conducts examinations
of insured institutions and, based upon appraisals, may revalue assets of an
insured institution and require establishment of specific reserves in
amounts equal to the difference between such revaluation and the book value
of the assets. In addition, the FDIC has a regulation which defines and
sets minimum requirements for capital adequacy.
The Company, the Bank, the Slade's Ferry Realty Trust, and the Slade's
Ferry Securities Corporation are "affiliates" within the meaning of the
Federal Reserve Act. Certain provisions of the Federal Reserve Act, made
applicable to the Bank by Section 18 (j) of the Federal Deposit Insurance
Act and administered with respect to the Bank by the FDIC, limit the amounts
of and establish collateral requirements with respect to the Bank's loans or
extensions of credit to and investments in affiliates. In addition, related
provisions of the Federal Reserve Act and FRB regulations also administered
with respect to the Bank by the FDIC limit the amounts of and establish
required procedures and credit standards with respect to loans and other
extensions of credit to officers, directors and principal stockholders of
the Bank, of the Company, and of any subsidiaries of the Company, and to
related interests of such persons.
Recent Regulatory Examinations
During the most recent regulatory examinations of the Company and the
Bank, no major or consequential violations were found.
LEGAL PROCEEDINGS
The Bank is involved in a civil suit brought by a former employee of
the National Bank of Fairhaven which primarily alleges a breach of contract
and other related claims. The demand by the plaintiff is $550,000 to settle
the case. Counsel for the Company believes that there are meritorious
defenses to the claims and the Company intends to vigorously defend the
suit. The Company believes that the suit will not have a material adverse
effect on the Company's financial condition, results of operation or
liquidity.
SELECTED STATISTICAL INFORMATION
The following tables and discussion present certain statistical
information concerning the business of the Company. Such tables and
discussion should be read in conjunction with "Description of Business," and
the financial statements and the notes thereto.
DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table sets forth the Company's average assets,
liabilities, and stockholders' equity, interest income earned and interest
paid, average rates earned and paid, and the net interest margin for the
years ending December 31, 1996, December 31, 1995, and December 31, 1994.
Averages are daily averages.
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------- --------------------------- ---------------------------
Avg Avg Avg
Average Int(1) Int Average Int(1) Int Average Int(1) Int
Balance Inc/Exp Rate Balance Inc/Exp Rate Balance Inc/Exp Rate
------- ------- ---- ------- ------- ---- ------- ------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning Assets (2)
Commercial Loans $ 23,440 $ 2,191 9.35% $ 17,478 $ 1,705 9.75% $ 16,845 $ 1,452 8.62%
Commercial Real Estate 90,576 9,035 9.98 70,060 6,703 9.57 57,983 5,190 8.95
Residential Real Estate 50,486 3,788 7.50 48,901 3,706 7.58 46,360 3,319 7.16
Consumer Loans 6,094 613 10.06 5,630 628 11.15 6,333 613 9.68
---------------------------------------------------------------------------------------------
Total Loans 170,596 15,627 9.16 142,069 12,742 8.97 127,521 10,574 8.29
Federal Funds Sold 14,994 783 5.22 10,361 598 5.77 4,584 167 3.64
U.S. Treas/Govt Agencies 43,871 2,715 6.19 45,300 2,924 6.45 43,580 2,484 5.70
States & Political Subdivisions 5,959 400 6.71 4,753 339 7.13 5,556 408 7.34
Mutual Funds 241 13 5.39 170 8 4.71 529 16 3.02
Marketable Equity Securities 1,332 45 3.38 1,013 37 3.65 888 33 3.72
Other Investments 811 45 5.55 140 6 4.29 6 -0- 0.00
---------------------------------------------------------------------------------------------
Total Earning Assets 237,804 $19,628 8.25% 203,806 $16,654 8.17% 182,664 $13,682 7.49%
---------------------------------------------------------------------------------------------
Allowance for Loan Losses (2,958) (2,450) (2,160)
Unearned Income (597) (434) (306)
Cash and Due From Banks 9,565 8,387 7,800
Other Assets 9,489 9,016 7,875
---------------------------------------------------------------------------------------------
Total Assets $253,303 $218,325 $195,873
=============================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY:
Savings $ 40,246 $ 1,006 2.50% $ 37,790 $ 955 2.53% $ 44,945 $ 1,136 2.53%
NOW's 28,788 858 2.98 21,568 757 3.51 22,784 596 2.61
Money Market Accounts 13,326 272 2.04 16,355 332 2.03 18,369 404 2.20
Time Deposits of $100M or more 18,813 1,104 5.87 15,403 856 5.56 12,760 508 3.98
Other Time Deposits 97,957 5,752 5.87 82,290 4,801 5.83 56,273 2,244 3.99
Borrowings 1,374 86 6.26 1,179 63 5.36 1,329 56 4.21
---------------------------------------------------------------------------------------------
Total Interest-bearing
Liabilities 200,504 $ 9,078 4.53% 174,585 $ 7,764 4.45% 156,460 $ 4,944 3.16%
---------------------------------------------------------------------------------------------
Demand Deposits 33,572 26,674 23,832
Other Liabilities 493 591 473
---------------------------------------------------------------------------------------------
Total Liabilities 234,569 201,850 180,765
---------------------------------------------------------------------------------------------
Common Stock 28 26 16
Paid-in Capital 14,393 12,871 11,599
Retained Earnings 4,486 4,227 4,077
Net Unrealized Loss on
Available-for-Sale Securities (173) (649) (584)
---------------------------------------------------------------------------------------------
Total Stockholders' Equity 18,734 16,475 15,108
---------------------------------------------------------------------------------------------
Total Liabilities & Stockholders'
Equity $253,303 $218,325 $195,873
=============================================================================================
Net Interest Income $10,550 $ 8,890 $ 8,738
=============================================================================================
Net Interest Spread 3.72% 3.72% 4.33%
=============================================================================================
Net Yield on Earnings Assets 4.44% 4.36% 4.78%
=============================================================================================
<FN>
<F1> On a fully taxable equivalent basis based on tax rate of 34%. Interest
income on investments and net interest income includes a fully taxable
equivalent adjustment of $133,000 in 1996, $113,000 in 1995, and
$136,000 in 1994.
<F2> Average balance includes non-accruing loans. The effect of including
such loans is to reduce the average rate earned on the Company's loans.
</FN>
</TABLE>
NET INTEREST INCOME - CHANGES DUE TO VOLUME AND RATE (1)
<TABLE>
<CAPTION>
1996 vs 1995 1995 vs 1994
Increase Increase
(Decrease) (Decrease)
---------------------------------------------------------------------
(Dollars in Thousands)
---------------------------------------------------------------------
Total Due to Due to Total Due to Due to
Change(2) Volume Rate Change(2) Volume Rate
--------- ------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Federal Funds Sold $ 185 $ 255 $ (70) 431 $ 271 $ 160
US Treas/Govt Agencies (209) (90) (119) 440 105 335
States & Political Subdivisions 61 83 (22) (69) (58) (11)
Mutual Funds 5 4 1 (8) (14) 6
Marketable Securities 8 11 (3) 4 4 0
Other Investments 39 33 6 6 3 3
Commercial Loans 486 569 (83) 253 59 194
Commercial Real Estate 2,332 2,005 327 1,513 1,117 396
Residential Real Estate 82 119 (37) 387 187 200
Consumer Loans (15) 50 (65) 15 (73) 88
---------------------------------------------------------------------
Total Interest Income 2,974 3,039 (65) 2,972 1,601 1,371
---------------------------------------------------------------------
Interest Expense:
Savings Accounts 51 62 (11) (181) (181) 0
NOW Accounts 101 234 (133) 161 (38) 199
Money Market Accounts (60) (62) 2 (72) (43) (29)
Time Deposits of $100M or more 248 195 53 348 125 223
Other Time Deposits 951 915 36 2,557 1,279 1,278
Borrowings 23 11 12 7 (7) 14
---------------------------------------------------------------------
Total Interest Expense 1,314 1,355 (41) 2,820 1,135 1,685
---------------------------------------------------------------------
Net Interest Income $1,660 $1,684 $ (24) 152 $ 466 $ (314)
=====================================================================
<FN>
<F1> Changes in interest income and interest expense attributable to changes
in both volume and rate have been allocated equally to changes due to
volume and changes due to rate.
<F2> The change in interest income on investments and net interest income
includes interest on a fully taxable equivalent basis based on a tax
rate of 34%.
</FN>
</TABLE>
Interest Rate Sensitivity
A formal measurement that is incorporated in the Asset/Liability
management process is the monthly analysis of the interest rate (Gap) table.
This measurement provides a static analysis of repricing opportunities of
the balance sheet. It is prepared by categorizing assets and liabilities
into time periods based on the next repricing opportunity. The analysis
determines the net dollar amount of assets less liabilities that are
repricing at various time periods.
The Company has an Asset/Liability Committee that reports to the Board
of Directors. Its objective is to monitor the exposure of planned net
interest margins to unexpected changes due to interest rate fluctuations.
These efforts also affect loan pricing, deposit interest rate strategies,
asset mix and volume guidelines, liquidity and capital planning.
At December 31, 1996, the analysis indicates the Company's interest
rate risk to have a reliance on short term liabilities. This position would
have an adverse effect on the Company's earnings in a rising rate
environment and conversely a positive effect on earnings in a decreasing
risk environment.
The Gap table as of December 31, 1996 is set forth below.
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------------
(Dollars in Thousands)
3 Months 4 Months 1 Year to 2 Year to 5 Years
REPRICING OPPORTUNITY or Less to 1 Year 2 Years 5 Years & Over Total
-------- --------- --------- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Loans $ 88,091 $ 40,675 $ 24,882 $ 7,148 $ 13,838 $194,634
Investments and Interest-Bearing
Time Deposits 7,442 6,452 9,047 13,834 21,107 57,882
Federal Funds Sold 13,000 --- --- --- --- 13,000
----------------------------------------------------------------------------------
Total Interest-Earning Assets $108,533 $ 47,127 $ 33,929 $ 40,982 $ 34,945 $265,516
==================================================================================
Cumulative Risk Sensitive Assets
(RSA) $108,533 $155,660 $189,589 $230,571 $265,516
==================================================================================
INTEREST-BEARING LIABILITIES
Regular Savings $ 42,182 $ --- $ --- $ --- $ --- $ 42,182
NOW Accounts 37,203 --- --- --- --- 37,203
Money Market Accounts 15,430 --- --- --- --- 15,430
Time Deposits $100,000 & Over 4,186 9,738 3,518 2,197 --- 19,639
Other Time Deposits 32,058 55,997 18,749 883 1,192 108,879
----------------------------------------------------------------------------------
Total Deposits 131,059 65,735 22,267 3,080 1,192 223,333
Federal Funds Purchased --- --- --- --- --- ---
Other Interest-Bearing Liabilities 1,200 --- --- 1,043 --- 2,243
----------------------------------------------------------------------------------
Total Interest-Bearing Liabilities $132,259 $ 65,735 $ 22,267 $ 4,123 $ 1,192 $225,576
==================================================================================
Cumulative Risk Sensitive
Liabilities (RSL) $132,259 $197,994 $220,261 $224,384 $225,576
==================================================================================
Gap (23,726) (18,608) 11,662 36,859 33,753 39,940
Cumulative Gap (23,726) (42,334) (30,672) 6,187 39,940
RSA/RSL (.82) (.72) 1.52 9.94 29.32
Cumulative RSA/RSL (.82) (.79) (.86) 1.03 1.18
Cumulative Gap/Total Assets (.08) (.15) (.11) .02 .14
</TABLE>
INVESTMENT PORTFOLIO
The following table shows the carrying amount of the major categories
of investment securities Held to Maturity for the years indicated:
<TABLE>
<CAPTION>
At December 31,
------------------------------
1996 1995 1994
---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C>
US Treasury Securities and
Obligations of US Government
Corporations and Agencies $13,193 $15,690 $ 7,719
Obligations of States and
Political Subdivisions 6,131 6,024 5,056
Mortgage-backed securities 257 17 18
Other Debt Securities 6 5 5
---------------------------------
$19,587 $21,736 $12,798
=================================
</TABLE>
In the following table, the carrying amount of Held to Maturity securities
maturing within stated periods as of December 31, 1996, is shown with the
weighted average interest yield from securities falling within the range of
maturities:
<TABLE>
<CAPTION>
US Treasury Obligations
& Government of States & Mortgage- Other
Corporations Political Backed Debt
& Agencies Subdivisions(1) Securities Securities Total
------------ --------------- ---------- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Due in 1 year or less:
Amount $ 4,689 $ 695 --- $ 5 $ 5,389
Yield 5.28% 6.44% --- 5.50% 5.43%
Due in 1 to 5 years:
Amount $ 5,496 $2,396 $ 243 $ 1 $ 8,136
Yield 6.61% 6.58% 6.57% 7.50% 6.60%
Due in 5 to 10 years:
Amount $ 3,008 $2,894 $ 14 --- $ 5,916
Yield 7.11% 6.88% 8.00% --- 7.00%
Due after 10 years:
Amount --- $ 146 --- --- $ 146
Yield --- 9.21% --- --- 9.21%
-------------------------------------------------------------------
Amount $13,193 $6,131 $ 257 $ 6 $19,587
===================================================================
Yield 6.25% 6.77% 6.65% 5.83% 6.42%
===================================================================
<FN>
<F1> Rates of tax exempt securities are shown assuming a 34% tax rate.
</FN>
</TABLE>
The following table shows the amortized cost basis of the major
categories of Available for Sale securities for the years indicated:
<TABLE>
<CAPTION>
At December 31,
------------------------------
1996 1995 1994
---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C>
US Treasury Securities and
Obligations of US Government
Corporations and Agencies $32,793 $31,678 $28,606
Mortgage-backed Securities 2,469 3,618 3,920
Asset-backed Securities 246 -0- -0-
Marketable Equity Securities 1,775 1,397 830
---------------------------------
$37,283 $36,693 $33,356
=================================
</TABLE>
In the following table, the amortized cost basis of Available for Sale
securities maturing within stated periods as of December 31, 1996, is shown
with the weighted average interest yield from securities falling within the
range of maturities:
<TABLE>
<CAPTION>
US Treasury
& Government Mortgage- Asset-
Corporations Backed Backed
& Agencies Securities Securities Total
------------ ---------- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Due in 1 year or less:
Amount $ 2,707 $ 953 $ --- $ 3,660
Yield 5.58% 6.23% --- 5.75%
Due in 1 to 5 years:
Amount 18,707 --- --- 18,707
Yield 5.86% --- --- 5.86%
Due in 5 to 10 years:
Amount 10,879 --- --- 10,879
Yield 6.86% --- --- 6.86%
Due after 10 years:
Amount 500 1,516 246 2,262
Yield 8.00% 5.64% 6.35% 6.24%
--------------------------------------------------------
Amount $32,793 $2,469 $ 246 $35,508(1)
========================================================
Yield 6.20% 5.87% 6.35% 6.18%
========================================================
<FN>
<F1> Does not include marketable equity securities.
</FN>
</TABLE>
The following table shows the amortized cost basis and fair value of
the major categories of Held to Maturity securities as of December 31, 1996:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Amortized Holding Holding
Cost Basis Gains Losses Fair Value
---------- ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Debt securities issued by the
U.S.Treasury and other U.S. Government
corporations and agencies $13,193 $30 $ 8 $13,215
Debt securities issued by states
of the United States and political
subdivisions of the states 6,131 38 67 6,102
Mortgage-backed securities 257 --- 35 222
Other debt securities 6 --- --- 6
------------------------------------------------
$19,587 $68 $110 $19,545
================================================
</TABLE>
Investments in Available for Sale securities are carried at fair value
on the balance sheet and are summarized as follows as of December 31, 1996.
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Amortized Holding Holding
Cost Basis Gains Losses Fair Value
---------- ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Debt securities issued by the
U.S. Treasury and other U.S. Government
corporations and agencies $32,793 $ 80 $281 $32,592
Marketable equity securities 1,775 268 56 1,987
Mortgage-backed securities 2,469 --- 38 2,431
Asset-backed securities 246 --- 1 245
------------------------------------------------
$37,283 $348 $376 $37,255
================================================
</TABLE>
<TABLE>
<CAPTION>
Deduction to Stockholders' Equity:
(In Whole Dollars)
<S> <C>
Unrealized loss on Available for Sale Securities $27,952
Less tax effect 25,324
-------
Net unrealized loss on Available for Sale Securities $ 2,628
=======
</TABLE>
LOAN PORTFOLIO
The following table shows the Company's amount of loans by category at
the end of each of the last five years.
<TABLE>
<CAPTION>
At December 31
--------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural $ 31,244 $ 16,747 $ 17,123 $ 16,309 $ 18,844
Real estate - construction and land development 6,891 6,865 2,290 4,651 1,848
Real estate - residential 59,500 50,477 50,938 48,088 50,670
Real estate - commercial 94,545 70,749 59,625 50,310 47,293
Consumer 6,681 6,148 6,097 6,550 8,101
Obligations of states and political
subdivisions 16 23 29 136 143
Other 109 85 89 34 36
--------------------------------------------------------------------
$198,986 $151,094 $136,191 $126,078 $126,935
Allowance for Possible Loan Losses (3,354) (2,498) (2,306) (1,954) (1,967)
Unamortized adjustment to fair value (54) 0 0 0 0
Unearned Income (643) (527) (403) (313) (294)
--------------------------------------------------------------------
Net Loans $194,935 $148,069 $133,482 $123,811 $124,674
====================================================================
</TABLE>
The following table shows the maturity distributions and interest rate
sensitivity of selected loan categories at December 31, 1996.
<TABLE>
<CAPTION>
Within One to After Five
One Year Five Years Years Total
-------- ---------- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Commercial, financial, and agricultural $17,642 $10,084 $3,518 $31,244
Real Estate - construction and land
development 1,770 730 4,391 6,891
--------------------------------------------------
$19,412 $10,814 $7,909 $38,135
==================================================
</TABLE>
The following table shows the amounts, included in the table above,
which are due after one year and which have fixed interest rates and
adjustable rates:
<TABLE>
<CAPTION>
Total Due After One Year
-------------------------------------------
Fixed Rate Adjustable Rate Total
---------- --------------- -----
(Dollars in Thousands)
<S> <C> <C> <C>
Commercial, financial, and agricultural $3,559 $10,043 $13,602
Real Estate - construction and land
development 427 4,694 5,121
---------------------------------------------
$3,986 $14,737 $18,723
=============================================
</TABLE>
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<TABLE>
<CAPTION>
December 31
----------------------------------------------------
(Dollars In Thousands)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $4,352 $2,695 $3,238 $4,084 $3,010
Loans 90 days or more past due
and still accruing 112 23 204 427 863
Real estate acquired by foreclosure
or substantively repossessed 308 633 888 2,160 1,367
------------------------------------------------------
Total nonperforming assets $4,772 $3,351 $4,330 $6,671 $5,240
======================================================
Percentage of nonaccrual loans to total loans 2.19% 1.78% 2.38% 3.24% 2.37%
Percentage of nonaccrual loans and real estate
acquired by foreclosure or substantively
repossessed to total assets 1.60% 1.43% 2.13% 3.18% 2.31%
Percentage of Allowance for Possible Loan
Losses to Nonaccrual Loans 77.07% 92.69% 71.22% 47.85% 65.35%
</TABLE>
Nonaccrual loans include restructured loans of $398,000 at December
31, 1996; $425,000 at December 31, 1995; and $286,000 at December 31, 1994.
Information with respect to nonaccrual and restructured loans for the
past five years ending December 31 is as follows:
<TABLE>
<CAPTION>
December 31
------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $4,352 $2,695 $3,238 $4,084 $3,010
Interest income that would have been
recorded under original terms $ 361 $ 243 $ 242 $ 443 $ 263
Interest income recorded during the period $ 62 $ 21 $ 19 $ 115 $ 57
</TABLE>
Nonperforming assets include nonaccrual loans, loans past due 90 days
or more but still accruing, restructured loans not performing in accordance
with amended terms, and other real estate acquired through foreclosure.
Nonperforming assets as a total increased to $4.8 Million at year end 1996,
from $3.4 Million reported at year end 1995. Nonaccrual loans at December
31, 1996 were up by $1.7 Million to $4.4 Million from $2.7 Million reported
on December 31, 1995. The increase in nonaccrual loans is attributable to
$896,411 of nonaccrual loans that were acquired from the National Bank of
Fairhaven, and a commercial account with $760,000 of borrowings which became
nonaccrual due to financial difficulties during the third quarter. The
latter loan consists of two separate parcels of commercial real estate which
are currently being marketed for sale by the borrower. The bank does not
anticipate any material losses on this loan due to the value of the
collateral. Loans that became nonaccrual during the current year, including
the aforementioned, amounted to $2,445,428. Offsetting this increase were
receipts of loan payments of $276,578 and loans of $218,731 that were deemed
uncollectible and charged off to the Allowance for Possible Loan Losses.
There was a transfer to Other Real Estate Owned of $107,741, and a transfer
to accrual status of a loan for $185,344.
Other loans in the nonaccrual status that are collateralized by real
estate have outstanding balances of $400,000 or less to any one individual
borrower. When a real estate loan becomes nonaccrual, an appraisal of the
property is obtained to determine that an 80% loan to value ratio exists.
If the loan to value exceeds 80% or if it is determined that all amounts due
according to the terms of the loan agreement will not be met, the original
loan is classified as an impaired loan with a watch list reserve allowance
assigned to it.
The Company places a loan on nonaccrual status when, in the opinion of
management, the collectibility of the principal and interest becomes
doubtful. Generally, when a commercial loan, commercial real estate loan or
a residential real estate loan becomes past due 90 days or more, the Company
discontinues the accrual of interest and reverses previously accrued
interest. The loan remains in the nonaccrual status until the loan is
current and six consecutive months of payments are made, then it is
reclassified as an accruing loan. When it is determined that the
collectibility of the loan no longer exists, it is charged off to the
Allowance for Loan Losses or, if applicable, any real estate that is
collateralizing the loan is acquired through foreclosure, at which time it
is categorized as Other Real Estate Owned. The nonaccrual category is
comprised of $1,233,588 of residential real estate loans, $2,379,581 of
commercial real estate loans, $715,728 of commercial loans and $23,250 of
other types of loans.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan", was adopted by the Company as of
January 1, 1995. Statement 114 applies to all loans except large groups of
smaller-balance homogeneous loans that are collectively evaluated for
impairment, loans measured at fair value or at a lower of cost or fair
value, leases, and debt securities as defined in Statement 115. Statement
114 requires that impaired loans be valued at the present value of expected
future cash flows discounted at the loan's effective interest rate or as a
practical expedient, at the loan's observable market value of the collateral
if the loan is collateral dependent. Smaller balance homogeneous loans are
considered by the Company to include consumer installment loans and credit
card loans. Included in the $4.4 Million of nonaccrual loans are $4.0
Million, which the company has determined to be impaired, of which $2.7
Million has a related allowance for credit losses of $.8 Million, and $1.3
Million has no related allowance for credit losses.
The Company has $500,000 of potential problem loans for which payments
are presently current but are identified as a possible risk. This
assessment is based on an objective review of the borrowers' financial
statements. The past experience with the borrower, the borrower's
background, and the applicable value of the assets collateralizing these
loans provides a degree of assurance that the loan will continue to be paid
as per the loan agreement. These issues are reviewed on a quarterly basis
to determine if there is any change in status that would cause management to
reclassify the loan from the accrual category to nonaccrual. The economy in
the southeastern region has had an overall improvement from the conditions
that existed in the previous years. The unemployment rate has decreased to
a 6.50% level, however, it continues to remain higher than the state average
of 5.50%. There can be no assurance that other potential problem loans will
not occur, however, management is optimistic that if the economy in the
region continues this improved trend, the level of nonperforming assets
could also reflect an improvement.
Other Real Estate Owned, which are properties acquired through
foreclosure, consists of 5 parcels totaling $307,591 at year end 1996.
Annual appraisals are performed on all these properties and if the appraisal
is less than the carrying value of the property, the carrying value is
written down by a charge to the writedown on OREO expense account.
In March 1997, the Bank classified a $1.6 Million commercial real
estate loan as nonaccrual. Based on a current appraisal obtained at that
time, the collateral is valued at $2.8 Million. The business is dependant
on seasonal cash flows which generally peak during the spring-summer period.
The borrower has agreed to accelerate cash payments to become current within
the July-August 1997 time frame on the assumption that the incoming cash
flows will occur as predicted.
The Company did not make any special provision to the Allowance for
Possible Loan Losses on the aforementioned loan due to the excess in
collateral values of approximately 43%. Potential problem loans remain at
$500,000 for which payments are presently current but are identified as
possible risk.
The combination of this loan, along with several other loans totaling
$800,000 that became past due 90 days or more but still accruing, was offset
by loans totaling $407,000 that were resolved, payments made on other
nonaccruing loans of $55,000, charge-offs of $114,000, and transfers to
Other Real Estate Owned of $222,000, resulting in a net increase in
nonperforming assets of $1.6 Million, from the $4.8 Million reported on
December 31, 1996.
INFORMATION WITH RESPECT TO NONACCRUAL AND PAST DUE LOANS
AT MARCH 31, 1997 AND 1996 AND DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
(Dollars in Thousands)
At March 31 At December 31
------------------- -------------------
1997 1996 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Nonaccrual Loans $5,205 $2,751 $4,352 $2,695
Loans 90 days or more past due
and still accruing 832 517 112 23
Real estate acquired by foreclosure
or substantively repossessed 386 350 308 633
Percentage of nonaccrual loans to total loans 2.60% 1.78% 2.19% 1.78%
Percentage of nonaccrual loans and real estate
acquired by foreclosure or substantively
repossessed to total assets 1.92% 1.34% 1.60% 1.43%
Percentage of allowance for possible loan losses
to nonaccrual loans 63.85% 96.36% 77.07% 92.69%
</TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The table below illustrates the changes in the Allowance for Possible
Loan Losses for the periods indicated.
<TABLE>
<CAPTION>
December 31
----------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Balance at January 1 $2,498 $2,306 $1,954 $1,967 $1,300
----------------------------------------------------------
Charge-offs:
Commercial (276) (184) (22) (963) (115)
Real estate-construction (0) (0) (0) (0) (0)
Real estate-mortgage (4) (79) (246) (451) (202)
Installment/Consumer (159) (134) (93) (85) (166)
----------------------------------------------------------
(439) (397) (361) (1,499) (483)
----------------------------------------------------------
Recoveries:
Commercial 332 1 51 0 9
Real estate-construction 0 0 0 0 0
Real estate-mortgage 0 16 2 2 0
Installment/Consumer 107 22 15 29 69
----------------------------------------------------------
439 39 68 31 78
----------------------------------------------------------
Net Charge-offs 0 (358) (293) (1,468) (405)
----------------------------------------------------------
Provision for loan losses 400 550 645 1,455 1,072
Allowance attributable to acquisition $ 456 0 0 0 0
----------------------------------------------------------
Balance at December 31: $3,354 $2,498 $2,306 $1,954 $1,967
==========================================================
Allowance for Loan Losses as a
percent of year end loans 1.69% 1.65% 1.70% 1.55% 1.55%
Ratio of net charge-offs to average
loans outstanding 0.00% 0.25% 0.23% 1.18% 0.33%
</TABLE>
The level of the Allowance for Possible Loan Losses is evaluated by
management and encompasses several factors. These factors include but are
not limited to recent trends in the nonperforming loans, the adequacy of the
assets which collateralize the nonperforming loans, current economic
conditions in the market area and various other external and internal
factors. Management's assessment of the adequacy of the Allowance for
Possible Loan Losses is reviewed by regulators and by the Company's
independent accountants.
The Company's provision for loan losses, which is a deduction from
earnings, in 1996 was reduced to $400,000 compared to prior years'
provisions of $550,000, $645,000, $1,455,000 and $1,072,000 for years ending
1995, 1994, 1993, and 1992 respectively. In 1996, the Company realized
significant recoveries of previously charged-off loans of $439,000 compared
to previous years of $39,000, $68,000, $31,000, and $78,000 in 1995, 1994,
1993, and 1992 respectively. Also increasing the Allowance for Possible
Loan Losses was $456,000, attributable to the aquisition of the National
Bank of Fairhaven.
Although nonaccrual loans increased in 1996, the amount provided to
the Allowance for Possible Loan Losses was deemed adequate by management
after full consideration of the value of the assets securing these loans.
This table shows an allocation of the allowance for loan losses as of
the end of each of the last five years.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992
--------------------- --------------------- --------------------- --------------------- --------------------
Percent of Percent of Percent of Percent of Percent of
Loans in Loans in Loans in Loans in Loans in
Each Each Each Each Each
Category to Category to Category to Category to Category to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans
------ ----------- ------ ----------- ------ ----------- ------ ----------- ------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial $ 789(1) 15.70% $ 597(1) 11.08% $ 588 12.82% $ 317 13.51% $ 256 14.96%
Real estate -
Construction 41 3.46 40 4.55 14 1.68 29 3.69 10 1.46
Real estate -
Mortgage 2,150(2) 77.42 1,581(2) 80.23 1,374 81.03 1,320 77.66 1,503 77.17
Consumer(3) 374 3.42 280 4.14 330 4.47 288 5.14 198 6.41
-----------------------------------------------------------------------------------------------------------
$3,354 100.00% $2,498 100.00% $2,306 100.00% $1,954 100.00% $1,967 100.00%
===========================================================================================================
<FN>
<F1> Includes amounts specifically reserved for impaired loans of $0.00 as
of December 31, 1996 and $214,542 as of December 31, 1995, as required
by Financial Accounting Standard No. 114, Accounting for Impairment of
Loans.
<F2> Includes amounts specifically reserved for impaired loans of $838,290
as of December 31, 1996 and $240,500 as of December 31, 1995, as
required by Financial Accounting Standard No. 114, Accounting for
Impairment of Loans.
<F3> Percent of loans in each category to total loans includes consumer,
obligations of states and political subdivisions and other.
</FN>
</TABLE>
The loan portfolio's largest segment of loans is commercial real
estate loans, which represent 47.5% of gross loans. Residential real
estate, which is the second largest segment of the loan portfolio,
represents 30% of gross loans. The Company requires a loan to value ratio
of 80% in both commercial and residential mortgages. These mortgages are
secured by real properties which have a readily ascertainable value.
Generally, commercial real estate loans have a higher degree of credit
risk than residential real estate loans because they depend primarily on the
success of the business. When granting these loans, the Company evaluates
the financial statements of the borrower(s), the location of the real
estate, the quality of management, and general economic and competitive
conditions. When granting a residential mortgage, the Company reviews the
borrower(s) repayment history on past debts, and assesses the borrower(s)
ability to meet existing obligations and payments on the proposed loans.
Commercial loans consist of loans predominantly collateralized by
inventory, furniture and fixtures, and accounts receivable. In assessing
the collateral for this type of loan, management applies a 40% liquidation
value to inventories; 25% to furniture, fixtures and equipment; and 60% to
accounts receivable. Commercial loans represent 15.7% of the loan
portfolio.
Consumer loans are generally unsecured borrowings and represent 3.5%
of the total loan portfolio. These loans have a higher degree of risk than
residential mortgage loans. The underlying collateral of a secured consumer
loan tends to depreciate in value. Consumer loans are typically made based
on the borrower's ability to repay the loan through continued financial
stability. The Company endeavors to minimize risk by reviewing the
borrower's repayment history on past debts, and assessing the borrower's
ability to meet existing obligations on the proposed loans.
Charge-offs in 1996 amounted to $439,000, up by $42,000 when compared
to losses incurred in 1995 of $397,000. The Company had charge-offs of
$361,000 in 1994, $1,499,000 in 1993 and $483,000 in 1992. The commercial
loan category incurred losses of $276,000 in 1996 compared to $184,000 in
1995, $22,000 in 1994, $963,000 in 1993 and $115,000 in 1992. The loss in
1993 was mostly attributable to one unusually large loan that resulted in a
$932,000 loss. The 1996 losses of $276,000 represent various commercial
loans deemed uncollectible and are not representative of any one industry.
The loss on installment and consumer loans of $159,000 represents credit
cards and various personal unsecured loans. Charge-offs attributable to
loans acquired through the acquisition of the National Bank of Fairhaven
amounted to $134,000.
DEPOSITS
Deposits are obtained from individuals and from small and medium sized
businesses in the local market area. The Bank also attracts deposits from
municipalities and other government agencies. The Bank does not solicit or
accept brokered deposits.
The following table sets forth the average amount and the average rate
paid on deposits for the periods indicated.
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- -------------------- --------------------
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
------- ------- ------- ------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing Demand Deposits $ 33,572 0.00% $ 26,674 0.00% $ 23,832 0.00%
Interest-bearing Demand Deposits 28,788 2.98 21,568 3.51 22,784 2.61
Savings Deposits 40,246 2.50 37,790 2.53 44,945 2.53
Money Market Deposits 13,326 2.04 16,355 2.03 18,369 2.20
Time Deposits $100,000 or More 18,813 5.87 15,403 5.56 12,760 3.98
Other Time Deposits 97,957 5.87 82,290 5.83 56,273 3.99
---------------------------------------------------------------
Totals $232,702 3.87% $200,080 3.85% $178,963 2.73%
===============================================================
</TABLE>
As of December 31, 1996, time certificates of deposit in amounts of
$100,000 or more had the following maturities:
<TABLE>
<CAPTION>
(Dollars in Thousands)
<S> <C>
Three months or less $ 7,335
Over three months through six months 5,038
Over six months through twelve months 4,700
Twelve months and over 4,400
-------
$21,473
=======
</TABLE>
RETURNS ON EQUITY AND ASSETS
The following table shows consolidated operating and capital ratios of
the Company for each of the last three years:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Return on Average Assets 0.94% 0.75% 0.75%
Return on Average Equity 12.69% 9.99% 9.71%
Dividend Payout Ratio 27.95% 29.03% 27.93%
Average Equity to Average
Assets Ratio 7.40% 7.55% 7.71%
</TABLE>
SHORT TERM BORROWINGS
The following table shows the Company's short-term borrowings at the
end of each of the last three years along with the maximum amount of
borrowings and average amounts outstanding as well as weighted average
interest rates for the last three years.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Balance at December 31 $1,200 $ 742 $1,314
Maximum Amount Outstanding
at Any Month's End $2,141 $3,700 $5,814
Average Amount Outstanding
During the Year $ 987 $1,179 $1,329
Weighted Average Interest
Rate During the Year 5.71% 5.34% 4.21%
</TABLE>
The Bank has the ability to borrow funds from correspondent banks and
the Federal Home Loan Bank, as well as the Federal Reserve Bank of Boston,
by pledging various investment securities as collateral. The Company did
not borrow during 1996, except for tax payments made by our customers, which
are owed to the Federal Reserve Bank Treasury Tax and Loan account, which
are classified as borrowed funds. During the first quarter of 1995, the
Company borrowed for 25 days with an average borrowing of $2.0 Million. The
Company also has notes payable of $1,050,000 due to Fleet Bank with a final
maturity in November 1999. This note was assumed from Fairbank, Inc. at the
time of the acquisition. Because of the term of the note, including
applicable prepayment fees, management determined it advantageous for the
Bank not to pay off the note.
Accounting for Deferred Income Taxes
The net deferred tax asset at year end 1996 was $1,746,107. The
amount of taxable income required to be generated to fully realize such net
deferred tax asset will be approximately $4.1 Million. Income before income
taxes earned by the Company in 1996 was $3,942,196.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The purpose of Management's Discussion and Analysis is to focus on
certain significant factors which have affected the Company's operating
results and financial conditions, and to provide stockholders a more
comprehensive review of the figures contained in the financial data of this
report.
In August 1996, the Company completed the acquisition of the National
Bank of Fairhaven. The acquisition extends the Bank's market area to the
New Bedford and Fairhaven region including Mattapoisette, Marion, and
Wareham, Massachusetts.
The acquisition permits expansion of our financial services delivery
system to a marketplace that demonstrates a need for a small business
oriented local bank. Our ability to make timely, prudent lending decisions
should help us significantly expand our customer base. The merger of
several local banks into larger institutions with remote management and
decision-making entities, presented a unique opportunity for our Bank to
enhance its growth and earning potential.
The acquisition process went very well, with a minimal amount of
problems. All related expenses are behind us and the good earnings stream
in the fourth quarter reflects the reward of this acquisition.
Results of Operations
Earnings for 1996 were up by 44.52% from 1995. The Company earned
$2,378,195 or $0.86 per share in 1996, compared to $1,645,587 or $0.60 per
share earned in 1995, and $1,467,241 or $0.57 per share in 1994. Return on
average assets increased to .94% in 1996 from .75% in 1995 and .75% in 1994.
Return on average equity for 1996, 1995, and 1994 was 12.69%, 9.99% and
9.71% respectively.
Net interest income on a fully taxable equivalent basis was $10.5
Million in 1996, $8.9 Million in 1995, and $8.7 Million in 1994. Management
attributes the increase in net interest income in 1996 to a larger loan
base, which generally produces higher yields than other earning assets.
Yield on earning assets increased to 8.25% in 1996 compared to 8.17%
in 1995 and 7.49% in 1994. This is primarily due to a higher average
earning rate in 1996 on commercial real estate of 9.98%, compared to 9.57%
earned in 1995 and 8.95% earned in 1994. In addition to the earning rate
increase reflected in this category, the average invested funds in
commercial real estate also increased to $90.6 Million in the current year
from $70.1 Million and $58.0 Million for years 1995 and 1994 respectively.
Cost of funds increased slightly, due to higher rates paid on
certificates of deposit with balances greater than $100,000 and other time
deposits, as well as a higher volume of deposit funds in these categories.
Cost of funds increased to 4.53% in 1996, from 4.45% in 1995 and 3.16% in
1994.
The net interest spread, which is the difference between the yield
earned on average earning assets and the rates paid on interest bearing
liabilities, remained the same in 1996 as in 1995 at 3.72%, down when
compared to 4.33% reported in 1994.
The net yield on earning assets, which is determined by dividing net
interest income by total average earning assets, increased to 4.44% in 1996
from 4.36% in 1995, however this was a decrease from the 4.78% reported in
1994.
Total Other Income for 1996 increased by $249,538 to $1,305,497 from
$1,055,959 reported in 1995. Total Other Income in 1994 was $1,099,068.
Service charges on deposit accounts, which is the largest component of Other
Income, was up by $54,572 in 1996 when compared to 1995. This increase is
attributable to a larger customer base being serviced, particularly in the
Fairhaven and New Bedford area, as a result of the acquisition of the
National Bank of Fairhaven, and the attraction of additional customers at
the Brayton Avenue office, due to the recently installed five lane drive-up
facility. In 1995, a slight decrease of $23,257 from 1994 occurred in
service charges, due to the introduction of the no-fee checking account,
whereby statements are mailed exclusive of the original paid checks. This
product is still being offered to our depositors; however, 1995 was largely
impacted due to the conversion by existing customers from the fee assessed
account to the no fee account. Service charges earned on overdrafts
increased by $67,573 in 1996 to $220,428 from $152,855. In 1994, the Bank
earned $169,689 in overdraft charges. Gains realized on sales of investment
securities were $112,631, $64,810, and $37,067 for 1996, 1995, and 1994
respectively. Due to favorable market conditions occurring throughout 1996,
various investments of marketable equity securities were sold realizing
gains. The market trends of these types of investments are monitored
closely and acted upon when management feels it is advantageous to do so.
The line item Other Income was $343,441, $263,869, and $294,630 for 1996,
1995, and 1994 respectively. An increase of $79,572 occurred in 1996 when
compared to the total recorded in 1995, and a decrease of $30,761 occurred
in 1995 from 1994. The increase in 1996 was a result of $30,000 of interest
earned on escrowed funds that were deposited with an independent depositor,
who acted as Exchange and Paying Agent for the acquisition of Fairbank Inc.
common stock during the stock tendering process. Also attributable to this
increase was additional revenue earned on safe deposit rentals of $20,342,
and other various miscellaneous and fee income totaling $20,230.
Total Other Expense for 1996 increased by $748,634 or 11.29%, to
$7,380,161 from $6,631,527 reported in 1995. Total Other Expense in 1995
decreased by 1.05% from $6,701,605 reported in 1994. Salaries and employee
benefits, which are the largest component of Other Expense increased by
$365,419 from $3,962,983 reported in 1995 to $4,328,402 in 1996. This
increase is attributable to general wage adjustments and increases in
employee benefits as well as the addition of 29 new officers and employees
of the National Bank of Fairhaven that were retained as Slade's Ferry Trust
Company employees. The staff of the National Bank of Fairhaven not only
enhanced the merger process, but also provided a continuity of service to
the customers and the account relationships that were acquired in the
merger.
Occupancy and equipment expense combined increased by $190,825 during
1996 primarily due to the additional cost incurred in maintaining banking
facilities acquired through the merger, the additional depreciation of the
new tellers equipment installed in mid 1996, and the depreciation of the new
drive-up facility.
In 1996 the Bank incurred a loss of $21,008 on sales of Other Real
Estate Owned property, whereas in 1995 a gain of $26,728 was realized and in
1994 a loss of $13,462. The Bank appraises OREO annually, and if the
appraisal is less than the book value, a writedown on OREO is incurred.
Writedown on OREO properties in 1996 totaled $30,000 compared to $104,578 in
1995 and $317,239 in 1994. The decrease in this category is due to fewer
parcels of property being carried.
The line item Other Expense increased by $371,170 in 1996 from
$1,307,703 to $1,678,873. Included in this increase is a new expense item
titled Amortization of Goodwill. Goodwill was a result of the premium paid
above the book value to the stockholders of Fairbank Inc., parent company of
the National Bank of Fairhaven. Goodwill is to be amortized over a fifteen
year period. In 1996, the amortization of goodwill reflects four months
totaling $98,000. Prior to the merger acquisition, the Company did not have
a balance sheet line item for goodwill. In addition, publications and
advertising increased in 1996 compared to 1995 by $93,500. This was
necessary, particularly in the Fairhaven - New Bedford area, as the merger
process evolved with emphasis on the name recognition of Slade's Ferry Trust
Company. Other material expenditures include $47,000 for various legal
fees, an increase in telephone expense of $28,000, and an increase in
computer fees of $36,000. Offsetting these expenses were decreases of
$57,000 in collection and repossession expense and a decrease of $39,000 in
OREO expenses. The remaining increases totaling $164,670 were a combination
of increases in postage, auditing, armored car services, checkbook printing,
outside consultants and various miscellaneous expenditures.
As a result of the FDIC adjusting its premium on deposit insurance,
the annual assessment was reduced considerably. FDIC assessment in 1996 was
$6,278 compared to $204,477 recorded in 1995 and $452,255 in 1994. There
was also an increase in stationery and supplies expense of $46,261 from
$197,392 in 1995 to $243,653 in 1996. The increase from 1994 to 1995 was
$28,568. The significant increase in 1996 is attributed to additional
supplies needed to stock the Fairhaven and New Bedford branches acquired in
August, 1996.
Income tax expense for 1996 increased to $1,564,001 up by $558,229
when compared to $1,005,772 in 1995 which was up by $118,122 when compared
to $887,650 in 1994.
Assets increased by $57.9 Million to $291.3 Million on December 31,
1996 from $233.4 Million reported at year end 1995. This increase was
primarily attributable to the acquisition of the National Bank of Fairhaven
and its parent company Fairbank, Inc. which was consummated in August 1996.
The acquisition was achieved by a cash outlay of $8.6 Million paid by
Slade's Ferry Trust Company to the stockholders of Fairbank, Inc. Assets
acquired totaled $65.1 Million which is comprised of $33.1 Million in loans,
Allowance for Possible Loan Losses of $0.5 Million, Investment Portfolio of
$6.4 Million, cash and deposits at other banks totaling $20.0 Million, other
assets amounting to $2.7 Million and goodwill of $3.4 Million. Liabilities
assumed consisted of deposits of $54.8 Million, notes payable of $1.3
Million, and other liabilities of $.4 Million.
The cash payment resulted in a premium paid above the book value of
Fairbank, Inc. of $3.4 Million, which is classified as Goodwill. Also
included in Goodwill is the net adjustment of book values to market values
of loans, investments, buildings and equipment, deposits and notes payable.
Goodwill is to be amortized over a fifteen year period.
The loan portfolio grew significantly, in addition to the loans
attributed to the acquisition. The Company's business development program,
combined with management's knowledge of local economic and market trends,
provided a steady quality growth to the portfolio. Loans at year end 1996
were up by $47.9 Million to $199.0 Million from $151.1 Million reported at
year end 1995. The portfolio is comprised of 47.5% in the commercial real
estate category, 29.9% in residential real estate category, and 22.6%
commercial, consumer, construction and other types of loans.
The largest component of the loan portfolio is commercial real estate,
which generally has a higher degree of credit risk than residential real
estate loans because they depend primarily on the success of the business.
These loans are collateralized by various types of commercial properties
primarily located within the Bank's market area extending throughout
southeastern Massachusetts and abutting cities and towns in Rhode Island.
There is no predominate type of property nor concentration of credit in any
one industry. The properties consist of apartment complexes, motels,
medical centers, strip malls, factories with multiple tenants, and retail
office units. Residential real estate is the second largest component of
loans that consists of one to four family residential properties located in
the southeast region of Massachusetts and nearby communities in Rhode
Island. All loans originated by the Bank are retained in the portfolio in
lieu of selling them as a package in the secondary market. Management
believes that this practice enhances and strengthens continued customer
relationships.
The investment portfolio is comprised of investments in the Available
for Sale category, the Held to Maturity category and Federal Home Loan Bank
stock. The total portfolio decreased from $58.8 Million reported on
December 31, 1995 to $57.7 Million on December 31, 1996. The net decrease
was a combination of $6.4 Million of investments acquired as a result of the
merger, offset by the maturing of various securities that were not
reinvested but used as a source to help fund the growth in loans.
Securities are classified as Available for Sale when the Company
intends to hold securities for an indefinite period of time, but not
necessarily to maturity. These securities may be sold in response to
interest rate changes, liquidity needs, and other factors. Any unrealized
gains or losses, net of taxes, on securities classified as Available for
Sale are reflected in Stockholders' Equity as a separate component.
Investments in the Available for Sale category consist predominately
of securities of U.S. Treasury and other U.S. government corporations and
agencies, mortgage-backed securities, and marketable equity securities.
Securities of U.S. Treasury and U.S. government corporations and agencies
have little or no credit risk, other than being sensitive to changes in
interest rates; and if held to maturity, these securities will mature at
par. However, all marketable equity securities are classified in the
Available-for-Sale category, and have a greater risk as they are subject to
rapid market fluctuations. These securities are monitored and evaluated
frequently to determine their suitability to sell or retain them in the
portfolio. Management minimizes its risk by limiting the total amount
invested into marketable equity securities to 5% of the total investment
portfolio.
The Available for Sale category had unrealized losses, net of taxes,
of $2,628 at December 31, 1996, and unrealized gains, net of taxes, of
$33,022 at year end 1995.
Stockholders' Equity increased by $2.0 Million to $19.8 Million on
December 31, 1996 from $17.8 million at year end 1995. The increase is a
result of earnings of $2,378,195 and the proceeds from the issuance of
common stock from the Dividend Reinvestment Program, of which $33,200 was
received from the optional cash contribution plan and $312,947 from the
reinvestment of cash dividends. Offsetting these increases were the
payments of cash dividends of $664,732 and $3,360 paid out for fractional
shares related to a 5% stock dividend declared on January 8, 1996. Also
indicated as a deduction from Stockholders' Equity are net unrealized losses
on securities classified as Available for Sale of $2,628, which is a
decrease of $35,650 from the net unrealized gain of $33,022 reported in
1995.
The Company provides a Dividend Reinvestment Program which entitles
stockholders to purchase additional shares of common stock at prevailing
market prices in lieu of receiving cash dividends. The program also allows
each participant to contribute up to $1,000 annually to purchase additional
shares.
Liquidity
Liquidity represents the ability of the Bank to meet its funding
requirements. In assessing the appropriate level of liquidity, the bank
considers deposit levels, lending requirements, and investment maturities in
light of prevailing economic conditions. Through this assessment, the Bank
manages its liquidity level to optimize earnings and responds to
fluctuations in customer borrowing needs.
The Company's principal sources of funds are customer deposits, loan
amortization, loan payoffs, and the maturities of investment securities.
Through these sources, funds are provided for customer withdrawals from
deposit accounts, loan origination, draw-downs on loan commitments,
acquisition of investment securities and other normal business activities.
Investors' capital also provides a source of funding.
The largest source of funds is provided by depositors. The largest
component of the Company's deposit base is term certificates which extend
out to a maximum of five years. The Company does not participate in
brokered deposits. Deposits are obtained from consumers and commercial
customers within the Bank's community reinvestment area, being Bristol
County, Massachusetts and several abutting towns in Rhode Island. Deposits
at year end 1996 were $267.8 Million, up by $53.6 Million from $214.2
Million reported at year end 1995. The deposit components consist of time
deposits (48.0%), regular savings (15.8%), demand deposits (16.6%), Money
Market accounts (5.7%) and NOW accounts (13.9%). Time deposits over
$100,000 were 8.0% of 1996 total deposits, and 7.9% of 1995 total deposits.
Exclusive of deposits of $54.8 Million that were acquired with the
acquisition of the National Bank of Fairhaven, deposit levels in 1996
remained relatively flat even though the Bank was very competitive with area
financial institutions in interest rates offered. Management believes that
growth in deposits was somewhat affected by depositors seeking higher yields
in nonbanking investment products. Interest rates paid on deposits are
established by the Bank's Asset and Liability Committee, which manages the
Bank's interest rates while maintaining a desirable net interest margin.
The Company also has the ability to borrow funds from correspondent
banks, the Federal Home Loan Bank and the Federal Reserve Bank of Boston by
pledging various investment securities.
Excess available funds are invested on a daily basis into Federal
Funds Sold. An appropriate level of Federal Funds Sold is maintained to
meet loan commitments, anticipated loan growth and deposit forecasts. Funds
exceeding this level are then used to purchase investment securities that
are suitable in yields and maturities for the investment portfolio. The
investment portfolio has securities maturing at strategic time periods and
is comprised of U.S. Treasury Securities, securities of U.S. Government
Agencies, and obligations of state and political subdivisions.
Liquidity in 1996 was primarily provided by the maturities and sales
of securities totaling $35.0 Million, in addition to cash and cash
equivalents of $20.0 Million acquired in the acquisition of the National
Bank of Fairhaven. These proceeds were offset by $8.6 Million paid to
Fairbank, Inc.'s shareholders, the purchase of $26.2 Million in securities,
and an increase in loans of $15.0 Million. Other events that affected
liquidity were cash flows of operating activities and financing activities,
as indicated in the statements of cash flows.
Capital
At December 31, 1995, the capital ratios for the Bank were 12.90% for
Total Capital, 11.60% for Tier I Capital and 7.54% for Leverage Capital.
This exceeded the "well capitalized" requirements of 10% for Total Capital,
6% for Tier I Capital, and 5% for Leverage Capital. As a result of the
merger and the acquisition of $65.1 Million in assets, the capital ratios
for year ending 1996 declined. Total Capital, Tier I Capital and Leverage
Capital were 9.51%, 8.22% and 5.66% respectively. The Company anticipates a
return to the "well capitalized" status in 1997.
The following table illustrates the capital position of Slade's Ferry
Bancorp and Slade's Ferry Trust Company for years ending December 31, 1996
and 1995.
<TABLE>
<CAPTION>
Slade's Ferry Bancorp 1996 1995
------------------- --------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets) $ 19,044 9.56% $ 19,704 12.95%
Minimum required 15,938 8.00 12,174 8.00
Excess 3,106 1.56 7,530 4.95
Tier I Capital (to Risk Weighted Assets) 16,543 8.27 17,794 11.65
Minimum required 8,003 4.00 6,111 4.00
Excess 8,540 4.27 11,683 7.65
Risk Adjusted Assets, net of goodwill,
nonqualifying intangible, excess
allowance and excess deferred tax
assets $199,183 $152,151
Tier I Capital (Leverage Ratio) 16,543 5.70 17,794 7.57
Minimum required 11,617 4.00 9,407 4.00
Excess 4,926 1.70 8,387 3.57
Quarterly average total assets, net
of goodwill, nonqualifying intangibles
and excess deferred tax assets $290,429 $235,184
<CAPTION>
Slade's Ferry Trust Company 1996 1995
------------------- --------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets) $ 18,935 9.51% $ 19,626 12.90%
Minimum required 15,934 8.00 12,172 8.00
Excess 3,001 1.51 7,454 4.90
Tier I Capital (to Risk Weighted Assets) 16,435 8.22 17,717 11.60
Minimum required 8,001 4.00 6,109 4.00
Excess 8,434 4.22 11,608 7.60
Risk Adjusted Assets, net of goodwill,
nonqualifying intangible, excess
allowance and excess deferred tax
assets $199,085 $152,144
Tier I Capital (Leverage Ratio) 16,435 5.66 17,717 7.54
Minimum required 11,615 4.00 9,405 4.00
Excess 4,820 1.66 8,312 3.54
Quarterly average total assets, net
of goodwill, nonqualifying intangibles
and excess deferred tax assets $290,386 $235,124
</TABLE>
Other Matters
In the normal course of business, the Bank has made various
commitments to extend credit in the form of loans and unused lines of
credit, or letters of credit. In management's opinion, these commitments do
not represent unusual credit risks.
Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 121 (SFAS 121) "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed of." Included in
the scope of Statement 121 are long-lived assets, such as premises and
equipment, and any impairment loss must be recognized when the estimate of
total undiscounted future cash flows attributable to the asset is less than
the asset's carrying amount. The Company has adopted Statement 121 and it
has no material effect on the financial statements.
DIRECTORS AND EXECUTIVE OFFICERS
The Company as the holding company for Slade's Ferry Trust Company
("Bank") has the same board of directors as the Bank and some of its
executive officers are also executive officers employed by the Bank. The
following table sets forth certain information about the directors and
executive officers of the Company and the Bank.
<TABLE>
<CAPTION>
Bank and
Director Company
of Bank Term Position or Office with
Name Age Since Expires the Bank and the Company
- ---- --- -------- -------- ------------------------
<S> <C> <C> <C> <C>
Thomas B. Almy 62 1964 1997
James D. Carey 54 1988 1998 President and Chief Executive
Officer of the Bank; Executive
Vice President of the Company
Peter G. Collias 65 1973 1997 Secretary and Clerk of
the Bank and the Company
Donald T. Corrigan 66 1959 1999 Retired; Chairman of the Board
of the Bank and of the Company
Edward S. Machado 75 1968 1997 Retired; former President of
the Bank
Francis A. Macomber 67 1980 1998
Majed Mouded, MD 55 1992 1998
Peter Paskowski 73 1971 1999 Retired; former President and
Executive Vice President of the
Bank
Kenneth R. Rezendes 63 1978 1999 President and Chief Executive
Officer of the Company
Bernard T. Shuman 76 1959 1998
William J. Sullivan 57 1985 1997
Charles Veloza 71 1979 1999
Ralph S. Borges 61 ---- ---- Senior Vice President/Treasurer
of the Bank; Treasurer of the
Company
Susan R. Hajder 49 ---- ---- Senior Vice President
and Operations Officer of the
Bank
Charlene J. Jarest 46 ---- ---- Vice President/Corporate
Services of the Bank
Carol A. Martin 51 ---- ---- Senior Vice President and
Branch Administrator of the Bank
Manuel J. Tavares 49 ---- ---- Senior Vice President
and Senior Loan Officer of
the Bank
</TABLE>
The following is a description of the business experience during the
last 5 years of the Directors and Executive Officers:
Thomas B. Almy: Architect with I. T. Almy Associates of Somerset,
Massachusetts since 1963.
James D. Carey: President and Chief Operating Officer of the Bank since
07/01/88 and Chief Executive Officer of the Bank since 01/01/96; Treasurer
of the Company since its inception to March 12, 1996, and Executive Vice
President of the Company since March 12, 1996. Mr. Carey was Executive Vice
President of the Bank from 05/01/88 to 06/30/88 and Senior Vice President
and Chief Financial Officer of First Cheshire National Bank of Keene, New
Hampshire from 09/1986 to 05/1988.
Peter G. Collias: Attorney with law firm of Peter G. Collias since 1992;
attorney with law firm of McGuire, Collias and Horvitz, Inc. of Fall River,
Massachusetts prior to 1992.
Donald T. Corrigan: Chairman of the Board of Directors of the Bank since
1984 and of the Company since March 12, 1996; Chief Executive Officer of the
Bank from 1969 to his retirement December 31, 1995; President of the Company
from its inception in 1989 until March 12, 1996, and President of the Bank
from 1969 to 1984. Retired Rear Admiral U.S. Navy Reserve; member and
director of Fall River Line Pier, Inc., Incorporator U.S.S. Massachusetts
Memorial; Associate Charlton Memorial Hospital; and member of Board of
Directors of Independent Bankers Association of America.
Edward S. Machado: President of the Bank from 1984 until his retirement on
12/31/87.
Francis A. Macomber: President, Treasurer and a Director of LeComte's Dairy
of Somerset, Massachusetts since prior to 1987.
Majed Mouded: Physician and endocrinologist, Chief of Medicine at St.
Anne's Hospital in Fall River, Massachusetts from 1995-1996, on active staff
since prior to 1991.
Peter Paskowski: President of the Bank from 01/01/88 until his retirement
on 06/30/88 and Executive Vice President of the Bank from 1984 to 1987.
Kenneth R. Rezendes: President of K. R. Rezendes, Inc., a heavy
construction firm since 1965. Also President of K. R. Management Corp. and
Assonet Land Development Corp. President and Chief Executive Officer of the
Company since March 12, 1996.
Bernard T. Shuman: President and Treasurer of Needlecraft Dress
Manufacturing Corporation until his retirement in 1985.
William J. Sullivan: President and Director of Sullivan Funeral Homes, Inc.
of Fall River and Somerset, Massachusetts since 1962.
Charles Veloza: President and Director of Charlie's Oil Co., a heating and
fuel oil distribution business of Fall River, Massachusetts since 1962.
Ralph S. Borges: Senior Vice President of the Bank since 1991, Treasurer of
the Bank since 1987, and Treasurer of the Company since March 12, 1996.
Employed by Bank since 1969.
Susan R. Hajder: Senior Vice President of the Bank since 1990 and
Operations Officer of the Bank since 1986. Employed by Bank since 1973.
Charlene J. Jarest: Vice President/Corporate Services of the Bank since
1993. Employed by Bank since 1991.
Carol A. Martin: Senior Vice President of the Bank since 1996 and Branch
Administrator of the Bank since 1989. Employed by the bank since 1963.
Manuel J. Tavares: Senior Vice President and Senior Loan Officer of the
Bank since 1989. Employed by Bank since 1987.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the information concerning beneficial
ownership of the Company's Common Stock by each director of the Company, by
the Chief Executive Officer and the executive officers other than the Chief
Executive Officer, and by the executive officers and directors as a group as
of March 31, 1997.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
DIRECTORS
Thomas B. Almy 50,642.504 (1) 1.81
958 Regan Road
Somerset, MA 02726
James D. Carey 19,937.410 (2) .71
457 Fairway Drive
Somerset, MA 02726
Peter G. Collias 10,858.369 (3) .39
84 North Main Street
Fall River, MA 02722
Donald T. Corrigan 45,834.295 (4) 1.64
95 Captain's Way
Somerset, MA 02726
Edward S. Machado 27,592.000 (5) .99
125 Perron Avenue
Somerset, MA 02726
Francis A. Macomber 96,669.713 (6) 3.45
27 Cypress Road
Somerset, MA 02726
Majed Mouded MD 42,622.000 (7) 1.52
111 Pontiac Road
Somerset, MA 02726
Peter Paskowski 20,339.000 (8) .73
113 Cusick Lane
Somerset, MA 02726
Kenneth R. Rezendes 105,865.805 (9) 3.78
P.O. Box 879
Assonet, MA 02702
Bernard T. Shuman 215.435 0.01
911 Langley Street
Fall River, MA 02720
William J. Sullivan 26,690.206 (10) .95
550 Locust Street
Fall River, MA 02720
Charles Veloza 89,668.000 3.20
100 Plymouth Blvd.
Westport, MA 02790
<FN>
NOTES:
<F1> Includes 44,540.047 shares held jointly with Mr. Almy's wife.
<F2> Includes 6,566.847 shares held jointly with Mr. Carey's wife,
6,009.769 shares held jointly with children, 2,166.017 shares held
jointly with another, 2,214.864 shares as custodian for other family
members, and 595.175 shares as custodian for others.
<F3> Includes 5,888.144 shares held jointly with Mr. Collias' wife.
<F4> Includes 472 shares held with another family member, 2,929.111 shares
held as custodian for other family members, and 11,852.184 shares held
as co-trustee in trust for other family members.
<F5> Includes 19,939 shares held jointly with Mr. Machado's wife, 646
shares held with another family member, 5,864 shares held by wife as
custodian for other family members, and 762 shares held by wife
jointly with children.
<F6> Includes 4,409.412 shares held by a pension trust of LeComte's Dairy,
62,227.882 shares held by Mr. Macomber's wife, and 2,525.352 shares
held as custodian for other family members.
<F7> Includes 41,499 shares held jointly with Dr. Mouded's wife.
<F8> Includes 14,644 shares held jointly with Mr. Paskowski's wife.
<F9> Includes 36,973.478 shares held jointly with Mr. Rezendes' wife,
42,183.176 shares held in IRA with F & Co as custodian, 18,694.845
shares held by wife in IRA with F & Co. as custodian, and 2,294.524
shares held by wife as custodian for other family members.
<F10> Includes 13,224.988 shares held jointly with Mr. Sullivan's wife and
459.302 shares held jointly with children.
</FN>
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS:
<S> <C> <C>
James D. Carey See Above See Above
Donald T. Corrigan See Above See Above
Kenneth R. Rezendes See Above See Above
Ralph S. Borges 6,044.000 .22
268 Lawton Street
Fall River, MA 02721
Susan R. Hajder 2,997.960 .11
9 Bark Circle
Swansea, MA 02777
Charlene J. Jarest 1,568.247 .06
14 Apple Hill Drive
Cranston, RI 02921
Carol A. Martin 8,068.710 .29
130 George Street
Somerset, MA 02726
Manuel J. Tavares 4,173.689 .15
P.O. Box 1401
Westport, MA 02790
All Executive Officers and 559,787.343 20.01
Directors as a Group
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the dollar value of all compensation
paid during the last three fiscal years to the Company's and the Bank's
highest paid executive officers including the Chief Executive Officer, whose
compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
Directors | All Other
Salary Bonus Fees | Compensation(1)
Name and Position Year $ $ $ | $
- ----------------- ---- ------ ----- --------- | ---------------
<S> <C> <C> <C> <C> <C>
James D. Carey 1996 160,010 15,000 -0- | 12,689
President/CEO - Bank; 1995 146,754 8,550 10,840 | 11,179
Exec. Vice President - Bancorp 1994 139,766 7,927 9,460 | 2,131
Donald T. Corrigan 1996 -0- -0- 10,450 | 57,018
Chairman of the Board - Bank 1995 117,832 7,950 10,890 | 54,024
Chairman of the Board - Bancorp 1994 112,221 7,397 9,570 | 46,235
Kenneth R. Rezendes 1996 -0- -0- 10,400 | -0-
President/CEO - Bancorp 1995 -0- -0- 9,415 | -0-
1994 -0- -0- 9,530 | -0-
<FN>
<F1> Includes $10,454 and $9,307 accrued in 1996 and 1995 respectively in
connection with the Supplemental Retirement Agreement (SERP) entered
into with Mr. Carey in 1995 which provides for the payment to Mr. Carey
upon his retirement of $2,500 per month for 120 months, and insurance
premiums for group life insurance of $2,235, $1,872, and $2,131 for
1996, 1995 and 1994 respectively.
Includes $51,052, $47,271 and $42,206 accrued in 1996, 1995 and 1994
respectively in connection with the Supplemental Retirement Agreement
(SERP) entered into with Mr. Corrigan in 1994, which provides for the
payment to Mr. Corrigan of $2,148 per month for 120 months and
insurance premiums for group life insurance of $5,966, $6,753 and
$4,029 for 1996, 1995 and 1994 respectively.
</FN>
</TABLE>
Directors are paid $200.00 for each Board of Directors meeting
attended. In addition, directors are paid $200.00 for each standing
committee and subcommittee meeting attended, plus an annual fee of $200.00
for serving on the committee, except for the chairman of such committee, who
is paid $400.00 for chairing the committee.
Salaried directors or employees of the Company or the Bank do not
receive any fees for attendance at board or committee meetings. The
practice of paying directors fees to salaried directors or employees was
discontinued January 1, 1996.
The Company adopted a Stock Option Plan in 1996 pursuant to which
discretionary grants of options may be made to key employees, including
officers, by the Stock Option Plan Committee of the Board of Directors to
purchase shares of the Company's common stock, and an automatic grant will
be made each year of an option for 2,000 shares to each eligible non-
employee director of the Company or its subsidiaries on the day after the
Annual Stockholders Meeting. Each option granted under the Plan is
exercisable under the terms of the Plan at a price equal to 100% of the fair
market value per share of the common stock on the grant date and is subject
to the other terms and conditions of the Plan. No options have been granted
under the Plan to date; however, under the terms of the Automatic Grant
portion of the Plan, 2,000 shares will be issued to eligible directors as of
the day after the Annual Stockholders Meeting (April 14, 1997). Currently,
there are 11 nonemployee directors eligible under the Automatic Grant
program. All of the options issued under the Automatic Grant program are
exercisable in full immediately.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the Company's and Bank's directors, executive officers, and
members of their families are at present, as in the past, customers of the
Bank and have transactions with the Bank in the ordinary course of business.
In addition, certain of the directors are at present, as in the past, also
directors, officers, or stockholders of corporations, trustees of trusts, or
members of partnerships which are customers of the Bank, and which have
transactions with the Bank in the ordinary course of business. Such
transactions with the directors, executive officers, members of their
families and with such corporations, trusts, and partnerships were on
substantially the same terms, including rates and collateral, as those
prevailing at the time for comparable transactions with other persons and
did not involve more than normal risk of collectability, or present other
features unfavorable to the Bank.
During the fiscal year ended December 31, 1996 and in prior years, the
Company and/or the Bank retained the legal services of Peter G. Collias, a
director and Clerk/Secretary of the Bank and Bancorp; and the legal services
of Thomas H. Tucker of McGowan, Engel, Tucker, Garrett & Schultz, who is the
son-in-law of Donald T. Corrigan, a Director and Chairman of the Board. The
Bank also utilized in 1996 the services of Director Thomas B. Almy of I. T.
Almy Associates for architectural services. Various goods and materials
were also purchased from Charlie's Oil Company, of which Director Charles
Veloza is President, and from LeComte's Dairy, of which Director Francis A.
Macomber is President.
CAPITAL STOCK
Description
The Company's authorized capital consists of 5,000,000 shares of $.01
par value Common Stock of which 2,797,474 shares are outstanding as of March
31, 1997.
Holders of shares are entitled to one vote for each share held of
record on all matters voted upon by the stockholders. Common stockholders
have no cumulative voting rights in the election of directors. Holders of
Common Stock are entitled to receive such dividends, if any, as may be
declared by the Board of Directors out of legally available funds, and to
share ratably in any distribution of the Company's assets after payment of
all debts and other liabilities upon liquidation, dissolution or winding-up.
Stockholders do not have preemptive rights to subscribe for additional
shares, and the shares are not subject to any conversion, redemption or
sinking fund provisions. The outstanding shares are, and the shares to be
issued by the Company in connection with this Offering will be, when issued,
fully-paid and nonassessable. There are currently no outstanding options to
purchase shares of the Company's Common Stock. However, it is anticipated
that options for 22,000 shares of Common Stock will be issued on the day
after the Annual Stockholders Meeting (April 14, 1997) to eligible
nonemployee directors under the Automatic Grant program of the Company 1996
Stock Option Plan.
All of the shares of Common Stock currently outstanding, are publicly
registered and freely transferable under the Securities Act of 1933 except
for shares issued to persons deemed "affiliates" of the Company.
The Company acts as its own transfer agent and registrar.
The following table sets forth the range of high and low bid
quotations as reported in the "pink sheets" during the most recent quarter
in the current year and by quarter during the previous three years.
<TABLE>
<CAPTION>
Sales Prices
--------------
Period High Low
- ------ ---- ---
<S> <C> <C> <C>
1997:
First Quarter $9.75 $8.88 Dividend declared per share $0.05
1996(1):
Fourth Quarter $9.00 $8.63
Third Quarter 8.50 7.55
Second Quarter 8.50 7.88
First Quarter 8.75 8.00 Dividends declared per share
$0.240
1995(2):
Fourth Quarter $8.75 $8.50
Third Quarter 9.18 8.38
Second Quarter 9.00 8.78
First Quarter(5) 8.75 8.58 Dividends declared per share
$0.174(4)
1994(3)(5):
Fourth Quarter $9.00 $8.66
Third Quarter 8.66 8.66
Second Quarter 8.83 8.83
First Quarter 8.83 8.66 Dividends declared per share
$0.158(4)
<FN>
<F1> In February 1996, the Company declared a 5% Stock Dividend
<F2> In February 1995, the Company declared a 5% Stock Dividend and in March
1995, the Company split its stock three for two
<F3> In February 1994, the Company declared a 5% Stock Dividend
<F4> Dividends per share have been restated to reflect the effect of the
stock splits and stock dividends.
<F5> Stock quotations have been adjusted to reflect the effect of the 3 for
2 stock split that occurred in March 1995.
</FN>
</TABLE>
These quotations reflect interdealer prices, without mark-up, mark-
down, or commission and may not necessarily represent actual transactions.
As of March 31, 1997, there were 884 stockholders of record of the
Company's Common Stock.
Dividends
The Company since its inception in 1990, and prior thereto the Bank,
has consistently paid dividends to the stockholders since 1961. In February
1995, the Company declared a 5% stock dividend resulting in the distribution
of 82,101 shares, and on March 13, 1995, the Company announced a 3 for 2
stock split which resulted in 865,533 additional shares issued. In 1995,
the Company paid quarterly cash dividends totaling $.17 per share plus an
extra cash dividend in December 1995 of $.03 per share for a total of $.20
per share in 1995.
In 1996, the Company issued a 5% stock dividend on the Company's
common stock, resulting in a distribution of 130,469 shares. The Company
also paid quarterly cash dividends totaling $.16 per share plus an extra
cash dividend in December 1996 of $.08 per share for a total of $.24 per
share in 1996.
The declaration of cash dividends, however, is dependent on a number
of factors, including regulatory limitations, and the Bank's operating
results and financial condition. The stockholders of the Company will be
entitled to dividends only when, and if, declared by the Company's Board of
Directors out of funds legally available. Under the Massachusetts Business
Corporation Law, a dividend may not be declared if the corporation is
insolvent or if the declaration of the dividend would render the corporation
insolvent.
Furthermore, the directors may be liable for authorization of a
dividend if such dividend is in violation of the Articles of Organization,
or if the corporation is then or is thereby rendered insolvent. The Company
will be considered insolvent when it is unable to pay debts as they fall due
in the usual course of business or when its liabilities are in excess of the
reasonable market value of assets held.
Chapter 172 Section 28 of the Massachusetts Statutes on Bank and
Banking provides that a bank's Board of Directors may, subject to the
restriction contained in the section, declare and pay dividends on capital
stock out of net profits from time to time and to such extent as they deem
advisable. However, under this provision, no cash dividend shall be paid
unless, following the payment of such dividend, the capital stock and
retained earnings account will be unimpaired.
INDEMNIFICATION
Under Section 67 of the Massachusetts Corporation Law, indemnification
of directors, officers, employees and other agents of a company can be
provided in the Articles of Organization or Bylaws of the Corporation. Such
indemnification may include payment by the Company of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by
the person indemnified to repay such payment if he shall be adjudicated to
be not entitled to indemnification, which undertaking may be accepted
without reference to the financial ability of such person to make repayment.
Such indemnification may be provided although the person to be indemnified
is no longer an officer, director, employee or agent of the corporation. No
indemnification, however, shall be provided for any person with respect to
any matter as to which he shall have been adjudicated in any proceeding not
to have acted in good faith in the reasonable belief that his action was in
the best interest of the Company.
Article VI of the Bylaws of the Company contains provisions providing
for the indemnification of officers and directors against liabilities
incurred in connection with civil or criminal proceedings actually brought
or threatened against them. The Company's Bylaws automatically indemnify
only the directors and provide that the Board of Directors may indemnify the
officers or any person serving at the Company's request as a trustee or
administrator of an employee benefit plan of the Company. Furthermore, the
Company's Bylaws contain provisions allowing payment of expenses in advance
upon an undertaking for repayment by the indemnified party without reference
to his financial ability to repay. The Bylaws provide that no
indemnification shall be afforded in situations where it shall have been
determined that the person involved was guilty of or liable for willful
misconduct or default or gross negligence and also deny indemnification
where the person did not act in good faith in the reasonable belief his
action was in the best interests of the Company. In situations where a
claim is compromised or settled indemnification is automatic, unless there
is a determination by a court or other tribunal having jurisdiction that the
individual did not act in good faith in the reasonable belief that his
action was in the best interests of the Company.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Company directors, officers, or
persons controlling them pursuant to the foregoing provisions, the Company
has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be passed upon
for the Company by Thomas H. Tucker, Esquire, McGowan, Engel, Tucker,
Garrett & Schultz, 125 High Street, Suite 2601, Boston, Massachusetts 02110.
EXPERTS
The consolidated financial statements of Slade's Ferry Bancorp and
subsidiaries as of December 31, 1996 and 1995 and for each of the years in
the three year period ended December 31, 1996 included herein, have been
included herein in reliance upon the reports of Shatswell, MacLeod &
Company, P.C., independent certified public accountants, appearing elsewhere
herein and upon the authority of said firm as experts in accounting and
auditing.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-1
Company Consolidated Audited Financial Statements as of
December 31, 1996 and December 31, 1995 and for each of
the years in the three year period ended December 31, 1996:
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-3
Consolidated Statements of Changes in Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-7
Parent Company Only Audited Financial Statements as of
December 31, 1996 and December 31, 1995 and for each of
the years in the three year period ended December 31, 1996:
Balance Sheets F-23
Statements of Income F-23
Statements of Changes in Stockholders' Equity F-24
Statements of Cash Flows F-24
</TABLE>
The Board of Directors
and Stockholders
Slade's Ferry Bancorp
Somerset, Massachusetts
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying consolidated balance sheets of Slade's Ferry
Bancorp (formerly known as Weetamoe Bancorp) and Subsidiary as of December 31,
1996 and 1995 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Slade's Ferry Bancorp and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Shatswell, MacLeod & Company, P.C.
SHATSWELL, MacLEOD & COMPANY, P.C.
West Peabody, Massachusetts
January 14, 1997
SLADE'S FERRY BANCORP AND SUBSIDIARY
(Formerly Known as Weetamoe Bancorp)
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
- ------ ------------- -------------
<S> <C> <C>
Cash and due from banks $ 11,128,724 $ 9,039,970
Federal funds sold 13,000,000 9,500,000
-------------------------------
Cash and cash equivalents 24,128,724 18,539,970
Interest bearing time deposits with other banks 149,598 100,000
Investments in available-for-sale securities (at fair value) 37,255,163 36,730,660
Investments in held-to-maturity securities (fair values of
$19,544,811 as of December 31, 1996 and $21,873,518 as of
December 31, 1995) 19,586,678 21,735,682
Federal Home Loan Bank stock 890,600 290,700
Loans, net 194,934,845 148,069,415
Premises and equipment 5,970,874 3,700,054
Goodwill 3,307,368
Other real estate owned 307,591 633,467
Accrued interest receivable 1,853,783 1,820,323
Other assets 2,957,251 1,801,383
-------------------------------
$ 291,342,475 $ 233,421,654
===============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 44,458,040 $ 28,509,176
Savings and NOW deposits 94,814,767 74,754,043
Time deposits 128,518,202 110,957,470
-------------------------------
Total deposits 267,791,009 214,220,689
Note payable 1,042,626
Other borrowed funds 1,200,000 741,773
Due to brokers 499,375
Other liabilities 962,140 632,467
-------------------------------
Total liabilities 271,495,150 215,594,929
-------------------------------
Stockholders' equity:
Common stock, par value $.01 per share; authorized 5,000,000
shares; issued and outstanding 2,789,142.3 shares in 1996
and 2,617,180.7 shares in 1995 27,891 26,172
Paid-in capital 14,607,299 13,136,923
Retained earnings 5,214,763 4,630,608
Net unrealized holding gain (loss) on available-for-sale
securities (2,628) 33,022
-------------------------------
Total stockholders' equity 19,847,325 17,826,725
-------------------------------
$ 291,342,475 $ 233,421,654
===============================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
SLADE'S FERRY BANCORP AND SUBSIDIARY
(Formerly Known as Weetamoe Bancorp)
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 15,626,903 $ 12,741,564 $ 10,574,181
Interest and dividends on securities:
Taxable 2,810,656 2,972,484 2,533,348
Tax-exempt 266,866 225,942 271,663
Other interest 790,506 601,210 166,920
----------------------------------------------
Total interest and dividend income 19,494,931 16,541,200 13,546,112
----------------------------------------------
Interest expense:
Interest on deposits 8,992,244 7,700,901 4,887,707
Interest on securities sold under agreements to repurchase 556 3,748
Interest on other borrowed funds 59,688 62,816 47,777
Interest on notes payable 26,139 4,452
----------------------------------------------
Total interest expense 9,078,071 7,764,273 4,943,684
----------------------------------------------
Net interest and dividend income 10,416,860 8,776,927 8,602,428
Provision for loan losses 400,000 550,000 645,000
----------------------------------------------
Net interest and dividend income after provision for
loan losses 10,016,860 8,226,927 7,957,428
----------------------------------------------
Other income:
Service charges on deposit accounts 628,997 574,425 597,682
Overdraft service charges 220,428 152,855 169,689
Securities gains, net 112,631 64,810 37,067
Other income 343,441 263,869 294,630
----------------------------------------------
Total other income 1,305,497 1,055,959 1,099,068
----------------------------------------------
Other expense:
Salaries and employee benefits 4,328,402 3,962,983 3,689,988
Occupancy expense 567,458 448,383 422,939
Equipment expense 504,489 432,739 407,712
Stationary and supplies 243,653 197,392 168,824
FDIC deposit insurance premium 6,278 204,477 452,255
(Gain) loss on sales of other real estate owned, net 21,008 (26,728) 13,462
Writedown of other real estate owned 30,000 104,578 317,239
Other expense 1,678,873 1,307,703 1,229,186
----------------------------------------------
Total other expense 7,380,161 6,631,527 6,701,605
----------------------------------------------
Income before income taxes 3,942,196 2,651,359 2,354,891
Income taxes 1,564,001 1,005,772 887,650
----------------------------------------------
Net income $ 2,378,195 $ 1,645,587 $ 1,467,241
==============================================
Earnings per share
Net income per share $ .86 $ .60 $ .57
==============================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
SLADE'S FERRY BANCORP AND SUBSIDIARY
(Formerly Known as Weetamoe Bancorp)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Net Unrealized
Holding Gain
(Loss) On
Common Paid-in Retained Available-For-
Stock Capital Earnings Sale Securities Total
-------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $ 15,528 $ 10,533,070 $ 4,579,324 $ 251,792 $ 15,379,714
Net change in unrealized holding gain on
available-for-sale securities (1,792,176) (1,792,176)
Net income 1,467,241 1,467,241
Issuance of 5% common stock dividend 775 1,045,030 (1,049,845) (4,040)
Issuance of common stock from dividend
reinvestment plan 124 169,172 169,296
Stock issuance relating to optional cash
contribution plan 28 37,390 37,418
Dividends declared ($.15 per share) (409,769) (409,769)
------------------------------------------------------------------------
Balance, December 31, 1994 16,455 11,784,662 4,586,951 (1,540,384) 14,847,684
Net change in unrealized holding loss on
available-for-sale securities 1,573,406 1,573,406
Net income 1,645,587 1,645,587
Stock split (3 for 2) 8,654 (11,041) (2,387)
Issuance of 5% common stock dividend 821 1,107,542 (1,113,162) (4,799)
Issuance of common stock from dividend
reinvestment plan 209 209,683 209,892
Stock issuance relating to optional cash
contribution plan 33 35,036 35,069
Dividends declared ($.18 per share) (477,727) (477,727)
------------------------------------------------------------------------
Balance, December 31, 1995 26,172 13,136,923 4,630,608 33,022 17,826,725
Net change in unrealized holding gain on
available-for-sale securities (35,650) (35,650)
Net income 2,378,195 2,378,195
Issuance of 5% common stock dividend 1,304 1,124,644 (1,129,308) (3,360)
Issuance of common stock from dividend
reinvestment plan 375 312,572 312,947
Stock issuance relating to optional cash
contribution plan 40 33,160 33,200
Dividends declared ($.24 per share) (664,732) (664,732)
------------------------------------------------------------------------
Balance, December 31, 1996 $ 27,891 $ 14,607,299 $ 5,214,763 $ (2,628) $ 19,847,325
========================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
SLADE'S FERRY BANCORP AND SUBSIDIARY
(Formerly Known as Weetamoe Bancorp)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,378,195 $ 1,645,587 $ 1,467,241
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of goodwill 98,000
Accretion, net of amortization of fair market value adjustments (1,429)
Amortization of organization cost 3,440 13,759
Gain on sale of fixed assets (8,702) (11,500)
Securities gains, net (112,631) (64,810) (37,067)
Disposal of fixed assets 11,229
Depreciation and amortization 500,378 421,344 389,286
Provision for loan losses 400,000 550,000 645,000
Deferred tax benefit (92,207) (147,018) (258,413)
Increase (decrease) in taxes payable (103,889) (130,854) 92,089
(Increase) decrease in interest receivable 384,435 (377,291) (253,074)
Increase (decrease) in interest payable (49,768) 46,544 77,544
Increase in accrued expenses 88,631 78,916 55,815
(Increase) decrease in prepaid expenses (130,768) 29,878 (35,247)
Increase (decrease) in other liabilities (139,617) 60,975 9,126
(Increase) decrease in other assets (322,275) 468,150 457
Accretion, net of amortization of securities (430,515) (131,441) (146,430)
Change in unearned income 115,825 123,639 90,792
(Gain) loss on sales of other real estate owned, net 21,008 (26,728) 13,462
Writedown of other real estate owned 30,000 104,578 317,239
--------------------------------------------
Net cash provided by operating activities 2,624,671 2,666,138 2,430,079
--------------------------------------------
Cash flows from investing activities:
Purchases of available-for-sale securities (10,128,087) (11,242,820) (9,225,422)
Proceeds from sales of available-for-sale securities 661,644 1,677,568 8,667,688
Proceeds from maturities of available-for-sale securities 14,859,193 6,340,942 4,842,628
Purchases of held-to-maturity securities (16,141,095) (25,375,641) (12,317,582)
Proceeds from maturities of held-to-maturity securities 19,514,788 16,421,213 11,313,257
Net increase in interest bearing time deposits with other banks (7,519)
Purchases of Federal Home Loan Bank stock (409,400) (290,700)
Redemption of Federal Home Loan Bank stock 93,600
Proceeds from sales of fixed assets 8,702 11,500
Proceeds from sales of other real estate owned 147,458 1,219,832 883,500
Net increase in loans (14,971,481) (16,343,674) (10,416,150)
Cash and cash equivalents of $19,936,591 acquired in the purchase
of Fairbank, Inc., less cash of $8,575,284 paid for the common
stock of Fairbank, Inc. 11,361,307
Capital expenditures (1,085,521) (126,146) (926,682)
Recoveries of previously charged-off loans 439,788 38,553 68,808
--------------------------------------------
Net cash provided by (used in) investing activities 4,343,377 (27,680,873) (7,098,455)
--------------------------------------------
Cash flows from financing activities:
Fractional shares paid in cash (3,360) (7,186) (4,040)
Proceeds from issuance of common stock 346,147 244,961 206,714
Net increase (decrease) in demand deposits, NOW and savings accounts 1,912,803 (4,318,602) (804,917)
Net increase (decrease) in time deposits (3,191,933) 41,224,488 (1,447,120)
Net decrease in securities sold under agreements to repurchase (113,551) 113,551
Net increase (decrease) in other borrowed funds 458,227 (458,227)
Dividends paid (658,165) (455,345) (389,727)
Payment on notes payable (243,013) (86,558)
--------------------------------------------
Net cash provided by (used in) financing activities (1,379,294) 36,116,538 (2,412,097)
--------------------------------------------
Net increase (decrease) in cash and cash equivalents 5,588,754 11,101,803 (7,080,473)
Cash and cash equivalents at beginning of year 18,539,970 7,438,167 14,518,640
--------------------------------------------
Cash and cash equivalents at end of year $ 24,128,724 $ 18,539,970 $ 7,438,167
============================================
Supplemental disclosures:
Loans transferred to other real estate owned $ 144,741 $ 1,581,571 $ 1,817,786
Loans originating from the sales of other real estate owned 435,000 205,000 1,861,500
Interest paid 9,127,839 7,717,729 4,866,140
Income taxes paid 1,760,097 1,283,644 1,053,974
Other real estate owned transferred to loans 333,000
In 1996 the Company purchased all of the common stock of Fairbank,
Inc. for $8,575,284. In conjunction with the acquisition,
liabilities were assumed as follows:
Fair value of assets acquired $ 65,141,843
Cash paid for the common stock 8,575,284
------------
Liabilities assumed $ 56,566,559
============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
SLADE'S FERRY BANCORP AND SUBSIDIARY
(Formerly Known as Weetamoe Bancorp)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - NATURE OF OPERATIONS
- -----------------------------
Slade's Ferry Bancorp (Company) (formerly known as Weetamoe Bancorp) is a
Massachusetts corporation that was organized in 1990 to become the holding
company of Slade's Ferry Trust Company (Bank). In December of 1996 the
stockholders of the Company approved the change of the name of the Company to
Slade's Ferry Bancorp effective January 1, 1997. The Company's primary activity
is to act as the holding company for the Bank. The Bank is a state chartered
bank, which was incorporated in 1959 and is headquartered in Somerset,
Massachusetts. The Bank operates its business from ten banking offices located
in Massachusetts. The Bank is engaged principally in the business of attracting
deposits from the general public and investing those deposits in residential
and real estate loans, and in commercial, consumer and small business loans.
NOTE 2 - ACCOUNTING POLICIES
- ----------------------------
The accounting and reporting policies of the Company and its Subsidiary conform
to generally accepted accounting principles and predominant practices within
the banking industry. The consolidated financial statements of the Company were
prepared using the accrual basis of accounting. The significant accounting
policies of the Company and its subsidiary are summarized below to assist the
reader in better understanding the consolidated financial statements and other
data contained herein.
PERVASIVENESS OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the
estimates.
BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, the Bank and the Bank's wholly-owned
subsidiaries, Slade's Ferry Realty Trust and Slade's Ferry Securities
Corporation. All significant intercompany accounts and transactions have
been eliminated in the consolidation.
CASH AND CASH EQUIVALENTS:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, cash items, due from banks, interest bearing deposits with
other banks and federal funds sold.
SECURITIES:
Investments in debt securities are adjusted for amortization of premiums
and accretion of discounts computed on the straight-line method which has
substantially the same effect as using the interest method. Gains or
losses on sales of investment securities are computed on a specific
identification basis.
The Company classifies debt and equity securities into one of three
categories: held-to-maturity, available-for-sale, or trading. This
security classification may be modified after acquisition only under
certain specified conditions. In general, securities may be classified as
held-to-maturity only if the Company has the positive intent and ability
to hold them to maturity. Trading securities are defined as those bought
and held principally for the purpose of selling them in the near term.
All other securities must be classified as available-for-sale.
-- Held-to-maturity securities are measured at amortized cost in the
balance sheet. Unrealized holding gains and losses are not included
in earnings or in a separate component of capital. They are merely
disclosed in the notes to the consolidated financial statements.
-- Available-for-sale securities are carried at fair value on the
balance sheet. Unrealized holding gains and losses are not included
in earnings, but are reported as a net amount (less expected tax)
in a separate component of capital until realized.
-- Trading securities are carried at fair value on the balance sheet.
Unrealized holding gains and losses for trading securities are
included in earnings.
LOANS:
Loans receivable that management has the intent and ability to hold for
the foreseeable future or until maturity or payoff are reported at their
outstanding principal balances reduced amounts due to borrowers on
unadvanced loans, by any charge-offs, the allowance for loan losses and
any deferred fees or costs on originated loans, or unamortized premiums
or discounts on purchased loans.
Interest on loans is generally recognized on a simple interest basis.
Loan origination and commitment fees and certain direct origination costs
are deferred, and the net amount amortized as an adjustment of the
related loan's yield. The Company is generally amortizing these amounts
over the contractual life of the related loans.
Cash receipts of interest income on impaired loans is credited to
principal to the extent necessary to eliminate doubt as to the
collectibility of the net carrying amount of the loan. Some or all of the
cash receipts of interest income on impaired loans is recognized as
interest income if the remaining net carrying amount of the loan is
deemed to be fully collectible. When recognition of interest income on an
impaired loan on a cash basis is appropriate, the amount of income that
is recognized is limited to that which would have been accrued on the net
carrying amount of the loan at the contractual interest rate. Any cash
interest payments received in excess of the limit and not applied to
reduce the net carrying amount of the loan are recorded as recoveries of
charge-offs until the charge-offs are fully recovered.
ALLOWANCE FOR POSSIBLE LOAN LOSSES:
An allowance is available for losses which may be incurred in the future
on loans in the current portfolio. The allowance is increased by
provisions charged to current operations and is decreased by loan losses,
net of recoveries. The provision for loan losses is based on management's
evaluation of current and anticipated economic conditions, changes in the
character and size of the loan portfolio, and other indicators. The
balance in the allowance for possible loan losses is considered adequate
by management to absorb any reasonably foreseeable loan losses.
As of January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan," as amended by SFAS No. 118. According to SFAS No. 114, a loan is
impaired when, based on current information and events, it is probable
that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement. The Statement requires that
impaired loans be measured on a loan by loan basis by either the present
value of expected future cash flows discounted at the loan's effective
interest rate, the loan's observable market price, or the fair value of
the collateral if the loan is collateral dependent.
The Statement is applicable to all loans, except large groups of smaller
balance homogeneous loans that are collectively evaluated for impairment,
loans that are measured at fair value or at the lower of cost or fair
value, leases, and convertible or nonconvertible debentures and bonds and
other debt securities. The Company considers its residential real estate
loans and consumer loans that are not individually significant to be
large groups of smaller balance homogeneous loans.
Factors considered by management in determining impairment include
payment status, net worth and collateral value. An insignificant payment
delay or an insignificant shortfall in payment does not in itself result
in the review of a loan for impairment. The Company applies SFAS No. 114
on a loan-by-loan basis. The Company does not apply SFAS No. 114 to
aggregations of loans that have risk characteristics in common with other
impaired loans. Interest on a loan is not generally accrued when the loan
becomes ninety or more days overdue. The Company may place a loan on
nonaccrual status but not classify it as impaired, if (i) it is probable
that the Company will collect all amounts due in accordance with the
contractual terms of the loan or (ii) the loan is an individually
insignificant residential mortgage loan or consumer loan. Impaired loans
are charged-off when management believes that the collectibility of the
loan's principal is remote. Substantially all of the Company's loans that
have been identified as impaired have been measured by the fair value of
existing collateral.
The financial statement impact of adopting the provisions of this
Statement was not material.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost, less accumulated depreciation
and amortization. Cost and related allowances for depreciation and
amortization of premises and equipment retired or otherwise disposed of
are removed from the respective accounts with any gain or loss included
in income or expense. Depreciation and amortization are calculated
principally on the straight-line method over the estimated useful lives
of the assets.
GOODWILL:
Goodwill arising from the acquisition of Fairbank, Inc. is reported net
of accumulated amortization. Goodwill is being amortized on a
straight-line basis over a period of fifteen years.
OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:
Other real estate owned includes properties acquired through foreclosure
and properties classified as in-substance foreclosures in accordance with
Financial Accounting Standards Board Statement No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructuring." These properties
are carried at the lower of cost or estimated fair value less estimated
cost to sell. Any writedown from cost to estimated fair value required at
the time of foreclosure or classification as in-substance foreclosure is
charged to the allowance for possible loan losses. Expenses incurred in
connection with maintaining these assets, subsequent writedowns and gains
or losses recognized upon sale are included in other expense.
In accordance with Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan," the Company
classifies loans as in-substance repossessed or foreclosed if the Company
receives physical possession of the debtor's assets regardless of whether
formal foreclosure proceedings take place.
INCOME TAXES:
The Company recognizes income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are established
for the temporary differences between the accounting basis and the tax
basis of the Company's assets and liabilities at enacted tax rates
expected to be in effect when the amounts related to such temporary
differences are realized or settled.
FAIR VALUES OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires that the Company disclose
estimated fair value for its financial instruments. Fair value methods
and assumptions used by the Company in estimating its fair value
disclosures are as follows:
Cash and cash equivalents: The carrying amounts reported in the balance
sheet for cash and federal funds sold approximate those assets' fair
values.
Securities (including mortgage-backed securities): Fair values for
securities are based on quoted market prices, where available. If quoted
market prices are not available, fair values are based on quoted market
prices of comparable instruments.
Loans receivable: For variable-rate loans that reprice frequently and
with no significant change in credit risk, fair values are based on
carrying values. The fair values for other loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for loans with similar terms to borrowers of similar credit
quality. The carrying amount of accrued interest approximates its fair
value.
Deposit liabilities: The fair values disclosed for demand deposits (e.g.,
interest and non-interest checking, passbook savings, and money market
accounts) are, by definition, equal to the amount payable on demand at
the reporting date (i.e., their carrying amounts). Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on
time deposits.
Off-balance sheet instruments: The fair value of commitments to originate
loans is estimated using the fees currently charged to enter similar
agreements, taking into account the remaining terms of the agreements and
the present creditworthiness of the counterparties. For fixed-rate loan
commitments and the unadvanced portion of loans, fair value also
considers the difference between current levels of interest rates and the
committed rates. The fair value of letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to
terminate them or otherwise settle the obligation with the counterparties
at the reporting date.
NOTE 3 - ACQUISITION OF FAIRBANK, INC.
- --------------------------------------
On August 23, 1996 the Company effected its acquisition of Fairbank, Inc., a
Massachusetts corporation, and its wholly owned subsidiary, the National Bank
of Fairhaven, through the Company's wholly owned subsidiary, Slade's Ferry
Trust Company. The acquisition was accomplished by the payment by Slade's Ferry
Trust Company of $8,575,284 in cash from its capital funds for all of the
outstanding shares of the common stock of Fairbank, Inc. As a result of the
acquisition, Fairbank, Inc. was dissolved, and the National Bank of Fairhaven
was merged into Slade's Ferry Trust Company. The National Bank of Fairhaven's
two banking offices in Fairhaven and New Bedford, Massachusetts have become
branches of Slade's Ferry Trust Company.
The acquisition has been accounted for as a purchase, and the results of
operations of Fairbank, Inc. since the date of the acquisition are included in
the consolidated financial statements. Goodwill reflected by the purchase
accounting amounted to $3,405,368 and is being amortized over 15 years on a
straight-line basis.
The following summary, prepared on an unaudited pro forma basis presents the
results of operations as though the Company and Fairbank, Inc. had been merged
as of the beginning of the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net interest income after provision for loan losses $ 12,077,046 $ 11,023,354
Noninterest income 1,349,224 1,375,517
----------------------------
Total 13,426,270 12,398,871
Noninterest expense 9,251,100 9,376,107
----------------------------
Income before income taxes 4,175,170 3,022,764
Income taxes 1,543,200 1,034,117
----------------------------
Net income $ 2,631,970 $ 1,988,647
============================
</TABLE>
The pro forma results are not necessarily indicative of what actually would
have occurred if the acquisition had been in effect for the entire years of
1996 and 1995. In addition, they are not intended to be a projection of future
results and do not reflect any effects that might be achieved from combined
operations.
NOTE 4 - SECURITIES
- -------------------
Debt and equity securities have been classified in the consolidated balance
sheets according to management's intent. The carrying amount of securities and
their approximate fair values are as follows as of December 31:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Holding Holding Fair
Basis Gains Losses Value
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Available-for-sale securities:
December 31, 1996:
Debt securities issued by the U.S. Treasury and
other U.S. government corporations and agencies $ 32,792,636 $ 80,150 $ 281,010 $ 32,591,776
Mortgage-backed securities 2,469,385 90 38,367 2,431,108
Asset-backed securities 245,806 377 245,429
Marketable equity securities 1,775,288 267,778 56,216 1,986,850
--------------------------------------------------------
$ 37,283,115 $ 348,018 $ 375,970 $ 37,255,163
========================================================
December 31, 1995:
Debt securities issued by the U.S. Treasury and
other U.S. government corporations and agencies $ 31,677,986 $ 223,943 $ 208,952 $ 31,692,977
Mortgage-backed securities 3,618,195 635 59,880 3,558,950
Marketable equity securities 1,397,077 139,708 58,052 1,478,733
--------------------------------------------------------
$ 36,693,258 $ 364,286 $ 326,884 $ 36,730,660
=========================================================
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Holding Holding Fair
Basis Gains Losses Value
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Held-to-maturity securities:
December 31, 1996:
Debt securities issued by the U.S. Treasury and
other U.S. government corporations and agencies $ 13,192,933 $ 30,164 $ 7,784 $ 13,215,313
Debt securities issued by states of the United
States and political subdivisions of the states 6,130,922 37,952 67,043 6,101,831
Mortgage-backed securities 256,823 35,178 221,645
Debt securities issued by foreign governments 6,000 28 6 6,022
--------------------------------------------------------
$ 19,586,678 $ 68,144 $ 110,011 $ 19,544,811
========================================================
December 31, 1995:
Debt securities issued by the U.S. Treasury and
other U.S. government corporations and agencies $ 15,689,916 $ 120,219 $ 4,684 $ 15,805,451
Debt securities issued by states of the United
States and political subdivisions of the states 6,024,170 78,856 57,191 6,045,835
Mortgage-backed securities 16,596 650 17,246
Other debt securities 5,000 14 4,986
--------------------------------------------------------
$ 21,735,682 $ 199,725 $ 61,889 $ 21,873,518
========================================================
</TABLE>
The scheduled maturities of held-to-maturity securities and available-for-sale
securities (other than equity securities) were as follows as of December 31,
1996:
<TABLE>
<CAPTION>
Held-to-maturity Available-for-sale
securities: securities:
---------------------------- ----------------------------
Amortized Amortized
Cost Fair Cost Fair
Basis Value Basis Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Debt securities other than mortgage-backed
and asset backed securities:
Due within one year $ 5,388,826 $ 5,391,093 $ 2,706,964 $ 2,710,895
Due after one year through five years 7,893,486 7,932,429 18,707,201 18,576,185
Due after five years through ten years 5,901,726 5,853,535 10,379,096 10,304,568
Due after ten years 145,817 146,109 999,375 1,000,128
Mortgage-backed securities 256,823 221,645 2,469,385 2,431,108
Asset-backed securities 245,806 245,429
------------------------------------------------------------
$ 19,586,678 $ 19,544,811 $ 35,507,827 $ 35,268,313
============================================================
</TABLE>
During 1996, proceeds from sales of available-for-sale securities amounted to
$661,644. Gross realized gains and gross realized losses on those sales
amounted to $117,911 and $5,280, respectively. During 1995, proceeds from sales
of available-for-sale securities amounted to $1,677,568. Gross realized gains
and gross realized losses on those sales amounted to $125,954 and $61,144,
respectively. During 1994, proceeds from sales of available-for-sale securities
amounted to $8,667,688. Gross realized gains and gross realized losses on those
sales amounted to $56,751 and $21,684, respectively.
There were no securities of issuers whose aggregate carrying amount exceeded
10% of stockholders' equity as of December 31, 1996.
A total par value of $8,685,000 and $4,200,000 of debt securities was pledged
to secure treasury tax and loan, trust department and public funds on deposit
and the loan from Fleet National Bank as of December 31, 1996 and 1995,
respectively.
NOTE 5 - LOANS
- --------------
Loans consisted of the following as of December 31:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Commercial, financial and agricultural $ 31,243,643 $ 16,746,853
Real estate - construction and land development 6,891,200 6,864,969
Real estate - residential 59,499,876 50,476,627
Real estate - commercial 94,545,028 70,749,115
Consumer 6,681,825 6,148,518
Obligations of states and political subdivisions 16,044 22,716
Other 108,596 85,472
------------------------------
198,986,212 151,094,270
Allowance for possible loan losses (3,354,311) (2,497,774)
Unearned income (642,906) (527,081)
Unamortized adjustment to fair value (54,150)
------------------------------
Net loans, carrying amount $ 194,934,845 $ 148,069,415
==============================
</TABLE>
Certain directors and executive officers of the Company and companies in which
they have significant ownership interest were customers of the Bank during
1996. Total loans to such persons and their companies amounted to $4,159,857 as
of December 31, 1996. During the year ended December 31, 1996, $2,070,473 of
new loans were made and repayments totaled $2,670,582.
Changes in the allowance for possible loan losses were as follows for the years
ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $ 2,497,774 $ 2,305,860 $ 1,953,863
Loans charged off (439,229) (396,639) (361,811)
Provision for loan losses 400,000 550,000 645,000
Recoveries of loans previously charged off 439,788 38,553 68,808
Transfer of Fairbank, Inc.'s allowance to
Slade's Ferry Trust Company 455,978
-----------------------------------------
Balance at end of period $ 3,354,311 $ 2,497,774 $ 2,305,860
=========================================
</TABLE>
Information about loans that meet the definition of an impaired loan in
Statement of Financial Accounting Standards No. 114 is as follows as of
December 31:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------
Recorded Related Recorded Related
Investment Allowance Investment Allowance
In Impaired For Credit In Impaired For Credit
Loans Losses Loans Losses
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Loans for which there is a related allowance
for credit losses $ 3,763,977 $ 838,290 $ 1,722,817 $ 455,036
Loans for which there is no related allowance
for credit losses 1,907,942 417,638
-----------------------------------------------------
Totals $ 5,671,919 $ 838,290 $ 2,140,455 $ 455,036
=====================================================
Average recorded investment in impaired loans
during the year ended December 31 $ 4,618,045 $ 2,772,395
=========== ===========
Related amount of interest income recognized
during the time, in the year ended December 31,
that the loans were impaired
Total recognized $ 148,102 $ 0
=========== ===========
Amount recognized using a cash-basis
method of accounting $ 148,102 $ 0
=========== ===========
</TABLE>
As of December 31, 1996, loans restructured in a troubled debt restructuring
before the effective date of SFAS No. 114 that are not impaired based on the
terms specified by the restructuring agreement totaled $376,797. The gross
interest income that would have been recorded in the year ended December 31,
1996 if such restructured loans had been current in accordance with their
original terms was $55,724. The amount of interest income on such restructured
loans that was included in net income for the year ended December 31, 1996 was
$46,651.
NOTE 6 - PREMISES AND EQUIPMENT
- -------------------------------
The following is a summary of premises and equipment as of December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Land $ 1,145,368 $ 765,368
Buildings 3,505,679 3,409,595
Furniture and equipment 2,559,912 1,771,935
Leasehold improvements 1,376,689 252,711
Renovations in process 323,481 6,807
--------------------------
8,911,129 6,206,416
Accumulated depreciation and amortization (2,940,255) (2,506,362)
--------------------------
$ 5,970,874 $ 3,700,054
==========================
</TABLE>
NOTE 7 - DEPOSITS
- -----------------
The aggregate amount of time deposit accounts (including CDs), each with a
minimum denomination of $100,000, was approximately $21,473,151 and $16,850,892
as of December 31, 1996 and 1995, respectively.
For time deposits as of December 31, 1996, the aggregate amount of maturities
for each of the following five years ended December 31, are:
<TABLE>
<S> <C>
1997 $ 101,987,427
1998 22,267,236
1999 3,079,784
2000 1,139,361
2001 52,644
Less: Unamortized adjustment to fair value (8,250)
-------------
$ 128,518,202
=============
</TABLE>
NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
- -------------------------------------------------------
Securities sold under agreements to repurchase generally mature within one to
four days from the transaction date.
There were no agreements outstanding as of December 31, 1996 and 1995. There
were no securities sold under agreements to repurchase during 1996.
Information concerning securities sold under agreements to repurchase is
summarized as follows for the year ended December 31, 1995:
<TABLE>
<S> <C>
Average balance during the year $ 14,622
Average interest rate during the year 3.80%
Maximum month-end balance during the year $ 0
</TABLE>
NOTE 9 - OTHER BORROWED FUNDS
- -----------------------------
Other borrowed funds consist of treasury tax and loan deposits and generally
are repaid within one to 120 days from the transaction date.
NOTE 10 - NOTE PAYABLE
- ----------------------
Note payable consisted of the following as of December 31, 1996:
Note payable by the Bank to Fleet National Bank. The note payable was assumed
by the Bank in the acquisition of Fairbank, Inc. Minimum quarterly principal
payments of $25,000 are payable on the last business day of each calendar
quarter. The interest rate on the loan is 3 month LIBOR plus 1.2% floating,
which has been swapped to yield a 9.01% fixed rate. Interest payments are due
quarterly and the maturity of the loan is November 25, 1999. Collateral for the
loan consists of U. S. Treasury or agency securities owned by the Bank.
The maturity requirements of the note payable are as follows based on minimum
quarterly principal payments of $25,000 as described above as of December 31,
1996:
<TABLE>
<S> <C>
1997 $ 100,000
1998 100,000
1999 850,000
Less: Unamortized adjustment to fair value (7,374)
-----------
$ 1,042,626
===========
</TABLE>
NOTE 11 - INCOME TAXES
- ----------------------
The components of income tax expense are as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $ 1,204,212 $ 866,336 $ 808,830
State 451,996 286,454 337,233
-----------------------------------------
1,656,208 1,152,790 1,146,063
-----------------------------------------
Deferred:
Federal (51,722) (105,334) (182,336)
State (40,485) (41,684) (76,077)
-----------------------------------------
(92,207) (147,018) (258,413)
-----------------------------------------
Total income tax expense $ 1,564,001 $ 1,005,772 $ 887,650
=========================================
</TABLE>
The reasons for the differences between the statutory federal income tax rates
and the effective tax rates are summarized as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1996 1995 1994
% of % of % of
Income Income Income
------ ------ ------
<S> <C> <C> <C>
Federal income tax at statutory rate 34.0% 34.0% 34.0%
Increase (decrease) in tax resulting from:
Tax-exempt income (2.3) (2.9) (4.0)
Dividends received deduction (.3) (.3) (.3)
Unallowable expenses .6 1.0 .7
Amortization of goodwill .8
State tax, net of federal tax benefit 6.9 6.1 7.3
---------------------------
39.7% 37.9% 37.7%
===========================
</TABLE>
The Company had gross deferred tax assets and gross deferred tax liabilities as
follows as of December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Operating loss carryover $ 342,442 $
Allowance for loan losses 1,127,190 903,615
Deferred loan fees 227,354 167,322
Interest on non-performing loans 137,931 59,370
Accrued employee benefits 118,464 72,931
Other real estate owned valuation 43,246 93,604
Other adjustments 3,365 285
Net unrealized holding loss on available-for-sale securities 25,324
--------------------------
Gross deferred tax assets 2,025,316 1,297,127
--------------------------
Deferred tax liabilities:
Accelerated depreciation (223,344) (38,713)
Prepaid pensions (53,531) (19,196)
Discount accretion (2,334) (5,480)
Net unrealized holding gain on available-for-sale securities (4,380)
--------------------------
Gross deferred tax liabilities (279,209) (67,769)
--------------------------
Net deferred tax assets $ 1,746,107 $ 1,229,358
==========================
</TABLE>
Deferred tax assets as of December 31, 1996 and 1995 have not been reduced by a
valuation allowance because management believes that it is more likely than not
that the full amount of deferred tax assets will be realized.
As of December 31, 1996, the Company had approximately $1,007,000 in operating
loss carryovers for tax purposes which expire in 2006.
NOTE 12 - EMPLOYEE BENEFITS
- ---------------------------
The Company has a defined benefit pension plan (plan) covering substantially
all of its full time employees who meet certain eligibility requirements.
Employees are eligible under the plan upon attaining age 21 and completing one
year of service. The benefits paid are based on 1.5% of total salary plus .5%
of compensation in excess of integration level per year of service. The
integration level is the first $750 of monthly compensation. The accrued
benefit is based on years of service.
The following table sets forth the funded status of the plan and amounts
recognized in the Company's consolidated balance sheet as of December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation (including vested benefits of
$532,732, and $1,763,760, respectively) $ 536,848 $ 1,779,565
===========================
Projected benefit obligation for services rendered to date $ (875,343) $ (2,229,379)
Plan assets at fair value, primarily invested in corporate stocks,
U.S. government securities and cash and cash equivalents 916,360 1,755,659
---------------------------
Plan assets greater (less) than projected benefit obligation 41,017 (473,720)
Unrecognized net gain from past experience different from
that assumed and effect of changes in assumptions 318,010 376,735
Unrecognized prior service cost (365,736)
Unrecognized net obligation from 1988 transition date being
amortized over 25.78 years 134,407 142,414
Adjustment required to recognize minimum liability (69,335)
---------------------------
Prepaid (accrued) pension cost included on the balance sheet $ 127,698 $ (23,906)
===========================
</TABLE>
Net periodic pension cost included the following components for the years ended
December 31:
<TABLE>
<CAPTION>
1996 1995 1994
-------- --------- ---------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 92,434 $ 115,008 $ 123,477
Interest cost on projected benefit obligation 65,745 171,702 147,203
Actual return on plan assets (70,423) (176,649) (91,589)
Net amortization and deferral (5,699) 59,332 (36,822)
----------------------------------
Net periodic pension cost $ 82,057 $ 169,393 $ 142,269
==================================
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 8.5% and 2.0%, respectively for 1996 and 8.59% and 4.0%,
respectively for 1995. The expected long-term rate of return on assets was
8.5%.
The Bank has a 401K plan for eligible employees who attain age 21 and complete
one year of service. The Bank contributes a discretionary amount to be
allocated to eligible participants. Current contributions vest fully after
seven years of continuous service. The amount that may be deferred by the
employees is limited by the amount that will not cause the plan to exceed IRS
limitations. Contributions made by the Bank charged to employee benefit expense
amounted to $7,000, $6,000 and $11,842 for the years ended December 31, 1996,
1995 and 1994, respectively.
NOTE 13 - COMMITMENTS AND CONTINGENT LIABILITIES
- ------------------------------------------------
The Company is obligated under certain agreements issued during the normal
course of business which are not reflected in the accompanying financial
statements.
The Company is obligated under various lease agreements covering branch offices
and equipment. These agreements are considered to be operating leases. The
total minimum rental due in future periods under these agreements is as follows
as of December 31, 1996:
<TABLE>
<S> <C>
1997 $ 46,662
1998 46,662
1999 46,662
2000 46,662
2001 46,662
Thereafter 268,464
---------
Total minimum lease payments $ 501,774
=========
</TABLE>
Certain leases contain provisions for escalation of minimum lease payments
contingent upon increases in real estate taxes and percentage increases in the
consumer price index. The total rental expense amounted to $66,223 for 1996,
$46,592 for 1995 and $46,788 for 1994.
NOTE 14 - FINANCIAL INSTRUMENTS
- -------------------------------
The Company is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to originate loans, standby
letters of credit and unadvanced funds on loans. The instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized in
the balance sheets. The contract amounts of those instruments reflect the
extent of involvement the Company has in particular classes of financial
instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments and standby
letters of credit is represented by the contractual amounts of those
instruments. The Company uses the same credit policies in making commitments
and conditional obligations as it does for on-balance sheet instruments.
Commitments to originate loans are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the borrower. Collateral held varies, but may
include secured interests in mortgages, accounts receivable, inventory,
property, plant and equipment and income-producing properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance by a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. Of the total standby letters of
credit outstanding as of December 31, 1996, $249,080 are secured by
certificates of deposit and savings accounts held at the Company.
The estimated fair values of the Company's financial instruments, all of which
are held or issued for purposes other than trading, are as follows as of
December 31:
<TABLE>
<CAPTION>
1996 1995
------------------------------ ------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 24,128,724 $ 24,128,724 $ 18,539,970 $ 18,539,970
Interest bearing time deposits with other banks 149,598 149,598 100,000 100,000
Available-for-sale securities 37,255,163 37,255,163 36,730,660 36,730,660
Held-to-maturity securities 19,586,678 19,544,811 21,735,682 21,873,518
Federal Home Loan Bank stock 890,600 890,600 290,700 290,700
Loans 194,934,845 195,498,000 148,069,415 147,912,000
Accrued interest receivable 1,853,783 1,853,783 1,820,323 1,820,323
Financial liabilities:
Note payable 1,042,626 1,047,220
Other borrowed funds 1,200,000 1,200,000 741,773 741,773
Deposits 267,791,009 268,344,000 214,220,689 215,275,219
</TABLE>
The carrying amounts of financial instruments shown in the above table are
included in the consolidated balance sheet under the indicated captions.
Accounting policies related to financial instruments are described in Note 2.
Off-balance-sheet liabilities
<TABLE>
<CAPTION>
1996 1995
------------ ------------
Notional Notional
Amount Amount
------------ ------------
<S> <C> <C>
Commitments to originate loans $ 9,402,290 $ 5,853,200
Standby letters of credit 1,176,936 1,149,131
Unadvanced portions of loans:
Consumer loans (including credit card loans and student loans) 2,805,679 2,475,100
Commercial real estate loans 223,000 100,000
Home equity loans 1,755,198 1,764,547
Commercial lines of credit 9,744,425 9,011,561
Construction loans 1,641,700 1,519,885
----------------------------
$ 26,749,228 $ 21,873,424
============================
</TABLE>
There is no material difference between the notional amounts and the estimated
fair values of loan commitments and unadvanced portions of loans. The fair
value of letters of credit approximates the notional value.
The Company has no derivative financial instruments subject to the provisions
of SFAS No. 119 "Disclosure About Derivative Financial Instruments and Fair
Value of Financial Instruments" other than the interest rate swap described in
Note 9.
NOTE 15 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
- ---------------------------------------------------------
Most of the Company's business activity is with customers located within the
state. There are no concentrations of credit to borrowers that have similar
economic characteristics. The majority of the Company's loan portfolio is
comprised of loans collateralized by real estate located in the state of
Massachusetts.
NOTE 16 - EARNINGS PER SHARE
- ----------------------------
Earnings per share for 1996, 1995 and 1994 were calculated using the weighted
average number of shares outstanding during those periods. For 1996, 1995 and
1994 earnings per share calculations the weighted average number of shares
outstanding were 2,764,887, 2,738,250 and 2,587,816, respectively. The weighted
average number of shares are adjusted to reflect the effect of a 5% stock
dividend issued in January 1996. Earnings per share previously reported in the
1995 annual report for the year ended December 31, 1995 were reduced by $.03
and by $.03 for the year ended December 31, 1994. Dividends declared previously
reported in the 1995 annual report have been restated to reflect the stock
dividend.
NOTE 17 - REGULATORY MATTERS
- ----------------------------
The Company and its subsidiary the Bank are subject to various regulatory
capital requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could
have a direct material effect on the Company's and the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and the Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
practices. Their capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December
31, 1996, that the Company and the Bank meet all capital adequacy requirements
to which they are subject.
As of December 31, 1996, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as adequately capitalized under the
regulatory framework for prompt corrective action. To be categorized as
adequately capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Bank's category.
The Company's and the Bank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
------------------ ------------------ ------------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------ -------- ----- -------- -----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital (to Risk Weighted Assets):
Consolidated $ 19,044 9.56% $ 15,938 >=8% N/A
Slade's Ferry Trust Company 18,935 9.51 15,934 >=8 $ 19,918 >=10%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated 16,543 8.27 8,003 >=4 N/A
Slade's Ferry Trust Company 16,435 8.22 8,001 >=4 12,002 >=6
Tier 1 Capital (to Average Assets):
Consolidated 16,543 5.70 11,617 >=4 N/A
Slade's Ferry Trust Company 16,435 5.66 11,615 >=4 14,519 >=5
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
------------------ ------------------ ------------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------ -------- ----- -------- -----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1995:
Total Capital (to Risk Weighted Assets):
Consolidated $ 19,704 12.95% $ 12,174 >=8% N/A
Slade's Ferry Trust Company 19,626 12.90 12,172 >=8 $ 15,215 >=10%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated 17,794 11.65 6,111 >=4 N/A
Slade's Ferry Trust Company 17,717 11.60 6,109 >=4 9,164 >=6
Tier 1 Capital (to Average Assets):
Consolidated 17,794 7.57 9,407 >=4 N/A
Slade's Ferry Trust Company 17,717 7.54 9,405 >=4 11,756 >=5
</TABLE>
The declaration of cash dividends is dependent on a number of factors,
including regulatory limitations, and the Company's operating results and
financial condition. The stockholders of the Company will be entitled to
dividends only when, and if, declared by the Company's Board of Directors out
of funds legally available therefore. Under the Massachusetts Business
Corporation Law, a dividend may not be declared if the corporation is insolvent
or if the declaration of the dividend would render the corporation insolvent.
The declaration of future dividends, whether by the Board of Directors of the
Company or the Bank, will be subject to favorable operating results, financial
conditions, tax considerations, and other factors.
As of December 31, 1996 the Company would be restricted from declaring
dividends in an amount greater than $16,543,000 as such declaration would
render the corporation insolvent. As of December 31, 1996 the Bank would be
restricted from declaring dividends in an amount greater than approximately
$3,001,000 as such declaration would decrease capital below the Bank's required
minimum level of regulatory capital.
NOTE 18 - STOCK OPTION PLAN
- ---------------------------
At the 1996 annual meeting stockholders approved a 1996 stock option plan
(Plan). The Plan is not in effect and will not be until enacted by the Board of
Directors. Management of the Company expects the Board to enact the Plan in
March of 1997. A summary of the Plan, as approved by stockholders, is as
follows.
The Plan is divided into two separate equity incentive programs, a
Discretionary Grant Program and an Automatic Grant Program. The maximum number
of shares of common stock issuable over the term of the Plan may not exceed
250,000 shares and the maximum aggregate number of shares issuable under both
programs in any plan year may not exceed 50,000 shares. Unless sooner
terminated by the Board, the Plan will in all events terminate on March 11,
2000.
Under the Discretionary Grant Program, key employees, including officers, may
be granted incentive stock options to purchase shares of common stock. The
option exercise price per share may not be less than one hundred percent of the
fair market value of common stock at grant date and generally become
exercisable in periodic installments over the optionee's period of service. Two
types of stock appreciation rights are authorized for issuance: (1) tandem
rights, which require the option holder to elect between the exercise of the
underlying option for shares of common stock and the surrender of such option
for appreciation distribution and (2) limited rights, which are automatically
exercised upon the occurance of a hostile takeover.
Eligibility for participation in the Automatic Grant Program is limited to
non-employee directors of the Company or its subsidiary who have completed
three full years of service as directors. Under the Automatic Grant Program a
nonstatutory option for 2,000 shares of common stock shall be granted each plan
year to eligible directors. The exercise price per share will be equal to one
hundred percent of the fair market value per share of common stock at grant
date, each option will have a maximum five year term, will be immediately
exercisable and the shares subject to each 2,000 share grant will vest in three
equal annual installments over the grantee's period of Board service.
NOTE 19 - LITIGATION
- --------------------
The Bank is a defendant in a liability action arising out of an alleged breach
of contract with a previous employee of National Bank of Fairhaven. Given the
early state of discovery, counsel for the Company is unable to assign a dollar
figure to the risk of loss pertaining to this matter and hence, no accrued
expense has been reflected in the consolidated financial statements. The demand
by the plaintiff is $550,000 to settle the case.
NOTE 20 - RECLASSIFICATION
- --------------------------
Certain amounts in the prior years have been reclassified to be consistent with
the current year's statement presentation.
NOTE 21 - PARENT COMPANY ONLY FINANCIAL STATEMENTS
- --------------------------------------------------
The following financial statements are for Slade's Ferry Bancorp (Parent
Company Only) and should be read in conjunction with the consolidated financial
statements of Slade's Ferry Bancorp and Subsidiary.
SLADE'S FERRY BANCORP
(Formerly Known as Weetamoe Bancorp)
(Parent Company Only)
FINANCIAL STATEMENTS
Balance sheets
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 180,607 $ 153,425
Investment in subsidiary, Slade's Ferry Trust Company 19,740,124 17,749,851
Premises and equipment 4,448 15,125
Other assets 37,713 17,050
----------------------------
$ 19,962,892 $ 17,935,451
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities $ 115,567 $ 108,726
----------------------------
Total liabilities 115,567 108,726
----------------------------
Stockholders' equity:
Common stock, par value $.01 per share; authorized 5,000,000
shares; issued and outstanding 2,789,142.3 shares in 1996
and 2,617,180.7 shares in 1995 27,891 26,172
Paid-in capital 14,607,299 13,136,923
Retained earnings 5,214,763 4,630,608
Net unrealized holding gain (loss) on available-for-sale
securities (2,628) 33,022
----------------------------
Total stockholders' equity 19,847,325 17,826,725
----------------------------
$ 19,962,892 $ 17,935,451
============================
</TABLE>
Statements of income
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Dividends from subsidiary $ 360,000 $ 267,000 $ 80,000
Interest income 2,474 1,827 3,927
Management fee income from subsidiary 415,904 546,028 552,698
Other income 11,500
-----------------------------------------
Total income 778,378 814,855 648,125
-----------------------------------------
Salaries and employee benefits 311,038 433,766 424,615
Equipment expense 20,596 33,605 30,812
Other expense 96,872 98,281 81,728
-----------------------------------------
Total expense 428,506 565,652 537,155
-----------------------------------------
Income before income taxes (benefit) and equity
in undistributed net income of subsidiary 349,872 249,203 110,970
Income taxes (benefit) (2,400) 11,688 18,182
-----------------------------------------
Income before equity in undistributed net income
of subsidiary 352,272 237,515 92,788
Equity in undistributed net income of subsidiary 2,025,923 1,408,072 1,374,453
-----------------------------------------
Net income $ 2,378,195 $ 1,645,587 $ 1,467,241
=========================================
</TABLE>
SLADE'S FERRY BANCORP
(Formerly Known as Weetamoe Bancorp)
(Parent Company Only)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,378,195 $ 1,645,587 $ 1,467,241
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of fixed asset (11,500)
Undistributed net income of subsidiary (2,025,923) (1,408,072) (1,374,453)
Amortization of organization cost 3,440 13,759
Depreciation and amortization 10,677 21,039 19,488
Disposal of fixed assets 11,229
Increase (decrease) in taxes payable (5,668) 1,659 301
Increase in accrued expenses 910 989 975
(Increase) decrease in prepaid expenses (210) (1,394) 108
Decrease in interest receivable 14
(Increase) decrease in other assets (14,785) 5,313 368
Decrease in other liabilities (636) (1,966)
-----------------------------------------
Net cash provided by operating activities 342,560 279,790 114,335
-----------------------------------------
Cash flows from investing activities:
Proceeds from sale of fixed asset 11,500
Capital expenditures (37,643)
Net cash used in investing activities (26,143)
-----------------------------------------
Cash flows from financing activities:
Fractional shares paid in cash (3,360) (7,186) (4,040)
Dividends paid (658,165) (455,345) (389,727)
Proceeds from issuance of common stock 346,147 244,961 206,714
-----------------------------------------
Net cash used in financing activities (315,378) (217,570) (187,053)
-----------------------------------------
Net increase (decrease) in cash and cash equivalents 27,182 62,220 (98,861)
Cash and cash equivalents at beginning of year 153,425 91,205 190,066
-----------------------------------------
Cash and cash equivalents at end of year $ 180,607 $ 153,425 $ 91,205
=========================================
Supplemental disclosure:
Income taxes paid $ 3,268 $ 10,029 $ 17,881
</TABLE>
The Parent Company Only Statements of Changes in Stockholders' Equity are
identical to the Consolidated Statements of Changes in Stockholders' Equity for
the years ended December 31, 1996, 1995 and 1994, and therefore are not
reprinted here.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 25. Other Expenses of Issuance and Distribution
The following table sets forth all expenses payable by the Registrant
in connection with the issuance and distribution of the securities to be
registered. All of the amounts shown are estimates except for the
registration fee.
<TABLE>
<S> <C>
Registration $ 1,583.33
Blue Sky Fees and Expenses 2,000.00
Printing Expenses 10,000.00
Legal Fees and Expenses 20,000.00
Accounting Fees and Expenses 5,000.00
Miscellaneous 1,000.00
----------
Total $39,583.33
==========
</TABLE>
ITEM 27. Exhibits
An index of exhibits appears at Page II-3.
ITEM 28. Undertakings
The undersigned Registrant hereby undertakes:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE> II-1
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
Town of Somerset, State of Massachusetts, on April 10, 1997.
SLADE'S FERRY BANCORP
By /s/ Kenneth R. Rezendes
Kenneth R. Rezendes, President
In accordance with the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on
the dates indicated.
/s/ Thomas B. Almy /s/ Ralph S. Borges
Thomas B. Almy Ralph S. Borges
Director Treasurer/Chief Financial Officer/
Chief Accounting Officer
/s/ James D. Carey /s/ Peter G. Collias
James D. Carey Peter G. Collias
Executive Vice President and Director Director
/s/ Donald T. Corrigan ________________________________
Donald T. Corrigan Edward S. Machado
Chairman of the Board and Director Director
/s/ Francis A. Macomber ________________________________
Francis A. Macomber Majed Mouded, M.D.
Director Director
/s/ Peter Paskowski /s/ Kenneth R. Rezendes
Peter Paskowski Kenneth R. Rezendes
Director President/Chief Executive Officer
and Director
/s/ Bernard T. Shuman /s/ William J. Sullivan
Bernard T. Shuman William J. Sullivan
Director Director
________________________________
Charles Veloza
Director
<PAGE> II-2
INDEX TO EXHIBITS
The following exhibits are included, unless otherwise noted, as being
an integral part of this Registration Statement and appear in the Exhibit
section of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
3.1 Articles of Incorporation of Slade's Ferry
Bancorp as amended
3.2 By-laws of Slade's Ferry Bancorp as amended (1)
5 Opinion Regarding Legality
10.1 Agreement and Plan of Merger by and between (2)
the Company and Fairbank, Inc.
10.2 The Company's 1996 Stock Option Plan (2)
10.3 Noncompetition Agreement between Slade's (3)
Ferry Trust Company and Edward S.
Machado (A substantially identical contract
exists with Peter Paskowski)
10.4 Supplemental Executive Retirement Agreement (4)
between the Company and Donald T. Corrigan
10.5 Supplemental Executive Retirement Agreement (1)
between the Company and James D. Carey
10.6 Supplemental Executive Retirement Agreement (1)
between the Company and Manuel J. Tavares
10.7 Swansea Mall Lease (3)
21 List of subsidiaries of Slade's Ferry Bancorp. (1)
24.1 Consent of Counsel is contained in Exhibit 5
24.2 Consent of Shatswell, MacLeod & Company, P.C.
99 Form of Subscription Form to be provided to offerees
<FN>
- --------------------
<F1> Incorporated by reference to the Registrant's Form 10-KSB for the year
ended December 31, 1996.
<F2> Incorporated by reference to the Registrant's Form 10-QSB for the
quarter ended March 31, 1996.
<F3> Incorporated by reference to the Registrant's Registration Statement on
Form S-4 File No. 33-32131.
<F4> Incorporated by reference to the Registrant's Form 10-KSB for the year
ended December 31, 1994.
</FN>
</TABLE>
<PAGE> II-3
FEDERAL IDENTIFICATION
NO. 04-3061936
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
We, Kenneth R. Rezendes, President
and Peter G. Collias, Clerk
of Weetamoe Bancorp.
(Exact name of corporation)
located at 100 Slade's Ferry Avenue, Somerset
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
1
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on
December 9, 1996, by vote of:
2,047,642.022 shares of common of 2,776,921.001 shares outstanding,
(type, class & series, if any)
shares of common of shares outstanding, and
(type, class & series, if any)
shares of common of shares outstanding.
(type, class & series, if any)
being at least a majority of each type, class or series outstanding and
entitled to vote thereon.
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: if the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of
separate 8 1/2 x 11 sheets of paper with a left margin of at least 1
inch. Additions to more than one article may be made on a single sheet
so long as each article requiring each addition is clearly indicated.
To change the number of shares and the par value (if any) of any type, class
or series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
Common: Common:
Preferred: Preferred:
Change to total authorized to:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
Common: Common:
Preferred: Preferred:
VOTED: To amend Article I of the Articles of Organization and Article I of
the By-laws of the corporation to change the name of the corporation
to Slade's Ferry Bancorp.
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such
filing, in which event the amendment will become effective on such later
date.
Later effective date: January 1, 1997.
SIGNED UNDER PENALTIES OF PERJURY, this 10th day of December, 1996.
/s/ Kenneth R. Rezendes, President
/s/ Peter G. Collias, Clerk
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
=======================================
I hereby approve the within Articles of
Amendment and the filing fee in the
amount of $100.00 having been paid, said
articles are deemed to have been filed
with me this 20th day of December, 1996.
Effective date: January 1st 1997
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Law Offices of Peter G. Collias
84 North Main Street, P.O. Box 2519
Fall River, MA 02722-2519
FORM CD-72-30M-4/86-8088881
FEDERAL IDENTIFICATION
NO. 04-3061936
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF MASSACHUSETTS SECRETARY OF STATE
WILLIAM FRANCIS GALVIN, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of stockholders
adopting the amendment. The fee for filing this certificate is prescribed by
General Laws, Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
---------
We, James D. Carey, Vice President, and
Peter G. Collias, Clerk of
Weetamoe Bancorp
(Name of Corporation)
located at 100 Slade's Ferry Avenue, Somerset, Massachusetts
do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted at a meeting held on March
11, 1996, by vote of
1,663,512.447 shares of common stock out of 2,754,050.182 shares outstanding,
(Class of Stock)
shares of out of shares outstanding,
(Class of Stock)
and
shares of out of shares outstanding,
(Class of Stock)
being at least a majority of each class outstanding and entitled to vote
thereon:(1)
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
Note: If the space provided under any Amendment or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
TO CHANGE the number of shares and the par value, if any, of each class of
stock within the corporation fill in the following:
The total presently authorized is:
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
COMMON 3,000,000 $0.01
PREFERRED
CHANGE the total to:
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
COMMON 5,000,000 $0.01
PREFERRED
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote
adopting the amendment, a later effective date not more than thirty days
after such filing, in which event the amendment will become effective on
such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 20th day of March, in the year 1996.
/s/ James D. Carey, Vice President
/s/ Peter G. Collias, Clerk
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles
of amendment and, the filing fee in the
amount of $ having been paid, said
articles are deemed to have been filed
with me the day of , 19 .
WILLIAM FRANCIS GALVIN
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Thomas H. Tucker, Esq.
125 High Street, Suite 2601
Boston, MA 02110
Telephone (617) 951-0047
Copy Mailed
FORM CD-72-30M-4/86-8088881 received April 23 1993
FEDERAL IDENTIFICATION
NO. 04-3061936
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of stockholders
adopting the amendment. The fee for filing this certificate is prescribed by
General Laws, Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
---------
We, Donald T. Corrigan, President, and
Peter G. Collias, Clerk of
Weetamoe Bancorp
(Name of Corporation)
located at 100 Slade's Ferry Avenue, Somerset, MA
do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted at a meeting held on March
8, 1993, by vote of
1,134,057.373 shares of Common Stock out of 1,554,736.258 shares outstanding,
(Class of Stock)
shares of out of shares outstanding,
(Class of Stock)
and
shares of out of shares outstanding,
(Class of Stock)
being at least a majority of each class outstanding and entitled to vote
thereon:(1)
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
Note: If the space provided under any Amendment or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11
sheets of paper leaving a left hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition is
clearly indicated.
TO CHANGE the number of shares and the par value, if any, of each class of
stock within the corporation fill in the following:
The total presently authorized is:
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
COMMON 2,000,000 $0.01
PREFERRED
CHANGE the total to:
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
COMMON 3,000,000 $0.01
PREFERRED
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote
adopting the amendment, a later effective date not more than thirty days
after such filing, in which event the amendment will become effective on
such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 17th day of March, in the year 1993.
/s/ Donald T. Corrigan, President
/s/ Peter G. Collias, Clerk
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles
of amendment and, the filing fee in the
amount of $1,000 having been paid, said
articles are deemed to have been filed
with me the 14th day of April, 1993.
/s/ Michael Joseph Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Thomas H. Tucker, Esq.
One International Place, Suite 701
Boston, MA 02110
Telephone (617) 951-9980
Copy Mailed
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL J. CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
ARTICLE I
The name of the corporation is:
Weetamoe Bancorp.
ARTICLE II
The purpose of the corporation is to engage in the
following business activities:
To buy, sell, own, hold, vote or otherwise deal in and with, on its
own behalf and not as a broker, the stock, securities or shares of any bank,
trust company or other form of banking institution or any other corporation,
association, trust or firm wherever situated or otherwise act as a bank-
holding company; to directly or indirectly, whether through any subsidiary
corporation or otherwise, purchase, acquire, hold, mortgage, pledge, loan
money upon, dispose of or otherwise deal in the assets of any bank, trust
company or other form of banking institution, or any other corporation,
association, trust or firm wherever situated; and to carry on any business
permitted by the laws of the Commonwealth of Massachusetts to a corporation
organized under Chapter 156B of the General Laws.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of
paper leaving a left hand margin of at least 1 inch. Additions to more than
one article may be continued on a single sheet so long as each article
requiring each such addition is clearly indicated.
ARTICLE III
The type and classes of stock and the total number of shares and par value,
if any, of each type and class of stock which the corporation is authorized
to issue is as follows:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
COMMON: COMMON: 2,000,000 $.01
PREFERRED: PREFERRED:
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class,
if shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special
or relative rights or privileges of that class and of each other class of
which shares are outstanding and of each series then established with any
class.
N/A
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are as follows:
N/A
ARTICLE VI
Other lawful provisions, if any, and regulation of business and affairs of
the corporation, for its voluntary dissolution, or for limiting, defining,
or regulating the powers of the corporation, or of its directors or
stockholders, or of any class of stockholders: (If there are no provisions
state "None".)
See attached continuation sheets VI-1 and VI-2.
Note: The preceding six (6) articles are considered to be permanent and may
ONLY be changed by filing appropriate Articles of Amendment.
WEETAMOE BANCORP.
ARTICLE VI
Continuation Sheet VI-1
Other lawful provisions for the conduct and regulation of the business
and affairs of the corporation, for its voluntary dissolution or for
limited, defining or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
A. (1) No Director or officer shall be disqualified by his office from
dealing or contracting as vendor, purchaser or otherwise, whether in his
individual capacity or through any other corporation, trust, association,
firm or joint venture in which he is interested as a stockholder, director,
trustee, partner or otherwise, with the corporation or any corporation,
trust, association, firm or joint venture in which the corporation shall be
a stockholder or otherwise interested or which shall hold stock or be
otherwise interested in the corporation, nor shall any such dealing or
contract be avoided, nor shall any Director or officer so dealing or
contracting be liable to account for any profit or benefit realized through
any such dealing or contract to the corporation or to any stockholder or
creditor thereof solely because of the fiduciary relationship established by
reason of his holding such Directorship or office. Any such interest of a
Director shall not disqualify him from being counted in determining the
existence of a quorum at any meeting nor shall any such interest disqualify
him from voting or consenting as a Director or having his vote or consent
counted in connection with any such dealing or contract.
(2) No stockholder shall be disqualified from dealing or contracting
as vendor, purchaser or otherwise, either in his individual capacity or
through any other corporation, trust, association, firm or joint venture in
which he is interested as a stockholder, director, trustee, partner or
otherwise, with the corporation or any corporation, trust, association, firm
or joint venture in which the corporation shall be a stockholder or
otherwise interested or which shall hold stock or be otherwise interested in
the corporation, nor shall any such dealing or contract be avoided, nor
shall any stockholder so dealing or contracting be liable to account for any
profit or benefit realized through any such contract or dealing to the
corporation or to any stockholder or creditor thereof by reason of such
stockholder holding stock in the corporation to any amount, nor shall any
fiduciary relationship be deemed to be established by such stockholding.
B. Meetings of the stockholders of the corporation may be held at any
place within the United States.
C. The corporation may be a partner in any business enterprise it
would have power to conduct by itself.
WEETAMOE BANCORP.
ARTICLE VI
Continuation Sheet VI-2
D. (1) There shall be three classes of directors to be known as Class
One, Class Two and Class Three respectively. The number of directors in each
class shall be fixed or determined as set forth in the by-laws but no class
shall have more than one additional director as compared to any other class.
Class One directors shall hold office until the first annual meeting and
until their respective successors are chosen and qualified; the Class Two
directors shall hold office until the second annual meeting and until their
respective successors are chosen and qualified; and the Class Three
directors shall hold office until the third annual meeting and until their
respective successors are chosen and qualified. Upon expiration of the terms
of office of the directors as classified above, their successors shall be
elected for the term of three years each and until their successors are
elected and qualified so that approximately one-third of the directors shall
be elected each year.
(2) Except for the initial directors as named in these articles of
incorporation to whom this provision shall not apply, no director shall
serve as such past attaining the age of seventy (70) years. Any director to
whom this provision applies shall submit or be deemed to have submitted his
resignation effective upon attaining his seventieth birthday. Any vacancy so
occurring in the board of directors may be filled for the remaining
unexpired term by majority vote of the remaining directors.
(3) The provisions of this Section D of Article VI may be amended only
by vote of 80% of the stock outstanding and entitled to vote thereon at a
stockholders' meeting duly called for the purpose.
WEETAMOE BANCORP.
ARTICLE VIII
Continuation Sheet VIII-1
Directors
<TABLE>
<CAPTION>
Name Residence Post Office Address
- ---- --------- -------------------
CLASS ONE
<S> <C> <C>
Donald T. Corrigan 95 Captain's Way same
Somerset, MA 02726
Peter Paskowski 113 Cusick Lane same
Somerset, MA 02726
Kenneth R. Rezendes Sammy's Lane same
P.O. Box 879
Assonet, MA 02702
Charles Veloza 100 Plymouth Blvd. c/o Charlie's Oil
Westport, MA 02790 46 Oak Grove Ave.
Fall River, MA 02723
CLASS TWO
Thomas B. Almy 958 Regan Road same
Somerset, MA 02726
Peter G. Collias 254 French St. 345 N. Main St.
Fall River, MA 02720 Fall River, MA 02720
William J. Sullivan 388 New Boston Rd. 550 Locust St.
Fall River, MA 02720 Fall River, MA 02720
Edward S. Machado 125 Perron Avenue same
Somerset, MA 02726
CLASS THREE
James P. Killoran 31 Arnold Street 41 N. Main St.
Somerset, MA 02726 Fall River, MA 02720
Francis A. Macomber 27 Cypress Road same
Somerset, MA 02726
Richard J. McNally 27 River Road 454 Main St.
Westport, MA 02790 Somerset, MA 02726
Bernard T. Shuman 911 Langley Street same
Fall River, MA 02720
James D. Carey 457 Fairway Drive same
Somerset, MA 02726
</TABLE>
WEETAMOE BANCORP.
ARTICLES OF ORGANIZATION
SIGNATURE PAGE
IN WITNESS WHEREOF and under the pains and penalties of perjury, we,
whose signatures appear below as incorporators and whose names and business
or residential addresses are clearly typed or printed beneath each signature
do hereby associate with the intention of forming this corporation under the
provisions of General Laws Chapter 156B and do hereby sign these Articles of
Organization as incorporators this 12th day of June 1989.
/s/ Donald T. Corrigan /s/ Peter Paskowski
Donald T. Corrigan Peter Paskowski
95 Captain's Way 113 Cusick Lane
Somerset, MA 02726 Somerset, MA 02726
/s/ Kenneth R. Rezendes /s/ Charles Veloza
Kenneth R. Rezendes Charles Veloza
Sammy's Lane 100 Plymouth Blvd.
P.O. Box 879 Westport, MA 02790
Assonet, MA 02702
/s/ Thomas B. Almy /s/ Peter G. Collias
Thomas B. Almy Peter G. Collias
958 Regan Road 254 French Street
Somerset, MA 02726 Fall River, MA 02720
/s/ William J. Sullivan /s/ Edward S. Machado
388 New Boston Road 125 Perron Avenue
Fall River, MA 02720 Somerset, MA 02726
/s/ James P. Killoran /s/ Francis A. Macomber
James P. Killoran Francis A. Macomber
31 Arnold Street 27 Cypress Road
Somerset, MA 02726 Somerset, MA 02726
/s/ Richard J. McNally /s/ Bernard T. Shuman
Richard J. McNally Bernard T. Shuman
27 River Road 912 Langley Street
Westport, MA 02790 Fall River, MA 02720
/s/ James D. Carey
James D. Carey
457 Fairway Drive
Somerset, MA 02726
ARTICLE VII
The effective date of organization of the corporation shall be the date
approved and filed by the Secretary of the Commonwealth. If a later
effective date is desired, specify such date which shall not be more than
thirty days after the date of filing.
The information contained in ARTICLE VIII is NOT a PERMANENT part of the
Articles of Organization and may be changed ONLY by filing the appropriate
form provided therefor.
ARTICLE VIII
a. The post office address of the corporation IN MASSACHUSETTS is:
P.O. Box 390, Somerset, Massachusetts 02726.
b. The name, residence and post office address (if different) of the
directors and officers of the corporation are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
- ---- --------- -------------------
<S> <C> <C>
Donald T. Corrigan 95 Captain's Way same
President: Somerset, MA 02726
James D. Carey 457 Fairway Drive same
Treasurer: Somerset, MA 02726
Peter G. Collias 254 French Street 345 North Main Street
Clerk: Fall River, MA 02720 Fall River, MA 02720
</TABLE>
Directors:
SEE ATTACHED Continuation Sheet VIII-1
c. The fiscal year of the corporation shall end on the last day of the
month of:
December
d. The name and BUSINESS address of the RESIDENT AGENT of the corporation,
if any, is:
Peter G. Collias, 345 N. Main Street, Fall River, Massachusetts 02720
ARTICLE IX
By-laws of the corporation have been duly adopted and the president,
treasurer, clerk and directors whose names are set forth above, have been
duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I/WE, whose
signature(s) appear below as incorporator(s) and whose names and business or
residential address(es) ARE CLEARLY TYPED OR PRINTED beneath each signature
do hereby associate with the intention of forming this corporation under the
provisions of General Laws, Chapter 156B and do hereby sign these Articles
of
Organization as incorporator(s) this day of 19 .
See attached signature page.
NOTE: If an already-existing corporation is acting as incorporator, type in
the exact name of the corporation, the state or other jurisdiction where it
was incorporated, the name of the person signing on behalf of said
corporation and the title he/she holds or other authority by which such
action is taken.
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B, SECTION 12
=================================================
I hereby certify that, upon an examination of
these articles of organization, duly submitted to
me, it appears that the provisions of the General
Laws relative to the organization of corporations
have been complied with, and I hereby approve said
articles; and the filing gee in the amount of
$2000.00 having been paid, said articles are deemed
to have been filed with me this 13th day of June 1989.
Effective date
/s/ Michael J. Connolly
MICHAEL J. CONNOLLY
Secretary of State
FILING FEE: 1/10 of 1% of the total amount of the
authorized capital stock, but not less than $200.00.
For the purpose of filing, shares of stock with a
par value less than one dollar or no par stock shall
be deemed to have a par value of one dollar per share.
PHOTOCOPY OF ARTICLES OF ORGANIZATION TO BE SENT
Thomas H. Tucker, Esq.
211 Congress Street
Boston, Massachusetts 02110
Telephone: (617) 542-5656
EXHIBIT 5
MCGOWAN, ENGEL, TUCKER, GARRETT & SCHULTZ
(A PROFESSIONAL ASSOCIATION INCLUDING A PROFESSIONAL CORPORATION)
COUNSELLORS AT LAW
125 HIGH STREET
PAUL A. McGOWAN, III HIGH STREET TOWER, SUITE 2601
MARK D. ENGEL BOSTON, MASSACHUSETTS 02110
THOMAS H. TUCKER (617)951-9980
ROBERT W. GARRETT TELECOPIER (617)951-0048
STEPHEN SCHULTZ
PETER L. KOFF
OF COUNSEL
April 11, 1997
Slade's Ferry Bancorp
Box 390
Somerset, MA 02726
Dear Sirs:
The undersigned has acted as counsel to Slade's Ferry Bancorp ("the
Company") which is filing a Registration Statement (SB-2) under the
Securities Act of 1933 relating to the registration and proposed offering of
325,000 shares (plus 225,000 additional shares at the Company's option) of
the Company's Common Stock, $.01 par value.
I have examined the Company's Certificate of Incorporation, its by-
laws and such other records and documents as I deem necessary as a basis for
this opinion.
Based on the foregoing examination, I am of the opinion that:
1. The Company was duly incorporated and is validly existing under
the laws of the Commonwealth of Massachusetts;
2. The shares of the Common Stock of the Company being registered
will, when issued, be legally issued, fully paid and non-assessable.
I hereby consent to the reference to me under the caption "Legal
Opinions" in the Prospectus included in the aforementioned Registration
Statement.
Sincerely,
/s/ Thomas H. Tucker
Thomas H. Tucker
EXHIBIT 24.2
SHATSWELL, MacLEOD & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
83 PINE STREET
WEST PEABODY, MASSACHUSETTS 01960-3635
(508)535-0206
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Slade's Ferry Bancorp
We hereby consent to the use of our reports and to all references to
our firm included in or made a part of this Registration Statement.
/s/ Shatswell, MacLeod & Company, P.C.
SHATSWELL, MacLEOD & COMPANY, P.C.
April 11, 1997
West Peabody, Massachusetts
EXHIBIT 99
SLADE'S FERRY BANCORP
100 SLADE'S FERRY AVENUE
SOMERSET, MA 02726
(508) 675-2121
SUBSCRIPTION FORM
FOR
SLADE'S FERRY BANCORP
Common Stock (Par value $.01 per share)
IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE
BETWEEN $9.00 AND $10.00 PER SHARE
Gentlemen:
It is my intent to purchase ________________ shares of Slade's Ferry
Bancorp Common Stock (par value $.01 per share). Minimum order 100 shares -
maximum order 10,000 shares. The expiration date for this offering is
currently set at May 31, 1997, which can be extended at the option of the
Company to June 15, 1997. No orders will be accepted after the expiration
date.
Please accept my intention to purchase.
_______________________________________
Name (Please print)
_______________________________________
_______________________________________
Address
_______________________________________
City, State, Zip
[ ] I have read the prospectus provided with this offering. I understand
that a Buy Order form will be sent to me upon effectiveness of the
registration statement which must be filled out and returned to the
Company with payment in full prior to the Expiration Date.
_______________________________________
Signature Date
_______________________________________
Signature Date
NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE
PRICE CAN BE RECEIVED UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE,
AND ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR
COMMITMENT OF ANY KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN
AFTER THE EFFECTIVE DATE. AN INDICATION OF INTEREST IN RESPONSE TO THIS
ADVERTISEMENT WILL INVOLVE NO OBLIGATION OR COMMITMENT OR ANY KIND.
