UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission file number 33-47248
----------
SLADE'S FERRY BANCORP (FORMERLY WEETAMOE BANCORP)
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3061936
- ------------------------------------ ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
- ------------------------------------------ ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 675-2121
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this form 10-KSB. [X]
Registrant's revenues for fiscal year ended December 31, 1996:
$20,800,428.
The aggregate market value of the voting stock of Weetamoe Bancorp, held
by nonaffiliates of the registrant as of December 31, 1996 was
approximately $18,742,031.20. On that date, there were 2,789,142.342
shares of Weetamoe Bancorp Common Stock, par value $.01 per shares,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
ANNUAL REPORT to security holders for fiscal year ended December 31, 1996
incorporated by reference into Part II. Proxy Statement for Annual
Meeting of Stockholders April 14, 1997 incorporated by reference into Part
III.
PART I
ITEM 1
BUSINESS
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.
Supervision and Regulation
Holding Company Regulation
- --------------------------
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 functions 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 Regulation
- ---------------
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.
Bank regulators have implemented risk based capital guidelines that
require a bank to maintain certain minimum capital as a percent of such
bank's assets and certain off-balance sheet items adjusted for predefined
credit risk factors (risk adjusted assets). Under the requirements a
minimum level of capital will vary among banks on safety and soundness of
operation. At December 31, 1996 the minimum regulatory capital level of
Risk Based Capital was 4% for Tier 1 Capital, 8% for total Capital and
Leverage Capital was 4%.
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 sub-
sidiaries 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 encompassing year end 1995 and nine months ending September 30,
1996, no major or consequential violations were found.
Statistical Information
- -----------------------
The following supplementary information required under Guide 3
(Statistical Disclosure by Bank Holding Companies) should be read in
conjunction with the related financial statements and notes thereto, which
are a part of this report.
I. 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
periods ending December 31, 1996, December 31, 1995, and December 31,
1994. Averages are daily averages.
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------- -------------------------- --------------------------
Average Int(1) Avg Int Average Int(1) Avg Int Average Int(1) Avg Int
Balance Inc/Exp Rate Balance Inc/Exp Rate Balance Inc/Exp Rate
-------- ------- ------- -------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS: (Dollars in Thousands)
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
CD's > $100M 18,813 1,104 5.87 15,403 856 5.56 12,760 508 3.98
Other Time Deposits 97,957 5,754 5.87 82,290 4,801 5.83 56,273 2,244 3.99
Other Borrowings 1,374 86 6.26 1,179 63 5.36 1,329 56 4.21
-----------------------------------------------------------------------------------
Total Interest-bearing Liabilities 200,504 $ 9,080 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 Spread 3.72% 3.72% 4.33%
===================================================================================
Net Interest 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)
CD's > 100 M 248 195 53 348 125 223
Other Time Deposits 953 917 36 2,557 1,279 1,278
Other Borrowings 23 11 12 7 (7) 14
-----------------------------------------------------------
Total Interest Expense 1,316 1,357 (41) 2,820 1,135 1,685
-----------------------------------------------------------
Net Interest Income $ 1,658 $ 1,682 $ (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. The table for the period ending December 31, 1996 is set forth
below. 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.
<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 $ 27,148 $ 13,838 $ 194,634
Investments 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 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 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
</TABLE>
II. INVESTMENT PORTFOLIO
The following table shows the book value 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 6 105 5
------------------------------
$ 19,587 $ 21,836 $ 12,798
==============================
</TABLE>
In the following table, the carry value 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 (net) 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
Yield 6.20% 5.87% 6.35% 6.18%
</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>
Gross
Gross Unrealized
Amortized Unrealized Holding
Cost Basis Holding 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
Amortized Unrealized Holding
Cost Basis Holding 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 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>
Deduction to Stockholder's Equity:
(In Whole Dollars)
Net unrealized loss on Available for Sale Securities $ 27,952
Less tax effect 25,324
--------
$ 2,628
========
III. 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 $ 16,744 $ 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 50,472 50,938 48,088 50,670
Real estate - commercial 94,545 70,749 59,625 50,310 47,293
Consumer 6,681 6,149 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 $ 151,087 $ 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) (520) (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 One to Five After Five
Year Years Years Total
---------- ----------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Commercial, financial, and agricultural $ 17,538 $ 10,084 $ 3,518 $ 31,140
Real Estate - construction 1,769 730 4,391 6,890
-----------------------------------------------
$ 19,307 $ 10,814 $ 7,909 $ 38,030
===============================================
</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 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, restructured loans and real estate
acquired by foreclosure or substantively repossessed to total assets 1.88% 1.62% 2.20% 3.18% 2.31%
Percentage of Allowance for Possible Loan Losses to Nonaccrual Loans .77% .93% 0.71% 0.48% .65%
</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. There were no restructured loans at December 31, 1993 or 1992.
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.
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.
IV. 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)
-----------------------------------------------
Additions charged to operations 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 Allowance for Possible Loan Losses at year end December 31, 1996
was $3,354,311; and $2,497,774, $2,305,860, $1,953,863, and $1,967,164 for
years ending 1995, 1994, 1993, and 1992 respectively. The Allowance for
Possible Loan Losses as a percent of year end loans was 1.69% in 1996,
1.65% in 1995, 1.70% in 1994 and 1.55% for 1993 and 1992.
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 when 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 when 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 Loss 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 appropriate 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) 11.35% $ 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) 80.04 1,374 81.03 1,320 77.66 1,503 77.17
Consumer 374 3.42 280 4.06 330 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.
</FN>
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.
V. 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>
<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 $ 4,186
Over three months through six months 5,038
Over six months through twelve months 4,700
Twelve months and over 5,715
--------
$ 19,639
========
</TABLE>
VI. 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 Assets 0.94% 0.75% 0.75%
Return on Equity 12.69% 9.99% 9.71%
Dividend Payout Ratio 27.95% 29.03% 27.93%
Equity to Assets Ratio 7.40% 7.55% 7.71%
</TABLE>
VII. 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; however, during the first quarter of
1995, the Company borrowed for 25 days with an average borrowing of $2.0
Million. Tax payments made by our customers, which are owed to the
Federal Reserve Bank Treasury Tax and Loan account, are classified as
borrowed funds. 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 terms
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 $1,764,107. The
amount of taxable income required to be generated to fully realize such
net deferred tax asset will be approximately $4.1 Million. The taxable
income earned by the Company in 1996 was $3,942,196.
ITEM 2
PROPERTIES
The main office of the Bank is located at 100 Slade's Ferry Avenue,
Somerset, Massachusetts at the junctions of U.S. Routes 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.
properties:
<TABLE>
<CAPTION>
Location Sq. Footage
-------- -----------
<S> <C> <C> <C>
Main Office 100 Slade's Ferry Ave. 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 Ave. Seekonk, MA 2,300
Fairhaven 75 Huttleston Ave. Fairhaven, MA 13,000
</TABLE>
Offices listed below are leased properties which indicate the applicable
lease expiration date.
Swansea Mall
(expires 2003) Rt 118 Swansea, MA 2,250
Brayton Avenue
Drive Up Complex
(expires 2000) 16 Stevens St. Fall River, MA 549
Walgreens Drug Store
(expires 2004) 835 Pleasant St. New Bedford, MA 835
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.
ITEM 3
LEGAL PROCEEDINGS
The Bank is a defendant 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.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special stockholders meeting on December 9, 1996, the
stockholders approved an amendment to the Corporation's articles of
organization and bylaws changing the name of the Corporation from Weetamoe
Bancorp to Slade's Ferry Bancorp effective January 1, 1997.
The vote on this matter was 2,047,642.022 FOR and 31,861.386
AGAINST.
At the same meeting, the stockholders also approved an amendment to
the bylaws establishing the position of Honorary Director, a non-voting
position for which only former directors are eligible.
The vote on this matter was 1,885,269.815 FOR and 194,233.593
AGAINST.
PART II
ITEM 5
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Reference is hereby made to Company's Annual Report to Stockholders
for the year ended December 31, 1996, attached as an exhibit hereto. The
information set forth on page 12 of such Annual Report with respect to the
Market for the Registrant's Common Stock and Related Stockholder Matters
is incorporated herein by reference.
ITEM 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Reference is hereby made to Company's Annual Report to Stockholders
for the year ended December 31, 1996, attached as an exhibit hereto. The
information entitled "Management's Discussion and Analysis" and set forth
on pages 14 through 20 of such Annual Report is incorporated herein by
reference.
ITEM 7
FINANCIAL STATEMENTS
Reference is hereby made to Company's Annual Report to Stockholders
for the year ended December 31, 1996, attached as an exhibit hereto. The
consolidated balance sheets at December 31, 1996 and 1995, and the
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 and the related notes with the report of Shatswell, MacLeod and
Company, independent auditors, which appear on pages 21 through 39 of such
Annual Report to Stockholders, are incorporated herein by reference.
ITEM 8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company had no disagreements with its independent accountants on
accounting and financial disclosure matters.
PART III
ITEM 9
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Reference is hereby made to the Company's definitive proxy statement
for the Annual Meeting of Stockholders April 14, 1997. The information
set forth on pages 8 through 9 and the first paragraph on page 10 and the
next to last paragraph of page 12 of such proxy statement is incorporated
herein by reference.
ITEM 10
EXECUTIVE COMPENSATION
Reference is hereby made to the Company's definitive proxy statement
for the Annual Meeting of Stockholders April 14, 1997. The information
set forth under this heading in the last paragraph of page 13 and on page
14 of such proxy statement is incorporated herein by reference.
ITEM 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is hereby made to the Company's definitive proxy statement
for the Annual Meeting of Stockholders April 14, 1997. The information
set forth under this heading on pages 10 through 12 of such proxy
statement is incorporated herein by reference.
ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is hereby made to the Company's definitive proxy statement
for the Annual Meeting of Stockholders April 14, 1997. The information
set forth under this heading on page 15 of such proxy statement is
incorporated herein by reference.
ITEM 13
EXHIBITS, LIST, AND REPORTS ON FORM 8-K
(a) Exhibits. See Exhibit Index
(b) Reports on Form 8-K.
An amendment to a report on Form 8-K dated August 23, 1996 was filed
dated November 6, 1996 which filed the following financial
statements:
(a) Financial Statements of business acquired
------------------------------------------
(1) Fairbank, Inc. and Subsidiary Consolidated Balance Sheets
as of June 30, 1996 and 1995 (Unaudited);
(2) Fairbank, Inc. and Subsidiary Consolidated Statements of
Income for the Periods Ended June 30, 1996 and 1995
(Unaudited);
(3) Fairbank, Inc. and Subsidiary Consolidated Statements of
Changes in Stockholders' Equity for the Periods Ended
June 30, 1996 and 1995 (Unaudited);
(4) Fairbank, Inc. and Subsidiary Consolidated Statements of
Cash Flows for the Periods Ended June 30, 1996 and 1995
(Unaudited);
(5) Fairbank, Inc. and Subsidiary Notes to Consolidated
Financial Statements for Six Months Ended June 30, 1996
and 1995 (Unaudited);
(6) Report of Independent Auditor;
(7) Fairbank, Inc. and Subsidiary Consolidated Audited
Financial Statements as of December 31, 1995 and 1994:
* Consolidated Balance Sheets
* Consolidated Statements of Income
* Consolidated Statements of Changes in Stockholders'
Equity
* Consolidated Statements of Cash Flows
* Notes to Consolidated Financial Statements
(b) Pro Forma Financial Statements
------------------------------
(1) Weetamoe Bancorp Pro Forma Consolidated Balance Sheet as
of June 30, 1996 (Unaudited);
(2) Weetamoe Bancorp Pro Forma Condensed Combined Statement
of Income for the Twelve Months Ended December 31, 1995
(Unaudited);
(3) Weetamoe Bancorp Pro Forma Condensed Combined Statement
of Income for the Six Months Ended June 30, 1996
(Unaudited).
A report on Form 8-K dated December 9, 1996 was filed reporting
under Item 5 the change of the Company's name to Slade's Ferry
Bancorp effective January 1, 1997 and the amendment to the bylaws
establishing the position of Honorary Director. No financial
statements were filed with this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 27, 1997.
Slade's Ferry Bancorp
By /s/ KENNETH R. REZENDES
-----------------------------------
Kenneth R. Rezendes, President
In accordance with the requirements of the Exchange Act, this report has
been signed by the following persons on behalf of the registrant and 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
- ----------------------------------- -----------------------------------
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/ Kenneth R. Rezendes
- ----------------------------------- -----------------------------------
Peter Paskowski Kenneth R. Rezendes
Director President, Chief Executive Officer
and Director
/s/ William J. Sullivan
- ----------------------------------- -----------------------------------
Bernard T. Shuman William J. Sullivan
Director Director
/s/ Charles Veloza
- -----------------------------------
Charles Veloza
Director
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<C> <S> <C>
3.1 Articles of Incorporation of Weetamoe Bancorp as amended
3.2 By-laws of Weetamoe Bancorp as amended
10.1 Agreement and Plan of Merger by and between Weetamoe Bancorp
and Fairbank, Inc. (1)
10.2 Weetamoe Bancorp 1996 Stock Option Plan (1)
10.3 Noncompetition Agreement between Slade's Ferry Trust Company
and Edward S. Machado (A substantially identical contract
exists with Peter Paskowski) (2)
10.4 Supplemental Executive Retirement Agreement between Weetamoe
Bancorp and Donald T. Corrigan (3)
10.5 Supplemental Executive Retirement Agreement between Weetamoe
Bancorp and James D. Carey
10.6 Supplemental Executive Retirement Agreement between Weetamoe
Bancorp and Manuel J. Tavares
10.7 Swansea Mall Lease (2)
13 Annual report to security-holders for fiscal year ended
December 31, 1996
21 List of subsidiaries of Weetamoe Bancorp.
23 Consent of Independent Public Accountants
27 Financial Data Schedule
<FN>
- --------------------
<F1> Incorporated by reference to the Registrant's Form 10-QSB for the
quarter ended March 31, 1996.
<F2> Incorporated by reference to the Registrant's Registration Statement
on Form S-4 File No. 33-32131.
<F3> Incorporated by reference to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1994.
</FN>
</TABLE>
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
SLADE'S FERRY BANCORP
AMENDED
By-Laws
ARTICLE I
Name, Location and Seal
The name of this corporation (hereinafter in these By-Laws called the
"corporation or the Bancorp") is Slade's Ferry Bancorp(1) or such other name
as may hereafter be adopted in accordance with law. The main office of the
Bancorp shall be located in Somerset, Massachusetts, subject to change as
authorized by law. The seal shall be circular in form with the name of the
corporation, its state of incorporation and the year thereof inscribed
thereon.
ARTICLE II
Stockholders
Section 1. Place. Meetings of the stockholders shall be held at the
principal office of the corporation in Massachusetts or at such other place
within or without the Commonwealth as may be named in the call.
Section 2. Annual Meetings. The annual meeting of stockholders shall
be held the second Monday in April in each year, commencing, in 1997(2) or,
in any year in which said day is a legal holiday, on the next succeeding
business day, other than Saturday, which is not a legal holiday, at such
hour as shall be specified in the notice of the meeting.
____________
<F1> Amended December 1996, effective January 1, 1997
<F2> Amended March, 1996
The business of such meeting shall include the election of Directors
and the election of the Clerk/Secretary. Additional business may be brought
before such meeting by the President, by five or more directors or by
stockholders of record holding, in total, not less than ten per cent of the
capital stock of the Corporation at the time issued and outstanding, by
delivering to the Clerk/Secretary, at least thirty days before the date of
such meeting, a written agenda of additional business stating the nature of
such additional business.
Section 3. Special Meetings. Special meetings of stockholders may be
called by the President, by five or more Directors, or by stockholders of
record holding not less than ten per cent of the voting capital stock of the
Bancorp at the time issued and outstanding, by delivering to the
Clerk/Secretary a written call of such meeting, stating the nature of the
business to be conducted thereat.
Section 4. Notice. A written notice of the date, place and hour of
all meetings of stockholders shall be given by the Clerk/Secretary (or by
any other officer who is entitled to call such a meeting) at least seven (7)
days before the meeting to each stockholder who is entitled to such notice,
by leaving such notice with him or at his residence or usual place of
business, or by mailing it, postage prepaid, and addressed to such
stockholder at his address as it appears in the records of the corporation.
Notice of a meeting need not be given to a stockholder if a written waiver
of notice, executed before or after the meeting by such stockholder or his
attorney thereunto duly authorized, is filed with the records of the
meeting.
Section 5. Conduct of Meetings. A majority of the outstanding
capital stock of the Bancorp entitled to vote thereat, represented in person
or by proxy, shall constitute a quorum for the transaction of business at
any meeting of stockholders. Stockholders, at any meeting, shall have one
vote for each share of stock held and a proportionate vote for each
fractional share.
The act of a majority in interest of those stockholders present at any
meeting at which there is a quorum shall be the act of the corporation. Less
than a quorum may adjourn any meeting from time to time until a quorum is
present.
The Chairman of the Board of Directors shall preside at all sessions
of all meetings of stockholders. In the absence of the Chairman of the Board
of Directors at any session of any meeting, the President shall preside. If
neither the Chairman of the Board of Directors nor the President shall be
present at any session of any meeting, the stockholders shall choose a
stockholder as temporary Chairman and the stockholder so chosen shall
preside until said session of the meeting is adjourned.
Section 6. Stock Certificates. Stock certificates shall be signed by
any two of the following officers: The Chairman of the Board of Directors,
the President, the Executive Vice-President, the Senior Vice-President, and
the Treasurer and shall bear the seal of the Bancorp. In case of the alleged
loss or destruction or the mutilation of a certificate of stock, a duplicate
certificate may be issued in place thereof upon such terms as the Board of
Directors may prescribe.
Section 7. Transfer of Stock. Transfer of shares of stock of the
Bancorp shall be recorded on its books upon the direction, in writing and in
such form as may be prescribed by the Board of Directors, of the holder
thereof.
Section 8. Stock and Transfer Books. The corporation shall keep in
the Commonwealth of Massachusetts at its principal office (or at an office
of its transfer agent or of its Clerk/Secretary or of its resident agent)
stock and transfer records, which shall contain the names of all
stockholders and the record address and the amount of stock held by each.
The corporation for all purposes may conclusively presume that the
registered holder of a stock certificate is the absolute owner of the shares
represented thereby and that his record address is his proper address. The
directors may fix in advance a time, which shall not be more than sixty days
before:
(i) the date of any meeting of stockholders, or
(ii) the date for the payment of any dividend or the making of any
distribution to stockholders, or
(iii) the last day on which the consent or dissent of stockholders
may be effectively expressed for any purpose,
as the record date for determining the stockholders having the right to
notice of and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution or the right to give such
consent or dissent. In such case, only stockholders of record on such date
shall have such right, notwithstanding any transfer of stock on the books of
the corporation after the record date; or without fixing such record date,
the directors may for any such purpose close the transfer books for all or
any part of such period.
ARTICLE I I I
Board of Directors
Section 1. Composition. (a) The Bancorp shall have a Board of
Directors of not less than seven nor more than twenty-five Directors divided
into Classes One, Two and Three as set forth in the Articles of
Organization.
(b) The total number of Directors and their division into classes may
be fixed within the limits specified in paragraph (a) at any meeting of
stockholders at which the number of Directors is a matter of business
properly before the meeting. The Board of Directors may also be enlarged
from the size fixed by the stockholders but within the limits specified in
paragraph (a) at any time by vote of a majority of Directors then in office
provided that any such additional directors shall be divided amongst and
assigned to the Classes of Directors.
Section 2. Election and Term of Office. Directors shall be elected
by ballot of such stockholders as have the right to vote thereon in
accordance with their class designation at the annual meeting of
stockholders and shall hold their respective offices as set forth in the
Articles of Organization. In the event the number of Directors fixed at a
special meeting of stockholders increases the number of Directors, Directors
to fill the places thus created may be elected at any special meeting of
stockholders at which the election of such Directors is a matter of business
properly before the meeting and shall hold their respective offices in
accordance with their class designation until the next following appropriate
annual meeting of stockholders, and thereafter until their successors are
elected and qualified.
Section 3. Resignations and Vacancies. Any Director may resign at
any time by giving written notice of his resignation to the Chairman of the
Board of Directors, the President or the Secretary. Any such resignation
shall take effect at the time specified therein, or, if no time is
specified, upon delivery. No acceptance of such resignation shall be
necessary to make it effective.
Vacancies in the Board of Directors, including vacancies created by
enlargement of the Board of Directors by vote of the Directors under Section
1 above, may be filled by majority vote of the full Board of Directors. The
person chosen to fill any vacancy in the Board of Directors shall hold
office for the unexpired portion of the term for which his predecessor was
elected or chosen, or, if the vacancy is a new position, for the unexpired
portion of the term of the class to which the position is assigned.
Section 4. Meetings. There shall be a regular meeting of the Board
of Directors at least quarterly and at such time and place as the Board may
designate. An annual meeting shall be held each year immediately after and
at the place of the meeting of stockholders at which the Board of Directors
is elected. No notice of any regular or annual meeting shall be necessary.
Special meetings of the Board of Directors shall be held whenever
called by the Secretary at the request of the Chairman of the Board of
Directors, the President, two members of the Executive Committee, or five
Directors. Notice of special meetings, which need not be in writing and
which need state only the time and place of the meeting, shall be given by
the Secretary to each Director at least twenty-four hours before the time of
the meeting. Notice of a meeting need not be given to any director if a
written waiver of notice executed by him before or after the meeting is
filed with the records of the meeting or to any director who attends the
meeting without protesting prior thereto or at its commencement the lack of
notice to him.
A majority of the Directors then in office shall constitute a quorum
for the transaction of business. If a quorum is present, a majority of the
directors present may take any action on behalf of the Board except to the
extent a larger number is required by law, the Articles of Organization or
these By-Laws. Less than a quorum of the Board of Directors may adjourn any
meeting from time to time until a quorum is present.
Section 5. Powers. The Board of Directors shall have power to manage,
control and direct the business, property and affairs of the Bancorp and to
do all things which under the laws of Massachusetts, from time to time in
force, boards of directors are or may be authorized to do except such as by
law, the Articles of Organization or their Bylaws are reserved to the
stockholders. Without limiting the generality of the foregoing, and in
addition to all powers elsewhere in these Bylaws and by law conferred upon
to all powers elsewhere in these Bylaws and by law conferred upon it, the
Board of Directors shall have the following powers: to issue stock from the
authorized but unissued capital stock of the corporation;(3) to designate a
Director to serve at its pleasure as Chairman of the Board of Directors; to
designate the same or another Director to serve as President; to designate
Directors, in addition to the Chairman of the Board and the President, to
serve at its pleasure as members of the Executive Committee; to designate a
person to serve as Treasurer; to establish such committees as it may deem
appropriate and to prescribe the duties and authorities of any such
committee, and to designate Directors to serve at its pleasure as members
thereof; to establish such other offices as it may deem appropriate, and to
designate persons to serve at its pleasure in such offices; to prescribe the
duties of all officers of the corporation and to fix their compensation, and
to require bonds of any officer or employee.
Section 6. Honorary Directors.(4) The Board of Directors may
designate and appoint such person or persons as it determines qualified to
be an Honorary Director. To qualify to be an Honorary Director, a person
must be a former Director in good standing of the corporation. The person
must have resigned as a Director or not hold the office of Director at the
time of appointment and must request that he be designated as Honorary
Director and approved by majority vote of the Board of Directors.
Appointment shall be for life subject to termination at the discretion of
the Board of Directors. An Honorary Director shall be allowed to attend any
regular or special meeting of the Board of Directors and may participate in
the meeting subject to the control of any person in charge of the meeting.
An Honorary Director shall not have any vote as a Director, his presence
shall not count towards any necessary quorum and he shall not be counted
against the total numbers of directors. Any Honorary Director who, acting
in good faith, suffers any monetary loss as a result of any claim, lawsuit
or action arising out of any action or activity as an Honorary Director
shall be entitled to indemnification or reimbursement by the corporation
upon a vote authorizing such indemnification or reimbursement by the Board
of Directors. An Honorary Director may be paid for attendance at any such
meeting at a fee established from time to time by the Board of Directors.
____________
<F3> Added by amendment, March 1993
<F4> Section added by amendment December 1996
ARTICLE IV
Executive Committee
Section 1. Composition. There shall be an Executive Committee
consisting of the Chairman of the Board, ex officio, the President, ex
officio, and such other Directors, not less than three, as the Board of
Directors shall from time to time elect and who shall serve at the pleasure
of the Board of Directors.
Section 2. Meetings. The Executive Committee shall meet at such time
and place as the Committee shall designate. No notice of any regular meeting
shall be necessary.
Special meetings of the Executive Committee may be held at any time.
Such meetings shall be called by the Chairman of the Board or President
whenever the business or affairs of the corporation so require and may be
called by two other members of the Executive Committee. Notice of every
special meeting, which need not be in writing and which need only state the
time and place of the meeting, shall be given by the calling party or by the
clerk of the Executive Committee, at least six hours before the time of the
meeting. Notice of a meeting need not be given to any director if a written
waiver of notice executed by him before or after the meeting is filed with
the records of the meeting or to any director who attends the meeting
without protesting prior thereto or at its commencement the lack of notice
to him.
A majority of the members of the Executive Committee shall constitute
a quorum for the transaction of business. Less than a quorum of the
Executive Committee may adjourn any meeting from time to time until a quorum
is present.
The Chairman of the Board shall preside at meetings of the Executive
Committee and in his absence, the President shall preside. If neither of
them is present, the members of the Executive Committee may designate a
temporary chairman.
The Executive Committee shall designate a clerk, who may be the
Clerk/Secretary of the Bancorp, to serve at its pleasure, who shall keep
records of its meetings, give notice of its meetings and perform such other
duties of a like nature as the Executive Committee may designate.
Section 3. Powers. Subject to control by the Board of Directors, the
Executive Committee shall, when the Board of Directors is not in session,
have and exercise all of the powers of the Board of Directors except the
power:
a. to change the principal office of the corporation;
b. to amend the By-Laws;
c. to elect officers required by law to be elected by the stockholders
or directors and to fill vacancies in any such offices;
d. to change the number of the Board of Directors and to fill
vacancies in the Board of Directors;
e. to remove officers or directors from office;
f. to authorized the payment of any dividend or distribution to
shareholders;
g. to authorize the reacquisition for value of stock of the
corporation; or
h. to authorize a merger.
ARTICLE V
OFFICERS
Section 1. Composition, Selection, Qualifications and Terms of
Office. The officers of the Corporation shall be the following: a Chairman
of the Board of Directors, a President and a Treasurer, each of whom shall
be elected annually by The Board of Directors at the first meeting of the
Board after the annual meeting of stockholders and shall hold office until
the first meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors are elected and
qualified; a Clerk/Secretary, who shall be elected annually at the annual
meeting of stockholders and shall hold office until the next annual meeting
of stockholders and until his successor is elected and qualified; and such
other officers as the Board of Directors may from time to time determine,
all of whom shall be elected or appointed by the Board of Directors or as it
may determine and shall hold office at the pleasure of the Board.
The Chairman of the Board and the President shall be elected from
among the members of the Board of Directors. The other officers may but need
not be elected or appointed from among the members of the Board. Any two or
more offices may be held by one person.
Section 2. Resignations, Removals and Vacancies. Any officer may
resign at any time by delivering written notice of his resignation to the
Chairman of the Board of Directors or the President. Any such resignation
shall take effect at the time specified therein, or, if no time is so
specified, upon delivery. No acceptance of such resignation shall be
necessary to make it effective.
The Chairman of the Board of Directors, President and the Treasurer
may be removed at any time by the affirmative vote of a majority of the
whole Board of Directors. Any other officer, agent or employee, other than
the Secretary, may be removed at any time by the Board of Directors.
Any officer, agent or employee, other than the Secretary, not elected
or appointed by the Board of Directors, may be removed at any time by the
President.
If any office for which a term of office is specified in these By-
Laws should become vacant by reason of death, incapacity or removal, the
vacancy may be filled in the manner provided in these By-Laws for election
appointment to such office; provided, however, that a vacancy in the office
of Clerk/Secretary may be filled at any special meeting of the stockholders
at which the filling of such vacancy is a matter of business properly before
the meeting. Any person so elected or appointed to fill any such vacancy
shall hold office for the unexpired portion of the term for which his
predecessor was elected or appointed.
If the office of Clerk/Secretary should become vacant by reason of
death, incapacity or removal, or should the Clerk/Secretary be temporarily
absent or disabled, and no Assistant Clerk/Secretary has been appointed the
President shall designate a person as Clerk/Secretary pro tem, who shall
perform the duties of the Clerk/Secretary until the vacancy shall have been
filled or the then-current term of office of the Clerk/Secretary shall have
expired, or until the absence or disability of the Clerk/Secretary shall
have terminated.
If the President should be temporarily absent or disabled, the Board
of Directors may designate a member of the Board of Directors to act
temporarily in his stead. If any officer, agent or employee, other than the
President and the Clerk/Secretary should be temporarily absent or disabled,
the Board of Directors may designate a person to act temporarily in the
stead of such officer, agent or employee.
If any officer, agent or employee, other than the Clerk/Secretary, not
elected or appointed by the Board of Directors, should be temporarily absent
or disabled, the President may designate a person to act temporarily in the
stead of such officer unless and until the Board of Directors should
designate some other person for such purpose.
Section 3. Powers and Duties. Except as the Board of Directors may in
general or specific other cases provide, the powers and duties of the
officers shall be as follows:
(a) Chairman of the Board of Directors. The Chairman of the Board of
Directors shall have the powers and duties conferred upon him by law, by
these By-Laws, and such other powers and duties as may be from time to time
prescribed by the Board of Directors.
(b) President. The President shall have the powers and duties by law
and elsewhere in these By-Laws conferred upon him; the authority to appoint
any agents or employees, other than those provided by law or by these By-
Laws to be elected or appointed by the stockholders or the Board of
Directors; the authority to fix the compensation of and to prescribe the
authority and duties, which may include the authority to appoint subordinate
agents or employees, of such agents and employees as he may appoint; and
such other powers, authority and duties as from time to time may be provided
by law or prescribed by the Board of Directors.
(c) Treasurer. The Treasurer shall have the control of the money,
securities and other property belonging to or in the possession or custody
of the corporation, and shall cause the same to be held or deposited for
safekeeping subject to the authority of the Board of Directors, and shall
perform such other duties as are usually required of Treasurers, or as may
be prescribed by law or by the Board of Directors.
(d) Clerk/Secretary. The Clerk/Secretary shall keep a record of the
proceedings at all meetings of stockholders and of the Board of Directors,
shall give notice, where required by these By-Laws, of meetings of
stockholders and of the Board of Directors, and shall perform such other
duties as are provided by law.
ARTICLE VI
Indemnification of Directors, Officers and Certain Others
The corporation shall indemnify any Director and may as determined by
the Board of Directors, indemnify any officer of the corporation or any
person serving at the Corporation's request as a Trustee or administrator of
any employees benefit plan of the corporation, against all expenses
(including court costs, attorneys' fees and the amount of any judgment or
reasonable settlement) actually and reasonably incurred by him, subsequent
to the adoption hereof, in connection with any claim asserted against him,
or any action, suit or proceeding in which he may be involved as a party, by
reason of his having been such Director, officer, trustee or administrator
or by reason of any action alleged to have been taken or omitted by him as
such Director, officer, trustee or administrator; provided, however, that
the corporation shall indemnify such director, officer, trustee or
administrator against expenses incurred in relation to any matter with
respect to which an allegation is made against him of willful misconduct,
willful default or of gross negligence in the conduct of his office only if
there be no final adjudication that such person is guilty of or liable for
such willful misconduct, willful default or gross negligence and one of the
following three conditions be complied with:
(a) There be a final adjudication that such person is not guilty of or
liable for such willful misconduct, willful default or gross negligence;
(b) There be a sufficient number of Directors then in office who are
not involved in such claim, action, suit or proceeding, to constitute a
majority of the whole Board of Directors, and there be a determination that
such person is free from such willful misconduct, willful default or gross
negligence by a vote of a majority of the Directors on a ballot in which no
Director who is involved in such claim, action, suit or proceeding shall
participate; or
(c) There be a determination that such person is free from such
willful misconduct, willful default, or gross negligence by a vote of a
majority of a committee of seven stockholders, none of whom is involved in
such claim, action, suit or proceeding, chosen to determine such matter at a
regular or special meeting of the stockholders of the Corporation.
Such indemnification may include payment by the corporation 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 under this
Article which undertaking may be accepted without reference to the financial
ability of such person to make repayment. Any such indemnification may be
provided although the person to be indemnified is no longer an officer,
director, trustee or administrator.
No indemnification 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 corporation or to the extent that such matter
relates to service with respect to any employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit
plan.
The right of indemnification herein provided for shall inure to the
benefit of the executors or administrators of each such Director, officer,
trustee or administrator and shall not be deemed exclusive of any other
rights to which he may be entitled, under any, statute, By-Law, agreement,
vote of stockholders or otherwise, or to which he might have been entitled
were it not for this provision.
ARTICLE VI I
Business Combinations
Section 1. Vote Required for Certain Business Combinations.
(a) The affirmative vote of the holders of not less than 80 percent of
the outstanding shares of "Voting Stock" (as hereinafter defined) held by
stockholders other than an "Interested Person" (as hereinafter defined)
shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of the Corporation with any Interested
Person unless the "Continuing Directors" (as hereinafter defined) of the
Corporation by at least a two-thirds vote (i) have expressly approved in
advance the acquisition of the outstanding shares of Voting Stock that
caused such Interested Person to become an Interested Person, or (ii) have
expressly approved such Business Combination either in advance of or
subsequent to such Interested Person's having become an Interested Person.
(b) The affirmative vote of the holders of not less than 90 percent of
the outstanding shares of "Voting Stock" (as hereinafter defined) held by
stockholders other than an "Interested Person" (as hereinafter defined)
shall be required for the approval or authorization of any "Business
Combination" ( as hereinafter defined) of the Corporation with any
Interested Person if the cash or fair market value (as determined by at
least two-thirds of the Continuing Directors) of the property, securities or
"Other Consideration to be Received" (as hereinafter defined) per share by
holders of Voting Stock of the Corporation in the Business Combination is
less than the "Fair Price" (as hereinafter defined) paid by the Interested
Person in acquiring any of its holdings of the Corporation's Voting Stock.
Section 2. Definitions. Certain words and terms as used in this
Article VII shall have the meanings given to them by the definitions and
descriptions in this Section.
2.1 Business Combination. The term Business Combination. shall mean
(a) any merger or consolidation of the Corporation or a subsidiary of the
Corporation with or into an Interested Person, (b) any sale, lease,
exchange, transfer or other disposition, including without limitation, a
mortgage or any other security device, of all or any "Substantial Part" as
hereinafter defined) of the assets either of the Corporation (including
without limitation, any voting securities of a subsidiary) or of a
subsidiary of the Corporation to an Interested Person, (c) any merger or
consolidation of an Interested Person with or into the Corporation or a
subsidiary of the Corporation, (d) any reclassification of securities,
recapitalization or other comparable transaction involving the Corporation
that would have the effect of increasing the voting power of any Interested
Person with respect to Voting Stock of the Corporation, and (e) any
agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Combination. The term
"business combination" shall not apply to any transaction with any
subsidiary of this corporation approved by the full Board of Directors for
purposes of internal reorganization.
2.2 Interested Person. The term "Interested Person" shall mean and
include any individual, corporation, partnership or other person or entity
which, together with its "Affiliates" and "Associates" (as defined in Rule
12B-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect at the date of the adoption of this Article),
"Beneficially Owns" (as defined in Rule 13D-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934 as in effect at the
date of the adoption of this Article) in the aggregate 20 percent or more of
the outstanding Voting Stock of the Corporation, and any Affiliate or
Associate of any such individual, corporation, partnership or other person
or entity. Without limitation, any share of Voting Stock of the Corporation
that any interested Person has the right to acquire at any time
(notwithstanding that Rule 13d-3 deems such shares to be beneficially owned
only if such right may be exercised within 60 days) pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, shall be deemed to be Beneficially Owned by the Interested Person
and to be outstanding for purposes of this definition. An Interested Person
shall be deemed to have acquired a share of the Voting Stock of the
Corporation at the time when such Interested Person became the Beneficial
Owner thereof. With respect to the shares owned by Affiliates, Associates or
other persons whose ownership is attributed to an Interested Person under
the foregoing definition of Interested Person, if the price paid by such
Interested Person for such shares is not determinable by two-thirds of the
Continuing Directors, the price so paid shall be deemed to be the higher of
(a) the price paid upon the acquisition thereof by the Affiliate, Associate
or other person or (b) the market price of the shares in question at the
time when the Interested Person became the Beneficial Owner thereof.
2.3. Voting Stock. The term "Voting Stock" shall mean all of the
outstanding shares of Common Stock of the Corporation and any outstanding
shares of preferred Stock entitled to vote on each matter on which the
holders of record of Common Stock shall be entitled to vote, and each
reference to a proportion of shares of Voting Stock shall refer to such
proportion of the votes entitled to be cast by such shares.
2.4. Continuing Director. The term "Continuing Director" shall mean a
Director who was a member of the Board of Directors of the Corporation
immediately prior to the time that the Interested Person involved in a
Business Combination became an Interested Person, or a Director who was
elected or appointed to fill a vacancy after the date the Interested Person
became an Interested Person by a majority of the then-current Continuing
Directors.
2.5. Fair Price. The term "Fair Price" shall mean the following: If
there is only one class of capital stock of the Corporation issued and
outstanding, the Fair Price shall mean the highest price that can be
determined by two-thirds of the Continuing Directors to have been paid at
any time by the Interested Person for any share or shares of that class of
capital stock. If there is more than one class of capital stock of the
Corporation issued and outstanding, the Fair Price shall mean with respect
to each class and series of capital stock of the Corporation, the amount
determined by two-thirds of the Continuing Directors to be the highest per
share price equivalent of the highest price that can be determined to have
been paid at any time by the Interested Person for any share or shares of
any class or series of capital stock of the Corporation. In determining the
Fair Price, all purchases by the Interested Person shall be taken into
account regardless of whether the shares were purchased before or after the
Interested Person became an Interested Person. Also, the Fair Price shall
include any brokerage commissions, transfer taxes and soliciting dealers'
fees paid by the Interested Person with respect to the shares of capital
stock of the Corporation acquired by the Interested Person. In case of any
Business Combination with an Interested Person, two-thirds of the Continuing
Directors shall determine the Fair Price for each class and series of the
capital stock of the Corporation. The Fair Price shall also include interest
compounded annually from the date an Interested Person became an Interested
Person through the date the Business Combination is consummated at the
publicly announced base rate of interest of The Bank of Boston less the
aggregate amount of any cash dividends paid, and the fair market value of
any dividends paid in other than cash on each share of capital stock in the
same time period, in an amount up to but not exceeding the amount of
interest so payable per share of capital stock.
2.6. Substantial Part. The term "Substantial Part" shall mean more
than 20 percent of the fair market value as determined by two-thirds of the
Continuing Directors of the total consolidated assets of the Corporation and
its subsidiaries taken as a whole as of the end of its most recent fiscal
year ended prior to the time the determination is being made.
2.7. Other Consideration to be Received. The term "Other Consideration
to be Received" shall include, without limitation, Common Stock or other
capital stock of the Corporation retained by its existing stockholders other
than Interested Persons or other parties to such Business Combination in the
event of a Business Combination in which the Corporation is the surviving
corporation.
Section 3. Determinations by the Continuing Directors. In making any
determinations, the Continuing Directors may engage such persons, including
investment banking firms and the independent accountants who have reported
on the most recent financial statements of the Corporation, and utilize
employees and agents of the Corporation, who will, in the judgment of the
Continuing Directors, be of assistance to the Continuing Directors. Any
determinations made by the Continuing Directors, acting in good faith on the
basis of such information and assistance as was then reasonably available
for such purposes, shall be conclusive and binding upon the Corporation and
its stockholders, including any Interested Person.
Section 4. Amendments, etc. of this Article VII.
Notwithstanding any other provisions of the Articles of Organization
or the By-Laws of the Corporation (and notwithstanding the fact that some
lesser percentage may be specified by law, the Articles of Organization or
the By-Laws of the Corporation) this Article VII shall not be amended,
altered, changed or repealed:
(a) as to any provision other than the "Fair Price" provisions without
the affirmative vote of 80 percent or more of the stock outstanding and
entitled to vote thereon at a stockholders' meeting duly called for the
purpose; or
(b) as to the "Fair Price" provisions without the affirmative vote of
90 percent or more of the stock outstanding and entitled to vote thereon at
a stockholders' meeting duly called for the purpose.
ARTICLE VIII
Amendment of By-Laws
These By-Laws may be amended at any meeting of stockholders where the
business of amending the By-Laws is properly before the meeting by the
affirmative vote of the holders of a majority of the shares of the capital
stock of the Trust Company at the time outstanding except as otherwise
provided under specific provisions of these By-Laws.
SLADE'S FERRY BANCORP 1996 ANNUAL REPORT
BANKER.
NEIGHBOR.
FRIEND.
DESCRIPTION OF BUSINESS
Slade's Ferry Bancorp *, originally incorporated as Weetamoe Bancorp in June
of 1989 under the laws of the Commonwealth of Massachusetts, is a one bank
holding company which owns and controls 100% of the assets of Slade's Ferry
Trust Company and its subsidiaries.
The primary business of Bancorp is the ongoing business of Slade's Ferry
Trust, a state chartered trust company incorporated in Massachusetts in
1959. The Trust Company is a member of the Federal Deposit Insurance
Corporation and serves as a retail bank.
Slade's Ferry provides multiple deposit products and a wide range of
financial services, including installment, residential and commercial
mortgages; as well as other forms of commercial lending. It serves a broad
customer base derived from southeastern Massachusetts and nearby Rhode
Island, currently operating ten strategically located retail facilities and
multiple ATM's in the towns of Fairhaven, Somerset, Swansea and Seekonk, and
the Cities of Fall River and New Bedford, MA. The Bank keeps convenient
business hours, including Saturdays.
The Bank actively competes with a variety of other financial institutions --
major banks, bank holding companies and credit unions -- for deposits, loans
and additional forms of business by offering competitive rates. The Bank
further distinguishes itself by adhering to an established philosophy of
providing professional, highly personal service throughout its marketplace.
An Equal Opportunity/Affirmative Action Employer (M/F/H/V), Slade's Ferry
Trust Company employed a total of 128 full-time and 50 part-time employees
as of December 31, 1996.
Corporate offices are located at 100 Slade's Ferry Avenue, Somerset, MA.
- --------------------
* On December 9, 1996, the stockholders of Weetamoe Bancorp voted to
change its corporate name to Slades's Ferry Bancorp in order to enhance
the overall recognition of the Company with its subsidiary, the Slade's
Ferry Trust Company. Therefore, the reader should recognize that the
name Slade's Ferry Bancorp is synonymous with Weetamoe Bancorp. The
trade symbol for Slade's Ferry Bancorp is SFBC.
ABOUT THIS YEAR'S ANNUAL
Each year thousands of visitors come to our little corner of New England to
revel in its natural beauty and captivating history. They take home not only
an appreciation for our region's picturesque scenery, but a respect for the
hard-working, big-hearted people they meet here.
At Slade's Ferry Bank, we're proud to call these industrious people our
neighbors, our community partners, our customers. Their values are a proud
legacy, handed down from the settlers who landed on these shores starting
more than three hundred years ago. As neighbors, we share a heritage rich
with stories of enterprising pioneers who built maritime and textile
industries that led the world.
They came from all over the globe. From Cape Verde, the Azores, Greece,
Ireland, Poland, Italy ... bold pioneers who sought new opportunities for
themselves and for future generations. Their hard work and deeply-held sense
of community helped shape the businesses and neighborhoods that make our
region the colorful tapestry visitors admire today.
From New Bedford and Fairhaven, through Fall River and into Swansea and
Somerset, our neighbors continue to enrich this region in so many ways. And
as a locally-owned financial partner, your bankers at Slade's Ferry are
fortunate to know their strength of character better than almost anyone.
Our customers are the kind of people who rally in the face of economic
hardship and continue to make our communities grow. They seek the best
education for their children. They work hard to own their own homes and
businesses.
They are the lifeblood of the hometowns we all share. And so in 1996, your
Bank saw an obligation to keep pace with the regional growth our customers
have worked so hard for. By adding Fairhaven and New Bedford branches, we've
greatly expanded our opportunities for profitable relationship-banking
throughout southeastern Massachusetts. We're confident that by making the
Slade's Ferry tradition of personal service and strong financial resources
more conveniently available to customers from Acushnet to Somerset, our
communities will benefit and our investors will be rewarded.
In this year's annual report, we invite you to travel these familiar towns
and cities with us. You'll gain a renewed sense of admiration for the
character of the hometowns -- and the neighbors -- we share.
SHAREHOLDERS LETTER
1996 was the most challenging year in our history, and also the most
rewarding. Once again, we attained record earnings, with a dramatic increase
from $1,645,587 in 1995 to $2,378,195 in 1996, an increase of 45% and asset
growth of more than $57,000,000 or 25%.
The most significant reason for our growth was the acquisition of the
National Bank of Fairhaven, which was accomplished in August. The merger
allowed us to expand the delivery of our financial services to the Greater
New Bedford marketplace. We believe that this will provide tremendous growth
opportunities to us for years to come.
The Greater New Bedford marketplace is as large, if not larger than, the
marketplace we have been serving. Our reception into this marketplace by
customers of National Bank, and the community at large, has been warm and
encouraging. The two banks shared similar philosophies of customer service;
the transition to Slade's Ferry Bank was very smooth, and merger related
problems were minimal.
We also updated our teller system in July, at all of our offices, in order
to provide more efficient service at each teller station.
In November, we opened the long awaited, five lane drive-up facility at our
Brayton Avenue office, in order to alleviate the traffic congestion. The
response from our customers has been very positive and appreciative for the
improved customer service.
We also experienced the largest net interest spreads in recent history, as
deposit rates remained dormant and loan rates stabilized. The improvement in
rate spreads generated greatly improved earnings and the return on average
assets rose to .94% from .75% in 1995. Earnings per share rose $.26 to $.86
from $.60 in 1995, an increase of 43%.
We also received a record amount of loan loss recoveries in 1996, totaling
$439,788, as customers continue the process of emerging from the economic
setbacks of the early nineties. Our Loan Loss Reserve is at a level we
believe is more than adequate to cover our exposure to known or unforeseen
losses that might occur in the foreseeable future.
As 1997 starts to unfold, we are focusing our efforts on expanding our
presence in the Greater New Bedford marketplace through business
development, marketing and public relations, as well as the commitment of
our human and financial resources. We believe that our customer driven,
personal service will make Slade's Ferry Bank a household name in this
community, which will create further growth and expansion of our family of
customers.
Slade's Ferry in 1996 continued to make a difference in the quality of life
throughout the region, by active personal involvement in more than 85 civic,
charitable, municipal and church organizations.
This spirit of volunteerism of our employees was most visible during "Fall
River Celebrates America", which I had the privilege of chairing, as the
familiar Slade's Ferry green shirts were seen everywhere throughout the
celebration. It is that same spirit that makes me so proud of them, and that
makes us truly unique.
Slade's Ferry is ready to serve the financial needs for the entire southeast
region, and we look with great anticipation and excitement to improving the
value of your investment in our bank. To that end, we changed our name in
December from Weetamoe Bancorp to Slade's Ferry Bancorp, which has greater
name recognition as we introduce ourselves to a new marketplace.
Your management team is committed to increasing the return to you, our
stockholder, for your steadfast support and confidence, and we continue to
devote our energies to the prudent management of the bank.
James D. Carey
Executive Vice President, Slade's Ferry Bancorp
President, Slade's Ferry Bank
GROWING
WITH
THE REGION
WE SERVE
[CAPTIONS FOR PHOTO'S]
Fairhaven boasts some especially beautiful examples of public architecture,
many of them gifts of Standard Oil millionaire and native son Henry
Huttleston Rogers. They include an Italian Renaissance-style library, a
French Gothic town hall and the Elizabethan-influenced Fairhaven High
School, built in 1906.
The Whaleman's Statue welcomes visitors to New Bedford Free Public Library.
The riches brought ashore by whaling ship captains transformed the city.
Stately mansions and impressive public buildings stand today as testament to
the preservation of New Bedford's proud history.
First-time home buyers Kathy and John Accord found Slade's Ferry's approach
to relationship banking crucial to making their mortgage application and
approval an easy process. "We have a high regard for the bankers at Slade's
Ferry," says John. "They've been very helpful every step of the way."
The vitality of New Bedford's working waterfront is ensured by the diversity
of the watercraft docked there. Fishing boats, sightseeing cruise ships and
passenger ferries are all home-ported here. Climb aboard to haul in the
day's catch, or take a scenic ocean excursion to Martha's Vineyard or
Cuttyhunk.
[END OF CAPTIONS]
Sample the wonderful ethnic festivals of southeastern Massachusetts and
Rhode Island and you'll marvel at the cultural diversity that has become
such a vital source of community strength and economic vigor. Savor the
spicy fragrance of hot Portuguese chourico at New Bedford's Feast of the
Blessed Sacrament, or tap your toes to a spritely Irish jig at Fall River's
St. Patrick's Day Parade. You'll be experiencing just some of the diverse
traditions that have blended so harmoniously throughout our region.
Happily, the regional unity we enjoy from this beautiful tapestry of
cultures still respects the unique values of each ethnic heritage. Each
color in our rainbow remains clear and bold.
So it is with the vibrant towns and cities of the southern New England shore
your Slade's Ferry bankers know so well. Whether we're walking New Bedford's
waterfront in the footsteps of Herman Melville, or surveying Westport's
rolling farmlands, your bankers understand the singular qualities -- and
financial needs -- of each community we serve.
Like you, most of us were born and raised right here. We grew up in the
ethnic neighborhoods, the suburbs and the seaside communities of
southeastern Massachusetts and nearby Rhode Island. So it's only natural
that we pursue Slade's Ferry's commitment to our own hometowns with more
than a little pride and enthusiasm.
We take tremendous satisfaction in helping customers -- and neighbors --
achieve their special dream. Take Kathy and John Accord. When they were
ready to take the plunge to build their first home, they came to Slade's
Ferry where Kathy's father started banking over 30 years ago. As first-time
buyers, they were full of questions and needed an accessible lending expert
who could guide them each step of the way. But they also needed more than
great service.
They needed a bank with the financial clout to offer the most competitive
rates and a quick closing process. They found it all at Slade's Ferry.
Today, Kathy and John are happily settled in their new home in Swansea
(along with three cats and two dogs). And when it comes time to add a car,
start a business, or borrow money for a child's education, they'll still
find it all right here. That's the essence of a Slade's Ferry banking
relationship.
THE COLORFUL
KALEIDOSCOPE WE CALLL HOME
One of the things that has made our country strong is its reputation as the
world's great melting pot. The same can be said for southeastern
Massachusetts and Rhode Island. People from all corners of the globe have
sought philosophical freedoms and economic opportunities on these shores
since the Pilgrims first landed on Cape Cod.
Take a Sunday drive through the towns and cities we serve. Symbols of our
cultural diversity greet you at every turn. From the stateliness of New
Bedford's and Fairhaven's sea captain's mansions to the architectural
marvels of Fall River's historic churches, you'll see the handiwork of
artisans from all over the world. Culinary traditions from Asia, Portugal
and Italy remain fresh and flavorful at ethnic markets. The spirit of the
original settlers can still be felt in the historic colonial villages of
Mattapoisett, Westport, Somerset and Rochester. And the importance of
religious freedom, sought by every immigrant group to this region, resonates
through the many houses of worship that grace city streets, town greens and
country roads.
Indeed, our region's cultural variety is impressive. But equally impressive
is the coming together of faiths, values and traditions in this seamless
rainbow tapestry we have woven together.
So it's fitting that our area's flagship festival, Fall River Celebrates
America, honors the cultural diversity that has made our country the envy of
the world. Jim Carey, Slade's Ferry President and 1996 Chairman of Fall
River Celebrates America, believes the event has evolved from an occasion
for waterfront entertainment to an opportunity to reflect upon some
closely-held ideals.
"The festival is a chance for people of all cultures to come together to
celebrate what it means to be an American. With everything from
international foods to Portuguese Night, to a seemingly endless variety of
entertainment, it's a microcosm of America in five days."
For Jim, one of the weekend's highlights is a naturalization ceremony
onboard the Battleship Massachusetts.
"About 75 residents -- mostly from areas we serve in southeastern
Massachusetts --become U.S. citizens. It's a very moving ceremony. And to be
there to welcome newcomers from Asia, the Azores, Italy and other nations
into our American family is just a great experience."
ACHIEVING
STRENGTH
THROUGH
DIVERSITY
[CAPTIONS FOR PHOTO'S]
Pleasure craft are safely harbored in the many marinas along Fairhaven's
tranquil waterfront. The ocean, bays and rivers that surround southeast New
England enhance the quality of life here in countless ways --and help make
the region a popular vacation destination.
In 1996, Slade's Ferry found a welcoming home in Fairhaven, where National
Bank of Fairhaven employees like customer service representative Zelia
Brodeur joined the Slade's Ferry team. The seamless transition has proven
itself in convenience for customers and a successful debut for your Bank's
new branches.
The waterfront lanes of historic Mattapoisett capture the romance of bygone
days. Visitors to the venerable Mattapoisett Inn delight in the spirit of
this seaside New England village, carefully preserved for the enjoyment of
future generations.
Nothing says Autumn in New England better than a weekend visit to a farm
stand, brimming with crisp apples, bright pumpkins and colorful Indian corn.
Such seasonal delights dot the farming countryside all around our towns and
cities.
A great blue heron stands motionless in a Somerset salt marsh, waiting for a
meal of fresh fish. Our area's abundant waterways and wetlands are carefully
preserved, making a peaceful home for wildlife from foxes to waterfowl.
The serenity of our region's farmlands harkens us back to a less complicated
time. Thoughtful community planning prevents rural areas from being
threatened by healthy economic growth. Prosperity and natural beauty are
compatible neighbors here.
David N. Kelley, II carries on a time-honored tradition of service
excellence at Fairhaven's D.N. Kelley & Son Inc., a marine vessel repair
business. A few years ago, the company's growing financial needs forced
Kelley to bank with an out-of-town institution that didn't know his business
or his customers. With the opening of Slade's Ferry's Fairhaven office,
Kelley has returned his business' banking relationship to his hometown, to
accessible financial partners he knows and trusts.
Southeastern New England is home to a wealth of educational resources. From
excellent public and private elementary schools, to vocational technical
high schools and college preparatory schools. The University of
Massachusetts at Dartmouth is nationally known for excellence in engineering
studies and other disciplines.
[END OF CAPTIONS]
When we welcomed the professionals at the National Bank of Fairhaven to the
Slade's Ferry family in 1996, we had the feeling we were coming home. Maybe
that's because Slade's Ferry has had a longstanding relationship with the
Fairhaven and New Bedford communities, as bankers and as active corporate
citizens. For many years, we have served customers in Dartmouth, Acushnet,
Mattapoisett and throughout Bristol County. And Slade's Ferry bankers have
been very active in supporting local programs like the Boy Scouts and Junior
Achievement. So it just felt right to us, and to our customers, to have a
home in the neighborhood.
It also felt right to have the employees of the National Bank of Fairhaven
join our team. It's meant a seamless transition for both bankers and
customers -- and a highly successful launch for your Bank's new branches.
That success has already shown itself in customer stories throughout greater
New Bedford and Fairhaven. The story of D.N. Kelley & Son Inc. is just one
telling example. The National Bank of Fairhaven had served the marine vessel
repair company for decades. But as the firm's reputation for excellence
spread across southern New England, and to transient customers around the
world, its financial needs changed and grew. To expertly service everything
from yachts to tugboats, the company had to expand its facilities and beef
up its equipment. D.N. Kelley was forced to turn to a larger, out-of-town
bank that didn't know its business or its customers. The financial resources
were there, but the distant, impersonal service was inconvenient and
frustrating.
You can probably guess the end of the story. With Slade's Ferry's financial
strength and competitiveness now backing their trusted partners from
Fairhaven, D.N. Kelley & Son was able to return its entire banking
relationship to its own hometown.
And as Slade's Ferry reaches out to more neighbors across our corner of New
England, we're confident there will be more happy endings for discerning
customers -- those who won't compromise on personal service to get the
financial clout of a larger bank. As your bank grows, so will our ability to
offer complete financial services to retail customers and local businesses,
large and small -- keeping the benefits of economic growth right here at
home, in the company of friends.
IN THE
COMPANY
OF FRIENDS
When you consider our region's "personality," one of the traits that
visitors so often admire is our respect for historic preservation, not just
of landmarks and natural resources, but of time-honored values. They point
to the enterprising textile makers who catapulted Fall River to its status
as "Spindle City" during the last century. Tourists relive whaling's Golden
Era in the waterfront historic districts of New Bedford and Fairhaven. And
they recall the romance of New England country living in the rambling stone
walls of South Dartmouth, Freetown and Acushnet.
Yet our vitality springs from a clear-sighted view of the future. Our
energies are combined, both to preserve our past and create a new "history"
for tomorrow that will rival that of our most golden days.
A famous descendant of the early settlers once declared that being a New
Englander means "doing your duty, caring for things that are good and true."
And while that Puritan ethic was a guiding light for our region's first
inhabitants, the principles of responsibility and respect for tradition are
just as meaningful to the immigrants who continue to enrich our communities.
At Slade's Ferry Bank, our foundations rest on the very same ethic of duty
and caring. For us, it is the skillful combination of financial know-how and
responsive personal service that continues to distinguish our banking team
from all the rest. Our enduring success rests solely on our ability to reach
out to young families, small business owners, seniors and growing
corporations with services that meet, and even anticipate, their needs.
As we look toward the new century, your bankers will put our steadfast
efforts and personal commitment into taking Slade's Ferry ever closer to the
heart of each hometown we serve.
For our investors, our longtime customers, those customers we haven't met
yet and our employees --we pledge to honor the people and ideals that built
our proud history, and work for a promising future, in this place called
home.
CELEBRATING
A PROUD
HISTORY THAT
UNITES US
[CAPTIONS FOR PHOTO'S]
The charming architecture of Swansea center is typified by the town's
offices, housed in a structure built of local fieldstone with terracotta
trim.
The vintage carousel in Fall River's Heritage State Park is the perfect
backdrop for this photo of visitors at Fall River Celebrates America.
Amateur photographer Peter Moniz captured the patriotic spirit of the
waterfront festival in this shot, selected as winner of the Fall River
Celebrates America Photo Contest sponsored by Slade's Ferry Bank.
As a data operator in Slade's Ferry's main office, Liz Camara uses state-of-
the-art technology to track customers' daily transactions. But one look at
her smile tells customers how she -- and her fellow Slade's Ferry bankers --
feel about the people behind those transactions.
A vibrant symbol of Fall River's conservation of historic architecture, the
former Durfee High School, erected in 1887, was renovated and rededicated in
1996 as the Fall River Trial Court. The landmark building is a replica of
City Hall in Paris, France, and features granite quarried from Fall River on
its first-floor exterior.
[END OF CAPTIONS]
SLADE'S FERRY BANCORP
(FORMERLY WEETAMOE BANCORP)
Market for Registrant's Common Equity
and Related Stockholder Matters
Market Information
Slade's Ferry Bancorp common stock is listed in the "pink sheets" of the
over-the-counter market. The following table sets forth the range of high
and low bid quotations as reported in the "pink sheets" by quarters for the
two most recent years.
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------
High Low High Low
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
1st quarter $8.75 $8.00 $8.75(1) $8.58(1)
2nd quarter 8.50 7.88 9.00 8.78
3rd quarter 8.50 7.55 9.18 8.38
4th quarter 9.00 8.63 8.75 8.50
- --------------------
<F1> The first quarter 1995 stock quotations have been adjusted to reflect
a 3 for 2 stock split that occurred in March 1995.
</TABLE>
These quotations reflect interdealer prices, without mark-up, mark-down, or
commission and may not necessarily represent actual transactions.
As of December 31, 1996, there were 868 stockholders of record of the
Company's common stock.
Dividends -- History and Policy
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.
Selected Financial Data
The following table sets forth selected financial data for the last five
years.
<TABLE>
<CAPTION>
Year Ended December 31
(Dollars in Thousands Except per Share Data) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
Applicable 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 $ 0.240 $ 0.174 $ 0.151 $ 0.092 $ 0.092
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
Shares Outstanding Year End 2,789,142 2,617,181 1,645,492 1,552,820 1,542,359
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 Discount 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 58,857 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 Interest Earning Assets(3) 4.44% 4.36% 4.78% 4.59% 4.23%
Interest Rate Margins(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
- --------------------
<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
Availabl-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.
</TABLE>
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 Mattapoisett, 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 Operation
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 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 margin, which is the difference between the yield earned on
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 earning assets, increased to 4.44% 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
Bankearned $169,689 in overdraft charges. Gains realized on sale 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
attributing 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 to $7,380,161 from
$6,631,527 reported in 1995 or 11.29%. 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 who 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 sale 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 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 periods ending
December 31, 1996, December 31, 1995, and December 31, 1994. Averages are
daily averages.
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Average Interest(1) Avg. Int. Average Interest(1) Avg. Int Average Interest(1) Avg. Int.
(Dollars in Thousands) Balance Inc/Exp Rate Balance Inc/Exp Rate Balance Inc/Exp Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<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. Treasury/Government
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 Possible
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
CD's > $100M 18,813 1,104 5.87 15,403 856 5.56 12,760 508 3.98
Other Time Deposits 97,957 5,754 5.87 82,290 4,801 5.83 56,273 2,244 3.99
Other Borrowings 1,374 86 6.26 1,179 63 5.34 1,329 56 4.21
- -----------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing
Liabilities 200,504 $ 9,080 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 Spread 3.72% 3.72% 4.33%
===================================================================================================================================
Net Yield on Earnings Assets 4.44% 4.36% 4.78%
===================================================================================================================================
- --------------------
<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.
</TABLE>
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 a noted increase in 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 and up by $676,351 when compared to $887,650
in 1994.
Financial Condition
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 attributable
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 the residential real estate category, and 22.6%
commercial, consumer, and other types of loans.
The largest component of the loan portfolio is commercial real estate loans,
which generally have 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 and in the Held to Maturity category. 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 unrecognized 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, 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 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 unrecognized losses, net of taxes, of
$2,628 at December 31, 1996, and unrecognized gains, net of taxes, of
$33,022 at year end 1995.
Nonperforming Assets
<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
=============================================================================================
Restructed debt performing in
accordance with amended terms,
not included above $ 819 $ 459 $ 139 $ -- $ --
=============================================================================================
Percentage of nonaccrual loans to
total loans 2.19% 1.78% 2.38% 3.24% 2.37%
Percentage of nonaccrual loans ,
restructured loans, and real estate acquired
by foreclosure or substantively repossessed
to total assets 1.88% 1.62% 2.20% 3.18% 2.31%
Percentage of allowance for possible loan
losses to nonaccrual loans .77% .93% .71% .48% .65%
</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.
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 percentage of nonaccrual loans to total loans
outstanding at December 31, 1996 was 2.19%, compared to 1.78% at December
31, 1995. The increase in nonaccrual loans is attributable to $896,411 of
nonaccrual loans that were acquired in the acquisition of 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.
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 ratio 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, $2,379,581 of commercial
real estate, $715,728 attributed to commercial loans and $23,250 to other
types of loans.
Loans past due 90 days or more but still accruing increased to $111,740 at
December 31, 1996. The Company continues to accrue on these loans, due to
the excess values of the collateral securing such loans compared to the
outstanding loan balances.
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.
The percentage of nonaccrual loans and real estate acquired by foreclosure
to total assets increased primarily due to the increase in nonaccrual loans.
The percentage of Allowance for Possible Loan Losses to nonaccrual loans
decreased to .77% at December 31, 1996 from .93% in 1995, .71% in 1994, .48%
in 1993 and .65% in 1992 due to an increase in nonaccrual 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
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.
The table below illustrates the changes in the Allowance for Possible Loan
Losses for the periods indicated.
<TABLE>
<CAPTION>
December 31
(Dollars In Thousands) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1 $2,498 $2,306 $1,954 $1,967 $1,300
Charge offs:
Commercial (144) (184) (22) (963) (115)
Real estate construction (0) (0) (0) (0) (0)
Real estate mortgage (136) (79) (246) (451) (202)
Installment/consumer (159) (134) (93) (85) (166)
- ----------------------------------------------------------------------------------
(439) (397) (361) (1,499) (483)
- ----------------------------------------------------------------------------------
Recoveries:
Commercial 59 1 51 0 9
Real estate construction 0 0 0 0 0
Real estate mortgage 333 16 2 2 0
Installment/consumer 47 22 15 29 69
- ----------------------------------------------------------------------------------
439 39 68 31 78
- ----------------------------------------------------------------------------------
Net charge offs (000) (358) (293) (1,468) (405)
- ----------------------------------------------------------------------------------
Additions charged to operations 400 550 645 1,455 1,072
Allowance attributable to acquisition 456 0 0 0 0
Balance at end of period $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 Allowance for Possible Loan Losses increased to $3.4 Million at December
31, 1996, from $2.5 Million at December 31, 1995. Significantly affecting
the increase was the provision which is charged against earnings of
$400,000, recoveries of previously charged-off loans of $439,788, and
$456,000 of allowance attributed to the acquisition. These increases were
offset by charge-offs of loans deemed uncollectible of $439,229. In 1996,
recoveries of previously charged-off loans were approximately the same
amount as charge-offs. This was somewhat unusual since, historically,
charge-offs have exceeded recoveries on an annual basis. In prior years, the
Company incurred net charge-offs of $358,085, $293,003, $1,468,300, and
$404,878 for the years 1995, 1994, 1993, and 1992 respectively. Recoveries
are a result of continuous collection efforts and improvement in business
conditions on accounts that were previously deemed as uncollectible. The
Allowance for Possible Loan Losses as a percentage to outstanding loans is
1.69% at year end 1996, 1.65% for year end 1995, 1.70% for year end 1994,
and 1.55% for years ending 1993 and 1992.
The level of the Allowance for Possible Loan Losses is evaluated by
management utilizing several factors. These factors include but are not
limited to, recent trends in 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. The
allowance is also evaluated by regulatory agencies and independent public
accountants as part of their examination and audit procedures.
In 1996, the Company's provision for loan losses, which is a deduction from
earnings, was $400,000, down by $150,000 when compared to 1995's provision
of $550,000, and down by $245,000 when compared to 1994's provision of
$645,000. The bank provided $1,455,000 in 1993 and $1,072,000 in 1992.
Although nonaccrual loans increased in 1996, the amount provided to the
Allowance for Possible Loan Losses was deemed appropriate by management
after full consideration of the value of the assets securing these loans.
The decreased provisions that occurred during the past three years are a
result of management's overall assessment of the loan portfolio, the ratio
of the allowance to outstanding loans, as well as the liquidation and
resolution of loans that had deteriorated into a nonperforming status during
the years prior to 1994.
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 source 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 Lthat 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
(Dollars In Thousands) 1996 1995
- -------------------------------------------------------------------------------------------------
<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 1 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 1 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
</TABLE>
<TABLE>
<CAPTION>
Slade's Ferry Trust Company
(Dollars In Thousands) 1996 1995
- -------------------------------------------------------------------------------------------------
<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 1 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 1 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
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.
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.
CERTIFIED PUBLIC ACCOUNTANTS
83 PINE STREET
WEST PEABODY, MASSACHUSETTS 01960-3635
(508) 535-0206
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
Consolidated Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
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.
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
Stationery 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.
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Net Unrealized
Holding Gain (Loss)
On Available-
Common Paid-in Retained For-Sale
Stock Capital Earnings 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.
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 sale 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.
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
Unrealized Unrealized
Amortized Holding Holding
Cost Basis Gains Losses Fair 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
=========================================================================================================
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 seurities 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:
- ---------------------------------------------------------------------------------------------------
Debt securities other than mortgage-backed and Amortized Fair Amortized
asset backed securities: Cost Basis Value Cost Basis Fair Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 loans 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 CD's), 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 statuary 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 has 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 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 Amount Fair Value Carrying Amount Fair 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 amount and the
estimated fair value 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:
-------------------------------------------------------
(Dollar Amounts in Thousands) Amount Ratio Amount Ratio Amount Ratio
- ---------------------------------------------------------------------------------------------------
<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
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 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>
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.
SLADE'S FERRY BANCORP
(FORMERLY WEETAMOE BANCORP)
<TABLE>
<S> <C> <C>
Board of Directors James D. Carey Luisa DiManno
Slade's Ferry Bancorp - Executive Vice President Assistant Treasurer
Slade's Ferry Trust Company
Ralph S. Borges William E. Diskin
Thomas Almy Treasurer Vice President
Architect - I.T. Almy Associates
Executive Management Raymond L. Foster
James D. Carey Slade's Ferry Trust Company Vice President
Executive Vice President of Bancorp
President of Bank James D. Carey Wayne M. Frost
Chief Executive Officer of Bank President Senior Vice President
Chief Executive Officer of Bank
Peter G. Collias, Esquire Suzanne M. Gamelin
Clerk/Secretary of Bancorp Ralph S. Borges Assistant Vice President
Senior Vice President/Treasurer
Donald T. Corrigan Joseph J. Ganem
Chairman of the Board of Bancorp Susan R. Hajder Assistant Vice President
Chairman of the Board of Bank Senior Vice President
Joseph Gesualdo
Edward S. Machado Charlene J. Jarest Vice President
Past President of Bank Vice President
Russell Godin
Francis A. Macomber Carol A. Martin Vice President
President - LeComtes All Star Dairy Inc. Senior Vice President
Elaine M. Guillemette
Majed Mouded MD Manuel J. Tavares Assistant Vice President
Physician Senior Vice President
Raymond J. Harris
Peter Paskowski Officers Vice President
Past President of Bank Slade's Ferry Trust Company
Sandra Medeiros
Kenneth R. Rezendes James H. Amidon Assistant Treasurer
President of Bancorp Vice President
President - K.R. Rezendes, Inc. Charlotte Nadeau
Isola A. Anctil Loan Operations Officer
Bernard T. Shuman Assistant Vice President
Past President/Treasurer Cecelia M. Machado
Priscilla Dress Corp. Cherie Ashton Vice President
Assistant Treasurer
William J. Sullivan Ann Padula
President - Sullivan Funeral Homes Maria C. Barbosa Assistant Vice President
Vice President
Charles Veloza Jeannine Paliotti
President - Charlie's Oil Co., Inc. Edward Bernardo Jr. Assistant Vice President
Vice President
Officers Janice R. Partridge
Slade's Ferry Bancorp Catherine Blakey Vice President
Assistant Treasurer
Donald T. Corrigan Fatima Raposa
Chairman of the Board Peter G. Collias Assistant Vice President
Corporate Secretary
Kenneth R. Rezendes Deborah A. Silvia
President Daniel B. Costa Assistant Treasurer
Assistant Treasurer
Mary M. Sullivan
Sandra Curtis Assistant Vice President
Compliance Auditor
</TABLE>
Corporate Headquarters
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
Tel. (508) 675-2121
Fax (508) 675-1751
Branch Locations
Fairhaven, MA
75 Huttleston Avenue
Fall River, MA
249 Linden Street
855 Brayton Avenue
New Bedford, MA
838 Pleasant Street
Seekonk, MA
1400 Fall River Avenue (Rte.6)
Somerset, MA
100 Slade's Ferry Avenue
2722 County Street
Somerset High School
Swansea, MA
Swansea Mall
2388 G.A.R. Highway
General Counsels
Atty. Peter G. Collias
84 North Main Street
Fall River, Massachusetts 02720
Tel. (508) 675-7894
Atty. Thomas H. Tucker
High Street Tower
125 High Street
Suite 2601
Boston, Massachusetts 02110
Tel. (617) 951-0047
Independent Certified Public Accountants
Shatswell, MacLeod and Company, P.C.
Certified Public Accountants
83 Pine Street
West Peabody, Massachusetts 01960
Tel. (508) 535-0206
Form 10-KSB
A copy of the Annual Report on Form 10-KSB for Slade's Ferry Bancorp as
filed with the Securities and Exchange Commission will be forwarded without
charge to any stockholder upon written request to:
Ralph S. Borges, Treasurer
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, MA 02726
Shareholder Services
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
Tel.(508) 675-2121
Annual Meeting
The Annual Meeting of Stockholders of
Slade's Ferry Bancorp will be held at
7:30 p.m. on April 14, 1997 at the
Venus de Milo Restaurant, 75 G.A.R. Highway, Swansea, Massachusetts.
Dividend Reinvestment Plan
The Plan provides for:
* Reinvestment of all of the dividends
* Voluntary cash contributions of up to
$1,000 annually, minimum $100.
* No service fees or commissions
Information may be obtained by contacting Shareholder Services at (508) 675-
2121
Corporate Headquarters 100 Slade's Ferry Avenue Somerset, MA 02726
Tel. (508) 675-2121 Fax (508) 675-1751
Exhibit 10.5
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is made this day of , 1996
between Weetamoe Bancorp, a Massachusetts corporation, with its principal
place of business in Somerset, Massachusetts, hereafter referred to as the
Employer, or the Corporation, and James D. Carey of Somerset, Massachusetts,
Executive Vice-President of the Corporation, hereafter referred to as the
Employee.
James D. Carey has been employed by the Corporation or its subsidiary
Slade's Ferry Bank ("the Bank") for a number of years. During this time, he
has performed his duties ably and well, to the satisfaction and substantial
benefit of the Corporation and the Bank. As a result, the Corporation
wishes to provide additional incentive to retain the services of James D.
Carey until his retirement.
THEREFORE, in consideration of these premises and the mutual promises
and obligation set forth hereafter, James D. Carey as Employee and the
Corporation as Employer agree as follows:
1. The Corporation agrees that, if Employee remains continuously employed
by the Corporation and/or its subsidiary Bank until his retirement, in such
offices and capacities as he may be elected to by the Board of Directors of
either entity at such compensation as may be mutually agreed upon, the
Corporation will pay and the Employee shall be entitled to receive
additional compensation in the amount of $2,500 per month for one hundred
twenty (120) months commencing on the first day of the first month following
his retirement.
2. (a) The Corporation agrees that the Employee may retire from full-time
employment upon the first day of the month immediately following his 65th
birthday, or at any time prior thereto after completing fifteen years
continuous employment with the Corporation if he becomes permanently and
totally disabled as defined in paragraph (b) or at anytime following his
65th birthday, but not later than the first day of February following his
70th birthday, hereinafter called the Retirement Date.
(b) Employee shall be deemed to have become permanently and totally
disabled if and when the Board of Directors of the Corporation determines,
on the basis of medical or other evidence satisfactory to it, that the
Employee qualifies as disabled under the Social Security Act (42 U.S.C.
section 1382) as amended for the purposes of supplemental security income.
3. The Corporation agrees that, in the event of the death of the Employee
after completing fifteen years continuous employment with the Corporation
and prior to the Retirement Date while employed by the Corporation, it will
pay to his surviving spouse, if any, or, if none, in equal shares to his
children then living and deceased children leaving issue then living by
right of representation, or to such other persons as he may have designated,
or if none, to his estate, $2,500 per month for one hundred and twenty
(120) consecutive months commencing upon the first day of the first month
following the date of death of the Employee. If any beneficiary should die
prior to the receipt of all such payments, any remaining payments shall be
made to such beneficiary's estate.
4. The Corporation agrees to pay to or for the benefit of Employee from the
date of his retirement and thereafter for and during the term of his natural
life such amounts as are required for the employer contribution to provide
medical health insurance coverage comparable to that provided immediately
before his retirement, supplemental to Medicare as it may be amended, in
the form of Blue Cross/Blue Shield Medex Gold or its substantial equivalent
according to the schedule of contribution by the Corporation or the Bank
and the Employee as is in effect for the Corporation's (or the Bank's, if
provided through the Bank) employees generally at the time of Employee's
retirement.
The Corporation agrees to pay to or for the benefit of Employee's wife
such amounts as are required according to the schedule of contribution by
the Corporation or the Bank and the Employee, as amended from time to time,
to provide master medical health insurance in effect at the Corporation or
the Bank and available to employees generally, or its equivalent, for
Employee's wife until she attains the age of 65 years or obtains coverage
under the Medicare program, whichever first occurs, and thereafter to pay
such amounts as are required under such schedule of contribution as is in
effect at that time to provide comparable medical health insurance coverage
supplemental to Medicare as it may be amended, in the form of Blue
Cross/Blue Shield Medex Gold, or its substantial equivalent, for and during
the term of her natural life.
5. Employee's rights and benefits under this agreement are in addition to
and not a substitute for Employee's rights and benefits under the
Corporation or Bank's other retirement, disability or benefit plans.
Subject to the terms of the group life insurance policy in force at the time
of retirement, the Bank will continue to include the Employee in the current
group life insurance policy in force at the time of retirement.
6. In the event that the Employee should die on or after the Retirement
Date but prior to receipt of any amount to which he is entitled hereunder
pursuant to Paragraph 1, or of all such amounts, any amounts remaining
unpaid shall be paid to such beneficiary or beneficiaries as the Employee
may designate by filing with the Corporation a notice in writing, but in the
absence of any such designation, such unpaid amounts shall be so paid to his
surviving spouse, if any, or, if none, in equal shares to his children then
living and deceased children leaving issue then living by right of
representation, and if none, then to his estate.
7. Whenever the Employee's beneficiaries (other than his, his spouse's or
any beneficiary's estate) shall be entitled to receive any amount hereunder,
the amount shall be paid to such beneficiaries in monthly installments: (a)
over a period of ten (10) years, in the event that no monthly installment
payments have theretofore commenced to the Employee, or (b) for the balance
of the ten (10) year period (commencing with the first such installment so
received by the Employee), on the same due dates, in the event payment of
monthly installments shall have theretofore commenced to the Employee.
8. Notwithstanding any other provision of this Agreement to the contrary,
the Employee shall have the right, with the consent of the Corporation, to
elect that payment of the amounts due hereunder be made (a) over a longer
period than one hundred and twenty (120) months or (b) as a life annuity
(with or without refund).
9. Notwithstanding any other provision of this Agreement to the contrary,
following his retirement, the Employee shall have the right, without the
consent of the Corporation, to demand immediate distribution to him in cash
or in kind of an amount equal to the value of the Supplemental Executive
Retirement Account determined as of the date of such demand, following
completion after his retirement of any three (3) successive fiscal years of
the Corporation in which the book value of the Corporation shall have been
successively decreased or any one or more successive fiscal year(s) in which
the book value of the Corporation shall have decreased by a total of more
than 33 1/3%.
10. As used herein the term "Value of the Account" shall mean an amount
equal to the sum of the monthly remaining payments for the remaining period
of payment discounted at the prime lending rate as published in the Wall
Street Journal on the first Monday after the event triggering the valuation.
11. Except as otherwise expressly provided in this Agreement, Employee
agrees on behalf of himself and of his executors and administrators, heirs,
legatees, distributees, and any other person or persons claiming any
benefits under him under this Agreement that this Agreement and its rights,
interests, and benefits shall not be assigned, transferred, pledged, or
hypothecated in any way by Employee or any executor, administrators, heir,
legatee, distributee, or other person claiming under Employee by virtue of
this Agreement, and shall not be subject to execution, attachment, or
similar process. Any attempted assignment, transfer, pledge or
hypothecation, or other disposition of this Agreement or of such rights,
interests, and benefits contrary to the above provisions, or the levy of any
attachment or similar process thereupon, shall be null and void and without
effect.
12. This agreement does not constitute an employment agreement. Nothing
contained in this agreement shall be construed to be a contract of
employment for any term of years, nor as conferring upon the Employee the
right to continue to be employed by the Corporation or the Bank in his
present capacity, or in any other capacity. It is expressly understood by
the parties hereto that this Agreement relates exclusively to additional
compensation for the Employee's services, which compensation is payable
after his retirement from full-time service with the Corporation and the
Bank or his death, and is not intended to be an employment contract. The
benefits payable under this agreement shall be independent of, and in
addition to, any benefits under any other employment agreement that may
exist from time to time between the parties hereto, or any other
compensation payable by the corporation to the Employee whether as salary or
otherwise. In the event that Employee's employment is terminated for any
reason other than his death or retirement under the provision of paragraphs
2 and 3 hereof, this Agreement shall automatically terminate and the
Corporation shall have no further obligation hereunder.
13. The rights of the Employee under this agreement and of any beneficiary
of the Employee shall be solely those of an unsecured creditor of the
Corporation, and neither the Employee nor any beneficiary of the Employee
shall have or acquire any interest, rights or claims to any property or
assets of the Corporation by virtue of this agreement except as set forth in
paragraph 16.B. The Corporation's obligation hereunder, except as set forth
in paragraph 16.B., shall be an unfunded and unsecured promise to pay money
in the future.
14. Hereafter, either during his full-time employment or while he is
receiving any benefits under this Agreement, Employee agrees that he will
not enter into competition with the Corporation or the Bank, directly or
indirectly, within the Town of Somerset or a fifty (50) mile radius thereof,
either as a director, officer, employee, agent, consultant, partner or any
other capacity with any business which is in substantial competition with
the Corporation or the Bank. The reasonable judgment of a majority of the
Board of Directors that such competition exists shall be conclusive for the
purposes of this Agreement. This provision shall not be construed to
prevent the Employee from owning shares in any publicly traded corporation
for investment purposes.
15. In the event that Employee should violate the provisions of Article 14
hereof, and should he continue to do so without adequate cause for a period
of thirty days after the Corporation shall have requested him in writing to
refrain from an action prohibited by said Article 14, Employee agrees that
no further payments shall be due him, his spouse, or any other designated
beneficiary under this Agreement and that the Corporation shall have no
further obligation whatsoever hereunder. Any disputes hereunder shall be
referred to arbitration pursuant to Article 17 hereof.
16.A. The Corporation agrees that it will not merge or consolidate with any
other corporation or organization, or permit its business to be taken over
by any other organization, unless and until the succeeding or continuing
corporation or other organization shall expressly assume the rights and
obligations of the Corporation herein set forth. The Corporation further
agrees that it will not cease its business activities or terminate its
existence, other than as heretofore set forth in this Article, without
having made adequate provision for the fulfilling of its obligations
hereunder.
16.B. In the event of a change of control (as defined below) of the
Corporation, Employee shall have the right (exercisable within 90 days of
the change of control) to require the Corporation to immediately fund the
unpaid portion of Employee's compensation hereunder by establishing an
irrevocable trust account with an independent corporate Trustee which is a
national or state charted bank with Trustee powers located in Massachusetts
or Rhode Island, funded with an amount which will be sufficient to meet all
of Employer's obligations hereunder. The terms of the Trust shall meet the
requirements of the Internal Revenue Service for "rabbi trusts" and shall
generally provide as set forth herein modified or expanded as necessary to
meet said IRS requirements. The Trust fund shall be held and managed by the
Trustee for the exclusive purpose of providing the compensation hereunder to
Employee hereunder and the Trustee shall act as agent of the Corporation by
making payments of benefits to the Employee in accordance with the terms
hereof. Any and all expenses and taxes incurred by reason of the Trust and
its income shall be paid by the Corporation. After all benefits payable
hereunder have been paid to the Employee or his beneficiaries or after this
agreement has otherwise properly terminated under its terms, any amounts
remaining in the Trust account shall revert to Corporation. Except for the
rights of creditors in the event of Corporation's bankruptcy or
receivership, Corporation shall have no right to reclaim amounts contributed
to the Trust hereunder until all benefits have been paid or this agreement
has properly terminated under its terms. In the event of Corporation's
bankruptcy or receivership, the Trustee shall, upon proper notice, deliver
all assets held hereunder to the Trustee in bankruptcy or the duly court
appointed receiver for the benefit of the general creditors (including
Employee) of Corporation.
"Change of Control" as used herein means any merger or consolidation with or
acquisition by any other organization, the sale of substantially all the
assets of the Corporation to another person or organization, or the
acquisition directly or indirectly of 20% or more of the common stock of the
Corporation by one or more persons or organizations acting in concert.
17. Unless otherwise provided in this agreement, any controversy or claim
arising out of or relating to this contract, or the breach thereof, shall be
settled by arbitration in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof. The
Corporation agrees that it will pay Employee's costs including reasonable
attorneys' fees in connection with any controversy or claim hereunder in
which Employee prevails or in which the Arbitrator(s) or court determine
that the Corporation should pay such costs.
18. This agreement shall be binding upon and inure to the benefit of the
parties, the Corporation's successors and assigns, and the Employee's heirs,
beneficiaries, executors and administrators.
IN WITNESS WHEREOF the parties have executed this agreement the day and year
first written above.
Weetamoe Bancorp
Attest: /s/ Peter Collias, Esq. By: /s/ Ralph Borges
--------------------------- --------------------------------
Secretary (Title: Sr. Vice President, Treasurer)
/s/ James D. Carey
--------------------------------
James D. Carey
Exhibit 10.6
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is made this day of , 1996
between Slade's Ferry Trust Company, a Massachusetts trust company, with its
principal place of business in Somerset, Massachusetts, hereafter referred
to as the Employer, or the Bank, and Manuel J. Tavares of Westport,
Massachusetts, Senior Vice-President of the Bank, hereafter referred to as
the Employee.
Manuel J. Tavares has been employed by the Bank for a number of
years. During this time, he has performed his duties ably and well, to the
satisfaction and substantial benefit of the Bank. As a result, the Bank
wishes to provide additional incentive to retain the services of Manuel
Tavares until his retirement.
THEREFORE, in consideration of these premises and the mutual promises
and obligation set forth hereafter, Manuel Tavares as Employee and the Bank
as Employer agree as follows:
1. The Bank agrees that, if Employee remains continuously employed by the
Bank and/or its subsidiary Bank until his retirement, in such offices and
capacities as he may be elected to by the Board of Directors of either
entity at such compensation as may be mutually agreed upon, the Bank will
pay and the Employee shall be entitled to receive additional compensation in
the amount of $1,500 per month for one hundred twenty (120) months
commencing on the first day of the first month following his retirement.
2. (a) The Bank agrees that the Employee may retire from full-time
employment upon the first day of the month immediately following his 65th
birthday, or at any time prior thereto after completing fifteen years
continuous employment with the Bank if he becomes permanently and totally
disabled as defined in paragraph (b) or at anytime following his 65th
birthday, but not later than the first day of February following his 70th
birthday, hereinafter called the Retirement Date.
(b) Employee shall be deemed to have become permanently and totally
disabled if and when the Board of Directors of the Bank determines, on the
basis of medical or other evidence satisfactory to it, that the Employee
qualifies as disabled under the Social Security Act (42 U.S.C. section 1382)
as amended for the purposes of supplemental security income.
3. The Bank agrees that, in the event of the death of the Employee after
completing fifteen years continuous employment with the Bank and prior to
the Retirement Date while employed by the Bank, it will pay to his surviving
spouse, if any, or, if none, in equal shares to his children then living and
deceased children leaving issue then living by right of representation, or
to such other persons as he may have designated, or if none, to his estate,
$1,500 per month for one hundred and twenty (120) consecutive months
commencing upon the first day of the first month following the date of death
of the Employee. If any beneficiary should die prior to the receipt of all
such payments, any remaining payments shall be made to such beneficiary's
estate.
4. The Bank agrees to pay to or for the benefit of Employee from the date
of his retirement and thereafter for and during the term of his natural life
such amounts as are required for the employer contribution to provide
medical health insurance coverage comparable to that provided immediately
before his retirement, supplemental to Medicare as it may be amended, in
the form of Blue Cross/Blue Shield Medex Gold or its substantial equivalent
according to the schedule of contribution by the Bank and the Employee as
is in effect for the Bank's employees generally at the time of Employee's
retirement.
The Bank agrees to pay to or for the benefit of Employee's wife such
amounts as are required according to the schedule of contribution by the
Bank and the Employee, as amended from time to time, to provide master
medical health insurance in effect at the Bank and available to employees
generally, or its equivalent, for Employee's wife until she attains the age
of 65 years or obtains coverage under the Medicare program, whichever first
occurs, and thereafter to pay such amounts as are required under such
schedule of contribution as is in effect at that time to provide comparable
medical health insurance coverage supplemental to Medicare as it may be
amended, in the form of Blue Cross/Blue Shield Medex Gold, or its
substantial equivalent, for and during the term of her natural life.
5. Employee's rights and benefits under this agreement are in addition to
and not a substitute for Employee's rights and benefits under the Bank's
other retirement, disability or benefit plans. Subject to the terms of the
group life insurance policy in force at the time of retirement, the Bank
will continue to include the Employee in the current group life insurance
policy in force at the time of retirement.
6. In the event that the Employee should die on or after the Retirement
Date but prior to receipt of any amount to which he is entitled hereunder
pursuant to Paragraph 1, or of all such amounts, any amounts remaining
unpaid shall be paid to such beneficiary or beneficiaries as the Employee
may designate by filing with the Bank a notice in writing, but in the
absence of any such designation, such unpaid amounts shall be so paid to his
surviving spouse, if any, or, if none, in equal shares to his children then
living and deceased children leaving issue then living by right of
representation, and if none, then to his estate.
7. Whenever the Employee's beneficiaries (other than his, his spouse's or
any beneficiary's estate) shall be entitled to receive any amount hereunder,
the amount shall be paid to such beneficiaries in monthly installments: (a)
over a period of ten (10) years, in the event that no monthly installment
payments have theretofore commenced to the Employee, or (b) for the balance
of the ten (10) year period (commencing with the first such installment so
received by the Employee), on the same due dates, in the event payment of
monthly installments shall have theretofore commenced to the Employee.
8. Notwithstanding any other provision of this Agreement to the contrary,
the Employee shall have the right, with the consent of the Bank, to elect
that payment of the amounts due hereunder be made (a) over a longer period
than one hundred and twenty (120) months or (b) as a life annuity (with or
without refund).
9. Notwithstanding any other provision of this Agreement to the contrary,
following his retirement, the Employee shall have the right, without the
consent of the Bank, to demand immediate distribution to him in cash or in
kind of an amount equal to the value of the Supplemental Executive
Retirement Account determined as of the date of such demand, following
completion after his retirement of any three (3) successive fiscal years of
the Bank in which the book value of the Bank shall have been successively
decreased or any one or more successive fiscal year(s) in which the book
value of the Bank shall have decreased by a total of more than 33 1/3%.
10. As used herein the term "Value of the Account" shall mean an amount
equal to the sum of the monthly remaining payments for the remaining period
of payment discounted at the prime lending rate as published in the Wall
Street Journal on the first Monday after the event triggering the valuation.
11. Except as otherwise expressly provided in this Agreement, Employee
agrees on behalf of himself and of his executors and administrators, heirs,
legatees, distributees, and any other person or persons claiming any
benefits under him under this Agreement that this Agreement and its rights,
interests, and benefits shall not be assigned, transferred, pledged, or
hypothecated in any way by Employee or any executor, administrators, heir,
legatee, distributee, or other person claiming under Employee by virtue of
this Agreement, and shall not be subject to execution, attachment, or
similar process. Any attempted assignment, transfer, pledge or
hypothecation, or other disposition of this Agreement or of such rights,
interests, and benefits contrary to the above provisions, or the levy of any
attachment or similar process thereupon, shall be null and void and without
effect.
12. This agreement does not constitute an employment agreement. Nothing
contained in this agreement shall be construed to be a contract of
employment for any term of years, nor as conferring upon the Employee the
right to continue to be employed by the Bank in his present capacity, or in
any other capacity. It is expressly understood by the parties hereto that
this Agreement relates exclusively to additional compensation for the
Employee's services, which compensation is payable after his retirement from
full-time service with the Bank or his death, and is not intended to be an
employment contract. The benefits payable under this agreement shall be
independent of, and in addition to, any benefits under any other employment
agreement that may exist from time to time between the parties hereto, or
any other compensation payable by the Bank to the Employee whether as salary
or otherwise. In the event that Employee's employment is terminated for any
reason other than his death or retirement under the provision of paragraphs
2 and 3 hereof, this Agreement shall automatically terminate and the Bank
shall have no further obligation hereunder.
13. The rights of the Employee under this agreement and of any beneficiary
of the Employee shall be solely those of an unsecured creditor of the Bank,
and neither the Employee nor any beneficiary of the Employee shall have or
acquire any interest, rights or claims to any property or assets of the Bank
by virtue of this agreement except as set forth in paragraph 16.B. The
Bank's obligation hereunder, except as set forth in paragraph 16.B., shall
be an unfunded and unsecured promise to pay money in the future.
14. Hereafter, either during his full-time employment or while he is
receiving any benefits under this Agreement, Employee agrees that he will
not enter into competition with the Bank, directly or indirectly, within the
Town of Somerset or a fifty (50) mile radius thereof, either as a director,
officer, employee, agent, consultant, partner or any other capacity with any
business which is in substantial competition with the Bank. The reasonable
judgment of a majority of the Board of Directors that such competition
exists shall be conclusive for the purposes of this Agreement. This
provision shall not be construed to prevent the Employee from owning shares
in any publicly traded corporation for investment purposes.
15. In the event that Employee should violate the provisions of Article 14
hereof, and should he continue to do so without adequate cause for a period
of thirty days after the Bank shall have requested him in writing to refrain
from an action prohibited by said Article 14, Employee agrees that no
further payments shall be due him, his spouse, or any other designated
beneficiary under this Agreement and that the Bank shall have no further
obligation whatsoever hereunder. Any disputes hereunder shall be referred
to arbitration pursuant to Article 17 hereof.
16.A. The Bank agrees that it will not merge or consolidate with any other
Bank or organization, or permit its business to be taken over by any other
organization, unless and until the succeeding or continuing corporation or
other organization shall expressly assume the rights and obligations of the
Bank herein set forth. The Bank further agrees that it will not cease its
business activities or terminate its existence, other than as heretofore set
forth in this Article, without having made adequate provision for the
fulfilling of its obligations hereunder.
16.B. In the event of a change of control (as defined below) of the Bank,
Employee shall have the right (exercisable within 90 days of the change of
control) to require the Bank to immediately fund the unpaid portion of
Employee's compensation hereunder by establishing an irrevocable trust
account with an independent corporate Trustee which is a national or state
charted bank with Trustee powers located in Massachusetts or Rhode Island,
funded with an amount which will be sufficient to meet all of Employer's
obligations hereunder. The terms of the Trust shall meet the requirements
of the Internal Revenue Service for "rabbi trusts" and shall generally
provide as set forth herein modified or expanded as necessary to meet said
IRS requirements. The Trust fund shall be held and managed by the Trustee
for the exclusive purpose of providing the compensation hereunder to
Employee hereunder and the Trustee shall act as agent of the Bank by making
payments of benefits to the Employee in accordance with the terms hereof.
Any and all expenses and taxes incurred by reason of the Trust and its
income shall be paid by the Bank. After all benefits payable hereunder have
been paid to the Employee or his beneficiaries or after this agreement has
otherwise properly terminated under its terms, any amounts remaining in the
Trust account shall revert to Bank. Except for the rights of creditors in
the event of Bank's bankruptcy or receivership, Bank shall have no right to
reclaim amounts contributed to the Trust hereunder until all benefits have
been paid or this agreement has properly terminated under its terms. In the
event of Bank's bankruptcy or receivership, the Trustee shall, upon proper
notice, deliver all assets held hereunder to the Trustee in bankruptcy or
the duly court appointed receiver for the benefit of the general creditors
(including Employee) of Bank.
"Change of Control" as used herein means any merger or consolidation with or
acquisition by any other organization, the sale of substantially all the
assets of the Bank to another person or organization, or the acquisition
directly or indirectly of 20% or more of the common stock of the Bank by one
or more persons or organizations acting in concert.
17. Unless otherwise provided in this agreement, any controversy or claim
arising out of or relating to this contract, or the breach thereof, shall be
settled by arbitration in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof. The
Bank agrees that it will pay Employee's costs including reasonable
attorneys' fees in connection with any controversy or claim hereunder in
which Employee prevails or in which the Arbitrator(s) or court determine
that the Bank should pay such costs.
18. This agreement shall be binding upon and inure to the benefit of the
parties, the Bank's successors and assigns, and the Employee's heirs,
beneficiaries, executors and administrators.
IN WITNESS WHEREOF the parties have executed this agreement the day and year
first written above.
Slade's Ferry Trust Company
Attest: /s/ Isola Anctil By: /s/ James D. Carey
--------------------------- --------------------------------
Assistant Secretary (Title: President, CEO)
/s/ Manuel J. Tavares
--------------------------------
Manuel J. Tavares
SUBSIDIARIES OF SLADE'S FERRY BANCORP
As of December 31, 1996, the Company had the following subsidiaries:
<TABLE>
<CAPTION>
Name State of Incorporation
- ---- ----------------------
<S> <C>
Slade's Ferry Trust Company Massachusetts
Slade's Ferry Realty Trust* Massachusetts
Slade's Ferry Securities Corporation Massachusetts
- --------------------
<F*> Subsidiary of Slade's Ferry Trust Company
</TABLE>
SHATSWELL, MacLEOD & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
83 PINE STREET
WEST PEABODY, MASSACHUSETTS 01960-3635
(508) 535-0206
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Annual Report on
Form 10-KSB of Slade's Ferry Bancorp (formerly known as Weetamoe Bancorp) of
our report dated January 14, 1997.
/s/ Shatswell, MacLeod & Company LLP
Shatswell, MacLeod & Company LLP
West Peabody, Massachusetts
March 31, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,979,126
<INT-BEARING-DEPOSITS> 149,598
<FED-FUNDS-SOLD> 13,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,255,163
<INVESTMENTS-CARRYING> 19,586,678
<INVESTMENTS-MARKET> 19,544,811
<LOANS> 198,986,212
<ALLOWANCE> 3,354,311
<TOTAL-ASSETS> 291,342,475
<DEPOSITS> 267,791,009
<SHORT-TERM> 1,200,000
<LIABILITIES-OTHER> 1,461,515
<LONG-TERM> 1,042,626
0
0
<COMMON> 27,891
<OTHER-SE> 19,819,434
<TOTAL-LIABILITIES-AND-EQUITY> 291,342,475
<INTEREST-LOAN> 15,626,903
<INTEREST-INVEST> 3,077,522
<INTEREST-OTHER> 790,506
<INTEREST-TOTAL> 19,494,931
<INTEREST-DEPOSIT> 8,992,244
<INTEREST-EXPENSE> 9,078,071
<INTEREST-INCOME-NET> 10,416,860
<LOAN-LOSSES> 400,000
<SECURITIES-GAINS> 112,631
<EXPENSE-OTHER> 7,380,161
<INCOME-PRETAX> 3,942,196
<INCOME-PRE-EXTRAORDINARY> 3,942,196
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,378,195
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.86
<YIELD-ACTUAL> 4.44
<LOANS-NON> 4,352,147
<LOANS-PAST> 110,672
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 500,000
<ALLOWANCE-OPEN> 2,497,774
<CHARGE-OFFS> 439,229
<RECOVERIES> 439,788
<ALLOWANCE-CLOSE> 3,354,311
<ALLOWANCE-DOMESTIC> 3,354,311
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
