SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO QUARTERLY REPORT ON FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 1996
For the quarterly period ended June 30, 1996
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Commission file number 34-0-25158
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BANCORP CONNECTICUT, INC.
---------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 061394443
- -----------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
121 Main Street, Southington, CT 06489
---------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 860-628-0351
------------
Indicate by a check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes (check mark) No
------------ ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date. The number of shares of common
stock, par value $1.00 per share, outstanding on July 19, 1996 was 2,662,881.
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the quarterly
period ended June 30, 1996 is being filed to revise the accounting treatment of
a 20% stock distribution from a stock dividend to a 6-for-5 stock split effected
in the form of a stock dividend.
<PAGE>
BANCORP CONNECTICUT, INC.
INDEX TO FORM 10-Q
------------------
PART I. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
Item 1. Financial Statements (unaudited)
(a) Consolidated Condensed Balance Sheets -
June 30, 1996 and December 31, 1995 1
(b) Consolidated Condensed Statements of
Income - Three months and six months
ended June 30, 1996 and 1995 2
(c) Consolidated Condensed Statements of
Changes in Capital Accounts - Six
months ended June 30, 1996 and 1995 4
(d) Consolidated Condensed Statements of
Cash Flows - Six months ended June 30,
1996 and 1995 5
(e) Notes to the Consolidated Condensed
Financial Statements - June 30, 1996 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security
Holders 16
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BANCORP CONNECTICUT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
(dollars in thousands)
June 30, December 31,
1996 1995
----------- -----------
(unaudited)
Assets:
Cash and due from banks $ 7,795 $ 6,572
Federal funds sold 0 4,100
-------- --------
Cash and cash equivalents 7,795 10,672
-------- --------
Trading account securities 456 391
Investment securities:
Available-for-sale (at market value) 107,886 106,889
Held-to-maturity 36,664 23,661
-------- --------
144,550 130,550
Loans 244,448 237,154
Less: Allowance for loan losses (4,903) (5,488)
Deferred loan fees (950) (960)
-------- --------
238,595 230,706
Federal Home Loan Bank stock 2,040 1,978
Bank premises and equipment 3,419 3,388
Other real estate owned 2,582 872
Accrued income receivable 2,693 2,520
Deferred taxes 2,478 2,425
Other assets 1,153 476
-------- --------
Total assets $405,761 $383,978
======== ========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand and Now $ 35,448 $ 33,924
Savings 98,496 99,967
Time 167,878 160,944
-------- --------
301,822 294,835
Mortgagors' escrow accounts 1,708 1,653
Advances from Federal Home Loan Bank 18,000 19,990
Federal funds purchased 1,000 675
Securities sold under agreements to repurchase 38,536 21,553
Accrued taxes, expenses and other liabilities 1,859 2,062
-------- --------
Total liabilities 362,925 340,768
-------- --------
Shareholders' Equity:
Common stock 2,730 2,263
Additional paid-in capital 18,700 18,862
Retained earnings 23,093 21,576
Unrealized gain (loss) on investment
securities, net (96) 509
Treasury stock, at cost (1,591) -
-------- --------
42,836 43,210
-------- --------
Total liabilities and shareholders' equity $405,761 $383,978
======== ========
See notes to unaudited consolidated condensed financial statements.
-1-
<PAGE>
BANCORP CONNECTICUT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $5,180 $4,709 $10,303 $ 9,271
Interest and dividends on securities:
U.S. Government and agency securities 1,336 1,357 2,683 2,579
Other bonds and notes 38 36 75 69
Marketable equity securities 691 598 1,325 1,191
------ ------ ------- -------
2,065 1,991 4,083 3,839
Interest on trading account 16 0 20 4
Interest on Federal funds sold 64 40 170 70
Other interest and dividend income 33 35 64 71
------ ------ ------- -------
Total interest income 7,358 6,775 14,640 13,255
------ ------ ------- -------
Interest Expense:
Interest on NOW deposits 63 61 127 119
Interest on savings deposits 669 595 1,330 1,206
Interest on time deposits 2,296 2,117 4,585 3,906
------ ------ ------- -------
3,028 2,773 6,042 5,231
Interest on borrowed funds 695 549 1,378 1,112
------ ------ ------- -------
Total interest expense 3,723 3,322 7,420 6,343
------ ------ ------- -------
Net interest income 3,635 3,453 7,220 6,912
Provision for loan losses 100 30 175 60
------ ------ ------- -------
Net interest income after
provision for loan losses 3,535 3,423 7,045 6,852
Other Income:
Net securities gains 41 30 242 66
Net trading account gains (losses) 50 (4) 64 2
Trust fees 111 84 223 167
Service charges on deposit accounts 136 125 270 254
Other 53 47 122 107
------ ------ ------- -------
391 282 921 596
------ ------ ------- -------
Other Expenses:
Salaries and employee benefits 1,125 1,047 2,220 2,050
Occupancy 128 122 278 246
Furniture and equipment expense 84 74 169 153
Data processing 155 144 311 284
FDIC assessments 0 158 1 316
Legal expense 84 46 159 109
OREO expense 5 (17) 87 43
Advertising expense 105 61 158 106
Other 485 419 906 828
------ ------ ------- -------
2,171 2,054 4,289 4,135
------ ------ ------- -------
Income before taxes 1,755 1,651 3,677 3,313
Provision for income taxes 565 525 1,203 1,071
------ ------ ------- -------
Net income $1,190 $1,126 $ 2,474 $ 2,242
====== ====== ======= =======
</TABLE>
-2-
<PAGE>
BANCORP CONNECTICUT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - CONTINUED
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average shares & common stock equivalents 2,864,839 2,793,724 2,865,245 2,785,270
Net income per share $0.42 $0.40 $0.86 $0.81
Cash dividend per share $0.179 $0.146 $0.350 $0.279
</TABLE>
Average shares outstanding and per share data have been restated for all
periods presented to reflect a 6-for-5 stock split effected in the form of a
stock dividend on June 19, 1996.
See notes to unaudited consolidated condensed financial statements.
-3-
<PAGE>
BANCORP CONNECTICUT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN CAPITAL ACCOUNTS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS) ON
COMMON PAID-IN RETAINED INVESTMENT TREASURY
STOCK CAPITAL EARNINGS SECURITIES STOCK
------ -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $2,248 $18,704 $18,870 ($2,465) $ 0
Net income 2,242
Stock options exercised 6 34
Cash dividends declared
($.279 per share) (754)
Decrease in net unrealized loss
on investment securities 2,296
------ ------- ------- ------- -------
Balance at June 30, 1995 $2,254 $18,738 $20,358 ($169) $ 0
====== ======= ======= ======= =======
Balance at December 31, 1995 $2,263 $18,862 $21,575 $ 509 $ 0
Net income 2,474
Stock options exercised 23 171
Cash dividends declared
($.35 per share) (956)
6-for-5 stock split
effected in the form of
a stock dividend 444 (444)
Treasury stock purchased (1,591)
Decrease in net unrealized gain
on investment securities (605)
Tax benefits related to common
stock option exercises and
restricted stock 111
------ ------- ------- ------- -------
Balance at June 30, 1996 $2,730 $18,700 $23,093 ($96) ($1,591)
====== ======= ======= ======= =======
</TABLE>
See notes to unaudited consolidated condensed financial statements.
-4-
<PAGE>
BANCORP CONNECTICUT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $2,474 $2,242
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation/amortization expense 226 207
Deferred income tax provision 369 1
Gain on sale of OREO (29) (44)
Net accretion and amortization of bond
premium and discount 57 (270)
Provision for loan losses 175 60
Provision for foreclosed real estate losses 51 9
Amortization of deferred loan points (89) (56)
Realized gains on held-for-sale securities (242) (66)
Net trading account gains (64) (2)
Increase in trading account 0 (243)
Increase in accrued income receivable (173) (185)
Increase (decrease) in accrued expenses payable
and other liabilities (203) 223
Increase in other assets (678) (214)
------- ------
Total adjustments (600) (580)
------- ------
Net cash provided by operating activities 1,874 1,662
------- ------
Cash flows from investing activities:
Purchases of securities held-to-maturity (18,616) (7,514)
Purchases of securities available-for-sale (24,016) (20,369)
Proceeds from sales of securities available-for-sale 5,794 10,625
Proceeds from maturities of securities 16,000 16,000
Paydowns on mortgage-backed securities 5,996 1,784
Purchases of Federal Home Loan Bank stock (61) 0
Net increase in loans (10,895) (7,717)
Purchases of premises and equipment, net (238) (124)
Proceeds from sale of foreclosed real estate, net 1,269 461
------- ------
Net cash used in investing activities (24,767) (6,854)
------- ------
Cash flows from financing activities:
Net increase in time deposits 7,178 16,333
Net decrease in other deposits (190) (10,936)
Net increase in mortgagors' escrow 55 116
Proceeds from borrowings 14,703 3,098
Repayment of borrowings (16,693) (11,397)
Net increase in Federal funds purchased 325 0
Net increase in repurchase agreements 16,983 7,801
Repurchase of common stock (1,591) 0
Proceeds from exercise of stock options 194 40
Cash dividends paid (948) (754)
------- ------
Net cash provided by financing activities 20,016 4,301
------- ------
Net decrease in cash and cash equivalents (2,877) (891)
------- ------
Cash and cash equivalents at beginning of period 10,672 6,050
------- ------
Cash and cash equivalents at end of period $7,795 $5,159
======= ======
Schedule of noncash investing and financing activities:
Change in unrealized loss on investment securities ($605) $2,296
Transfer of loans to other real estate owned 2,719 464
Foreclosed real estate sales financed 316 154
Transfer of In-substance foreclosures to loans 3,292
See notes to unaudited consolidated condensed financial statements.
</TABLE>
-5-
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
In the opinion of Bancorp Connecticut, Inc. (the "Corporation"), the
accompanying unaudited consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly its financial position as of June 30, 1996 and the results of
operations and cash flows for the three and six month periods ended June 30,
1996 and 1995. The results of its operations for the periods shown are not
necessarily indicative of the results to be expected for the full year.
Certain 1995 amounts have been reclassified to conform with the 1996
presentation. These reclassifications had no impact on net income.
NOTE 2. Investment Securities
The amortized cost, gross unrealized gains and losses and estimated market
values of investment securities as of June 30, 1996 and December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Held-to-Maturity
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
(000's), June 30, 1996 Cost Gains Losses Value
- ---------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
United States Government
agency obligations $ 22,788 $ 92 $ (280) $ 22,600
Municipal bonds 3,131 64 (19) 3,176
Mortgage-backed securities 10,745 0 (361) 10,384
-------- ------- -------- --------
$ 36,664 $ 156 $ (660) $ 36,160
======== ======= ======== ========
Available-for-Sale
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- ----------
United States Government
obligations $ 16,698 $ 72 $ (16) $ 17,024
Mortgage-backed securities 35,384 240 (341) 35,283
Marketable equity securities 47,851 444 (363) 47,932
Mutual funds 7,846 0 (199) 7,647
-------- ------- -------- --------
$108,049 $ 756 $ (919) $107,886
======== ======= ======== ========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Held-to-Maturity
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
(000's), December 31, 1995 Cost Gains Losses Value
- -------------------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
United States Government
agency obligations $ 17,947 $ 251 $ (24) $ 18,174
Municipal bonds 3,022 112 (5) 3,129
Mortgage-backed securities 2,692 27 0 2,719
-------- ------- -------- --------
$ 23,661 $ 390 $ (29) $ 24,022
======== ======= ======== ========
Available-for-Sale
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- ----------
United States Government
obligations $ 22,917 $ 205 $ (12) $ 23,110
Mortgage-backed securities 38,888 497 (120) 39,265
Marketable equity securities 36,375 665 (201) 36,839
Mutual funds 7,846 0 (171) 7,675
-------- ------- -------- --------
$106,026 $ 1,367 $ (504) $106,889
======== ======= ======== ========
</TABLE>
NOTE 3. Activity in the Allowance for Loan Losses
(dollars in thousands) 1996 1995
----- ------
Balance at beginning of year $5,488 $6,136
Provision for loan losses 175 60
Charge-offs (834) (569)
Recoveries 74 136
------ ------
Balance at June 30, $4,903 $5,763
====== ======
7
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. Nonperforming Assets
June 30, December 31,
(dollars in thousands) 1996 1995
-------- ------------
Nonaccrual loans
Residential real estate $ 2,578 $ 3,650
Commercial real estate 570 1,134
Commercial 346 1,062
Consumer 356 410
------- -------
Total nonaccrual loans 3,850 6,256
Accruing loans past due 90 days or more - -
Total nonperforming loans 3,850 6,256
Other real estate owned 2,582 872
------- -------
Total nonperforming assets $ 6,432 $ 7,128
======= =======
Nonperforming loans as percentage
of total loans 1.57% 2.64%
======= =======
Nonperforming assets as a percentage
of total assets 1.59% 1.86%
======= =======
FOR FURTHER INFORMATION AND FOR ASSISTANCE IN READING THIS REPORT, REFER TO THE
FINANCIAL STATEMENTS AND FOOTNOTES INCLUDED IN THE CORPORATION'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 AND TO THE MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION INCLUDED
IN THIS REPORT.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Second Quarter Ended June 30, 1996
Bancorp Connecticut, Inc. ("the Registrant") is the holding company of
Southington Savings Bank (the "Bank"). Since the Bank is the Registrant's sole
subsidiary, the Registrant's earnings and financial condition are predicated
almost entirely on the performance of the Bank.
Changes in Financial Condition
Investments
Total investments increased from $130,550,000 at December 31, 1995 to
$144,550,000 at June 30, 1996. The increase was primarily due to the purchase of
mortgage-backed securities in the held-to- maturity portfolio which was funded
by an increase in repurchase agreements.
Other Real estate owned
Other real estate owned increased by $1,710,000 from December 31, 1995 to June
30, 1996 primarily as a result of the settlement of a lawsuit during the first
quarter of 1996 which enabled the Bank to take possession of properties that
collateralized various loans which were involved in the litigation.
Other Assets
Other assets increased from $476,000 at December 31, 1995 to $1,153,000 at June
30, 1996 due primarily to an increase in the refund receivable for Federal and
State income taxes of $492,000 for the period.
Deposits
Total deposits increased $6,987,000 or 2.4% from December 31, 1995 to June 30,
1996 primarily as a result of CD promotions and a free checking account program
during the year which brought new money into the Bank.
9
<PAGE>
Shareholder's equity
On June 19, 1996, the Registrant issued a six-for-five stock split effected in
the form of a stock dividend. In connection with the split, common stock was
credited and additional paid in capital was charged for the aggregate par value
of the shares that were issued. In addition, the Registrant has repurchased
approximately 72,800 shares into treasury between December 31, 1995 and June 30,
1996 which is accounted for by the cost method.
Changes in Results of Operations
Earnings
Net income for the quarter ended June 30, 1996 was $1,190,000 as compared to
$1,126,000 for the second quarter of 1995, an increase of 5.7%. The increase was
primarily due to higher net interest income, and to a lesser extent, increases
in noninterest income and net securities gains. The annualized return on average
assets for the quarter ended June 30, 1996 was 1.20% as compared to 1.24% for
the quarter ended June 30, 1995.
Net income for the six months ended June 30, 1996 was $2,474,000 as compared to
$2,242,000 for the same period of 1995. The increase was primarily due to higher
net interest income, a higher level of net securities gains and increased
noninterest income as well as a substantial reduction in FDIC insurance premiums
which took effect during the latter part of 1995. The annualized return on
average assets for the six months ended June 30, 1996 was 1.26% as compared to
1.25% for six months ended June 30, 1995.
Net Interest Income
Net interest income increased $182,000 or 5.3% for the second quarter of 1996 as
compared to the same quarter of 1995. Interest income increased $583,000 or 8.6%
for the three month period ended June 30, 1996 as compared to the same period in
1995, primarily as a result of an increase in average interest earning assets of
$29,932,000 or 8.4% as compared to the prior year's quarter. The tax equivalent
yield on earning assets increased to 7.95% for the current quarter as compared
to 7.91% for the same quarter of 1995.
10
<PAGE>
Interest expense increased $401,000 or 12.1%, primarily from an increase in
average interest bearing liabilities of $27,937,000 or 9.1% as compared to the
prior year's quarter. The Bank's cost of funds increased to 4.45% for the
current quarter as compared to 4.34% for the same quarter of 1995.
Net interest income increased $308,000 or 4.5% for the six months ended June 30,
1996 as compared to the same period in 1995. Interest income increased
$1,385,000 or 10.4% as compared to the same six month period of 1995. The tax
equivalent yield on earning assets increased to 7.93% as compared to 7.81% for
the same six month period in 1995. In addition, average interest earning assets
rose 8.9% during the period. Interest expense increased $1,077,000 or 17.0% for
the first six months of 1996 as compared to the first six months of 1995. The
Bank's cost of funds increased to 4.48% for the first six months of 1996
compared to 4.17% for the same period of 1995. Average interest bearing
liabilities increased 9.1% as compared to the prior year's period.
Provision for Loan Losses
The provision for loan losses increased to $100,000 for the second quarter of
1996 as compared to $30,000 for the same quarter of 1995 in response to an
increase in commercial loans during 1996. As of June 30, 1996, nonperforming
loans totaled $3,850,000 or 1.57% of total loans as compared to $7,024,000 or
2.93% on June 30, 1995. This reduction is due to the settlement of foreclosure
actions during the first quarter of 1996 which resulted in the transfer of
approximately $3 million from non-performing loans to other real estate owned.
The allowance for loan losses as a percentage of nonperforming loans was 127.4%
as of June 30, 1996 as compared to 82.1% on June 30, 1995. Net loan charge-offs
for the second quarter of 1996 were $267,000 as compared to $326,000 for the
same quarter of 1995.
For the six months ended June 30, 1996, the provision for loan losses was
$175,000 as compared to $60,000 for the same period in 1995. Net charge-offs for
the first six months of 1996 totaled $760,000 as compared to $433,000 for the
same period in 1995 and include the nonrecoverable amount from the settlement of
the foreclosure actions mentioned previously.
11
<PAGE>
Nonperforming assets declined to $6,432,000 or 1.6% of total assets as of June
30, 1996 as compared to $7,583,000 or 2.1% as of June 30, 1995, a decline of
15.2%. (See note 4 to the unaudited consolidated financial statements.)
Management believes the allowance for loan losses is maintained at a level that
is adequate to absorb losses within the loan portfolio. (See notes 3 and 4 to
the unaudited consolidated financial statements.)
Other Income
Noninterest income was $391,000 for the second quarter of 1996 as compared to
$282,000 for the same quarter of 1995, an increase of 38.7%. The increase was
primarily due to net securities and trading account gains of $91,000 in the
current quarter as compared to $26,000 for the same quarter of 1995. In
addition, trust fees increased $27,000 or 32.1% for the second quarter of 1996
as compared to the same quarter of 1995 due primarily to an increase in assets
under management.
Noninterest income for the six months ended June 30, 1996 totaled $921,000 as
compared to $596,000 for the same period in 1995, an increase of 54.5%. The
primary reason for the increase was an increase in net securities and trading
account gains to $306,000 for the six month period ended June 30, 1996 from
$68,000 for the same period of 1995. In addition, trust fees increased $56,000
or 33.5% for the six month period ended June 30, 1996 as compared to the same
period of 1995 due to an increase in assets under management.
Other Expenses
Noninterest expenses increased $117,000 or 5.7% for the second quarter of 1996
as compared to the same quarter of 1995. Salaries and benefits increased $78,000
or 7.4% during the second quarter of 1996 in comparison to the same quarter of
1995 as a result of normal compensation adjustments and additional staffing.
Also, advertising expense increased $44,000 or 72.1% for the quarter ended June
30, 1996 as compared to the same quarter in 1995 due to an extended checking
account campaign, the introduction of 24 hour
12
<PAGE>
telephone banking and additional advertising for loan products during the
quarter. These increases were partially offset by a reduction in FDIC insurance
premiums from 0.23% of deposits to the minimum of $1,000 semiannually which
resulted in a decrease in premiums of $158,000 during the second quarter of 1996
as compared to the same quarter in 1995.
Noninterest expenses increased $154,000 or 3.7% for the six months ended June
30, 1996 as compared to the same period in 1995. Salaries and benefits increased
$170,000 or 8.3% for the six months ended June 30, 1996 as compared to the same
period in 1995 due to normal compensation adjustments and additional staffing.
In addition, legal expense increased $50,000 or 45.9% for the six month period
ended June 30, 1996 as compared to the same period in 1995 due primarily to
additional costs resulting from the settlement of a lawsuit during the period.
Income Taxes
Estimated income taxes for the second quarter of 1996 were $565,000 as compared
to $525,000 for the same quarter of 1995. The increase was primarily due to the
generation of income before taxes of $1,755,000 for the quarter ended June 30,
1996 as compared to $1,651,000 for the same quarter of 1995. The effective tax
rate for the second quarter of 1996 was 32.2% as compared to 31.8% for the same
quarter of 1995, and is lower than the expected statutory rate due to the
Federal and State dividends received deduction.
Estimated income taxes for the six months ended June 30, 1996 were $1,203,000 as
compared to $1,071,000 for the same period in 1995. The increase was primarily
due to the generation of income before taxes of $3,677,000 for the six months
ended June 30, 1996 as compared to $3,313,000 for the same period in 1995. The
effective rate for the first six months of 1996 was 32.7% as compared to 32.3%
for the same period of 1995.
13
<PAGE>
Average Balances, Interest, Yields and Rates (Fully Taxable Equivalent Basis)
- -----------------------------------------------------------------------------
(2)
- ---
The following table presents daily average statements of condition, which
include nonaccrual loans, the components of net interest income and selected
statistical data on a fully taxable equivalent basis.
<TABLE>
<CAPTION>
Three months ended Three months ended 1996 Compared to 1995
June 30, 1996 June 30, 1995 Increase (Decrease) Due to
-------------------------- ------------------------- --------------------------
(dollars in thousands) Average Yield/ Average Yield/
- ---------------------- Balance Interest Rate Balance Interest Rate Volume Rate Net(1)
------- -------- ------ -------- ------- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans $239,791 $5,180 8.64% $222,811 $4,709 8.45% $365 $106 $471
Taxable investment securities
(at cost) 135,340 $2,338 6.91% 125,514 2,205 7.03% 170 (37) 133
Municipal bonds 3,132 $56 7.15% 2,925 53 7.25% 4 (1) 3
Federal funds sold 4,171 $65 6.23% 2,639 40 6.06% 24 1 25
Other interest-earning assets 3,405 $33 3.88% 2,018 35 6.94% 18 (20) (2)
---------------- --------------- --------------------
Total interest-earning assets 385,839 7,672 7.95% 355,907 7,042 7.91% 581 49 630
---------------- --------------- --------------------
Noninterest-earning assets:
Cash and due from banks 4,994 4,209
Premises and equipment, net 3,450 3,631
Other assets 7,617 4,265
Less loan loss allowance (5,023) (6,050)
-------- --------
TOTAL ASSETS $396,877 $361,962
======== ========
LIABILITIES AND EQUITY
Interest-bearing liabilities:
NOW and savings deposits $113,962 $722 2.53% $111,836 $647 2.31% $ 12 $ 63 $ 75
Time deposits 166,786 2,296 5.51% 154,979 2,117 5.46% 162 17 179
Mortgagors' escrow deposits 1,318 10 3.03% 1,183 9 3.04% 1 0 1
FHLB of Boston advances
and other borrowings 20,044 275 5.49% 13,441 177 5.27% 90 8 98
Securities sold under agreements
to repurchase 32,229 420 5.21% 24,963 372 5.96% 99 (51) 48
---------------- ---------------- ---------------------
Total interest-bearing
liabilities 334,339 3,723 4.45% 306,402 3,322 4.34% 364 37 401
---------------- ---------------- ---------------------
Noninterest-bearing liabilities:
Demand deposits 18,660 14,964
Other 1,112 911
Stockholders' equity 42,766 39,685
-------- --------
TOTAL LIABILITIES AND EQUITY $396,877 $361,962
======== ========
Net interest income before Federal
tax equivalent adjustment 3,949 3,720 $217 $ 12 $229
Federal tax equivalent adjustment (314) (267) ====================
------ ------
Net interest income $3,635 $3,453
====== ======
Net interest spread (tax equivalent basis) 3.50% 3.57%
==== =====
Net interest margin (tax equivalent basis) 4.09% 4.18%
==== =====
</TABLE>
(1) The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(2) Fully taxable equivalent income was calculated based on statutory federal
and state tax rates
-14-
<PAGE>
Average Balances, Interest, Yields and Rates (Fully Taxable Equivalent Basis)
- -----------------------------------------------------------------------------
(2)
- ---
The following table presents daily average statements of condition, which
include nonaccrual loans, the components of net interest income and selected
statistical data on a fully taxable equivalent basis.
<TABLE>
<CAPTION>
Six months ended Six months ended 1996 Compared to 1995
June 30, 1996 June 30, 1995 Increase (Decrease) Due to
----------------------------- ------------------------- --------------------------
(dollars in thousands) Average Yield/ Average Yield/
- ---------------------- Balance Interest Rate Balance Interest Rate Volume Rate Net (1)
-------- -------- ----- -------- ------- ------ ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans $238,628 $10,303 8.64% $221,087 $9,271 8.39% $751 $281 $1,032
Taxable investment securities 133,297 4,589 6.89% 124,473 4,274 6.87% 304 11 315
Municipal bonds 3,097 111 7.17% 2,816 101 7.17% 10 0 10
Federal funds sold 6,559 170 5.18% 2,368 70 5.91% 110 (10) 100
Other interest-earning assets 2,859 64 4.48% 2,116 71 6.71% 21 (28) (7)
------------------ ----------------- ---------------------
Total interest-earning assets 384,440 15,237 7.93% 352,860 13,787 7.81% 1,196 254 1,450
------------------ ----------------- ---------------------
Noninterest-earning assets:
Cash and due from banks 4,375 4,359
Premises and equipment, net 3,467 3,657
Other assets 6,764 3,499
Less loan loss allowance (5,233) (5,916)
-------- --------
TOTAL ASSETS $393,813 $358,459
======== ========
LIABILITIES AND EQUITY
Interest-bearing liabilities:
NOW and savings deposits $113,561 $1,441 2.54% $114,065 $1,312 2.30% ($6) 135 $129
Time deposits 165,082 4,585 5.55% 149,421 3,906 5.23% 425 254 679
Mortgagors' escrow deposits 1,058 16 3.02% 1,032 13 2.52% 0 3 3
FHLB of Boston advances
and other borrowings 19,438 530 5.45% 13,443 354 5.27% 163 13 176
Securities sold under agreements
to repurchase 32,472 848 5.22% 26,058 758 5.82% 173 (83) 90
------------------ ----------------- -------------------
Total interest-bearing
liabilities 331,611 7,420 4.48% 304,019 6,343 4.17% 755 322 1,077
------------------ ---------------- -------------------
Noninterest-bearing liabilities:
Demand deposits 18,200 14,791
Other 1,044 851
Stockholders' equity 42,958 38,798
-------- --------
TOTAL LIABILITIES AND EQUITY $393,813 $358,459
======== ========
Net interest income before Federal
tax equivalent adjustment $7,817 $7,444 $441 ($68) $373
Federal tax equivalent adjustment (597) (532) ====================
------ ------
Net interest income 7,220 6,912
====== ======
Net interest spread (tax equivalent basis) 3.45% 3.64%
==== =====
Net interest margin (tax equivalent basis) 4.07% 4.22%
===== =====
</TABLE>
(1) The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(2) Fully taxable equivalent income was calculated based on statutory federal
and state tax rates
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
a. Wednesday, May 15, 1996 - Annual Meeting
b. Directors elected at this meeting:
Michael J. Karabin
David P. Kelley
Ralph G. Mann
Anthony S. Pizzitola
Directors whose term of office as director continued after
this meeting:
Norbert H. Beauchemin
Walter J. Hushak
Frederick E. Kuhr
Joseph J. LaPorte
Andrew J. Meade
Robert D. Morton
Frank R. Miller
Dennis J. Stanek
c.1 The election of four directors for a three year term who,
with the eight directors whose term of office do not expire
at this meeting, will constitute the full Board of Directors.
16
<PAGE>
For Withheld
--- --------
Michael J. Karabin 1,590,888 24,392
David P. Kelley 1,587,125 28,155
Ralph G. Mann 1,590,888 24,392
Anthony S. Pizzitola 1,590,888 24,392
2. The amendment of the Registrant's Certificate of
Incorporation to reduce the number of shares of the
Company's Common Stock from 12,000,000 shares to
7,000,000 shares
For Against Abstain
--- ------- -------
Total Votes 1,572,060 13,878 29,342
3. The ratification of the appointment of Coopers & Lybrand
L.L.P. as the Registrant's independent accountants for the
fiscal year ending December 31, 1996
For Against Abstain
--- ------- -------
Total Votes 1,576,022 4,484 34,774
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits Required by Item 601 of Regulation S-K.
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation of Registrant
(Incorporated by reference to Exhibit 3.1
to the Registrant's Registration Statement
on Form S-4 (Registration No. 33-77696)
(the "Registration Statement")).
3.2 Bylaws of Registrant (Incorporated by
reference to Exhibit 3.2 to the
Registration Statement).
3.3 Certificate of Amendment of Certificate of
Incorporation dated May 20, 1996.
17
<PAGE>
4 Instruments defining the rights of
security holders (Included in Exhibits 3.1
and 3.2).
10.1 Employment Agreement dated as of
January 1, 1994, by and between the
Bank and Robert D. Morton
(Incorporated by reference to
Exhibit 10.1 to the Registration
Statement).
10.2 Southington Savings Bank 1986 Stock Option
Plan (Incorporated by reference to Exhibit
10.2 to the Registration Statement).
10.3 Southington Savings Bank 1993 Stock Option
Plan (Incorporated by reference to Exhibit
10.3 to the Registration Statement).
10.4 Pension Plan of Southington Savings Bank,
as amended (Incorporated by reference to
Exhibit 10.4 to the Registration
Statement).
11.1 Statement re computation of per share
earnings.
27 Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant filed a report on Form 8-K during the second quarter of 1996 to
report 1) that the stockholders of the Registrant approved an amendment to the
Registrant's Certificate of Incorporation to reduce the number of authorized
shares from 12,000,000 shares to 7,000,000 shares; and 2) the Registrant
announced that its board of directors had authorized a stock dividend of twenty
percent on all issued and outstanding shares of the Registrant's Common Stock.
The record date for the stock dividend was June 5, 1996 and the date of
distribution was June 19, 1996. The date of the report was May 15, 1996.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANCORP CONNECTICUT, INC.
-----------------------------
(Registrant)
Date: November 8, 1996 By: /s/ Robert D. Morton
---------------- --------------------
Robert D. Morton
Its President and Cheif Executive
Officer (A duly authorized officer)
Date: November 8, 1996 By: /s/ Anthony Priore, Jr.
---------------- -----------------------
Anthony Priore, Jr.
Its Treasurer and Secretary
(Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of
Registrant (Incorporated by reference
to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-4
(Registration No. 33-77696) (the
"Registration Statement")).
3.2 Bylaws of Registrant (Incorporated by
reference to Exhibit 3.2 to the
Registration Statement).
3.3 Certificate of Amendment of Certificate of
Incorporation dated May 20, 1996.
4 Instruments defining the rights of
security holders (Included in Exhibits
3.1 and 3.2).
10.1 Employment Agreement dated as of January 1,
1994, by and between the Bank and Robert D.
Morton (Incorporated by reference to Exhibit
10.1 to the Registration Statement).
10.2 Southington Savings Bank 1986 Stock Option
Plan (Incorporated by reference to Exhibit
10.2 to the Registration Statement).
10.3 Southington Savings Bank 1993 Stock Option
Plan (Incorporated by reference to Exhibit
10.3 to the Registration Statement).
10.4 Pension Plan of Southington Savings Bank, as
amended (Incorporated by reference to
Exhibit 10.4 to the Registration Statement).
11.1 Statement re computation of
per share earnings
27 Financial Data Schedule
<PAGE>
Exhibit 3.3: Certificate of Amendment of Certificate of Incorporation
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * *
Bancorp Connecticut, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company").
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors-of the Company,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Company, declaring said amendment to be
advisable and directing that the amendment be considered at the next annual
meeting of the stockholders. The resolution setting forth the proposed amendment
is as follows:
RESOLVED: That the first paragraph of Article Fourth of the Company's
Certificate of Incorporation be amended and restated to read in
its entirety: "The total authorized captial stock of the
Corporation consists of 8 million shares, consisting of 7 million
shares of Common Stock, par value $1.00 per share, and 1 million
shares of Preferred stock, without par value."
SECOND: That thereafter, pursuant to the resolutions of the Company's Board
of Directors, the annual meeting of the stockholders of the Company was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statue were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Bancorp Connecticut, Inc. has caused this
certificate to be signed by Anthony Priore, Jr., this 20th day of May, 1996.
BANCORP CONNECTICUT, INC.
By: /s/ Anthony Priore, Jr.
------------------------------
Anthony Priore, Jr.
Its Secretary and Treasurer
<PAGE>
Exhibit 11.1: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Quarter ended Six months ended
(dollar amounts in thousands except June 30, June 30,
per share) -------------- ----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income - primary and fully diluted $1,190 $1,126 $2,474 $2,242
- -------------------------------------- ====== ====== ====== ======
Weighted Average Common Stock
and Common Equivalent Stock
Weighted average common stock outstanding 2,684 2,702 2,700 2,700
Assumed conversion (as of the beginning of
each period or upon issuance during a
period) of stock options outstanding at
the end of each period 181 91 165 85
Weighted average common stock outstanding -
primary 2,865 2,794 2,865 2,785
====== ===== ===== =====
Weighted average common stock outstanding 2,684 2,702 2,700 2,700
Assumed conversion (as of the beginning of
each period or upon issuance during a
period) of stock options outstanding at
the end of each period 214 112 186 92
Weighted average common stock outstanding -
fully diluted 2,898 2,814 2,886 2,792
====== ====== ====== ======
Earnings per Weighted Average Common Share $0.443 $0.417 $0.916 $0.830
------ ------ ------ ------
Earnings per Common and Common Equivalent Share
Primary $0.415 $0.403 $0.864 $0.805
------ ------ ------ ------
Fully Diluted $0.411 $0.400 $0.857 $0.803
------ ------- ------ ------
</TABLE>
Average shares outstanding and per share data have been restated for all periods
presented to reflect a 6-for-5 stock split effected in the form of a stock
dividend on June 19, 1996.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,795
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 456
<INVESTMENTS-HELD-FOR-SALE> 107,886
<INVESTMENTS-CARRYING> 36,664
<INVESTMENTS-MARKET> 36,160
<LOANS> 244,448
<ALLOWANCE> (4,903)
<TOTAL-ASSETS> 405,761
<DEPOSITS> 301,822
<SHORT-TERM> 42,776
<LIABILITIES-OTHER> 3,567
<LONG-TERM> 14,760
0
0
<COMMON> 2,730
<OTHER-SE> 40,106
<TOTAL-LIABILITIES-AND-EQUITY> 405,761
<INTEREST-LOAN> 10,303
<INTEREST-INVEST> 4,083
<INTEREST-OTHER> 254
<INTEREST-TOTAL> 14,640
<INTEREST-DEPOSIT> 6,042
<INTEREST-EXPENSE> 7,420
<INTEREST-INCOME-NET> 7,220
<LOAN-LOSSES> 175
<SECURITIES-GAINS> 242
<EXPENSE-OTHER> 4,289
<INCOME-PRETAX> 3,677
<INCOME-PRE-EXTRAORDINARY> 3,677
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,474
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.86
<YIELD-ACTUAL> 7.62
<LOANS-NON> 3,850
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 11,909
<ALLOWANCE-OPEN> 5,488
<CHARGE-OFFS> 834
<RECOVERIES> 74
<ALLOWANCE-CLOSE> 4,903
<ALLOWANCE-DOMESTIC> 3,104
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,799
</TABLE>
