SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission File Number 34-0-25158
BANCORP CONNECTICUT, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 06-1394443
- ---------------------------------- ------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
121 MAIN STREET, SOUTHINGTON, CONNECTICUT 06489
- ----------------------------------------- -------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (860) 628-0351
-------------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
COMMON STOCK, $1.00 PAR VALUE - 5,212,918 SHARES AS OF MAY 8, 2000
- --------------------------------------------------------------------------------
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<PAGE>
BANCORP CONNECTICUT, INC.
FORM 10-Q
INDEX
PART I.
Page
Item 1. Financial Statements
Consolidated Condensed Statements of Condition as of
March 31, 2000 (unaudited) and December 31, 1999......... 3
Consolidated Condensed Statements of Income for the
Three Months Ended March 31, 2000 and 1999 (unaudited)... 4
Consolidated Condensed Statements of Changes in Shareholders'
Equity for the Three Months Ended
March 31, 2000 and 1999 (unaudited)...................... 5
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (unaudited)... 6
Notes to Consolidated Condensed Financial
Statements (unaudited)................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 21
PART II.
Item 1. Legal Proceedings........................................... 22
Item 2. Changes in Securities and Use of Proceeds................... 22
Item 3. Defaults Upon Senior Securities............................. 22
Item 4. Submission of Matters to a Vote of Security Holders......... 22
Item 5. Other Information........................................... 22
Item 6. Exhibits and Reports on Form 8-K............................ 22
Signatures............................................................... 24
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<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
BANCORP CONNECTICUT, INC.
March 31, December 31,
(dollars in thousands, except per share data) 2000 1999
- --------------------------------------------------------------------------------
(unaudited) (Note 1)
Assets
Cash and due from banks $ 10,694 $ 13,548
Interest bearing deposits with banks 6 346
Federal funds sold 1,200 6,725
------------ ------------
Cash and cash equivalents 11,900 20,619
------------ ------------
Securities available-for-sale (at market value) 227,056 214,495
Trading account securities 212 348
Federal Home Loan Bank stock 6,042 4,392
Loans 321,189 316,093
Less:
Deferred loan fees (734) (702)
Allowance for loan losses (5,787) (5,681)
------------ ------------
Net loans 314,668 309,710
------------ ------------
Deferred income taxes 8,634 8,535
Premises and equipment, net 3,823 3,971
Accrued income receivable 3,798 3,482
Foreclosed real estate, net 251 195
Other assets 3,078 3,051
------------ ------------
Total assets $ 579,462 $ 568,798
------------ ------------
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 348,453 $ 348,441
Funds borrowed 180,850 171,129
Other liabilities 7,394 7,696
------------ ------------
Total liabilities 536,697 527,266
------------ ------------
Commitments and Contingencies - -
Shareholders' equity:
Preferred stock, no par value:
authorized 1,000,000 shares;
none issued and outstanding - -
Common stock, $1.00 par value:
authorized 7,000,000 shares;
issued 5,877,854 shares in 2000 and
5,830,811 shares in 1999 5,878 5,831
Additional paid-in capital 18,808 18,507
Retained earnings 37,509 36,293
Accumulated other comprehensive loss (11,501) (11,611)
Treasury stock, at cost: 655,836 shares in
2000 and 625,836 shares in 1999 (7,929) (7,488)
------------ ------------
Total shareholders' equity 42,765 41,532
------------ ------------
Total liabilities and shareholders' equity $ 579,462 $ 568,798
------------ ------------
The accompanying notes are an integral part of these consolidated condensed
financial statements.
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
BANCORP CONNECTICUT, INC.
Three Months Ended
March 31,
-----------------------
(dollars in thousands, except per share data) 2000 1999
- --------------------------------------------------------------------------------
(unaudited)
Interest income:
Interest on loans, including fees $ 6,405 $ 5,788
-------- ---------
Interest and dividends on investment securities:
Interest income 3,400 2,646
Dividend income 468 582
Interest on trading account 6 2
-------- ---------
3,874 3,230
-------- ---------
Interest on federal funds sold 76 10
Other interest and dividends 92 45
-------- ---------
Total interest income 10,447 9,073
-------- ---------
Interest expense:
Savings deposits 587 630
Time deposits 1,990 1,979
NOW accounts 341 289
-------- ---------
2,918 2,898
Interest on borrowed money 2,387 1,688
-------- ---------
Total interest expense 5,305 4,586
-------- ---------
Net interest income 5,142 4,487
Provision for loan losses 118 30
-------- ---------
Net interest income after provision
for loan losses 5,024 4,457
-------- ---------
Noninterest income:
Net securities gains 158 402
Net trading account losses (64) (27)
Service charges on deposit accounts 195 182
Call options premiums 167 94
Gains on sales of loans, originated for sale 150 38
Brokerage servicing fees 107 55
Trust fees - 153
Other 118 80
-------- ---------
Total noninterest income 831 977
-------- ---------
Noninterest expense:
Salaries and employee benefits 1,684 1,599
Furniture and equipment 261 240
Net occupancy 159 156
Data processing 135 123
Advertising 115 72
Other 610 673
-------- ---------
Total noninterest expense 2,964 2,863
-------- ---------
Income before income taxes 2,891 2,571
Provision for income taxes 863 736
-------- ---------
Net income $ 2,028 $ 1,835
======== =========
Average common shares outstanding:
Basic 5,225,218 5,156,638
Diluted 5,474,829 5,524,443
Net income per common share:
Basic $ 0.39 $ 0.36
Diluted $ 0.37 $ 0.33
Cash dividend per share $ 0.155 $ 0.140
The accompanying notes are an integral part of these consolidated condensed
financial statements.
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<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
BANCORP CONNECTICUT, INC.
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Other
Comprehensive
Additional Income Total
Common Paid-In Retained Unrealized Treasury Shareholders'
(dollars in thousands, except per share data) Stock Capital Earnings Gains(Losses) Stock Equity
- ---------------------------------------------- ----------- ------------ ----------- -------------- ------------- ---------------
Balance, December 31, 1998 $ 5,653 $ 17,421 $ 31,761 $ 825 $ (5,744) $ 49,916
---------------
Net income - - 1,835 - - 1,835
Decrease in net unrealized gain
on securities available-for-sale - - - (1,156) - (1,156)
---------------
Total comprehensive income 679
---------------
Stock options exercised (60,040 shares) 60 346 - - - 406
Cash dividends declared ($0.14 per share) - - (719) - - (719)
Tax benefits related to common stock
options exercised - 75 - - - 75
---------- ------------ ----------- -------------- ------------- ---------------
Balance, March 31, 1999 $ 5,713 $ 17,842 $ 32,877 $ (331) $ (5,744) $ 50,357
========== ============ =========== ============== ============= ===============
Balance, December 31, 1999 $ 5,831 $ 18,507 $ 36,293 $ (11,611) $ (7,488) $ 41,532
---------------
Net income - - 2,028 - - 2,028
Decrease in net unrealized loss on
securities available-for-sale - - - 110 - 110
---------------
Total comprehensive loss 2,138
---------------
Stock options exercised (46,843 shares) 47 211 - - - 258
Cash dividends declared ($0.155 per share) - - (812) - - (812)
Treasury stock purchased (30,000 shares) - - - - (441) (441)
Tax benefits related to common stock
options exercised - 90 - - - 90
---------- ------------ ----------- -------------- ------------- ---------------
Balance, March 31, 2000 $ 5,878 $ 18,808 $ 37,509 $ (11,501) $ (7,929) $ 42,765
========== ============ =========== ============== ============= ===============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
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<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
BANCORP CONNECTICUT, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended
March 31,
(in thousands) 2000 1999
- ---------------------------------------------------------------------------------------
(unaudited)
Cash flows from operating activities:
Net income $ 2,028 $ 1,835
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of bond premiums (accretion
of discounts), net (797) (301)
Deferred income tax provision (benefit) (154) 239
Provision for loan losses 118 30
Provision for foreclosed real estate losses - 13
Gain on sale of foreclosed real estate (8) -
Gains on sales of loans, originated for sale (150) (38)
Proceeds from sales of loans, originated for
sale 7,836 2,563
Loans originated for sale (9,495) (2,743)
Amortization of deferred loan points (36) (76)
Net securities gains (158) (402)
Net trading account losses 64 27
Depreciation and amortization 201 195
Decrease (Increase) in trading account 72 (265)
Increase in accrued income receivable (316) (221)
Increase in other assets (22) (292)
(Decrease) increase in other liabilities (212) 1,066
---------- ----------
Total adjustments (3,057) (205)
---------- ----------
Net cash (used for) provided by operating
activities (1,029) 1,630
---------- ----------
Cash flows from investing activities:
Purchases of securities available-for-sale (28,919) (49,168)
Proceeds from sales of securities available-for-sale 15,910 30,216
Proceeds from maturities of securities - 10,574
Paydowns on mortgage-backed securities 1,568 6,583
Purchases of Federal Home Loan Bank stock (1,650) -
Net increase in loans (3,360) (9,935)
Purchases of premises and equipment, net (51) (38)
Proceeds from sales of foreclosed real estate, net 74 -
---------- ----------
Net cash used for investing activities (16,428) (11,768)
---------- ----------
Cash flows from financing activities:
Net increase (decrease) in time deposits 4,481 (17)
Net decrease in other deposits (4,469) (2,766)
Net (decrease) increase in Federal funds purchased
and repurchase agreements (26,779) 15,703
Proceeds from other borrowings 123,500 3,000
Repayment of other borrowings (87,000) (2,000)
Proceeds from exercise of stock options 258 406
Repurchase common stock (441) -
Cash dividends paid (812) (719)
---------- ----------
Net cash provided by financing activities 8,738 13,607
---------- ----------
Net (decrease) increase in cash and cash
equivalents (8,719) 3,469
Cash and cash equivalents at beginning of period 20,619 11,178
---------- ----------
Cash and cash equivalents at end of period $ 11,900 $ 14,647
========== ==========
Noncash Investing and Financing Activities:
Decrease in net unrealized loss/gain on securities
available-for-sale $ 110 $ (1,156)
Transfer of loans to foreclosed real estate 129 -
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
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<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
BANCORP CONNECTICUT, INC.
NOTE 1 - BASIS OF PRESENTATION
The consolidated condensed financial statements of Bancorp Connecticut, Inc.
(the "Corporation") include the accounts of its wholly owned subsidiary,
Southington Savings Bank (the "Bank"). The Bank operates four branches and a
mortgage lending center in Southington, Connecticut and one branch in
Wallingford, Connecticut. It has two subsidiaries, BCI Financial Corporation
("BCIF") and SSB Mortgage Corporation ("SSBM"). BCIF is an indirect auto finance
subsidiary located in Southington, Connecticut. SSBM, which commenced operations
during the first quarter of 1999, is a passive investment company formed to take
advantage of changes in Connecticut state tax statutes. The Bank's primary
source of revenue is providing loans to customers who are either small and
middle market businesses or individuals. All significant intercompany balances
and transactions have been eliminated in consolidation.
The consolidated condensed statement of condition as of March 31, 2000, the
consolidated condensed statements of income, consolidated condensed statements
of changes in shareholders' equity and consolidated condensed statements of cash
flows for the three month periods ended March 31, 2000 and 1999 have been
prepared by the Corporation without audit. Certain amounts for prior periods
have been reclassified to conform to the current period presentation.
In the opinion of management, the financial statements have been prepared in
conformity with generally accepted accounting principles for interim financial
statements and include all adjustments necessary to present fairly the financial
position of the Corporation as of March 31, 2000 and the results of operations,
changes in shareholders' equity and cash flows for the three month periods ended
March 31, 2000 and 1999. Results of operations for the three month period ended
March 31, 2000 is not necessarily indicative of results for any other period.
The statement of condition as of December 31, 1999, which has been included for
comparative purposes, has been condensed from the audited statements for the
year then ended. Certain information and footnote disclosures normally included
in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated
condensed financial statements should be read in conjunction with the financial
statements and notes thereto included in the Corporation's annual report on Form
10-K for the year ended December 31, 1999.
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<PAGE>
NOTE 2 - SECURITIES
The amortized cost, gross unrealized gains and losses and estimated market
values of securities available-for-sale as of March 31, 2000 and December 31,
1999 were as follows:
March 31, 2000
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------------------------------------------
(in thousands)
United States Government
and agency obligations $ 63,767 $ - $ (10,424) $ 53,343
Municipal bonds 5,607 7 (162) 5,452
Corporate bonds 946 - (22) 924
Mortgage-backed securities 101,090 40 (3,687) 97,443
Capital trust preferreds 31,312 20 (2,802) 28,530
Marketable equity securities 40,838 1,332 (2,209) 39,961
Mutual funds 922 492 (11) 1,403
--------- ------- ---------- ---------
$ 244,482 $ 1,891 $ (19,317) $ 227,056
========= ======= ========== =========
December 31, 1999
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------------------------------------------
(in thousands)
United States Government
and agency obligations $ 60,867 $ - $ (10,939) $ 49,928
Municipal bonds 5,356 8 (132) 5,232
Corporate bonds 944 - (21) 923
Mortgage-backed securities 87,378 1 (3,811) 83,568
Capital trust preferreds 29,131 50 (2,582) 26,599
Marketable equity securities 47,670 1,461 (1,939) 47,192
Mutual funds 740 326 (13) 1,053
------------ ------- ----------- ---------
$ 232,086 $ 1,846 $ (19,437) $ 214,495
============ ======= =========== =========
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<PAGE>
NOTE 3 - LOANS
The composition of the loan portfolio was:
March 31, December 31,
2000 1999
------------ -----------
(in thousands)
Commercial $ 63,160 $ 56,828
Commercial real estate 48,251 47,961
Residential real estate 130,421 131,942
Real estate construction 2,455 3,250
Consumer 76,902 76,112
------------ -----------
321,189 316,093
Less:
Deferred loan fees (734) (702)
Allowance for loan losses (5,787) (5,681)
------------ -----------
Total loans $ 314,668 $ 309,710
===========- ===========
NOTE 4 - ALLOWANCE FOR LOAN AND FORECLOSED REAL ESTATE LOSSES
Changes in the allowances were:
Three Months Ended
March 31,
------------------------------
2000 1999
----------- -------------
(in thousands)
Allowance for loan losses:
Balance, beginning of year $ 5,681 $ 5,549
Provision for loan losses 118 30
Loans charged-off (98) (25)
Recoveries 86 26
----------- -------------
Balance, end of period $ 5,787 $ 5,580
=========== =============
Allowance for foreclosed real estate losses:
Balance, beginning of year $ 50 $ 50
Provision for losses - 13
Write-downs, net - (13)
----------- -------------
Balance, end of period $ 50 $ 50
=========== =============
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<PAGE>
NOTE 5 - NONPERFORMING ASSETS
The balances of nonperforming assets were:
March 31, December 31,
2000 1999
----------- ------------
(dollars in thousands)
Nonaccrual loans:
Commercial $ 112 $ 420
Commercial real estate 22 -
Residential real estate 640 857
Consumer 134 127
----------- ------------
Total nonaccrual loans 908 1,404
Accruing loans past due 90 days or more - -
----------- ------------
Total nonperforming loans 908 1,404
Foreclosed real estate 251 195
----------- ------------
Total nonperforming assets $ 1,159 $ 1,599
=========== ============
Nonperforming loans as a percentage
of total loans 0.28% 0.44%
=========== ============
Nonperforming assets as a percentage
of total assets 0.20% 0.28%
=========== ============
NOTE 6 - DEPOSITS
Deposits consisted of the following:
March 31, December 31,
2000 1999
-------------- -----------
(in thousands)
Noninterest-bearing demand deposits $ 36,691 $ 40,905
NOW accounts 48,787 49,380
Regular savings 70,732 69,534
Money market savings 30,965 31,825
Certificates of deposit 160,759 156,530
Club accounts 519 267
-------------- -----------
Total deposits $ 348,453 $ 348,441
============== ===========
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<PAGE>
NOTE 7 - FUNDS BORROWED
Funds borrowed consisted of the following:
March 31, December 31,
2000 1999
-------------- -----------
(in thousands)
Federal funds purchased $ 2,500 $ 2,100
Securities sold under repurchase agreements 57,520 84,699
Federal Home Loan Bank advances 120,830 72,830
Federal Reserve Bank advances - 11,500
-------------- -----------
Total funds borrowed $ 180,850 $ 171,129
============== ===========
NOTE 8 - PER COMMON SHARE DATA
Basic earnings per share is computed using the weighted average common shares
outstanding during the periods presented. The computation of diluted earnings
per share is similar to the computation of basic earnings per share except the
denominator is increased to include the number of additional common shares that
would have been outstanding if dilutive potential common shares had been issued.
The shares used in the computations for the three months ended March 31, 2000
and 1999 were as follows:
2000 1999
-------- -------
(in thousands)
Basic 5,225 5,157
Effect of dilutive stock options 250 367
-------- -------
Diluted 5,475 5,524
======== =======
NOTE 9 - SHAREHOLDERS' EQUITY
The following table presents the components and related tax effects allocated to
other comprehensive income for the three month period ended March 31, 2000.
Before Tax Net
Tax (Benefit) of Tax
Amount Expense Amount
---------- ---------- --------
(in thousands)
Net unrealized gains on securities
arising during the period $ 323 $108 $ 215
Less: reclassification adjustment
for gains realized
in net income 158 53 105
---------- ---------- --------
Net unrealized gains on securities $ 165 $ 55 $ 110
========== ========== ========
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<PAGE>
The following table presents the components and related tax effects allocated to
other comprehensive income for the three month period ended March 31, 1999.
Before Tax Net
Tax (Benefit) of Tax
Amount Expense Amount
---------- ---------- --------
(in thousands)
Net unrealized losses on securities
arising during the period
Less: reclassification adjustment $ (1,351) $ (460) $ (891)
for gains realized
in net income 402 137 265
---------- -------- ---------
Net unrealized losses on securities $ (1,753) $ (597) $ (1,156)
========== ======== =========
On April 21, 1999, the Corporation announced that it planned to repurchase up to
5% (260,000) of its outstanding common shares over the next twelve months. On
April 20, 2000, this share buyback program was terminated. Pursuant to that
program, the Corporation purchased 136,338 shares of its outstanding shares of
common stock, or 2.6% of its outstanding shares as of April 21, 1999 and April
29, 2000.
On April 19, 2000, the Corporation's Board of Director's voted to authorize a
new share buyback program of up to 5% (262,000) of its outstanding shares of
common stock over the next year. Purchases are made from time to time in the
open market and through private transactions. The timing and amount of these
transactions, funded through available corporate funds, will depend upon market
conditions and corporate requirements. Shares repurchased are held in treasury
for general corporate purposes including reissue to satisfy the exercise of
outstanding stock options. Through May 8, 2000, the Corporation repurchased
25,000 shares at an average price of $14.78.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTH PERIODS
ENDED MARCH 31, 2000 AND 1999
The following discussion and analysis presents a review of the financial
condition and results of operations of Bancorp Connecticut, Inc. (the
"Corporation"). Since Southington Savings Bank (the "Bank") is the sole
subsidiary of the Corporation, the Corporation's earnings and financial
condition are predicated almost entirely on the performance of the Bank. This
review should be read in conjunction with the consolidated condensed financial
statements and other financial data presented elsewhere herein.
CHANGES IN FINANCIAL CONDITION
INVESTMENTS - Securities available-for-sale increased $12,561,000 or 5.9% to
$227,056,000 as of March 31, 2000 from $214,495,000 as of December 31, 1999.
Purchases of securities net of proceeds from maturities and sales (excluding
realized gains) and paydowns on mortgage-backed securities amounted to
$11,441,000 during the first quarter of 2000. This increase in securities was
primarily funded by additional net borrowings of $9,721,000 in order to enhance
net interest income. Net unrealized losses in the securities portfolio totaled
$17,426,000 as of March 31, 2000 compared to unrealized losses of $17,591,000 as
of December 31, 1999.
As of March 31, 2000, approximately 47.5% or $19,000,000 of the marketable
equity securities portfolio was comprised of money market preferred stocks.
These securities are highly liquid, reprice every 49 days and are subject to the
tax advantages of the Federal dividends received deduction in 2000 and 1999.
LOANS - Loans increased $5,096,000 or 1.6% to $321,189,000 as of March 31, 2000
from $316,093,000 as of December 31, 1999 primarily due to increased commercial
loan volume. Commercial loans and commercial real estate loans increased
$6,622,000 or 6.3% and represented 34.7% of the loan portfolio as of March 31,
2000. Purchased Small Business Administration loans accounted for $4,769,000 of
this commercial loan increase.
DEPOSITS - Total deposits as of March 31, 2000 in the amount of $348,453,000
remained relatively unchanged compared to the $348,441,000 as of December 31,
1999. The increase in time deposits of $4,481,000 was principally offset by a
decrease in noninterest-bearing demand deposits of $4,214,000.
BORROWINGS - Advances from the Federal Home Loan Bank of Boston (the "FHLB")
increased by $48,000,000 or 65.9% to $120,830,000 as of March 31, 2000 compared
to $72,830,000 as of year end 1999. Federal Reserve Bank advances decreased by
$11,500,000 during the quarter resulting in no outstanding advances as of March
31, 2000. In addition, Federal funds purchased and securities sold under
agreements to repurchase decreased $26,779,000 or 30.9% to $60,020,000 from
$86,799,000. The resultant net increase of $9,721,000 in borrowings was
primarily utilized to fund the Bank's net purchases of securities. As of March
31, 2000, broker/dealer repurchase agreements and retail repurchase agreements
totaled $41,540,000 and $15,980,000, respectively.
CHANGES IN RESULTS OF OPERATIONS
EARNINGS - Net income for the quarter ended March 31, 2000 was $2,028,000
compared to $1,835,000 for the first quarter of 1999, an increase of 10.5%. On a
diluted per common share basis, the Corporation earned $.37 per share in 2000
compared to $.33 per share in 1999. Increases in net interest income and
noninterest income (exclusive of securities gains), partially offset by
increased noninterest expense and a higher provision for loan losses were
principally responsible for the improved operating results. The annualized
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<PAGE>
return on average assets for the quarter ended March 31, 2000 was 1.44% compared
to 1.40% for the same quarter last year while the return on average equity rose
to 19.53% from 14.69% the previous year. The increase in the return on average
equity was due to the increase in net income compared to the prior year quarter
as well as the increase in net unrealized losses in the securities portfolio and
the common stock purchases under the Corporation's share repurchase program
which reduced average equity.
NET INTEREST INCOME - Net interest income, the difference between interest
earned on interest earning assets and interest expense incurred on interest
bearing liabilities, is a significant component of the Corporation's
consolidated condensed statements of income. Net interest income is affected by
changes in the volumes of and rates on interest earning assets and interest
bearing liabilities, the volume of interest earning assets funded with
noninterest bearing deposits and shareholders' equity, and the level of
nonperforming assets.
Average interest earning assets increased by $50,580,000 or 9.9% to $559,616,000
for the three months ended March 31, 2000 from $509,036,000 for the same quarter
in 1999.
For the three months ended March 31, 2000 net interest income, on a tax
equivalent basis, increased $627,000 or 13.3% compared to the same period in
1999 mainly as a result of increases in the average volume of the loan and
invested funds portfolios of $27,055,000 and $23,525,000, respectively, and
favorable rate variances with respect to investments. In addition, average
noninterest bearing demand deposits were $3,105,000 or 9.2% higher during 2000
compared to 1999 which helped reduce the average cost of funds and thus had a
positive effect on net interest income.
The ratio of net interest income to average interest earning assets on a tax
equivalent basis was 3.81% for the quarter ended March 31, 2000 compared to
3.70% for the same period in 1999. A proportionately greater rise in yields on
earning assets compared with interest rates on sources of funds helped to
achieve the increase in the interest rate margin in 2000 compared to 1999. If,
however, short-term interest rates continue to rise, some compression in the net
interest margin is likely to occur. Average yields were computed on a tax
equivalent basis using a Federal income tax rate of 34% for 2000 and 1999 and a
state income tax rate of 0.0% for both periods, due to the formation of a
passive investment company in 1999.
PROVISION FOR LOAN LOSSES - For the three months ended March 31, 2000 and 1999,
the provisions for loan losses were $118,000 and $30,000, respectively. Net loan
charge-offs totaled $12,000 for the first quarter of 2000 compared to net loan
recoveries of $1,000 for the same period in 1999. The allowance for loan losses
was $5,787,000 or 1.80% of outstanding loans as of March 31, 2000 compared to
$5,580,000 or 1.89% of outstanding loans as of March 31, 1999. Nonperforming
loans were $908,000 as of March 31, 2000 and $1,115,000 as of March 31, 1999,
representing .28% and .38%, respectively, of outstanding loans.
Management regularly monitors and has established a formal process for
determining the adequacy of the allowance for loan losses. This process results
in an allowance that consists of two components, allocated and unallocated. The
allocated component includes allowance estimates that result from analyzing
certain individual loans (including impaired loans), and specific loan types.
The policy of the Bank is to review all commercial loans and delinquent consumer
loans quarterly. Up to a total of nine risk rating classifications are used to
describe the credit risk associated with commercial and consumer loans. Of these
classifications, the problem loan categories are: "substandard," "doubtful" and
"loss." Loans designated loss are charged-off quarterly. A risk factor is
assigned by loan type to loans within each classification in determining the
respective allowance. For loans that are analyzed individually, third-party
information such as appraisals may be used to supplement management's analysis.
For loans that are analyzed on a pool basis, such as residential mortgage loans
(1-4 family), management's analysis consists of reviewing delinquency trends,
historical charge-off experience, prevailing economic conditions, size and
current composition of the loan portfolio, collateral value trends and other
relevant factors. The unallocated component of the allowance for loan losses is
intended to compensate for the subjective nature of estimating an adequate
allowance for loan losses, economic uncertainties, and other factors. The
unallocated portion of the allowance for loan losses was $1,657,000 as of March
31, 2000 compared to $1,580,000 as of December 31, 1999.
-14-
<PAGE>
NONINTEREST INCOME - Total noninterest income, excluding net securities gains,
net trading account losses and trust fees, increased by $288,000 or 64.1% to
$737,000 in the first quarter of 2000 from $449,000 for the same period in 1999.
Call options premiums increased $73,000 for the first quarter of 2000 compared
to 1999. Brokerage servicing fees increased $52,000 for the first quarter of
2000 compared to 1999 due to higher sales volume. The gains on sales of loans,
originated for sale, increased $112,000 or 294.7% in 2000 compared to 1999
primarily as a result of loans generated for sale into the secondary market by
BCIF, the Bank's indirect auto finance company. Other income totaled $118,000 in
2000 compared to $80,000 in 1999, representing an increase of $38,000 or 47.5%.
This increase reflected increased fee income of $29,000 from insurance fees
recorded by the Bank.
During the first quarter of 2000, the Corporation recognized total net
securities gains of $158,000 on the sale of securities available-for-sale
compared to net securities gains of $402,000 in 1999, a decrease of $244,000. In
addition, there were no trust fees recorded in 2000 as compared to $153,000 for
1999 as a result of the sale of the Bank's trust operations during the third
quarter of 1999. Net trading account losses totaled $64,000 for the first
quarter of 2000 compared to $27,000 for the same period in 1999.
NONINTEREST EXPENSE - Operating expenses increased $101,000 or 3.5% to
$2,964,000 in the first quarter of 2000 from $2,863,000 in 1999.
Salaries and employee benefits were $85,000 or 5.3% higher in 2000 compared to
1999. This increase reflects higher commission salaries of $37,000 and scheduled
employee annual salary increases partially offset by no trust operation salaries
and benefits in 2000 as compared to approximately $71,000 in 1999. Higher group
medical and retirement benefit costs of $32,000 were more than offset by a
decreased utilization of temporary employees during 2000 in the amount of
$48,000.
The expenses related to furniture and equipment increased $21,000 or 8.8% to
$261,000 for the first quarter of 2000 compared to $240,000 for the same period
in 1999. Higher computer maintenance expenses of $12,000 during 2000 as compared
to 1999 were the primary reason for the increase.
Advertising expense increased $43,000 or 59.7% to $115,000 for the first quarter
of 2000 compared to $72,000 for the same period in 1999 primarily as a result of
increases in advertising expenditures to promote the Bank and its products
including Internet banking to its consumer customers.
The decrease in other noninterest expenses of $63,000 or 9.4% reflected a net
decrease in a number of miscellaneous expense categories. The most significant
decreases in these categories were $42,000 of expenses incurred in 1999 for
outside fund management fees and other operating expenses for the internal trust
operations of the Bank, which was sold during the third quarter of 1999, and
$16,000 of net foreclosed real estate activity.
PROVISION FOR INCOME TAXES - The provision for income taxes for the three months
ended March 31, 2000 and 1999 was $863,000 and $736,000, respectively,
representing effective tax rates of 29.9% and 28.6%, respectively. The effective
income tax rates are below statutory rates primarily as a result of the
dividends received deduction and the establishment of the passive investment
company.
On May 19, 1998, the Connecticut state legislature enacted legislation which
permits financial services companies which maintain an office in Connecticut,
and have a minimum of five employees (among other provisions), the authority to
create a limited passive investment company ("PIC") for the purpose of holding
for investment loans collateralized by real estate free from Connecticut
corporation business tax. The regulation is effective for income tax years
beginning January 1, 1999. During the fourth quarter of 1998, the Bank formed a
passive investment company, SSB Mortgage Corporation. Subsequently, for tax
years beginning January 1, 1999, the Corporation's state tax expense has been
eliminated resulting in the lower effective tax rates mentioned above.
-15-
<PAGE>
LIQUIDITY - The liquidity of a banking institution reflects its ability to
provide funds to meet loan requests, to accommodate possible outflows in
deposits and to take advantage of interest rate market opportunities. Funding of
loan requests, providing for liability outflows and management of interest rate
fluctuations require continuous analysis in order to match the maturities of
specific categories of short-term loans and investments with specific types of
deposits and borrowings. Bank liquidity is thus normally considered in terms of
the nature and mix of a banking institution's sources and uses of funds. The
Bank's Asset Liability Committee is responsible for implementing the policies
and guidelines for the maintenance of prudent levels of liquidity.
The Bank's principal sources of funds for operations are cash flows generated
from earnings, deposits, loan repayments, borrowings from correspondent banks
and securities sold under repurchase agreements. Such sources are supplemented
by interest bearing deposits with banks, Federal funds sold and unencumbered
securities available-for-sale. Brokered deposits were not utilized as a source
of funds during 2000 or 1999, and none were outstanding as of March 31, 2000.
The Bank is a member of the Federal Home Loan Bank of Boston (the "FHLB"), which
makes substantial borrowings available to its members. The Bank is eligible to
borrow against its assets in an amount not to exceed collateral as defined by
the FHLB. As of March 31, 2000, qualified collateral totaled $163,023,000. The
Bank's actual borrowings on that date were $120,830,000.
The inflow and outflow of funds is detailed in the consolidated condensed
statements of cash flows for the three months ended March 31, 2000 and 1999 and
is summarized below.
During the current period, cash and cash equivalents decreased by $8,719,000, as
net cash used for operating and investing activities of $17,457,000 exceeded the
net cash provided by financing activities of $8,738,000.
Net cash used for investing activities, which primarily reflects the net
redeployment of funds into the loan and securities portfolios, was $16,428,000
for the three months ended March 31, 2000. During this period, the Corporation
experienced net originations of loans totaling $3,360,000 and a net increased
investment in securities in the amount of $11,441,000, which were funded
primarily by increased borrowings.
The net cash provided by financing activities of $8,738,000 for the three months
ended March 31, 2000 primarily reflected net increases in funds borrowed from
the FHLB of $48,000,000 partially offset by decreases in funds borrowed from the
Federal Reserve Bank of $11,500,000 and Federal funds purchased and repurchase
agreements of $26,779,000.
Closely related to the concept of liquidity is the management of interest
earning assets and interest bearing liabilities, which focuses on maintaining
stability in the interest rate spread, an important factor in earnings growth
and stability. Emphasis is placed on maintaining a controlled rate sensitivity
position to avoid wide swings in interest rate spreads and to minimize risk due
to changes in interest rates. An asset or liability is considered rate sensitive
within a specified period when it matures or could be repriced within such
period in accordance with its contractual terms. Management establishes overall
policy and interest rate risk tolerance levels which are administered by the
Bank's Asset Liability Committee on a monthly basis.
CAPITAL RESOURCES - The Bank is 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 Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classifications are also subject to quantitative judgements by the
regulators about components, risk weightings and other factors.
-16-
<PAGE>
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as of March 31,
2000, that the Bank meets all capital adequacy requirements to which it is
subject.
To be categorized as well capitalized, the Bank must maintain the ratios set
forth in the table below. Management believes that there are no events or
conditions that have occurred that would change its category. The Bank's actual
capital amounts and ratios were (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
To Be Well Capitalized
Under Prompt Corrective
Actual Action Provisions
------------------ -----------------------
Amount Ratio Amount Ratio
------- -------- --------- ---------
As of March 31, 2000:
Total Capital (to Risk Weighted Assets) $ 52,254 14.56 % >/= $ 35,899 >/= 10.0 %
Tier I Capital (to Risk Weighted Assets) 47,751 13.30 >/= 21,539 >/= 6.0
Tier I Capital (to Average Assets) 47,751 8.50 >/= 28,076 >/= 5.0
</TABLE>
On January 19, 2000, the Board of Directors of the Corporation declared a cash
dividend of $.155 per common share which was paid on February 15, 2000 to
shareholders of record on February 1, 2000. Subsequent to March 31, 2000, the
Board of Directors of the Corporation declared a cash dividend of $.17 per
common share payable on May 16, 2000 to shareholders of record on May 1, 2000.
The Corporation's improvement in earnings for the first quarter of 2000 led to
the 9.7% increase in its dividend to shareholders.
On April 21, 1999, the Corporation announced that it planned to repurchase up to
5% (260,000) of its outstanding common shares over the next twelve months. On
April 20, 2000, this share buyback program was terminated. Pursuant to that
program, the Corporation purchased 136,338 shares of its outstanding shares of
common stock, or 2.6% of its outstanding shares as of April 21, 1999 and April
29, 2000.
On April 19, 2000, the Corporation's Board of Director's voted to authorize a
new share buyback program of up to 5% (262,000) of its outstanding shares of
common stock over the next year. Purchases are made from time to time in the
open market and through private transactions. The timing and amount of these
transactions, funded through available corporate funds, will depend upon market
conditions and corporate requirements. Shares repurchased are held in treasury
for general corporate purposes including reissue to satisfy the exercise of
outstanding stock options. Through May 8, 2000, the Corporation repurchased
25,000 shares at an average price of $14.78.
YEAR 2000
PROJECT PLAN
Management recognized the major impact the Year 2000 computer chip problem would
have on all corporations doing business. The following plan was implemented to
identify critical systems that had to be modified to avoid any disruption of
daily business. The implementation of the project plan has been successfully
completed.
AWARENESS PHASE: Management created a Year 2000 project team to develop an
overall Year 2000 strategy, provide education to employees and to establish
corporate accountability. The awareness phase was completed February 28, 1998.
RISK ASSESSMENT PHASE: Beginning in March 1998, an assessment of all hardware,
software, networks and other processing platforms was performed. Year 2000
problems were identified and mission critical applications prioritized. In July
1998, the Bank completed the conversion to a new core processing system
utilizing Jack Henry & Associates software and IBM AS400 hardware, both of which
had been certified Year 2000 compliant. This new data processing solution
addressed many of the Bank's mission critical applications. The risk assessment
phase included the development of contingency plans for all mission critical
applications. The risk assessment phase was completed on December 31, 1998 and
the contingency plan was completed on June 30, 1999.
-17-
<PAGE>
RENOVATION PHASE: Management established a December 31, 1998 target date for
replacement or modification of the Bank's mission critical internal applications
to allow for a full year of testing. This phase was essentially completed ahead
of time with the replacement of the core data processing system.
VALIDATION PHASE: This phase provided for the testing of hardware, software,
interfaces and integration with other systems. It also included testing and
certifying third parties for Year 2000 readiness. The Bank's new core processing
system has been certified Year 2000 compliant by its manufacturer. However, the
Bank performed its own independent tests rather than utilize proxy testing
results from the vendor. In addition, the Bank retained the services of an
independent party to review overall plan effectiveness and the results of
testing. The validation phase on all critical systems was completed by June 30,
1999.
IMPLEMENTATION PHASE: As applications became certified they were considered to
be placed into service. Management assessed the impact of any system failing the
certification tests and implemented the contingency plan developed for that
application. The Bank's primary internal technological systems including the
core processing system, teller equipment and local area network have already
been placed into service. Implementation of all critical systems was completed
by June 30, 1999.
COSTS
In 1997, the Bank completed an extensive analysis of its data processing systems
and decided to bring its core processing system in-house rather than continue in
a service bureau relationship environment. The decision to move to an in-house
solution was primarily based on the improved operating effectiveness, enhanced
new product development and expanded management reporting the new system could
provide. However, the additional benefit of the decision was the purchase of a
mainframe computer, banking software and peripheral devices that had already
been certified Year 2000 compliant. The cost of the new software and hardware
(which includes all new teller equipment) acquired for the July 1998 conversion
totaled $1,991,000. This cost has been capitalized and is being amortized and
depreciated over the useful lives of the assets. Related amortization and
depreciation amounts to approximately $437,000 per year.
The Corporation does not separately track the internal costs associated with its
Year 2000 readiness project, and such costs are primarily the portion of an
employee's time spent on Year 2000 related issues.
Year 2000 external readiness costs, consisting primarily of labor costs in the
testing and validation of systems, professional consulting costs and marketing
costs to keep customers informed of Year 2000 progress, approximated $100,000 in
1999. The Bank does not expect to incur any additional significant Year 2000
costs.
RISKS AND CONTINGENCIES
Based upon a self-assessment of its current Year 2000 readiness, management
believed the greatest Year 2000 uncertainties and exposures were not within its
own technological systems but within its third-party vendor relationships and
its commercial borrowers. Since the Year 2000 date change, there have been no
technological problems with third-party vendors and the Bank's loan portfolio
has not been adversely affected by Year 2000 issues related to its commercial
borrowers.
As of year-end 1998, the Bank had devoted the majority of its efforts to convert
to the new core processing system. Since the Year 2000 date change, the Bank has
not experienced any disruptions to customer service or system failures related
to any of its core processing systems.
The Bank is also subject to the safety and soundness standards for Year 2000
readiness established by the Federal Deposit Insurance Corporation and the State
of Connecticut Banking Department and has completed the Phase 2 examinations by
these agencies to date. Management believes it has complied with all standards
set forth by the regulatory agencies.
-18-
<PAGE>
AVERAGE STATEMENTS OF CONDITION, NET INTEREST INCOME AND INTEREST RATES(a)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31,
-----------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
(dollars in thousands) Balance Interest Rate(c) Balance Interest Rate(c)
- ---------------------------------------------------------------------------------------------------------------------------
Assets
Interest-earning assets:
Loans(b) $315,356 $ 6,405 8.12% $288,301 $ 5,788 8.03%
Taxable investment securities(c) 227,484 3,949 6.94% 213,080 3,385 6.35%
Municipal bonds(c) 5,554 109 7.85% 3,543 61 6.89%
Federal funds sold 5,403 76 5.63% 837 10 4.78%
Other interest-earning assets 5,819 98 6.74% 3,275 47 5.74%
-------- ------- -------- -------
Total interest-earning assets 559,616 10,637 7.60% 509,036 9,291 7.30%
------- -------
Noninterest-earning assets 4,959 16,212
-------- --------
Total Assets $564,575 $525,248
======== ========
Liabilities and Equity
Interest-bearing liabilities:
NOW and savings deposits $147,630 928 2.51% $147,835 919 2.49%
Time deposits 159,249 1,990 5.00% 159,577 1,979 4.96%
Federal funds purchased and
repurchase agreements 68,813 922 5.36% 88,510 1,148 5.19%
Other borrowings 104,555 1,465 5.60% 42,599 540 5.07%
-------- ------- -------- -------
Total interest-bearing liabilities 480,247 5,305 4.42% 438,521 4,586 4.18%
------- -------
Noninterest-bearing liabilities:
Demand deposits 36,805 33,700
Other 5,979 3,057
Shareholders' equity 41,544 49,970
-------- --------
Total Liabilities and
Shareholders' Equity $564,575 $525,248
======== ========
Net interest income on a tax
equivalent basis(c) 5,332 4,705
Tax equivalent adjustment (190) (218)
------- -------
Net interest income $ 5,142 $ 4,487
======= =======
Net interest spread (tax equivalent basis) 3.18% 3.12%
====== ======
Net interest margin (tax equivalent basis) 3.81% 3.70%
====== ======
(a) Computed on an annualized basis.
(b) Average balances for loans include nonaccrual and renegotiated balances.
(c) Yields/Rates are computed on a tax equivalent basis using a Federal
income tax rate of 34% for 2000 and 1999 and a state income tax rate of 0%
in 2000 and 1999.
</TABLE>
-19-
<PAGE>
RATE/VOLUME ANALYSIS
Three Months Ended March 31, 2000
Compared to 1999
----------------------------------
Increase (Decrease)
Due to
--------------------
(in thousands) Volume Rate Net(1)
- ------------------------------------------------------------------------
Interest earned on:
Loans $ 549 $ 68 $ 617
Taxable investment securities 238 326 564
Municipal bonds 39 9 48
Federal funds sold 64 2 66
Other interest-earning assets 42 9 51
-------- -------- --------
Total interest income 932 414 1,346
-------- -------- --------
Interest paid on:
NOW and savings deposits (1) 10 9
Time deposits (4) 15 11
Federal funds purchased and
repurchase agreements (263) 37 (226)
Other borrowings 863 62 925
-------- -------- --------
Total interest expense 595 124 719
-------- -------- --------
Change in net interest income $ 337 $ 290 $ 627
======== ======= ========
(1) The change in interest due to both tax equivalent rate and volume has been
allocated to changes due to volume and changes due to tax equivalent rate in
proportion to the relationship of the absolute dollar amounts of the change in
each.
-20-
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. The primary
market risk to which the Bank is exposed is interest rate risk. The majority of
the Bank's interest rate risk arises from the instruments, positions and
transactions entered into for purposes other than trading. They include loans,
securities available-for-sale, deposit liabilities, short-term borrowings and
long-term debt. Interest rate risk occurs when assets and liabilities reprice at
different times as interest rates change.
The Bank manages interest rate risk through an Asset Liability Committee
comprised of senior management. The committee monitors exposure to interest rate
risk on a quarterly basis using both a traditional gap analysis and simulation
analysis. Traditional gap analysis identifies short and long-term interest rate
positions or exposure. Simulation analysis measures the amount of short-term
earnings at risk under both rising and falling rate scenarios. The Bank's
interest rate risk as of March 31, 2000 and December 31, 1999 utilizing a
simulation model to measure the estimated percentage change in net interest
income due to an increase or decrease in market interest rates of up to 200
basis points, spread evenly over the next twelve months, is within the Bank's
established 10% tolerance limit.
-21-
<PAGE>
PART II.
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
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 (Incorporated by
reference to Exhibit 3.3 to the Quarterly Report on
Form 10-Q for the quarterly period ended June 30,
1996)
4.1 Instruments defining the rights of security holders
(Included in Exhibits 3.1 and 3.2)
-22-
<PAGE>
4.2 Form of Stock Certificate (Incorporated by reference
to Exhibit 4.5 to the Registrant's Registration
Statement on Form S-8 (Registration
No. 33-333-2638))
10.1 Employment Agreement dated as of January 1, 1997, by
and between the Bank and Robert D. Morton
(Incorporated by reference to Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996)
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)
10.5 Southington Savings Bank Supplemental Retirement
Plan (Incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996)
10.6 Bancorp Connecticut, Inc. 1997 Stock Option Plan
(Incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8
(Registration No. 33-30146))
10.7 Southington Savings Bank Supplemental Executive
Retirement Plan (effective December 21, 1998)
(Incorporated by reference to Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)
27 Financial Data Schedule
(b) Reports on Form 8-K
The registrant did not file any Report on Form 8-K during the first quarter of
2000.
-23-
<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: MAY 8, 2000 /S/ ROBERT D. MORTON
----------------------------- ----------------------------
Robert D. Morton
President and Chief
Executive Officer
(Principal Executive Officer)
Date: MAY 8, 2000 /S/ PHILLIP J. MUCHA
------------------------------ ----------------------------
Phillip J. Mucha
Chief Financial Officer
and Treasurer/Secretary
(Principal Accounting Officer)
-24-
<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 (Incorporated by
reference to Exhibit 3.3 to the Quarterly Report on
Form 10-Q for the quarterly period ended June 30,
1996)
4.1 Instruments defining the rights of security holders
(Included in Exhibits 3.1 and 3.2)
4.2 Form of Stock Certificate (Incorporated by reference
to Exhibit 4.5 to the Registrant's Registration
Statement on Form S-8 (Registration
No. 33-333-2638))
10.1 Employment Agreement dated as of January 1, 1997, by
and between the Bank and Robert D. Morton
(Incorporated by reference to Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996)
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)
10.5 Southington Savings Bank Supplemental Retirement
Plan (Incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996)
10.6 Bancorp Connecticut, Inc. 1997 Stock Option Plan
(Incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-8
(Registration No. 33-30146))
10.7 Southington Savings Bank Supplemental Executive
Retirement Plan (effective December 21, 1998)
(Incorporated by reference to Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)
27 Financial Data Schedule
-25-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Condition at March 31, 2000 (unaudited) and
the Consolidated Condensed Statements of Operations for the three months ended
March 31, 2000 (unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 10,694
<INT-BEARING-DEPOSITS> 6
<FED-FUNDS-SOLD> 1,200
<TRADING-ASSETS> 212
<INVESTMENTS-HELD-FOR-SALE> 227,056
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 321,189
<ALLOWANCE> (5,787)
<TOTAL-ASSETS> 579,462
<DEPOSITS> 348,453
<SHORT-TERM> 79,830
<LIABILITIES-OTHER> 7,394
<LONG-TERM> 101,020
0
0
<COMMON> 5,878
<OTHER-SE> 36,887
<TOTAL-LIABILITIES-AND-EQUITY> 579,462
<INTEREST-LOAN> 6,405
<INTEREST-INVEST> 3,874
<INTEREST-OTHER> 168
<INTEREST-TOTAL> 10,447
<INTEREST-DEPOSIT> 2,918
<INTEREST-EXPENSE> 5,305
<INTEREST-INCOME-NET> 5,142
<LOAN-LOSSES> 118
<SECURITIES-GAINS> 158
<EXPENSE-OTHER> 2,964
<INCOME-PRETAX> 2,891
<INCOME-PRE-EXTRAORDINARY> 2,891
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,028
<EPS-BASIC> .39
<EPS-DILUTED> .37
<YIELD-ACTUAL> 3.68
<LOANS-NON> 908
<LOANS-PAST> 0
<LOANS-TROUBLED> 488
<LOANS-PROBLEM> 5,517
<ALLOWANCE-OPEN> 5,681
<CHARGE-OFFS> 98
<RECOVERIES> 86
<ALLOWANCE-CLOSE> 5,787
<ALLOWANCE-DOMESTIC> 4,130
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,657
</TABLE>
