-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KZkCUHrbALqPSu+6Ub5SgM6AcaafRhlHVLbHlheOtPNiXNqa8MdWU4QeKeNGfMuu sLkEZ2efVUEi0L1ocLSNHg== 0000908737-97-000201.txt : 19970515 0000908737-97-000201.hdr.sgml : 19970515 ACCESSION NUMBER: 0000908737-97-000201 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIS BANCORP INC CENTRAL INDEX KEY: 0001013049 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 043303264 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20809 FILM NUMBER: 97603648 BUSINESS ADDRESS: STREET 1: P O BOX 3034 STREET 2: 1441 MAIN STREET CITY: SPRINGFIELD STATE: MA ZIP: 01102-3034 BUSINESS PHONE: 4137488000 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 03/31/97 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: 000-20809 SIS BANCORP, INC. (Exact Name of Issuer as Specified in its Charter) Massachusetts 04-3303264 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) SIS BANCORP, INC. 1441 Main Street Springfield, Massachusetts 01102 (Address of Principal Executive Offices) (Zip Code) (413) 748-8000 (Issuers Telephone Number, Including Area Code) 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 the registrant's common stock, as of the latest practicable date: 5,616,800 shares as of May 7, 1997. CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Report contains certain "forward-looking statements" including statements concerning plans, objectives, future events or performance and assumptions and other statements which are other than statements of historical fact. SIS Bancorp, Inc. and its subsidiaries (the "Company") wish to caution readers that the following important factors, among others, may have affected and could in the future affect the Company's actual results and could cause the Company's actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf on the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, with which the Company must comply, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company's organization, compensation and benefit plans; (iii) the effect on the Company's competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as nonbank providers of various financial services; (iv) the effect of unforeseen changes in interest rates; and (v) the effect of changes in the business cycle and downturns in the local, regional or national economies. SIS BANCORP, INC. AND SUBSIDIARIES FORM 10-Q INDEX PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Statement of Operations for the three months ended March 31, 1997 and 1996............................. 1 Condensed Consolidated Statement of Financial Condition at March 31, 1997 and December 31, 1996................................ 2 Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 1997 and 1996............................. 3 Condensed Consolidated Statement of Changes in Stockholders' Equity for the three months ended March 31, 1997 and 1996..................... 5 Notes to the Unaudited Financial Statements............................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 8 PART II OTHER INFORMATION Item 1. Legal Proceedings.......................................... 22 Item 2. Changes in Securities...................................... 22 Item 3. Default 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................................................................ 23 SIS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Dollars In Thousands Except Per Share Amounts) (Unaudited) Three Months Ended March 31, -------------------------- 1997 1996 ----------- ----------- Interest and dividend income: Loans $ 12,984 $ 11,552 Investment securities available for sale 7,788 4,126 Investment securities held to maturity 3,363 2,946 Federal funds sold and short term investments 229 214 ----------- ----------- Total interest and dividend income 24,364 18,838 ----------- ----------- Interest expense: Deposits 8,337 8,077 Borrowings 3,534 1,190 ----------- ----------- Total interest expense 11,871 9,267 ----------- ----------- Net interest and dividend income 12,493 9,571 Less: Provision for possible loan losses 401 700 ----------- ----------- Net interest and dividend income after provision for possible loan losses 12,092 8,871 Noninterest income: Net gain on sale of loans 106 270 Net gain on sale of securities -- 2 Fees and other income 2,612 2,309 ----------- ----------- Total noninterest income 2,718 2,581 ----------- ----------- Noninterest expense: Operating expenses: Salaries and employee benefits 4,719 4,250 Occupancy expense of bank premises, net 976 782 Furniture and equipment expense 508 542 Other operating expenses 3,673 3,116 ----------- ----------- Total operating expenses 9,876 8,690 ----------- ----------- Foreclosed real estate (income)expense (28) 160 Net expense (income) of real estate operations 421 (14) ----------- ----------- Total noninterest expense 10,269 8,836 Income before income tax expense 4,541 2,616 Income tax expense 1,771 212 ----------- ----------- Net income $ 2,770 $ 2,404 =========== =========== Earnings per share: Primary $ 0.50 $ 0.45 Fully diluted $ 0.50 $ 0.45 Weighted average shares outstanding: Primary 5,559,144 5,336,487 Fully diluted 5,559,284 5,336,487 See accompanying Notes to the Unaudited Financial Statements 1
SIS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Dollars In Thousands Except Share Amounts) (Unaudited) March 31, December 31, 1997 1996 ------------ ------------- ASSETS Cash and due from banks $ 42,524 $ 31,902 Federal funds sold and short-term investments 21,656 10,045 Investment securities available for sale 480,070 449,323 Investment securities held to maturity (fair value: $185,962 at March 31, 1997 and $191,617 at December 31, 1996) 188,614 192,174 Loans receivable, net of allowance for possible losses ($16,287 at March 31, 1997 and $15,597 at December 31, 1996) 616,447 610,597 Accrued interest and dividends receivable 8,988 8,982 Investments in real estate and real estate partnerships 2,730 2,757 Foreclosed real estate, net 344 381 Bank premises, furniture and fixtures, net 27,352 27,106 Other assets 15,020 15,345 ----------- ----------- Total assets $ 1,403,745 $ 1,348,612 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 1,006,873 $ 969,517 Federal Home Loan Bank advances 104,693 68,471 Securities sold under agreements to repurchase 154,570 176,577 Loans payable 2,848 2,848 Mortgage escrow deposits 6,539 4,396 Accrued expenses and other liabilities 26,902 24,886 ----------- ----------- Total liabilities 1,302,425 1,246,695 ----------- ----------- Commitments and contingent liabilities -- -- Stockholders' equity: Preferred stock ($.01 par value; 5,000,000 shares authorized: no shares issued and outstanding) -- -- Common stock ($.01 par value; 25,000,000 shares authorized; shares issued: 5,732,200 at March 31, 1997 and 5,723,600 at December 31, 1996; outstanding: 5,661,800 at March 31, 1997 and 5,723,600 at December 31, 1996) 57 57 Unearned compensation (3,624) (3,693) Additional paid-in capital 42,891 42,665 Retained earnings 63,115 60,993 Net unrealized gain on investment securities available for sale 748 1,895 Treasury stock, at cost (70,400 shares) (1,867) -- ----------- ----------- Total stockholders' equity 101,320 101,917 ----------- ----------- Total liabilities and stockholders' equity $ 1,403,745 $ 1,348,612 =========== ===========
See accompanying Notes to the Unaudited Financial Statements 2
SIS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars In Thousands) (Unaudited) Three Months Ended March 31, ---------------------- 1997 1996 --------- --------- Cash Flows From Operating Activities Net income $ 2,770 $ 2,404 Adjustments to reconcile net income to net cash provided by/ (used for) operating activities Provision for possible loan losses 401 700 Depreciation 718 747 Amortization of premium on investment securities, net 533 588 ESOP and restricted stock expenses 348 376 Investment security gains -- (2) Income from equity investment in partnerships (1) (87) Gain on sale of loans (106) (270) Disbursements for mortgage loans held for sale (15,101) (33,322) Receipts from mortgage loans held for sale 15,207 33,592 Changes in other assets and other liabilities: Decrease (increase) in other assets, net 727 (1,549) (Decrease) increase in accrued expenses and other liabilities 2,016 (904) --------- --------- Net cash provided by operating activities 7,512 2,273 --------- --------- Cash Flows From Investing Activities Proceeds from sales of investment securities available for sale -- 6,600 Proceeds from maturities and principal payments received on investment securities available for sale 32,203 46,750 Purchase of investment securities available for sale (64,927) (107,484) Proceeds from maturities and principal payments received on investment securities held to maturity 10,713 11,728 Purchase of investment securities held to maturity (7,264) (23,436) Net increase in loans receivable (6,340) (3,819) Net decrease in foreclosed real estate 37 1,368 Proceeds from sale of loans 89 284 Purchase of fixed assets (936) (553) --------- --------- Net cash used for investing activities (36,425) (68,562) --------- ---------
See accompanying Notes to the Unaudited Financial Statements 3
SIS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (continued) (Dollars In Thousands) (Unaudited) Three Months Ended March 31, --------------------- 1997 1996 -------- --------- Cash Flows from Financing Activities Net increase in deposits 37,356 25,738 Net increase in borrowings 14,215 34,845 Net increase in mortgagors' escrow deposits 2,143 1,975 Net proceeds from exercise of stock options 175 -- Repurchase of common stock (2,095) -- Cash dividends paid (648) -- -------- -------- Net cash provided by financing activities 51,146 62,558 -------- -------- Increase (decrease) in cash and cash equivalents 22,233 (3,731) Cash and cash equivalents, beginning of period 41,947 38,422 -------- -------- Cash and cash equivalents, end of period $ 64,180 $ 34,691 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for interest to depositors and interest on debt $ 11,733 $ 9,220 Non-cash investing activities: Transfers to foreclosed real estate, net $ -- $ 341
See accompanying Notes to the Unaudited Financial Statements 4
SIS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For The Three Months Ended March 31, 1997 and 1996 (Dollars In Thousands) Net unrealized gain (loss) on investment Unearned Additional securities Treasury Common Compen- Paid-In Retained available Stock Stock sation Capital Earnings for sale at Cost Total ------- ------- ---------- -------- ------------- --------- ------- Balance at December 31, 1996 $ 57 $(3,693) $42,665 $60,993 $ 1,895 $ -- $ 101,917 Net income -- -- -- 2,770 -- -- 2,770 Cash dividends declared ($0.12 per share) -- -- -- (648) -- -- (648) Issuance of common stock in connection with employee and non-employee directors benefit programs -- (98) 45 -- -- 228 175 Decrease in unearned compensation -- 167 181 -- -- -- 348 Change in unrealized gain (loss) on investment securities available for sale -- -- -- -- (1,147) -- (1,147) Treasury stock purchased -- -- -- -- -- (2,095) (2,095) ------ ------- ------- ------- -------- --------- --------- Balance at March 31, 1997 $ 57 $(3,624) $42,891 $63,115 $ 748 $ (1,867) $ 101,320 ====== ======= ======= ======= ======== ========= ========= Balance at December 31, 1995 $ 57 $(4,937) $41,790 $42,833 $ 1,726 $ -- $ 81,469 Net Income -- -- -- 2,404 -- -- 2,404 Issuance of common stock in connection with employee and non-employee directors benefit programs -- (241) 241 -- -- -- -- Decrease in unearned compensation -- 529 76 -- -- -- 605 Change in unrealized gain (loss) on investment securities available for sale -- -- -- -- (241) -- (241) ------ ------- ------- ------- -------- --------- --------- Balance at March 31, 1996 $ 57 $(4,649) $42,107 $45,237 $ 1,485 $ -- $ 84,237 ====== ======= ======= ======= ======== ========= =========
See accompanying Notes to the Unaudited Financial Statements 5 SIS BANCORP, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (Dollars in thousands except per share amounts) 1. Holding Company Formation SIS Bancorp, Inc., a Massachusetts corporation, was organized by Springfield Institution for Savings (the "Bank") for the purpose of reorganizing the Bank into a holding company structure. The Company acquired 100% of the outstanding shares of the Bank's common stock, par value $1.00 per share, in a 1:1 exchange for shares of the Company's common stock, par value $.01 per share (the "Company Common Stock"). Upon the effectiveness of such share-for-share exchange (the "Reorganization") on June 21, 1996, the Bank became the wholly-owned subsidiary of the Company and the Bank's former stockholders became stockholders of the Company. The Reorganization was accounted for in a manner similar to a pooling of interests, and accordingly, the information included in the financial statements and their accompanying notes presents the combined results of the Bank and the Company as if the Reorganization had been effected on January 1, 1996. 2. Condensed Consolidated Financial Statements The Condensed Consolidated Financial Statements of the Company included herein are unaudited, and in the opinion of management all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial condition, results of operations and cash flows, as of and for the periods covered herein, have been made. Certain information and note disclosures normally included in Condensed Consolidated Financial Statements have been omitted as they are included in the most recent Securities and Exchange Commission ("SEC") Form 10-K and accompanying Notes to the Financial Statements (the "Form 10-K") filed by the Company for the year ended December 31, 1996. Management believes that the disclosures contained herein are adequate to make a fair presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the Form 10-K. The results for the three month interim period covered hereby are not necessarily indicative of the operating results for a full year. 3. New Accounting Pronouncements Effective January 1, 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 125 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", that provides accounting and reporting standards which require that after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. In addition to setting requirements regarding the initial recording and subsequent accounting for assets, liabilities and derivatives acquired in transfers of financial assets, this Statement requires that debtors reclassify financial assets pledged as collateral and that secured parties recognize those assets and their obligation to return them in certain circumstances in which the secured party has taken control of those assets. SFAS 125 is effective prospectively for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996 and for collateral related matters on January 1, 1998. The adoption of this statement did not have a material affect on the Company's financial position as of March 31, 1997 or on the results of its operations for the three month period then ended. In February of 1997 the Financial Accounting Standards Board issued SFAS 128, "Earnings Per Share". SFAS 128 establishes standards for computing and presenting earnings per share ("EPS") and applies to entities with publicly held common stock or potential common stock. This statement simplifies the standards for computing EPS previously found in APB Opinion No. 15, "Earnings Per Share," and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 128 will be effective for financial statements issued after December 15, 1997, and will be adopted by the Company in its 1997 annual report. If SFAS 128 had been effective during the first quarter of 1997, pro forma basic and diluted EPS for the three months ended March 31, 1997 would have been $0.53 and $0.50, respectively. 6 4. Dividend Policy The Company paid its first quarterly cash dividend in the amount of $0.12 per share on February 20, 1997. On April 24, 1997 the Company declared a dividend of $0.12 per share payable on May 23, 1997 to shareholders of record as of the close of business on May 5, 1997. 5. Divestment Related Charges The Company has certain subsidiaries that are engaged in various real estate investments, directly or in joint ventures with unaffiliated partners. In accordance with the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the Company has terminated its real estate development activities and is in the process of selling its remaining real estate investments. In the first quarter of 1997, the Company established a reserve of $1.0 million relating to the divestment of its real estate investment and brokerage subsidiaries, Colebrook Inc. and subsidiaries ("Colebrook"). This amount is included in net expense of real estate operations in the March 31, 1997 Condensed Consolidated Statement of Operations. The $1.0 million reserve consists of $0.7 million in severance and benefit accruals and $0.3 million for other expenses. As of March 31, 1997, no amounts have been paid relating to the divestiture. This divestment is scheduled to be completed within one year. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (DOLLARS IN THOUSANDS) Overview SIS Bancorp, Inc., a Massachusetts corporation (the "Company"), was organized by Springfield Institution for Savings (the "Bank") for the purpose of reorganizing the Bank into a holding company structure ("the Reorganization"). Upon the effectiveness of the Reorganization, the Bank became the wholly-owned subsidiary of the Company and the Bank's former stockholders became stockholders of the Company. Substantially all of the Company's operations are conducted through the Bank. The Bank provides a wide variety of financial services which include retail and commercial banking, residential mortgage origination and servicing, and commercial and consumer lending. The Bank's revenues are derived principally from interest payments on its loan portfolios and mortgage-backed and other investment securities. The Bank's primary sources of funds are deposits, borrowings and principal and interest payments on loans and mortgage-backed securities. Results of Operations for the Three Months Ended March 31, 1997 and March 31, 1996 The Company reported net income of $2.8 million, or $0.50 per share fully diluted for the first quarter of 1997 as compared to net income of $2.4 million, or $0.45 per share fully diluted for the same period last year. The improved results are primarily attributable to increased net interest income partially offset by higher noninterest expenses and income tax expense. Net Interest Income Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income is affected by the mix and volume of assets and liabilities, and the movement and level of interest rates. The Company invests in certain assets that have preferential tax treatment. In order to present yields on a comparable basis, net interest income is presented on a fully taxable equivalent basis for purposes of yield and margin analysis. The following table sets forth, for the period indicated, average balances, interest income and expense, and yields earned or rates paid on the major categories of assets and liabilities. Non-accrual loans have been included in the appropriate average balance loan category, but unpaid interest on non-accrual loans has not been included for purposes of determining interest income. In addition, investment securities available for sale are reflected at amortized cost. 8
Three Months Ended March 31, ------------------------------------------------------------------------------ 1997 1996 -------------------------------------- -------------------------------------- Average Average Average Average Balance Interest(1) Yield/Cost(1) Balance Interest(1) Yield/Cost(1) ---------- ----------- ------------- --------- ----------- ------------- (Dollars In Thousands) Interest-earning assets: Fed funds sold and interest-bearing deposits $ 17,569 $ 229 5.21% $ 15,792 $ 214 5.36% Investment securities held to maturity 193,075 3,363 6.97% 174,574 2,946 6.75% Investment securities available for sale 457,804 7,873 6.88% 260,110 4,126 6.35% Residential real estate loans 237,316 4,732 7.98% 255,386 5,033 7.88% Commercial real estate loans 115,275 2,557 8.87% 118,681 2,444 8.24% Commercial loans 165,508 3,527 8.52% 111,522 2,492 8.84% Home equity loans 106,078 2,075 7.93% 69,350 1,486 8.62% Consumer loans 4,452 128 11.50% 6,858 97 5.66% ---------- ------ ------ ---------- ------ ----- Total interest-earning assets 1,297,077 24,484 7.55% 1,012,273 18,838 7.44% Allowance for loan losses (15,883) (15,422) Non-interest-earning assets 89,906 80,504 ---------- ---------- Total assets $1,371,100 $24,484 $1,077,355 $18,838 ========== ======= ========== ======= Interest-bearing liabilities: Deposits Savings accounts $ 198,288 $ 1,098 2.25% $ 188,855 $ 1,177 2.51% NOW accounts 58,035 144 1.01% 54,246 168 1.25% Money market accounts 205,236 1,677 3.31% 203,808 1,696 3.35% Time deposit accounts 421,806 5,418 5.21% 370,581 5,036 5.47% ---------- ------ ------ ---------- ------ ----- Total interest-bearing deposits 883,365 8,337 3.83% 817,490 8,077 3.97% Borrowed funds 256,880 3,534 5.50% 83,721 1,190 5.62% ---------- ------ ------ ---------- ------ ----- Total interest-bearing liabilities 1,140,245 11,871 4.22% 901,211 9,267 4.14% Non-interest-bearing liabilities 130,405 96,523 ---------- ---------- Total liabilities 1,270,650 997,734 Total stockholders' equity 100,450 79,621 ---------- ---------- Total liabilities and stockholders' equity $1,371,100 $11,871 $1,077,355 $ 9,267 ========== ======= ========== ======= Net interest income/spread $12,613 3.33% $ 9,571 3.30% ======= ==== ======= ===== Net interest margin as a % of interest- earning assets 3.89% 3.78% ==== ===== Tax equivalent adjustment $ 120 $ -- ------- ------- Net interest income/spread per Condensed Consolidated Statement of Operations $12,493 $ 9,571 ======= ======= (1) On a fully taxable equivalent basis. Calculated using a Federal income tax rate of 34% for 1997 and 1996.
Net interest income on a fully taxable equivalent basis for the three months ended March 31, 1997 was $12.6 million compared to $9.6 million for the three months ended March 31, 1996, an increase of $3.0 million or 31.8%. Total interest income was $24.5 million on a fully taxable equivalent basis for the three months ended March 31, 1997, an increase of $5.6 million or 30.0% from the same period last year. These increases are primarily due to an increase in average interest-earning assets. Average interest-earning assets totaled $1.3 billion in the first quarter of 1997 compared to $1.0 billion in the first quarter of 1996, an increase of $284.8 million or 28.1%. Total investments increased $216.2 million and were funded by higher deposit levels and borrowed funds. Total loans increased $66.8 million as the Company continued to focus on the commercial and home equity market segments, which grew by $54.0 million or 48.4% and $36.7 million or 53.0%, respectively. Residential real estate loan balances declined $18.1 million or 7.1% for the three months ended March 31, 1997, reflecting amortization and prepayments of the existing loan portfolio partially offset by adjustable rate mortgage production. The Company originates long-term fixed rate mortgages for sale in the secondary market and generally holds adjustable rate mortgages in the Company's loan portfolio. Total interest expense was $11.9 million for the three months ended March 31, 1997 compared to $9.3 million during the same period in 1996, an increase of $2.6 million or 28.1%. This increase is attributable to increases in interest-bearing deposits and borrowed funds. Interest-bearing deposits totaled $883.4 million for the quarter ended March 31, 1997 compared to $817.5 million for the same period in 1996, an increase of $65.9 million or 8.1%. This growth occurred primarily in time deposits which increased $51.2 million largely attributable to the introduction of new CD products. Borrowed funds averaged $256.9 million for the three months ended March 31, 1997 compared to $83.7 9 million for the same period in 1996 reflecting the use of Federal Home Loan Bank ("FHLB") advances and repurchase agreements to leverage a portion of the Company's capital. The following table presents the changes in net interest income (on a fully taxable equivalent basis) resulting from changes in interest rates or changes in the volume of interest-earning assets and interest-bearing liabilities during the periods indicated. Changes which are attributable to both rate and volume have been allocated evenly between the change in rate and volume components. Three Months Ended March 31, 1997 versus 1996 -------------------------------- Increase (Decrease) Due to -------------------------------- Volume Rate Net -------- -------- ---------- (Dollars In Thousands) Interest-earning assets: Federal funds sold and interest bearing deposits $ 24 $ (9) $ 15 Investment securities held to maturity 317 100 417 Investment securities available for sale 3,268 479 3,747 Residential real estate loans (358) 57 (301) Commercial real estate loans (73) 186 113 Commercial loans 1,178 (143) 1,035 Home equity loans 753 (164) 589 Consumer loans (52) 83 31 ------- ------- ------- Total interest-earning assets 5,057 589 5,646 ------- ------- ------- Interest-bearing liabilities: Deposits: Savings accounts 56 (135) (79) NOW accounts 11 (35) (24) Money market accounts 12 (31) (19) Time deposit accounts 676 (294) 382 ------- ------- ------- Total deposits 755 (495) 260 Borrowed funds 2,422 (78) 2,344 ------- ------- ------- Total interest-bearing liabilities 3,177 (573) 2,604 ------- ------- ------- Change in net interest income $ 1,880 $ 1,162 $ 3,042 ======= ======= ======= Provision for Possible Loan Losses The Company's provision for possible loan losses was $0.4 million for the first quarter of 1997 compared to $0.7 million in the first quarter of 1996. The provision for possible loan losses is based upon management's judgment of the amount necessary to maintain the allowance for possible loan losses at a level which is considered adequate. 10 Non-interest Income Non-interest income is composed of fee income for bank services and gains or losses from the sale of assets. The components of non-interest income for the periods presented are as follows: Three months ended March 31, ------------------------- 1997 1996 --------- -------- Net gain on sale of loans $ 106 $ 270 Net gain on sale of securities -- 2 Loan charges and fees 685 707 Deposit related fees 1,604 1,403 Other charges and fees 323 199 ------ ------ $2,718 $2,581 ====== ====== Net gain on sale of loans decreased $0.2 million. Management attributes the decrease to reduced production and sale of fixed rate single family residential mortgage loans due to a higher interest rate environment. Deposit service charges increased $0.2 million due primarily to fees associated with the Company's larger noninterest bearing account base. Non Interest Expense Salaries and Benefits Expense Salaries and benefits expense totaled $4.7 million for the first quarter of 1997 compared to $4.3 million for the same period in 1996, an increase of $0.4 million reflecting standard wage increases as well as an increase in staffing related to new branch openings and branch related support personnel for the Company's consumer strategy. Occupancy Expense of Bank Premises Occupancy expense of bank premises totaled $1.0 million for the first quarter 1997 compared to $0.8 million for the same period in 1996, an increase of $0.2 million. This increase is primarily due to costs associated with the expansion of the retail branch network and the addition of stand alone ATMs. 11 Other Operating Expense The components of other operating expense for the periods presented are as follows: Three months ended March 31, ------------------------------ 1997 1996 -------- -------- Marketing $ 591 $ 330 Insurance 139 101 Professional services 747 640 Outside processing 1,117 957 Other 1,079 1,088 ------ ------ $3,673 $3,116 ====== ====== Marketing expense increased $0.3 million related to advertising and marketing expenses associated with the promotion of home equity lines and loans. Outside processing increased $0.2 million, reflecting higher transaction and account volume resulting from the Company's consumer strategy. Net Expense of Real Estate Operations The Company has certain subsidiaries that are engaged in various real estate investments, directly or in joint ventures with unaffiliated partners. In accordance with the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the Company has terminated its real estate development activities and is in the process of selling its remaining real estate investments. Net expense of real estate operations was $0.4 million higher during the first quarter of 1997 compared to the same period in 1996. In the first quarter of 1997, the Company recognized a $0.6 million gain on the sale of a real estate property which was offset by the establishment of a reserve of $1.0 million relating to the divestment of Colebrook. The $1.0 million reserve consists of $0.7 million in severance and benefit accruals and $0.3 million for other expenses. As of March 31, 1997, no amounts have been paid relating to the divestiture. This divestment is scheduled to be completed within one year. Income Taxes For the three months ended March 31, 1997 the Company recorded income tax expense of $1.8 million compared with income tax expense of $0.2 million for the three months ended March 31, 1996. The increase in income tax expense is attributable to the Company becoming fully taxable for financial reporting purposes beginning in the fourth quarter of 1996 and a 73.6% increase in pre-tax earnings. 12 Balance Sheet Analysis - Comparison Of March 31, 1997 To December 31, 1996 Total assets increased from $1.3 billion at December 31, 1996 to $1.4 billion at March 31, 1997. This increase primarily reflects growth in loans and investments funded through an increase in deposits and wholesale borrowings. Investments The Company's investment portfolio increased $27.2 million from $641.5 million at December 31, 1996 to $668.7 million at March 31, 1997. The Company engages in investment activities for both investment and liquidity purposes. The Company maintains an investment securities portfolio which consists primarily of U.S. Government and Agency securities, corporate obligations, asset-backed securities, collateralized mortgage obligations, Federal Home Loan Bank stock, and marketable equity securities. Other short-term investments held by the Company periodically include interest-bearing deposits and federal funds sold. The Company also maintains a mortgage-backed securities portfolio consisting of securities issued and guaranteed by the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Company ("FHLMC") in addition to publicly traded mortgage-backed securities issued by private financial intermediaries which are rated "AA" or higher by rating agencies of national prominence. Securities which the Company has the intent and ability to hold until maturity are classified as held-to-maturity and are carried at amortized cost, while those securities which have been identified as assets that may be sold prior to maturity or assets for which there is not a positive intent to hold to maturity are classified as available-for-sale and are carried at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity. The table below sets forth certain information regarding the amortized cost and fair value of the Company's investment portfolio at the dates indicated.
March 31, 1997 ----------------------------------------------------------- Available for Sale Held to Maturity ---------------------------- --------------------------- (Dollars In Thousands) Amortized Amortized Cost Fair Value Cost Fair Value ----------- ------------ ------------ ------------ U.S. Government and Agency obligations $ 30,898 $ 30,652 $ -- $ -- Collateralized mortgage obligations 27,594 27,359 -- -- Mortgage-backed securities 401,198 402,574 142,020 139,930 Asset-backed securities -- -- 46,394 45,832 Other bonds and short term obligations -- -- 200 200 Other securities 19,331 19,485 -- -- -------- -------- -------- -------- Total $479,021 $480,070 $188,614 $185,962 ======== ======== ======== ======== December 31, 1996 ----------------------------------------------------------- Available for Sale Held to Maturity ---------------------------- --------------------------- (Dollars In Thousands) Amortized Amortized Cost Fair Value Cost Fair Value ----------- ------------ ------------ ------------ U.S. Government and Agency obligations $ 29,901 $ 29,943 $ -- $ -- Collateralized mortgage obligations 28,965 29,007 -- -- Mortgage-backed securities 371,921 374,218 149,856 149,252 Asset-backed securities -- -- 42,118 42,165 Other bonds and short term obligations 1,681 1,681 200 200 Other securities 14,276 14,474 -- -- -------- -------- -------- -------- Total $446,744 $449,323 $192,174 $191,617 ======== ======== ======== ========
13 Loan Portfolio Composition Gross loans comprised $631.4 million or 45.0% of total assets as of March 31, 1997. The following table sets forth information concerning the Company's loan portfolio in dollar amounts and percentages, by type of loan at March 31, 1997 and at December 31, 1996.
March 31, 1997 December 31, 1996 ----------------------- ------------------------ Percent of Percent of Amount Total Amount Total --------- ---------- ------------ ---------- (Dollars In Thousands) Residential real estate loans $236,622 37.47% $242,410 38.79% Commercial real estate loans 112,280 17.78% 118,442 18.95% Commercial loans 170,782 27.05% 155,808 24.93% Home equity loans 106,460 16.86% 104,206 16.67% Consumer loans 5,278 0.84% 4,132 0.66% -------- ------ -------- ------ Total loans receivable, gross 631,422 100.00% 624,998 100.00% -------- ------ -------- ------ Less: Unearned income and fees (1,312) (1,196) Allowance for loan losses 16,287 15,597 -------- -------- Total loans receivable, net $616,447 $ 610,597 ======== =========
The Company continues to actively originate loans secured by first mortgages on one to four family residences, and offers a variety of fixed and adjustable rate mortgage loan products. The Company originates long-term fixed rate mortgages for sale in the secondary market and generally holds adjustable rate mortgages in the Company's loan portfolio. During the three months ended March 31, 1997, the Company experienced an increase in prepayments in its adjustable rate mortgage portfolio. These prepayments offset new originations and resulted in a $5.8 million decrease in residential real estate balances between December 31, 1996 and March 31, 1997. During the three months ended March 31, 1997, commercial loan balances increased $15.0 million, reflecting the Company's continued focus on lending activities in the local business market. During this same period commercial real estate loan balances decreased $6.1 million primarily due to prepayments. Home equity loans outstanding have increased $2.3 million since December 31, 1996. Management attributes this increase to the active promotion of these products. Non-performing Assets Non-performing assets totaled $6.4 million as of March 31, 1997 compared to $7.6 million as of December 31, 1996, a decrease of $1.2 million or 15.3%. The decrease was principally attributable to a decrease of $2.1 million in non-accruing commercial real estate loans partially offset by an increase of $0.9 million in loans past due 90 days but still accruing. The decrease in non-accruing commercial real estate loans is attributable primarily to the payment in full of two loans. 14 The following table sets forth information regarding the components of non-performing assets for the periods presented: March 31, December 31, 1997 1996 ----------- ----------- (Dollars In Thousands) Non-accrual loans (1): Residential real estate loans $1,415 $1,287 Commercial real estate loans 2,362 4,428 Commercial loans 577 674 Home equity loans 188 157 Consumer loans 3 1 ------ ------ Total non-accrual loans 4,545 6,547 ------ ------ Loans past due 90 days still accruing (2) 1,315 428 ------ ------ Total non-performing loans 5,860 6,975 Foreclosed real estate (3) 344 381 Restructured loans on accrual status (4) 197 198 ====== ====== Total non-performing assets $6,401 $7,554 ====== ====== Total non-performing loans to total gross loans 0.93% 1.12% Total non-performing assets to total assets 0.46% 0.56% Allowance for possible losses to non-performing loans 277.94% 223.61% (1) Non-accrual loans are loans that are contractually past due in excess of 90 days, for which the Company has stopped the accrual of interest, or loans which are not past due but on which the Bank has stopped the accrual of interest based on management's assessment of the circumstances surrounding these loans. (2) Accruing loans past due 90 days or more are loans which have not been placed on non-accrual status as, in management's opinion, the collection of the loan, in full, is not in doubt. (3) Foreclosed real estate includes OREO, defined as real estate acquired through foreclosure or acceptance of a deed in lieu of foreclosure. The Company carries foreclosed real estate at the lower of cost or net realizable value, which approximates fair value less estimated selling costs. (4) Restructured loans are loans for which concessions, including reduction of interest rates or deferral of interest or principal payments, have been granted due to the borrower's financial condition. Restructured loans on non-accrual status are reported in the non-accrual loan category. Restructured loans on accrual status are those loans that have complied with terms of a restructuring agreement for a satisfactory period (generally six months). 15 Allowance for Possible Loan Losses The allowance for possible loan losses reflects an amount that, in management's judgment, is adequate to provide for potential losses in the loan portfolio. In addition, examinations of the adequacy of the loan loss reserve are conducted periodically by various regulatory agencies. The allowance for possible loan losses at March 31, 1997 was $16.3 million, compared to $14.6 million at March 31, 1996. The activity in the allowance for possible loan losses for the three months ended March 31, 1997 and 1996 was as follows:
Three Months Ended March 31, ---------------------------- 1997 1996 ---------- ----------- (Dollars In Thousands) Balance, beginning of period $ 15,597 $ 14,986 Provision for loan losses 401 700 Charge-offs: Residential real estate loans (3) -- Commercial real estate loans -- (1,866) Commercial loans (128) -- Home equity loans (15) (63) Consumer loans (44) (18) -------- -------- Total charge-offs (190) (1,947) Recoveries: Residential real estate loans 1 408 Commercial real estate loans 426 407 Commercial loans 39 45 Home equity loans 5 11 Consumer loans 8 9 -------- -------- Total recoveries 479 880 -------- -------- Net recoveries/(charge offs) 289 (1,067) Balance, end of period $ 16,287 $ 14,619 ========= ======= Ratio of net loan recoveries/(charge offs) during the period to average loans outstanding during the period 0.05% (0.19%) Ratio of allowance for possible loan losses to total loans at the end of the period 2.58% 2.54% Ratio of allowance for possible loan losses to non-performing loans at the end of the period 277.94% 133.73%
16 At March 31, 1997, the recorded investment in loans that are considered impaired under SFAS 114 "Accounting by Creditors for Impairment of a Loan" was $9.6 million. Included in this amount is $1.4 million of impaired loans for which the related SFAS 114 allowance is $0.3 million and $8.2 million of impaired loans for which the SFAS 114 allowance is zero. The average recorded investment in impaired loans during the three months ended March 31, 1997 was approximately $8.6 million. For the three month period ended March 31, 1997, the Company recognized interest income on these impaired loans of $0.1 million. The following table shows the allocation of the allowance for possible loan losses to the various types of loans as well as the percentage of loans in each category to total loans.
March 31, 1997 December 31, 1996 ------------------------------- -------------------------------- % of % of Total Total Allowance for Allowance for Amount Loan Losses Amount Loan Losses ------------- ------------- ------------ -------------- Residential real estate loans $ 2,289 14.05% $ 1,540 9.87% Commercial real estate loans 4,986 30.61% 5,808 37.24% Commercial loans 6,831 41.95% 6,711 43.03% Home equity loans 1,585 9.73% 1,207 7.74% Consumer loans 596 3.66% 331 2.12% ------- ------ ------- ------ Total allowance for possible loan losses $16,287 100.00% $15,597 100.00% ======= ====== ======= ======
Deposit Distribution The principal source of funds for the Company are deposits from local consumers and businesses. There were no brokered deposits at March 31, 1997. The Company's deposits consist of demand and NOW accounts, passbook and statement savings accounts, money market accounts and time deposits. Total deposits were $1.0 billion at March 31, 1997 compared to $969.5 million at December 31, 1996, an increase of $37.4 million. This growth occurred primarily in demand deposits, savings accounts and time deposits. Demand deposits and savings accounts increased $9.6 million and $9.7 million, respectively, as customers continue to take advantage of free savings and checking accounts offered as a result of the Company's consumer deposit strategy to attract and retain core deposits, which provide the Company with a lower cost source of funds. The $16.4 million growth in time deposits is primarily attributable to the introduction of new CD products. The following table presents the composition of deposits for the periods indicated: March 31, 1997 December 31, 1996 ------------------------ -------------------------- Percent Percent of of Amount Total Amount Total ----------- --------- ----------- ---------- (Dollars In Thousands) Demand deposits $ 110,128 10.94% $ 100,527 10.37% NOW accounts 61,185 6.08% 57,980 5.98% Savings accounts 205,117 20.37% 195,418 20.16% Money market accounts 207,995 20.66% 209,523 21.61% Time deposits 422,448 41.95% 406,069 41.88% ---------- ------ ---------- ------ Total deposits $1,006,873 100.00% $ 969,517 100.00% ========== ====== ========== ====== 17 Borrowings Borrowings consist of FHLB advances, securities sold under agreements to repurchase, and loans payable. The Company generally uses borrowings to fund loan growth and to leverage a portion of its capital position. Borrowings increased $14.2 million from $247.9 million at December 31, 1996 to $262.1 million at March 31, 1997 reflecting a portion of the funding for the growth in loans and investments. Regulatory Capital The Company 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 adverse effect on the Company's financial statements. Under applicable capital adequacy requirements the Company must meet specific minimum capital requirements that involve quantitative measures of the Company's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require both the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. As of March 31, 1997 both the Company and the Bank exceed all capital adequacy requirements to which they are subject and qualify as "well capitalized" under applicable regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the FDIC. The Company's and Bank's actual capital amounts and ratios are presented in the table. No deductions were made from capital for interest-rate risk.
Minimum Minimum Requirements Requirements For Capital To Qualify As Actual Adequacy Purposes Well Capitalized -------------------- ------------------- -------------------- Amount Ratio Amount Ratio Amount Ratio --------- ------- --------- ------- ---------- -------- As of March 31, 1997: Tier I Capital (to Average Assets) Company $ 96,695 7.1% $ 54,689 4.0% N/A Bank $ 95,618 7.0% $ 54,650 4.0% $ 68,313 5.0% Tier I Capital (to Risk Weighted Assets) Company $ 96,695 12.5% $ 31,056 4.0% $ 46,584 6.0% Bank $ 95,618 12.3% $ 31,038 4.0% $ 46,557 6.0% Total Capital (to Risk Weighted Assets) Company $106,476 13.7% $ 62,112 8.0% $ 77,640 10.0% Bank $105,399 13.6% $ 62,076 8.0% $ 77,595 10.0% As of December 31, 1996: Tier I Capital (to Average Assets) Company $ 96,317 7.4% $ 52,007 4.0% N/A Bank $ 95,816 7.4% $ 51,999 4.0% $ 64,999 5.0% Tier I Capital (to Risk Weighted Assets) Company $ 96,317 12.8% $ 30,118 4.0% $ 45,177 6.0% Bank $ 95,816 12.7% $ 30,110 4.0% $ 45,165 6.0% Total Capital (to Risk Weighted Assets) Company $105,804 14.1% $ 60,236 8.0% $ 75,296 10.0% Bank $105,300 14.0% $ 60,220 8.0% $ 75,275 10.0%
Recent amendments to the Federal Reserve Board's Regulation Y, which included a definition of "well capitalized" for bank holding companies, became effective on April 21, 1997. 18 Interest Rate Risk Management Using management's estimates of asset prepayments and core deposit decay in its computation, the Company estimates that its cumulative one-year gap position was liability sensitive by $37.0 million or 2.64% of total assets at March 31, 1997. The following table sets forth the amounts of assets and liabilities outstanding at March 31, 1997, which are anticipated by the Company to mature or reprice in each of the future time periods shown using certain assumptions based on its historical experience, the current interest rate environment, and other data available to management. Management believes that these assumptions approximate actual experience and considers such assumptions reasonable, however, the interest rate sensitivity of the Company's assets and liabilities could vary substantially if different assumptions were used or actual experience differs from the assumptions used. Management periodically reviews and, when appropriate, changes assumptions used in creating this table. 19
GAP Position At March 31, 1997 ---------------------------------------------------------------------- More than six Less than months less six months than one year 1 - 5 Years Over 5 Yrs TOTAL ------------ ------------- ------------- ------------ ------------ (Dollars In Thousands) Assets: Federal funds sold and interest bearing deposits $ 21,656 $ -- $ -- $ -- $ 21,656 Investment securities 296,215 160,763 180,267 31,439 668,684 Residential real estate loans 77,393 43,204 101,559 13,366 235,522 Commercial real estate loans 28,185 16,628 58,568 6,554 109,935 Commercial loans 77,672 10,492 73,827 8,508 170,499 Home equity loans 83,464 1,193 13,357 8,983 106,997 Consumer loans 4,727 52 217 241 5,237 Other assets -- -- -- 85,215 85,215 ---------- ---------- ---------- ---------- ---------- Total assets $ 589,312 $ 232,332 $ 427,795 $ 154,306 $1,403,745 ========== ========== ========== ========== ========== Liabilities & stockholders' equity: Savings accounts $ 30,768 $ 30,768 $ 143,581 $ -- $ 205,117 NOW accounts 9,178 9,178 42,829 -- 61,185 Money market accounts 62,398 62,398 83,199 -- 207,995 Time deposits 251,785 111,421 59,242 -- 422,448 Borrowed funds 246,660 250 7,330 7,871 262,111 Other liabilities & stockholders' equity 21,922 21,922 65,766 135,279 244,889 ---------- ---------- ---------- ---------- ---------- Total liabilities & stockholders' equity $ 622,711 $ 235,937 $ 401,947 $ 143,150 $1,403,745 ========== ========== ========== ========== ========== Period GAP position $ (33,399) $ (3,605) $ 25,848 $ 11,156 Net period GAP as a percentage of total assets (2.38%) (0.26%) 1.84% 0.79% Cumulative GAP $ (33,399) $ (37,004) $ (11,156) -- Cumulative GAP as a percentage of total assets (2.38%) (2.64%) (0.79%) -- For purposes of the above interest sensitivity analysis: Residential loans held for sale at March 31, 1997 totaling $2.4 million are in the less than six month interest sensitivity period. Fixed rate assets are scheduled by contractual maturity and adjustable rate assets are scheduled by their next repricing date. In both cases, assets that have prepayment optionality are adjusted for the Company's estimate of prepayments. Loans do not include non-accrual loans of $4.5 million. Loans do not include the allowance for loan loss of $16.3 million. In certain deposit categories where there is no contractual maturity, Management assumed the sensitivity characteristics listed below based on the current interest rate environment and the Company's historical experience. Management reviews these assumptions on a quarterly basis and may modify them as circumstances dictate. - Savings accounts are assumed to decay at an annual rate of 30%. - NOW accounts are assumed to decay at an annual rate of 30%. - Money market accounts are assumed to decay at an annual rate of 60%. - Non-interest bearing accounts of $110.1 million are included in other liabilities and are assumed to decay at an annual rate of 40%.
Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, while certain assets and liabilities may have similar contractual maturities or periods to repricing, they may react in different ways to changes in market interest rates. Further, in the event of a change in interest rates, prepayment and early 20 withdrawal levels would likely deviate significantly from those assumed in calculating the table. Additionally, certain assets, such as adjustable rate mortgages, have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Finally, the ability of borrowers to service their adjustable rate mortgages may decrease in the event of an interest rate increase. Liquidity Liquidity measures the ability of the Company to meet its maturing obligations and existing commitments, to withstand fluctuations in deposit levels, to fund its operations and to provide for customer credit needs. If the Company requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB and collateral eligible for repurchase agreements. Because the Company has a stable retail deposit base, management believes that significant borrowings will not be necessary to maintain its current liquidity position. Management intends to continue seeking opportunities for expansion and believes that the Company's liquidity, capital resources and borrowing capabilities are adequate for its current and intended operations. 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is involved in litigation arising in the normal course of business. Management does not believe that the ultimate liabilities arising from such litigation, if any, would be material in relation to the consolidated results of operations or financial position of the Company. 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 Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - none (b) Reports on Form 8-K On January 23, 1997, a Form 8-K was filed by the Company relating to (i) the adoption of a Shareholder Rights Plan on January 22, 1997; (ii) a Stock Repurchase Program authorizing the purchase of up to 5% of the Company's Common Stock; (iii) and a Press Release issued on 1/23/97 relating to the announcement of financial results for the year ended 12/31/96 and the declaration of a quarterly cash dividend of $0.12 per share payable on February 20, 1997 to holders of record as of the close of business on February 3, 1997. 22 SIGNATURES Under the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIS BANCORP, INC. (Registrant) May 13, 1997 /s/ F. William Marshall, Jr. Date F. William Marshall, Jr. President and Chief Executive Officer May 13, 1997 /s/ John F. Treanor Date John F. Treanor Executive Vice President and Chief Financial Officer 23 EX-27 2
9 This schedule contains summary financial information extracted from the unaudited financial statements of SIS Bancorp, Inc. at and for the period ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 42,524 3,656 18,000 0 480,070 188,614 185,962 616,447 16,287 1,403,745 1,006,873 259,263 33,441 2,848 0 0 57 101,263 1,403,745 12,984 11,151 229 24,364 8,337 11,871 12,493 401 0 3,673 4,541 4,541 0 0 2,770 .50 .50 7.51 4,545 1,315 197 0 15,597 190 479 16,287 16,287 0 0
-----END PRIVACY-ENHANCED MESSAGE-----