-----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, FqywBsEak//AEvAA7uOs+1BPrMA4SbZ97LQ2vow0XAXl8M+izsYOdfUPcT02GiIW 5McSZCRQL+ICC2hvng/nOw== 0000914317-00-000360.txt : 20000512 0000914317-00-000360.hdr.sgml : 20000512 ACCESSION NUMBER: 0000914317-00-000360 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCBT FINANCIAL COMPANIES INC CENTRAL INDEX KEY: 0001074972 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 043437708 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-72565 FILM NUMBER: 626673 BUSINESS ADDRESS: STREET 1: 307 MAIN STREET CITY: HYANNIS STATE: MA ZIP: 02601 BUSINESS PHONE: 5087608323 MAIL ADDRESS: STREET 1: 307 MAIN STREET CITY: HYANNIS STATE: MA ZIP: 02601 FORMER COMPANY: FORMER CONFORMED NAME: CCBT BANCORP INC DATE OF NAME CHANGE: 19981209 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended March 31, 2000 Commission File No. 000-25381 CCBT FINANCIAL COMPANIES, INC. (Exact name of Registrant as specified in its charter) Massachusetts 04-3437708 (State of Incorporation) (I.R.S. Employer Identification No.) 307 Main Street, Hyannis, Massachusetts 02601 (Address of principal executive office) (Zip Code) (Registrant's telephone #, incl. area code): 508-394-1300 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. (1) [X] Yes No and (2) [X] Yes : No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. There were 8,608,048 shares of common stock outstanding as of March 31, 2000. TABLE OF CONTENTS Section Description Page PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition 3 March 31, 2000 (Unaudited) and December 31, 1999 Consolidated Statements of Income (Unaudited) 4 Three Months Ended March 31, 2000 and 1999 Consolidated Statements of Cash Flows (Unaudited) 5 Three Months Ended March 31, 2000 and 1999 Consolidated Statements of Changes in Stockholders' Equity 6 (Unaudited) Three Months Ended March 31, 2000 and 1999 Consolidated Statements of Comprehensive Income (Unaudited) 6 Three Months Ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 8-16 and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 PART II OTHER INFORMATION Item 1. Legal Proceedings 17 Item 2. Changes in Securities and Use of Proceeds 17 Item 3. Defaults upon Senior Securities 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURES 18 Exhibit Index 18 PART I FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------
CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF CONDITION March 31, December 31, 2000 1999 -------------- -------------- ASSETS (Unaudited) Cash and due from banks $ 36,771,235 $ 43,415,100 Short term interest-bearing deposits 22,702,464 2,207,328 Securities available for sale, at fair value 441,805,200 463,379,414 Federal Home Loan Bank stock, at cost 22,125,400 22,125,400 Federal Reserve Bank of Boston stock, at cost 1,096,700 1,096,700 Loans, net of reserve for loan losses 704,233,526 663,584,422 Loans held for sale 195,300 200,000 Premises and equipment 12,162,266 12,396,729 Deferred tax assets 4,255,464 4,657,933 Accrued interest receivable on securities 3,413,335 2,850,366 Principal and interest receivable on loans 3,547,326 3,156,914 Other assets 9,076,392 12,044,040 -------------- -------------- Total assets $1,261,384,608 $1,231,114,346 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 757,122,073 $ 766,063,617 Borrowings from the Federal Home Loan Bank 381,864,413 347,962,999 Other short-term borrowings 20,477,601 19,345,885 Current taxes payable 3,098,969 1,721,187 Interest payable on deposits and borrowings 2,877,336 3,061,932 Post retirement benefits payable 2,585,849 2,501,480 Employee profit sharing retirement and bonuses payable 669,788 2,396,542 Other liabilities 3,803,421 2,411,093 -------------- -------------- Total liabilities 1,172,499,450 1,145,464,735 -------------- -------------- Stockholders' equity Common stock, $2.50 par value Authorized: 12,000,000 shares Issued: 9,061,064 shares in 2000 and 1999 22,652,660 22,652,660 Surplus 13,903,294 13,903,294 Undivided profits 60,905,242 58,181,480 Treasury stock, at cost (453,016 shares) -7,399,628 -7,399,628 Accumulated other comprehensive income -1,176,410 -1,688,195 -------------- -------------- Total stockholders' equity 88,885,158 85,649,611 -------------- -------------- Total liabilities and stockholders' equity $1,261,384,608 $1,231,114,346 ============== ==============
See accompanying notes to the unaudited consolidated financial statements. 3 PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued)
CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months ended March 31, 2000 1999 ----------- ----------- (Unaudited) INTEREST INCOME: Interest and fees on loans $13,715,616 $12,019,115 Interest on short term interest-bearing deposits 73,816 175,286 Taxable interest income on securities 7,664,395 5,617,027 Tax-exempt interest income on securities 207,958 164,432 Dividends on securities 362,838 369,400 ----------- ----------- Total interest income 22,024,623 18,345,260 ----------- ----------- INTEREST EXPENSE: Interest on deposits 4,863,923 4,269,717 Interest on borrowings from the Federal Home Loan Bank 5,586,152 4,834,960 Interest on other short-term borrowings 259,125 143,404 ----------- ----------- Total interest expense 10,709,200 9,248,081 ----------- ----------- Net interest income 11,315,423 9,097,179 Provision for loan losses -- -- ----------- ----------- Net interest income after provision for loan losses 11,315,423 9,097,179 ----------- ----------- NON-INTEREST INCOME: Financial Advisor Fees 1,507,595 1,324,990 Deposit account service charges 488,179 446,381 Branch banking fees 714,072 712,417 Electronic banking fees 388,502 363,417 Brokerage fees and commissions 283,545 240,650 Net gain (loss) on sale of securities -21,092 54,855 Net gain on sale of loans 23,057 173,439 Other income 196,491 100,791 ----------- ----------- Total non-interest income 3,580,349 3,416,940 ----------- -----------
NON-INTEREST EXPENSE: Salaries 3,157,318 2,978,504 Employee benefits 1,549,054 1,149,541 Building and equipment 1,117,970 1,019,929 Data processing 689,621 743,386 Accounting and legal fees 203,230 142,924 Other outside services 472,598 429,011 Delivery and communication 328,675 313,688 Directors' fees 87,500 75,500 Marketing and advertising 203,863 156,647 Printing and supplies 166,171 196,791 Insurance 95,820 73,419 Expenses from defaulted loans 13,246 18,679 All other expenses 597,568 179,607 ----------- ----------- Total operating expense 8,682,634 7,477,626 ----------- ----------- Net income before taxes 6,213,138 5,036,493 Applicable income taxes 2,112,089 1,987,635 ----------- ----------- Net income $ 4,101,049 $ 3,048,858 =========== =========== Average shares outstanding 8,608,048 9,045,270 Basic earnings per share $ 0.48 $ 0.34 Diluted earnings per share $ 0.48 $ 0.34 Cash dividends declared $ 0.16 $ 0.14
See accompanying notes to the unaudited consolidated financial statements. 4 PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued)
CCBT FINANCIAL COMPANIES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months ended March 31, 2000 1999 ------------- ------------- CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Net income $ 4,101,049 $ 3,048,858 Adjustments to reconcile net income to net cash flow provided by operating activities: Provision for loan losses -- -- Depreciation and amortization 539,695 500,600 Net accretion of securities (4,632,731) (1,626,757) Amortization of deferred loan fees (102,184) (45,828) Net (gain) loss on sale of investment securities 21,092 (54,855) Deferred income taxes 975,313 1,168,397 Net gain on sale of loans (23,057) (173,439) Net change in: Loans held for sale 4,700 3,384,000 Accrued interest receivable (953,381) 401,031 Accrued expenses and other liabilities (434,653) 5,581,005 Other, net 4,641,429 (2,777,201) ------------- ------------- Net cash provided by operating activities 4,137,272 9,405,811 ------------- ------------- CASH PROVIDED (USED) BY INVESTING ACTIVITIES Net increase in loans (33,058,138) (43,868,432) Proceeds from sale of loans 3,648,217 42,322,382 Dispositions of property from defaulted loans -- 115,000 Maturities of securities 48,937,255 131,806,462 Purchase of available for sale securities (62,860,730) (136,824,964) Sales of available for sale securities 28,637,749 33,516,265 Purchase of premises and equipment (304,653) (387,676) ------------- ------------- Net cash provided (used) investing activities (15,000,300) 26,679,037 ------------- ------------- CASH PROVIDED BY FINANCING ACTIVITIES Net decrease in deposits (8,941,544) (24,272,914) Net increase in borrowings from the Federal Home Loan Bank 31,901,414 26,640,882 Net increase in other short-term borrowings 3,131,716 1,236,800 Purchase of CCBT Financial Companies, Inc. common stock in open market -- (1,583,750) Cash dividends paid on common stock (1,377,287) (1,268,549) ------------- ------------- Net cash provided by financing activities 24,714,299 752,469 ------------- ------------- Net increase in cash and cash equivalents 13,851,271 36,837,317 Cash and cash equivalents at beginning of period 45,622,428 29,490,715 ------------- ------------- Cash and cash equivalents at end of period $ 59,473,699 $ 66,328,032 ============= ============= Cash equivalents include amounts due from banks, short term interest-bearing deposits and federal funds sold
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for: Interest $ 10,893,796 $ 9,047,813 Income taxes 583,348 1,000,000 Non-cash transactions: Additions to property from defaulted loans $ 70,000 $ 115,000 Loans to finance OREO property -- 100,000
See accompanying notes to the unaudited consolidated financial statements. 5 PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued)
CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Three Months ended March 31, 2000 1999 ------------ ------------ (Unaudited) COMMON STOCK Balance, beginning of the year $ 22,652,660 $ 22,652,660 ------------ ------------ Balance, March 31 22,652,660 22,652,660 ------------ ------------ SURPLUS Balance, beginning of the year 13,903,294 13,903,294 ------------ ------------ Balance, March 31 13,903,294 13,903,294 ------------ ------------ UNDIVIDED PROFITS Balance, beginning of the year 58,181,480 46,704,129 Net Income 4,101,049 3,048,858 Dividends declared (1,377,287) (1,268,549) ------------ ------------ Balance, March 31 60,905,242 48,484,438 ------------ ------------ TREASURY STOCK Balance, beginning of the year (7,399,628) -- Purchase of Treasury stock -- (1,583,750) ------------ ------------ Balance, March 31 (7,399,628) (1,583,750) ------------ ------------ ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of the year (1,688,195) 282,317 Net other comprehensive income 511,785 253,977 ------------ ------------ Balance, March 31 (1,176,410) 536,294 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY $ 88,885,158 $ 83,992,936 ============ ============
See accompanying notes to the unaudited consolidated financial statements.
CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Three Months ended March 31, 2000 1999 ----------- ----------- (Unaudited) Net income $ 4,101,049 $ 3,048,858 ----------- ----------- Holding gains on securities available for sale 893,162 491,292 Reclassification of gains(losses) on securities held in income 21,092 (54,855) ----------- ----------- Net unrealized gains 914,254 436,437 Related tax effect (402,469) (182,460) ----------- ----------- Net other comprehensive income 511,785 253,977 ----------- ----------- Comprehensive income $ 4,612,834 $ 3,302,835 =========== ===========
See accompanying notes to the unaudited consolidated financial statements. 6 PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued) CCBT Financial Companies, Inc. Notes to Consolidated Financial Statements Three months ended March 31, 2000 and 1999 Business CCBT Financial Companies, Inc. ("Company") was incorporated under the laws of the Commonwealth of Massachusetts on October 8, 1998 under the name of CCBT Bancorp, Inc. at the direction of the Board of Directors and management of Cape Cod Bank and Trust Company ("Bank") for the purpose of becoming a bank holding company for the Bank. On February 11, 1999, Bancorp became the holding company for the Bank by acquiring 100% of the outstanding shares of the Bank's common stock in a 1:1 exchange for Bancorp common stock. During 1999, the Company's name was changed to CCBT Financial Companies, Inc. The Bank's charter was converted to that of a national bank effective September 1, 1999. Currently, the Company's business activities are conducted primarily through the Bank. During 1999, the Company announced that it had entered into a purchase agreement with Fleet Bank to acquire two of Fleet's banking offices, in Falmouth and Wareham, Massachusetts. The Company also announced an agreement to acquire 51% of the stock of Murray & MacDonald Insurance Services, Inc. of Falmouth, Massachusetts. Both acquisitions have received regulatory approval and are expected to be concluded by early summer. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain amounts have been reclassified in the March 31, 1999 financial statements to conform to the 2000 presentation . In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the current fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - -------------- General This Form 10Q contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those projected in the forward-looking statements as a result, among other factors, of changes in general national or regional economic conditions, changes in loan default and charge-off rates, reductions in deposit levels necessitating increased borrowing to fund loans and investments, changes in interest rates, changes in the size and nature of the Company's competition, uncertainties relating to the ability of the Company and its suppliers, vendors and other third parties to resolve remaining Year 2000 issues in a timely manner, and changes in the assumptions used in making such forward-looking statements. The following discussion should be read in conjunction with the accompanying consolidated financial statements and selected consolidated financial data included within this report. Given that the Company's principal activity currently is ownership of the Bank, for ease of reference, the term "Company" in this item generally will refer to the investments and activities of the Company and the Bank except where otherwise noted. CCBT Financial Companies, Inc. is a bank holding company. Its sole subsidiary, Cape Cod Bank and Trust Company N. A. , is a commercial bank with twenty-seven banking offices located in Barnstable County, Massachusetts. As such, its principal business activities are the acceptance of deposits from businesses and individuals and the making of loans. The Bank also has a sizable Trust Department. The Bank's core market is comprised of retail, wholesale and manufacturing businesses; primary households (including a significant retirement population); and a growing number of second home owners. In addition, a substantial non-core vacation population contributes to seasonal deposit growth. 7 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ---------------------
CCBT FINANCIAL COMPANIES, INC. NET INTEREST INCOME, NET INTEREST MARGIN Quarters ended March 31, 2000 1999 --------------------------------- ------------------------------------- Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Paid Balance Expense Rate Paid ------- ------- --------- ------- ------- --------- Assets (Dollar amounts in Thousands) - ------ Securities Mortgage-backed securities $ 32,013 $ 650 8.12% $ 80,233 $ 1,009 5.02% U.S. Government CMO's 145,796 2,519 6.91% 152,736 1,540 4.03% U.S. Government agencies 29,790 463 6.32% 22,066 286 5.18% Other CMO's 69,665 1,255 7.21% 66,058 850 5.14% State & municipal agencies 19,700 208 5.58% 17,141 177 5.36% Other securities 203,225 3,213 6.43% 175,330 2,464 5.62% Unrealized gains (losses) (2,924) 0 181 0 ---------- --------- ---------- ----------- Total securities 497,265 8,308 6.79% 513,745 6,326 4.98% ---------- --------- ---------- ----------- Loans Commercial 81,194 1,900 9.51% 72,894 1,637 8.98% Commercial construction 22,954 511 8.96% 11,162 248 8.89% Residential construction 46,305 711 6.07% 36,965 539 5.83% Commercial mortgages 210,930 4,735 9.03% 205,530 4,596 8.95% Industrial revenue bonds 1,125 24 11.93% 1,378 26 10.62% Residential mortgages 298,302 5,046 6.77% 256,882 4,260 6.63% Home equity loans 24,878 570 9.21% 20,483 434 8.59% Consumer loans 8,596 219 10.22% 10,885 279 10.25% Overdrafts 450 0 592 0 ---------- --------- ---------- ----------- Total Loans 694,734 13,716 7.93% 616,771 12,019 7.80% ---------- --------- ---------- ----------- Total earning assets 1,191,999 22,024 7.46% 1,130,516 18,345 6.53% --------- ----------- Non - earning assets 49,837 45,713 ---------- ---------- Total assets $1,241,836 $1,176,229 ========== ==========
Liabilities & stockholders' equity - ---------------------------------- Deposits NOW accounts $ 111,151 219 0.79% $ 108,845 221 0.82% Regular savings 153,622 1,169 3.06% 158,456 1,125 2.88% Money Market accounts 137,690 1,151 3.36% 139,575 1,058 3.07% Time certificates of deposit 178,504 2,325 5.24% 151,871 1,866 4.98% ---------- --------- ---------- ----------- Total interest bearing deposits 580,967 4,864 3.37% 558,747 4,270 3.10% ---------- --------- ---------- ----------- Borrowings Borrowings from the FHLB 384,353 5,586 5.89% 365,599 4,835 5.36% Other short-term borrowings 20,660 259 5.04% 15,340 143 3.79% ---------- --------- ---------- ----------- Total borrowings 405,013 5,845 5.80% 380,939 4,978 5.30% ---------- --------- ---------- ----------- Total interest bearing liabilities 985,980 10,709 4.37% 939,686 9,248 3.99% --------- ---------- Demand deposits 161,576 146,980 Non-interest bearing liabilities 8,175 5,211 Stockholders' equity 86,105 84,352 ---------- ---------- Total liabilities & equity $1,241,836 $1,176,229 ========== ========== Net interest income/ spread $ 11,315 3.09% $ 9,097 2.53% ========= =========== Net interest margin (NII/Avg Earning Assets) 3.82% 3.22%
8 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ----------------------
CCBT FINANCIAL COMPANIES, INC. VOLUME/ RATE ANALYSIS Three Months ended March 31, 2000 vs March 31, 1999 Changes in income/expense due to Volume Rate Total ------- ------- ------- EARNING ASSETS Securities Mortgage-backed securities $ (269) $ (90) $ (359) U.S. Government CMOs (32) 1,011 979 U.S. Government agencies 38 139 177 Other CMOs 19 386 405 State & municipal agencies 12 19 31 Other securities 143 606 749 Unrealized gains (losses) -- -- -- ------- ------- ------- Total securities (89) 2,071 1,982 ------- ------- ------- Loans Commercial 65 197 262 Commercial construction 89 174 263 Residential construction 47 125 172 Commercial mortgages 41 97 138 Industrial revenue bonds (2) 0 (2) Residential mortgages 236 550 786 Home equity loans 33 103 136 Consumer loans (20) (40) (60) Overdrafts -- -- -- ------- ------- ------- Total loans 489 1,206 1,695 ------- ------- ------- Total earning assets $ 400 $ 3,277 $ 3,677 ------- ------- -------
INTEREST BEARING LIABILITIES Deposits NOW accounts $ 2 $ (4) $ (2) Regular savings (12) 57 45 Money Market accounts (5) 98 93 Time certificates of deposit 115 344 459 ------- ------- ------- Total interest bearing deposits 100 495 595 ------- ------- ------- Borrowings FHLB 90 661 751 Other short-term borrowings 20 96 116 ------- ------- ------- Total borrowings 110 757 867 ------- ------- ------- Total interest bearing liabilities $ 210 $ 1,252 $ 1,462 ------- ------- ------- Net changes due to volume/rate $ 190 $ 2,025 $ 2,215 ======= ======= =======
9 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ---------------------- Sources of funds As shown in the table on the previous page, average interest bearing deposits outstanding increased 4.0% when comparing the first quarter 2000 with the first quarter 1999. The cost of those funds was somewhat greater in the 2000 period as management increased deposit rates in conjunction with recent increases in market rates. Average borrowed funds increased 6.3% in the 2000 period in order to fund increased loan outstandings. Rates on these borrowed funds were also somewhat higher in the 2000 period when compared to 1999, again reflecting the recent general rise in market rates. The remaining sources of funds, i.e., non-interest bearing demand deposits, other liabilities and capital, averaged 8.2% higher in the 2000 period under discussion when compared to 1999, led by demand deposit growth of $14.6 million, nearly 10%. In total, average total funds sources increased $65.6 million or 5.6%, while the average cost of interest bearing funds increased from 3.99% to 4.37%. Uses of funds When compared to the first three months of 1999, average earning assets were higher in 2000 by 5.4% and represented 96% of average total assets in each period. Loan growth of nearly $78 million or 12.6% was spearheaded by residential construction and mortgage lending, up nearly $51 million or 17.3% in a very active local market during 1999, along with increased commercial lending, up $25 million or 8.8%. The $16 million investment portfolio reduction partially offsets this loan growth . Consistent with higher market rates generally, and particularly in the investment portfolio where significant reductions of mortgage refinancings increased earnings on all mortgage related securities , the average yield on earning assets rose to 7.46% for the three months ended March 31, 2000 from the 6.53% reported for the comparable period in 1999. Net interest income Net interest income was $11.3 million for the three months ended March 31, 2000 as compared to $9.1 million for the same period in 1999, up 24.4%. The spread and net interest margin ratios were 3.09% and 3.82%, respectively, for the three months ended March 31, 2000 as compared to 2.53% and 3.22%, respectively, for the comparable 1999 period. Generally higher rates and reduced mortgage repayment speeds improved asset yields while deposit rates have not risen as quickly. Provision for possible loan losses No provisions were made to the reserve for possible loan losses in the quarters ended March 31, 2000 or 1999. Management believes that, upon continuing review of loan payment and quality statistics, the current reserve continues to be adequate to cover possible losses. Non-interest income Non-interest income totaled $3.6 million for the three months ended March 31, 2000, up 4.8% compared to the $3.4 million earned during the same period in 1999. Financial advisor fees and deposit activity fees were the primary contributors to this increase. While higher market rates reduced opportunities for gains on sales of mortgage loans, slower housing turnover reduced the amortization of servicing rights acquired in conjunction with prior sales. Non-interest expenses During the first quarter of 2000, non-interest expenses totaled $8.7 million, greater than the $7.5 million expended during the comparable period last year by $1.2 million or 16.1%. Salaries expense rose $179 thousand or 6.0%. Lower numbers and dollar levels of residential mortgage originations thus far in 2000 have combined to account for nearly two-thirds of this increase. Benefits expenses rose significantly as well in the first quarter of 2000, in part because increased profitability warranted a greater current provision for possible performance-based compensation awards at year end. The $418 thousand variance in "All other expenses" includes a one-time writeoff of $183 thousand remaining organization expenses of the Company, a one-time $120 thousand charge off related to the merchant credit card portfolio and an increased commitment to staff training and education. Other categories of non-interest expense were generally in line with management expectations. 10 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ---------------------- Income taxes Applicable State and Federal income tax expense of $2.1 million for the quarter ended March 31, 2000 was 6.3% greater than the $2.0 million recorded for the same quarter in 1999, a reflection of higher pretax net income mitigated by tax advantages derived from the Bank's real estate investment trust subsidiary. The combined effective State and Federal tax rate was 34.0% of pretax net income for the quarter just completed, and was 39.5% of pretax net income for the 1999 first quarter. Net income Consolidated net income was $4,101,049 representing earnings per share of $0.48 for the three months ended March 31, 2000 as compared to $3,048,858 or $0.34 per share for the comparable three months ended March 31, 1999. Annualized returns on average assets and average equity were 1.32% and 19.31%, respectively, for the three months ended March 31, 2000 as compared to 1.04% and 14.46%, respectively, for the three months ended March 31, 1999. COMPARATIVE ANALYSIS OF SELECTED PERIOD-END ASSETS, LIABILITIES AND CAPITAL The Company had $1.26 billion consolidated total assets, $757.1 million deposits and $88.9 million stockholders' equity at March 31, 2000. Its capital to assets ratio was 7.05%, exceeding all regulatory requirements. As compared to reported balances at December 31, 1999, gross loans increased $40.8 million or 6.0%, deposits decreased $8.9 million or 1.2% and borrowed funds increased $35.0 million or 9.5%. INVESTMENT SECURITIES The adjusted cost and estimated market values of investment securities which the Company considers to be available for sale at March 31, 2000 and December 31, 1999 were as follows:
March 31, 2000 (in thousands) ------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value -------- -------- -------- -------- U. S. Government agency CMOs $169,964 $ 2,169 $ 3,551 $168,582 Other U. S. Government agencies 27,896 200 371 27,725 Other collateralized mortgage obligations 64,212 349 504 64,057 State and municipal obligations 20,556 -- -- 20,556 Other debt securities 160,905 506 526 160,885 -------- -------- -------- -------- Totals $443,533 $ 3,224 $ 4,952 $441,805 ======== ======== ======== ========
December 31, 1999 (in thousands) ------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value -------- -------- -------- -------- U. S. Government agency CMOs $176,935 $ 2,234 $ 4,444 $174,725 Other U. S. Government agencies 16,819 3 266 16,556 Other collateralized mortgage obligations 79,425 535 677 79,283 State and municipal obligations 20,596 -- -- 20,596 Other debt securities 172,542 429 752 172,219 -------- -------- -------- -------- Totals $466,317 $ 3,201 $ 6,139 $463,379 ======== ======== ======== ========
11 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ---------------------- Investment securities available for sale decreased $21.6 million, from $463.4 million at December 31, 1999 to $441.8 million at March 31, 2000 to provide funding of first quarter loan growth as shown in the table below. Net losses from security sales were $21 thousand during the quarter ended March 31, 2000 compared to net gains of $55 thousand during the same period in 1999. LOANS The following is a summary of the Company's outstanding loan balances as of the dates indicated:
March 31, December 31, 2000 1999 --------- --------- (in thousands) Mortgage loans on real estate: Residential $ 305,072 $ 290,722 Commercial 216,128 203,987 Construction 72,226 68,809 Equity lines of credit 26,630 23,036 --------- --------- 620,056 586,554 --------- --------- Other loans Commercial 85,104 77,776 Industrial revenue bonds 1,146 1,137 Consumer 9,214 9,275 --------- --------- 95,464 88,188 --------- --------- Total loans 715,520 674,742 Less: Allowance for loan losses (11,286) (11,158) --------- --------- Loans, net $ 704,234 $ 663,584 ========= ========= Loans held for sale $ 195 $ 200 ========= =========
As shown in the table above, total loans increased $40.8 million or 6.0% to $715.5 million at March 31, 2000 as compared to December 31, 1999, with balanced growth between commercial/commercial real estate and residential mortgage loans, up $19.5 and $17.9 million, respectively. New residential mortgage originations of $3.6 million fixed rate and $51.0 million adjustable rate were achieved in the first quarter 2000. During the same period, the Company sold $3.6 million residential mortgages, producing net gains of $23 thousand. Non performing assets and loan loss experience As shown in the table on the next page, non-performing assets were $2.6 million or .20% of total assets at March 31, 2000 compared to $3.3 million or .27% of total assets at December 31, 1999. Accrual of interest income on loans is discontinued when it is questionable whether the borrower will be able to pay the principal and interest in full and/or when loan payments are 60 days past due, or 90 days past due if the loan is fully secured by real estate or other collateral held by the Bank. 12 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ----------------------
March 31, December 31 2000 1999 ------ ------ (in thousands) Nonaccrual loans $1,013 $1,777 Loans past due 90 days or more and still accruing -- -- Property from defaulted loans 1,570 1,500 ------ ------ Total non-performing assets $2,583 $3,277 ====== ====== Restructured troubled debt performing in accordance with amended terms, not included above $ 620 $ 626 ====== ======
The following is a summary of the activity in the reserve for loan losses for the indicated periods:
Three months ended March 31, 2000 1999 --------- -------- (in thousands) Balance at the beginning of the period $ 11,158 $ 11,108 Provisions -- -- Recoveries 155 112 -------- -------- 11,313 11,220 Less: Charge-offs (27) (76) -------- -------- Balance at the end of the period $ 11,286 $ 11,144 ======== ========
Management believes that, upon review of loan quality and payment statistics, provisions from current income were unnecessary in the indicated periods, notwithstanding growth in the loan portfolio. The reserve represented 1.58% of total loans at March 31, 2000, 1.65% at December 31, 1999, and 1.86% at March 31, 1999. Management considers the reserve to be adequate at March 31, 2000, although there can be no assurance that the reserve is adequate or that additional provisions might be necessary. The Company had outstanding commitments to originate new residential and commercial mortgages of $45.4 million at March 31, 2000 and $57.0 million at December 31, 1999 which are not reflected on the consolidated statement of financial condition. Additional unadvanced loan funds at March 31, 2000 are shown below.
Additional Unadvanced Loan Commitments March 31, December 31, 2000 1999 -------- -------- (in thousands) Commercial loans Dealer floor plan $ 7,299 $ 8,067 Lines of credit 52,429 54,735 Other 1,606 1,781 Commercial mortgages Construction 17,034 20,197 Other 1,539 613 Residential mortgages Home equity 36,436 34,734 Consumer loans Lines of credit 2,089 2,023 -------- -------- Total $118,432 $122,150 ======== ========
13 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ---------------------- DEPOSITS The following table is a summary of deposits outstanding as of the dates indicated:
March 31, December 31, 2000 1999 -------- -------- (in thousands) Demand deposits $168,423 $167,624 NOW accounts 115,319 120,307 Other savings deposits 150,589 158,142 Money market accounts 143,373 138,287 Certificates of deposit > $100,000 59,276 60,666 Other time deposits 120,142 121,038 -------- -------- Total deposits $757,122 $766,064 ======== ========
Reflecting somewhat the seasonal nature of the Cape Cod economy as discussed in "Liquidity" on page 15 herein, total deposits at March 31, 2000 are $8.9 million or 1.2% lower than total deposits at December 31, 1999. Generally, the Company's strategy is to price deposits according to local market rates, offering higher alternative rates based on increasing amounts deposited. Interest rates paid are frequently reviewed and are modified to reflect changing conditions. BORROWED FUNDS Historically, the Company has selectively engaged in short and long term borrowings from the Federal Home Loan Bank of Boston, and has sold securities under agreements to repurchase, to fund loans and investments. At March 31, 2000, borrowed funds totaled $402.3 million, up 9.5% or $35.0 million compared to borrowed funds at December 31, 1999. This increase offsets the seasonal deposit decline described under the section entitled "Deposits" above and contributes to the support of heretofore described loan growth. STOCKHOLDERS' EQUITY The Company's capital to assets ratio was 7.05% at March 31, 2000 compared to 6.96% at December 31, 1999. The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and/or the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Holding companies, such as the Company, are not subject to prompt corrective action provisions. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts of total and Tier 1 capital (as defined) to average assets (as defined). The following schedule displays these capital guidelines and the ratios of the Company and the Bank as of March 31, 2000. 14 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - ----------------------
Minimum March 31, 2000 Regulatory -------------------------- Guidelines Company Bank ---------- ------- ---- Tier 1 leverage capital 3.00% 7.24% 6.72% Tier 1 capital to risk-weighted assets 4.00% 10.14% 9.44% Total capital to risk-weighted assets 8.00% 11.38% 10.69%
The Company's book value at March 31, 2000 was $10.33 per share compared to $9.95 per share at December 31, 1999. LIQUIDITY The Bank normally experiences a wide swing in its liquidity each year as a result of the seasonal nature of the economy in its market area. Liquidity is usually high in late summer and early fall and the annual low point is usually in the early spring. The Bank's investment portfolio is of high quality and is highly marketable although a gain or loss would be realized if the market value of securities sold were not equal to their adjusted book value at date of sale. Alternately, the Bank can borrow funds using investment securities as collateral. The Bank has an available line of credit of $5.0 million from the Federal Home Loan Bank of Boston, has established a line of credit for the purchase of federal funds from a regional bank and may borrow from the Federal Reserve Bank if necessary. ASSET/LIABILITY MANAGEMENT Through the Company's Asset/Liability Management Committee ("ALCO"), which is comprised of senior management and several Directors, the Company monitors the level and general mix of earning assets and interest bearing liabilities, with particular attention to those assets and liabilities which are rate-sensitive. The primary objective of ALCO is to manage interest rate risk in accordance with policies approved by the Board of Directors regarding acceptable levels of interest rate risk, liquidity and capital. The committee meets monthly and sets the rates paid on deposits, approves loan pricing and reviews investment transactions. Given the substantial liquidity from cash flow and maturities of the Company's investment portfolio, the sizable proportion of rate sensitive loans to total loans, and the large core deposit base, ALCO believes the Company to be moderately asset-sensitive to changes in interest rates. Nevertheless, the Company's strategy has included the funding of certain fixed rate loans with medium term borrowed funds in order to mitigate a margin squeeze should interest rates rise. The Cape Cod market is one in which competing financial institutions frequently offer a wide range of yields for similar deposit products. Within this market, the Company finds it necessary, from time to time, to offer higher rates than it would otherwise justify, thereby increasing pressure on net interest income. In order to offset this pressure somewhat, the Company is strategically focusing on customer relationship profitability. 15 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (cont.) - --------------------- COMPUTER PROCESSING IN THE YEAR 2000 The statements in the following section include "Year 2000 readiness disclosure" within the meaning of the Year 2000 Information and Readiness Act of 1998. Much computer software has been written which allows or allowed the year in a date to be recognized and/or stored based on a two-digit number, i.e., "12/31/99", clearly recognizable as meaning December 31, 1999. The same is true of a variety of hardware devices with built-in clock-calendars, such as computers. In some cases, this could have created problems at the turn of the century because "01/01/00" could have been interpreted to mean January 1, 1900 rather than January 1, 2000. If such circumstances are not identified and corrected in advance, they could have caused system failure or erroneous calculations of such items as interest income or expense. This could potentially have had a significant impact on the Bank's ability to do business. For the Bank's internal computer processing, it was determined to be necessary to replace some of its computers and to acquire more recent versions of certain software. $800,000 was spent for this purpose in 1998 and an additional $540,000 was spent in 1999. These costs have been capitalized and are being depreciated over the useful lives of the items purchased. The Bank relies on outside vendors for much of its critical data processing. Prior to December 31, 1999, these vendors assured the Bank that they were Year 2000 compliant. The Bank's testing confirmed this on those systems that were considered to be critical or of high risk. Contingency plans for processing of daily work in the event of failure of any of these systems were in place on December 31, 1999. As a result of these efforts and assurances, the Company has not experienced computer failures of any kind affecting either internal or subcontracted computer processing as of March 31, 2000. The Bank is also dependent on other providers in the conduct of its business, most notably for electrical power and telecommunications. If these providers experience Year 2000 problems, disruption of service, especially if prolonged, could seriously affect the Bank's ability to conduct business as usual. The Company has not experienced any disruption of service from these providers. Certain of the Bank's customers may also have been subject to Year 2000 problems which may have impacted their ability to do business. Among other repercussions, this could have reduced their ability to make loan payments to the Bank. To the Company's knowledge, no customers have been seriously affected by Year 2000 problems. Other customers may withdraw funds from the Bank in anticipation of possible Year 2000 disruptions. The Bank has traditionally maintained a substantial liquidity position in the normal course of doing business, and expects to continue to maintain a liquid investment portfolio to meet any unusual deposit outflows. Although the Company has not experienced any Year 2000 related problems, some additional dates remain which might disrupt its normal business operations. These are listed below. Until these dates, and others yet unidentified are successfully passed, and until any Year 2000 issues that might arise are corrected, the Company's Year 2000 readiness and contingency plans will remain in effect. October 10 First date to require an eight digit date field Status: open December 31 2000/2001 year end Status: open Please refer to the statement regarding "Forward-Looking Information" at the beginning of Part II, Item 7 of this 10Q entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" with regard to any forward-looking statements in this section. Although management of the Bank and the Company believe that their responses to the Year 2000 issue are appropriate, neither the Bank nor the Company can guarantee their Year 2000 readiness, nor that of material vendors or customers, nor the effectiveness of contingency plans in the event of a failure in any of the Bank's computer systems. 16 PART I FINANCIAL INFORMATION ITEM 3. Quantitative and Qualitative Disclosures about Market Risk - ------------------------------------------------------------------ For a discussion of the Company's management of market risk exposure, see "Asset/Liability Management" in Item 2 of Part I of this report and Item 7A of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the "1999 Annual Report"). For quantitative information about market risk, see Item 7A of Part II of the Company's 1999 Annual Report. There have been no material changes in the quantitative and qualitative disclosures about market risk as of March 31, 2000 from those presented in the Company's 1999 Annual Report. PART II OTHER INFORMATION ITEM 1. Legal proceedings - -------------------------- There are no material legal proceedings to which the Company is a party or to which any of its property is subject, although the Company is a party to ordinary routine litigation incidental to its business. 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 Exhibit Description 27 Financial data schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the three month period ended March 31, 2000. 17 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. (Registrant): CCBT Financial Companies, Inc. Date: May 8, 2000 /s/STEPHEN B. LAWSON -------------------- STEPHEN B. LAWSON, President and Chief Executive Officer /s/NOAL D. REID --------------- NOAL D. REID, Chief Financial Officer and Treasurer EXHIBIT INDEX Exhibit Description 27 Financial data schedule 18 EX-27 2
9 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 36,771,235 22,702,464 441,805,200 22,125,400 715,519,242 0 0 715,519,242 1,261,384,608 (11,285,716) 757,122,073 1,172,499,450 270,012,468 13,035,363 132,329,546 0 22,652,660 66,232,498 1,261,384,608 8,232,191 7,872,353 362,838 73,616 22,024,523 4,863,923 5,845,277 11,315,423 0 (21,092) 8,682,634 6,213,138 0 0 4,101,049 0.48 0.48 3.82 1,224,000 0 620,000 10,626,621 11,158,126 27,484 155,270 11,285,716 11,285,716 0 0
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