-----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, LshFXwi8Dqfy4dnL12Cyp3cvGszvtsAi6is+C1CYX0ad9rfvUXzJIGFMy9ksm2BG pxCFQFpPhYkb1aEWoHOEHQ== /in/edgar/work/20000811/0000914317-00-000549/0000914317-00-000549.txt : 20000921 0000914317-00-000549.hdr.sgml : 20000921 ACCESSION NUMBER: 0000914317-00-000549 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCBT FINANCIAL COMPANIES INC CENTRAL INDEX KEY: 0001074972 STANDARD INDUSTRIAL CLASSIFICATION: [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: 692682 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 0001.txt FORM 10-Q 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 June 30, 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.) 495 Station Avenue, South Yarmouth, Massachusetts 02664 ------------------------------------------------- --------- (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) : Yes [X] No and (2) : Yes [X] 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 June 30, 2000. TABLE OF CONTENTS
Section Description Page No. - ------- ----------- -------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition 1 June 30, 2000 (Unaudited) and December 31, 1999 Consolidated Statements of Income (Unaudited) 2 Three and Six Months Ended June 30, 2000 and 1999 Consolidated Statements of Cash Flows (Unaudited) 3 Six Months Ended June 30, 2000 and 1999 Consolidated Statements of Changes in Stockholders' Equity (Unaudited) 4 Six Months Ended June 30, 2000 and 1999 Consolidated Statements of Comprehensive Income (Unaudited) 4 Six Months Ended June 30, 2000 and 1999 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition 5-21 and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 22 PART II OTHER INFORMATION Item 1. Legal Proceedings 22 Item 2. Changes in Securities and Use of Proceeds 22 Item 3. Defaults upon Senior Securities 22 Item 4. Submission of Matters to a Vote of Security Holders 22 Item 5. Other Information 22 Item 6. Exhibits and Reports on Form 8-K 22 SIGNATURES 23
PART I FINANCIAL INFORMATION Item 1. Financial Statements CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF CONDITION
June 30, December 31, 2000 1999 ------------------- ------------------- ASSETS (Unaudited) Cash and due from banks $ 42,330,849 $ 43,415,100 Short term interest-bearing deposits 551,715 2,207,328 Securities available for sale, at fair value 422,478,428 463,379,414 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 744,763,873 663,584,422 Loans held for sale --- 200,000 Premises and equipment 16,508,094 12,396,729 Deferred tax assets 4,892,278 4,657,933 Accrued interest receivable on securities 2,964,302 2,850,366 Principal and interest receivable on loans 3,848,913 3,156,914 Intangibles 10,807,261 --- Other assets 12,105,264 12,044,040 ------------------- ------------------- Total assets $ 1,284,473,077 $ 1,231,114,346 =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 902,723,037 $ 766,063,617 Borrowings from the Federal Home Loan Bank 254,315,005 347,962,999 Other short-term borrowings 25,031,105 19,345,885 Current taxes payable 1,476,211 1,721,187 Interest payable on deposits and borrowings 2,372,546 3,061,932 Post retirement benefits payable 2,685,036 2,501,480 Employee profit sharing retirement and bonuses payable 1,338,152 2,396,542 Other liabilities 3,075,732 2,411,093 ------------------- ------------------- Total liabilities 1,193,016,824 1,145,464,735 ------------------- ------------------- Minority interest 168,442 --- ------------------- ------------------- 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 63,876,972 58,181,480 Treasury stock, at cost (453,016 shares) (7,399,628) (7,399,628) Accumulated other comprehensive income (1,745,487) (1,688,195) ------------------- ------------------- Total stockholders' equity 91,287,811 85,649,611 ------------------- ------------------- Total liabilities and stockholders' equity $ 1,284,473,077 $ 1,231,114,346 =================== ===================
See accompanying notes to the unaudited consolidated financial statements. PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued) CCBT FINANCIAL COMPANIES, INC CONSOLIDATED STATEMENTS OF INCOME
Three Months ended June 30, 2000 1999 ---------------- ---------------- (Unaudited) INTEREST INCOME: Interest and fees on loans $ 14,718,174 $ 11,996,758 Interest on short term interest-bearing deposits 229,134 260,388 Taxable interest income on securities 6,869,437 6,315,107 Tax-exempt interest income on securities 218,504 200,124 Dividends on securities 484,084 403,964 ---------------- ---------------- Total interest income 22,519,333 19,176,341 ---------------- ---------------- INTEREST EXPENSE: Interest on deposits 5,401,427 4,272,932 Interest on borrowings from the Federal Home Loan Bank 5,344,440 4,909,866 Interest on other short-term borrowings 331,321 174,662 ---------------- ---------------- Total interest expense 11,077,188 9,357,460 ---------------- ---------------- Net interest income 11,442,145 9,818,881 Provision for loan losses --- --- ---------------- ---------------- Net interest income after provision for loan losses 11,442,145 9,818,881 ---------------- ---------------- NON-INTEREST INCOME: Financial advisor fees 1,829,900 1,584,124 Deposit account service charges 485,407 529,907 Branch banking fees 766,538 808,685 Electronic banking fees 610,350 305,778 Loan servicing and other loan fees 130,318 43,232 Brokerage fees and commissions 250,096 284,459 Net gain on sale of securities 49,394 4,249 Net gain on sale of loans 4,597 120,738 Insurance commissions 194,592 --- Other income 128,040 86,546 ---------------- ---------------- Total non-interest income 4,449,232 3,767,718 ---------------- ---------------- NON-INTEREST EXPENSE: Salaries 3,529,577 3,050,320 Employee benefits 1,436,467 1,193,726 Building and equipment 1,170,409 1,086,786 Data processing 752,252 747,987 Accounting and legal fees 258,454 250,033 Other outside services 565,146 507,472 Delivery and communication 415,051 323,601 Directors' fees 88,250 75,500 Marketing and advertising 320,441 268,481 Printing and supplies 227,036 172,216 Insurance 92,423 62,172 Expenses from defaulted loans 958 13,908 All other expenses 412,833 282,116 ---------------- ---------------- Total operating expense 9,269,297 8,034,318 ---------------- ---------------- Minority interest (10,496) --- ---------------- ---------------- Net income before taxes 6,632,576 5,552,281 Applicable income taxes 2,279,237 1,842,679 ---------------- ---------------- Net income $ 4,353,339 $ 3,709,602 ================ ================ Average shares outstanding 8,608,048 8,941,188 Basic earnings per share $0.50 $0.41 Diluted earnings per share $0.50 $0.41 Cash dividends declared $0.16 $0.14 Six Months ended June 30, 2000 1999 --------------- ---------------- (Unaudited) INTEREST INCOME Interest and fees on loans $ 28,433,790 $ 24,015,873 Interest on short term interest-bearing deposits 302,950 435,674 Taxable interest income on securities 14,533,832 11,932,134 Tax-exempt interest income on securities 426,462 364,556 Dividends on securities 846,922 773,364 --------------- ---------------- Total interest income 44,543,956 37,521,601 --------------- ---------------- INTEREST EXPENSE: Interest on deposits 10,265,350 8,542,649 Interest on borrowings from the Federal Home Loan Bank 10,930,592 9,744,826 Interest on other short-term borrowings 590,446 318,066 --------------- ---------------- Total interest expense 21,786,388 18,605,541 --------------- ---------------- Net interest income 22,757,568 18,916,060 Provision for loan losses --- --- --------------- ---------------- Net interest income after provision for loan losses 22,757,568 18,916,060 --------------- ---------------- NON-INTEREST INCOME: Financial advisor fees 3,337,495 2,909,114 Deposit account service charges 973,586 976,288 Branch banking fees 1,480,610 1,521,102 Electronic banking fees 998,852 669,195 Loan servicing and other loan fees 185,903 47,307 Brokerage fees and commissions 533,641 525,109 Net gain on sale of securities 28,302 59,104 Net gain on sale of loans 27,654 294,177 Insurance commissions 194,592 --- Other income 268,946 183,262 --------------- ---------------- Total non-interest income 8,029,581 7,184,658 --------------- ---------------- NON-INTEREST EXPENSE: Salaries 6,686,895 6,028,824 Employee benefits 2,985,521 2,343,267 Building and equipment 2,288,379 2,106,715 Data processing 1,441,873 1,491,373 Accounting and legal fees 461,684 392,957 Other outside services 1,037,744 936,483 Delivery and communication 743,726 637,289 Directors' fees 175,750 151,000 Marketing and advertising 524,304 425,128 Printing and supplies 393,207 369,007 Insurance 188,243 135,591 Expenses from defaulted loans 14,204 32,587 All other expenses 1,010,401 461,723 --------------- ---------------- Total operating expense 17,951,931 15,511,944 --------------- ---------------- Minority interest (10,496) --- --------------- ---------------- Net income before taxes 12,845,714 10,588,774 Applicable income taxes 4,391,326 3,830,314 --------------- ---------------- Net income $ 8,454,388 $ 6,758,460 =============== ================ Average shares outstanding 8,608,048 8,992,941 Basic earnings per share $0.98 $0.75 Diluted earnings per share $0.98 $0.75 Cash dividends declared $0.32 $0.28
See accompanying notes to the unaudited consolidated financial statements. PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued) CCBT FINANCIAL COMPANIES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months ended June 30,
2000 1999 ------------------ ----------------- CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Net income $ 8,454,388 $ 6,758,460 Adjustments to reconcile net income to net cash flow provided by operating activities: Provision for loan losses --- --- Depreciation and amortization 1,099,517 1,025,535 Net amortization of securities 13,645,606 2,252,725 Amortization of deferred loan fees (235,135) 50,690 Net gain on sale of investment securities (28,302) (59,104) (Prepaid) deferred income taxes (479,321) 762,875 Net gain on sale of loans (27,654) (294,172) Net change in: Loans held for sale 200,000 1,942,480 Accrued interest receivable (805,935) 615,898 Accrued expenses and other liabilities (899,581) 3,820,319 Other, net (7,118,894) 6,425,045 ------------------ ----------------- Net cash provided by operating activities 13,804,689 23,300,751 ------------------ ----------------- CASH USED BY INVESTING ACTIVITIES Net increase in loans (87,675,346) (77,824,051) Proceeds from sale of loans 6,453,313 63,701,791 Sales of property from defaulted loans 70,000 115,000 Maturities of securities 114,130,910 242,784,124 Purchase of available for sale securities (147,307,413) (313,766,711) Sales of available for sale securities 57,060,977 34,137,508 Purchase of premises and equipment (5,214,744) (963,663) ------------------ ----------------- Net cash used by investing activities (62,482,303) (51,816,002) ------------------ ----------------- CASH PROVIDED BY FINANCING ACTIVITIES Net increase in deposits 136,659,420 12,117,870 Net (decrease) increase in borrowings from the Federal Home Loan Bank (93,647,994) 26,546,467 Net increase in other short-term borrowings 5,685,220 4,897,017 Purchase of CCBT Financial Companies, Inc. common stock in open market --- (2,454,912) Cash dividends paid on common stock (2,758,896) (2,522,607) ------------------ ----------------- Net cash provided by financing activities 45,937,750 38,583,835 ------------------ ----------------- Net (decrease) increase in cash and cash equivalents (2,739,864) 10,068,584 Cash and cash equivalents at beginning of period 45,622,428 29,490,715 ------------------ ----------------- Cash and cash equivalents at end of period $ 42,882,564 $ 39,559,299 ================== ================= 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 $ 22,475,774 $ 18,590,203 Income taxes 4,467,843 3,400,000 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. PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued) CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Six Months ended June 30,
2000 1999 -------------- -------------- (Unaudited) Net income $ 8,454,388 $ 6,758,460 ------------ ------------ Unrealized holding (losses) gains on securities available for sale (31,096) 1,073,040 Reclassification of (gains) on securities held in income (28,302) (59,104) ------------ ------------ Net unrealized (losses) gains (59,398) 1,013,936 Related tax effect 2,106 (396,718) ------------ ------------ Net other comprehensive (loss) income (57,292) 617,218 ------------ ------------ Comprehensive income $ 8,397,096 $ 7,375,678 ============ ============
See accompanying notes to the unaudited consolidated financial statements. CCBT FINANCIAL COMPANIES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Six Months ended June 30,
2000 1999 ------------------ ----------------- (Unaudited) COMMON STOCK Balance, beginning of the year $ 22,652,660 $ 22,652,660 ------------------ ----------------- Balance, June 30 22,652,660 22,652,660 ------------------ ----------------- SURPLUS Balance, beginning of the year 13,903,294 13,903,294 ------------------ ----------------- Balance, June 30 13,903,294 13,903,294 ------------------ ----------------- UNDIVIDED PROFITS Balance, beginning of the year 58,181,480 46,704,129 Net Income 8,454,388 6,758,460 Dividends declared (2,758,896) (2,522,607) ------------------ ----------------- Balance, June 30 63,876,972 50,939,982 ------------------ ----------------- TREASURY STOCK Balance, beginning of the year (7,399,628) --- Purchase of Treasury stock --- (2,454,913) ------------------ ----------------- Balance, June 30 (7,399,628) (2,454,913) ------------------ ----------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of the year (1,688,195) 282,317 Net other comprehensive (loss) income (57,292) 617,218 ------------------ ----------------- Balance, June 30 (1,745,487) 899,535 ------------------ ----------------- TOTAL STOCKHOLDERS' EQUITY $ 91,287,811 $ 85,940,558 ================== =================
See accompanying notes to the unaudited consolidated financial statements. PART I FINANCIAL INFORMATION Item 1. Financial Statements (continued) CCBT FINANCIAL COMPANIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six months ended June 30, 2000 and 1999 Note 1. Basis of Presentation Business CCBT Financial Companies, Inc. (the "Company") was incorporated under the laws of the Commonwealth of Massachusetts on October 8, 1998 under the name of CCBT Bancorp, Inc. (the "Bancorp") at the direction of the Board of Directors and management of Cape Cod Bank and Trust Company (the "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. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principals 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 principals for complete financial statements. Certain amounts have been reclassified in the June 30, 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 and six months ended June 30, 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. Minority Interest During the second quarter of 2000, the Bank concluded its purchase of 51% of the firm of Murray & MacDonald Insurance Services, Inc. of Falmouth, Massachusetts. The minority interest amounts shown in the Company's consolidated balance sheet and income statements represent the interest of the minority shareholder in that company. 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 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 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 is PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) 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. In addition to the acquisition of 51% of the Murray & MacDonald Insurance Services, Inc. Insurance agency, the Company also completed its acquisition of branches of Fleet Bank, in Wareham and Falmouth, Massachusetts during the second quarter of 2000. These branches have added approximately $55 million deposits, at a 15.5% premium, to the Bank at June 30, 2000. This premium will be amortized based upon the Company's evaluation of the estimated lives of the core deposits acquired. 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-eight banking offices and 32 ATMs located in Barnstable and Plymouth Counties in Massachusetts as well as around the clock telephone and computer banking. 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. (The remainder of this page intentionally left blank) PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) CCBT FINANCIAL COMPANIES, INC. AVERAGE BALANCE SHEET, INTEREST RATES and SPREAD Three months ended June 30,
2000 --------------------------------------------------- Ave. Ave. Y-T-D Y-T-D Y-T-D Balance Interest Yield --------------- ------------- -------------- (Dollar amounts in thousands) Assets Securities Mortgage-backed securities $ 30,391 $ 570 7.51% U.S. Government CMOs 134,366 2,477 7.37% U.S. Government agencies 27,831 453 6.61% Other CMOs 50,161 768 6.13% State & municipal agencies 20,594 226 5.81% Other securities 198,993 3,308 6.76% Unrealized (losses) gains (1,720) --- --------------- ------------- Total securities 460,616 7,802 6.90% --------------- ------------- Loans Commercial 85,155 2,058 9.56% Commercial construction 27,271 652 9.56% Residential construction 53,077 832 6.27% Commercial mortgages 216,547 4,930 9.11% Industrial revenue bonds 1,046 24 13.26% Residential mortgages 309,963 5,319 6.86% Home equity 28,555 689 9.64% Consumer loans 8,675 214 9.86% Overdrafts 318 --- --------------- ------------- Total Loans 730,607 14,718 8.05% --------------- ------------- Total earning assets 1,191,223 22,520 7.61% ------------- Non - earning assets 56,729 --------------- Total assets $ 1,247,952 =============== Liabilities & stockholders' equity Deposits NOW accounts $ 119,999 217 0.72% Regular savings 146,989 1,135 3.10% Money Market accounts 142,975 1,315 3.69% Time certificates of deposit 193,771 2,735 5.66% --------------- ------------- Total interest bearing deposits 603,734 5,402 3.59% --------------- ------------- Borrowings FHLB 347,059 5,344 6.19% Other short-term borrowings 24,315 331 5.48% --------------- ------------- Total borrowings 371,374 5,675 6.14% --------------- ------------- Total interest bearing liabilities 975,108 11,077 4.56% ------------- Demand deposits 177,335 Non-interest bearing liabilities 7,792 Stockholders' equity 87,717 --------------- Total liabilities & equity $ 1,247,952 =============== Net interest income/spread $ 11,443 3.05% ============= Net interest margin (NII/Avg Earning Assets) 3.86% 1999 ----------------------------------------------------- Ave. Ave. Y-T-D Y-T-D Y-T-D Balance Interest Yield ---------------- ------------ -------------- (Dollar amounts in thousands) Assets Securities Mortgage-backed securities $ 70,425 $ 950 5.40% U.S. Government CMOs 137,763 1,763 5.12% U.S. Government agencies 29,548 410 5.55% Other CMOs 62,799 807 5.14% State & municipal agencies 19,486 207 5.53% Other securities 209,773 3,042 5.80% Unrealized (losses) gains 1,476 --- ---------------- ------------ Total securities 531,270 7,179 5.47% ---------------- ------------ Loans Commercial 78,859 1,762 8.94% Commercial construction 14,824 323 8.62% Residential construction 38,172 565 5.93% Commercial mortgages 205,156 4,506 8.69% Industrial revenue bonds 1,312 24 10.29% Residential mortgages 247,178 4,113 6.79% Home equity 21,851 452 8.26% Consumer loans 10,477 253 9.66% Overdrafts 613 --- ---------------- ------------ Total Loans 618,442 11,998 7.73% ---------------- ------------ Total earning assets 1,149,712 19,177 6.68% ------------ Non - earning assets 57,826 ---------------- Total assets $ 1,207,538 ================ Liabilities & stockholders' equity Deposits NOW accounts $ 111,946 229 0.82% Regular savings 158,496 1,135 2.87% Money Market accounts 142,260 1,087 3.06% Time certificates of deposit 150,938 1,822 4.84% ---------------- ------------ Total interest bearing deposits 563,640 4,273 3.04% ---------------- ------------ Borrowings FHLB 368,137 4,910 5.35% Other short-term borrowings 17,323 175 4.04% ---------------- ------------ Total borrowings 385,460 5,085 5.29% ---------------- ------------ Total interest bearing liabilities 949,100 9,358 3.95% ------------ Demand deposits 162,156 Non-interest bearing liabilities 12,885 Stockholders' equity 83,397 ---------------- Total liabilities & equity $ 1,207,538 ================ Net interest income/ spread $ 9,819 2.73% ============ Net interest margin (NII/Avg Earning Assets) 3.43%
PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) CCBT FINANCIAL COMPANIES, INC. VOLUME/RATE ANALYSIS Three months ended June 30, 2000 vs June 30, 1999
Changes in income/expense due to --------------------------------------------------- Volume Rate Total --------------- ------------- -------------- EARNING ASSETS Securities Mortgage-backed securities $ (643) $ 263 $ (380) U.S. Government CMOs (46) 760 714 U.S. Government agencies (26) 69 43 Other CMOs (177) 138 (39) State & municipal agencies 16 3 19 Other securities (183) 449 266 --------------- ------------- -------------- Total securities (1,059) 1,682 623 --------------- ------------- -------------- Loans Commercial 145 151 296 Commercial construction 281 48 329 Residential construction 226 41 267 Commercial mortgages 252 172 424 Industrial revenue bonds (8) 8 0 Residential mortgages 1,066 140 1,206 Home equity 149 88 237 Consumer loans (44) 5 (39) --------------- ------------- -------------- Total Loans 2,067 653 2,720 --------------- ------------- -------------- Total earning assets $ 1,008 $ 2,335 $ 3,343 --------------- ------------- -------------- INTEREST BEARING LIABILITIES Deposits NOW accounts $ 15 $ (27) $ (12) Regular savings (85) 85 0 Money Market accounts 6 222 228 Time certificates of deposit 559 354 913 --------------- ------------- -------------- Total interest bearing deposits 495 634 1,129 --------------- ------------- -------------- Borrowings FHLB (302) 736 434 Other short-term borrowings 83 73 156 --------------- ------------- -------------- Total borrowings (219) 809 590 --------------- ------------- -------------- Total interest bearing liabilities $ 276 $ 1,443 $ 1,719 --------------- ------------- -------------- Net interest income $ 732 $ 892 $ 1,624 =============== ============= ==============
PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2000 vs. THREE MONTHS ENDED JUNE 30, 1999 Sources of funds As shown in the table on page 7, average interest bearing deposits outstanding increased $40.1 million or 7.1% during the second quarter 2000 versus the second quarter 1999. With exception to the lower rate on NOW accounts, the cost of those funds rose in the 2000 period as management increased deposit rates in response to generally rising market rates. During the quarter, the Company introduced a one year certificate of deposit with an aggressive and popular 7.20%APY. Concurrently, average borrowed funds, notably FHLB borrowings, declined in the 2000 period while rates paid on these borrowed funds also increased. The remaining sources of funds, i.e., non-interest bearing demand deposits, other liabilities and capital, averaged 5.6% higher, including average demand deposit growth of $15.2 million or 9.4%. In total, average sources of funds increased $40.4 million or 3.3% period to period, while the average cost of interest bearing funds increased from 3.95% during the quarter ended June 30, 1999 to 4.56% for the same period in 2000. Uses of funds When compared to the second three months of 1999, average earning assets were higher in 2000 by 3.6% with an 18.1% increase in average loan outstandings partially offset by reduced investments. Average earning assets represented 95% of average total assets in each period. Loan growth was spearheaded by residential mortgage, home equity and related construction lending, up a combined $84.4 million or 27.5% in a very active local market. Combined commercial lending activities contributed another $29.9 million or 10.0% growth. Consistent with the general rise in market rates, the average yield on earning assets rose to 7.61% for the three months ended June 30, 2000 from the 6.68% reported for the comparable period in 1999. Net interest income Net interest income was $11.4 million for the three months ended June 30, 2000 as compared to $9.8 million for the same period in 1999, up 16.5%. The spread and net interest margin ratios were 3.05% and 3.86%, respectively, for the three months ended June 30, 2000 as compared to 2.73% and 3.43%, respectively, for the comparable 1999 period. As shown in the Volume/Rate Analysis table on page 8, the Company's net interest income improved in both volume and rate categories during the second quarter 2000 as compared to the same quarter last year. Provision for loan losses No provisions were made to the reserve for loan losses in the quarters ended June 30, 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 $4.4 million for the three months ended June 30, 2000, up $682 thousand or 18.1% compared to the $3.8 million earned during the same period in 1999, reflecting new Financial advisor product fees from the Trust department, new revenues from insurance activities, and other volume changes. Deposit and branch related fees are lower in 2000 due to higher account balances and fewer overdrafts, while the lower gain on sale of loans results from lower originations and sales of fixed rate residential mortgages. Offsetting these lower gains is an increase in residential mortgage servicing fees as well as a reduced rate of amortization of servicing rights consistent with reduced early payoffs as compared to last year. PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Non-interest expenses During the second quarter of 2000, non-interest expenses totaled $9.3 million, $1.2 million or 15.4% greater than the expenses of the comparable period last year. Approximately 20% of this increase are direct expenses of the newly acquired insurance agency. Salaries and benefits, the largest combined category of expense, rose $722 thousand or 17.0% to total $5.0 million for the second three months of 2000. While salaries and commissions increased 5.0% in 2000 versus 1999, deferred originations on residential mortgages declined such that total salaries increased $330 thousand or nearly 11%. Increased benefits expenses include a greater current provision for possible performance-based compensation awards at year end, consistent with increased profitability thus far in 2000. Higher marketing and printing costs reflect the Company's entrance into new markets, i.e., Wareham, Massachusetts and insurance services. All other expense categories are in line with management expectations. Minority interest The second quarter minority interest on the 49% minority holding of Murray & MacDonald Insurance Services, Inc. includes some initial investment in increasing that company's ability to provide additional service to its enlarged customer base. Income taxes Consistent with higher pretax net income, the combined State and Federal income tax expense of $2.3 million for the quarter ended June 30, 2000 was 23.7% greater than the $1.8 million recorded for the same quarter in 1999. The combined effective State and Federal tax rate was 34.4% of pretax income in the second quarter of 2000 and 33.2% of pretax net income for 1999. Net income Consolidated net income was $4.4 million, representing earnings per share of $0.50 for the three months ended June 30, 2000 as compared to $3.7 million or $0.41 per share for the comparable three months ended June 30, 1999. Annualized returns on average assets and average equity were 1.40% and 19.96%, respectively, for the three months ended June 30, 2000 as compared to 1.23% and 17.84%, respectively, for the prior comparable period. (The remainder of this page intentionally left blank) PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) CCBT FINANCIAL COMPANIES, INC. AVERAGE BALANCE SHEET, INTEREST RATES and SPREAD Six months ended June 30,
2000 --------------------------------------------------- Ave. Ave. Y-T-D Y-T-D Y-T-D Balance Interest Yield --------------- ------------ -------------- (Dollar amounts in thousands) Assets Securities Mortgage-backed securities $ 31,202 $ 1,220 7.82% U.S. Government CMOs 140,081 4,996 7.13% U.S. Government agencies 28,811 916 6.46% Other CMOs 59,913 2,023 6.75% State & municipal agencies 20,147 434 5.70% Other securities 201,108 6,521 6.59% Unrealized (losses) gains (2,322) --- --------------- ------------ Total securities 478,940 16,110 6.84% --------------- ------------ Loans Commercial 83,175 3,958 9.67% Commercial construction 25,112 1,163 9.31% Residential construction 49,691 1,543 6.14% Commercial mortgages 213,739 9,665 9.09% Industrial revenue bonds 1,085 48 12.57% Residential mortgages 304,133 10,365 6.82% Home equity 26,716 1,259 9.47% Consumer loans 8,635 433 10.04% Overdrafts 384 --- --------------- ------------ Total Loans 712,670 28,434 8.02% --------------- ------------ Total earning assets 1,191,610 44,544 7.56% ------------ Non - earning assets 53,283 --------------- Total assets $ 1,244,893 =============== Liabilities & stockholders' equity Deposits NOW accounts $ 115,575 436 0.76% Regular savings 150,305 2,304 3.08% Money Market accounts 140,333 2,466 3.53% Time certificates of deposit 186,137 5,060 5.47% --------------- ------------ Total interest bearing deposits 592,350 10,266 3.49% --------------- ------------ Borrowings FHLB 365,706 10,930 6.01% Other short-term borrowings 22,487 590 5.28% --------------- ------------ Total borrowings 388,193 11,520 5.97% --------------- ------------ Total interest bearing liabilities 980,543 21,786 4.47% ------------ Demand deposits 169,455 Other liabilities 7,984 Stockholders' equity 86,911 --------------- Total liabilities & equity $ 1,244,893 =============== Net interest income/spread $ 22,758 3.09% ============ Net interest margin (NII/Avg Earning Assets) 3.84% 1999 -------------------------------------------------- Ave. Ave. Y-T-D Y-T-D Y-T-D Balance Interest Yield ---------------- ------------ -------------- (Dollar amounts in thousands) ASSETS Securities Mortgage-backed securities $ 75,486 $ 1,959 5.19% U.S. Government CMOs 145,325 3,303 4.55% U.S. Government agencies 25,774 696 5.40% Other CMOs 64,507 1,657 5.14% State & municipal agencies 18,320 384 5.45% Other securities 192,402 5,506 5.72% Unrealized (losses) gains 832 --- ---------------- ------------ Total securities 522,646 13,505 5.21% ---------------- ------------ Loans Commercial 75,893 3,399 8.96% Commercial construction 13,003 571 8.73% Residential construction 37,572 1,104 5.92% Commercial mortgages 205,342 9,102 8.82% Industrial revenue bonds 1,345 50 10.60% Residential mortgages 252,003 8,373 6.65% Home equity 21,171 886 8.44% Consumer loans 10,680 532 9.98% Overdrafts 602 --- ---------------- ------------ Total Loans 617,611 24,017 7.77% ---------------- ------------ Total earning assets 1,140,257 37,522 6.61% ------------ Non - earning assets 51,713 ---------------- Total assets $ 1,191,970 ================ LIABILITIES & STOCKHOLDERS' EQUITY Deposits NOW accounts $ 110,404 450 0.82% Regular savings 158,476 2,260 2.87% Money Market accounts 140,925 2,145 3.07% Time certificates of deposit 151,402 3,688 4.91% ---------------- ------------ Total interest bearing deposits 561,207 8,543 3.07% ---------------- ------------ Borrowings FHLB 366,875 9,745 5.36% Other short-term borrowings 16,337 318 3.93% ---------------- ------------ Total borrowings 383,212 10,063 5.30% ---------------- ------------ Total interest bearing liabilities 944,419 18,606 3.97% ------------ Demand deposits 154,610 Other liabilities 9,069 Stockholders' equity 83,872 ---------------- Total liabilities & equity $ 1,191,970 ================ Net interest income/spread $ 18,916 2.64% ============ Net interest margin (NII/Avg Earning Assets) 3.30%
PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) CCBT FINANCIAL COMPANIES, INC. VOLUME/RATE ANALYSIS Six months ended June 30, 2000 vs June 30, 1999
Changes in income/expense due to ---------------------------------------------------- Volume Rate Total ---------------- ------------- -------------- EARNING ASSETS Securities Mortgage-backed securities $ (1,433) $ 694 $ (739) U.S. Government CMOs (142) 1,835 1,693 U.S. Government agencies 90 130 220 Other CMOs (136) 502 366 State & municipal agencies 39 11 50 Other securities 278 737 1,015 ------------ ------------ ------------- Total securities (1,304) 3,909 2,605 ------------ ------------ ------------- Loans Commercial 337 222 559 Commercial construction 543 49 592 Residential construction 363 76 439 Commercial mortgages 374 189 563 Industrial revenue bonds (15) 13 (2) Residential mortgages 1,745 247 1,992 Home equity 247 126 373 Consumer loans (102) 3 (99) ------------ ------------ ------------- Total Loans 3,492 925 4,417 ------------ ------------ ------------- Total earning assets $ 2,188 $ 4,834 $ 7,022 ------------ ------------ ------------- INTEREST BEARING LIABILITIES Deposits NOW accounts $ 20 $ (34) $ (14) Regular savings (121) 165 44 Money Market accounts (10) 331 321 Time certificates of deposit 896 476 1,372 ------------ ------------ ------------- Total interest bearing deposits 785 938 1,723 ------------ ------------ ------------- Borrowings FHLB (33) 1,218 1,185 Other short-term borrowings 141 131 272 ------------ ------------ ------------- Total borrowings 108 1,349 1,457 ------------ ------------ ------------- Total interest bearing liabilities $ 893 $ 2,287 $ 3,180 ------------ ------------ ------------- Net interest income $ 1,295 $ 2,547 $ 3,842 ============ ============ =============
PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2000 vs SIX MONTHS ENDED JUNE 30, 1999 Sources of funds As shown in the table on page 11, average interest bearing deposits outstanding increased $31.1 million when comparing the first half of 2000 versus the same period in 1999. With exception to lowered rates on NOW accounts, the cost of those funds was greater in the 2000 period as management raised deposit rates in response to generally rising market rates. Average borrowed funds increased $5.0 million in the 2000 period. The rates paid on these borrowed funds were also higher than in the 1999 period, again reflecting the general rise in market rates. The remaining sources of funds, i.e., non-interest bearing demand deposits, other liabilities and capital, averaged 6.8% higher in the 2000 period, including demand deposit growth of $14.8 million or 9.6%. In total, average sources of funds increased $52.9 million or 4.4% while the average cost of interest bearing funds rose from 3.97% during the six months ended June 30, 1999 to 4.47% in 2000. Uses of funds Average loans were higher by $95.1 million or 15.4% in 2000 while investments were lower by $43.7 million or 8.4%, and on a combined basis, approximated 96% of average total assets during each period. Loan growth was spearheaded by residential mortgage and related construction lending, up $69.8 million or 22.5% in very active local market. Accordingly, the investment portfolio declined in size with reductions occurring primarily in mortgage related categories. During the six months ended June 30, 2000 the average yield on earning assets rose to 7.56% from the 6.61% reported for the comparable period in 1999. Net interest income Net interest income was $22.8 million for the six months ended June 30, 2000 as compared to $18.9 million for the same period in 1999, up 20.3%. The spread and net interest margin ratios were 3.09% and 3.84%, respectively, for the six months ended June 30, 2000 as compared to 2.64% and 3.30%, respectively, for the comparable 1999 period. While consumer attraction to lower residential mortgage rate opportunities lowered yields on the residential mortgage portfolio and the securities portfolio in 1999, interest rates have been rising in 2000, thereby having the opposite effect. These factors, along with increased commercial and commercial real estate construction lending, are significant contributors to the increased net interest income. As shown on the Volume/Rate Analysis on page 12, the Company's net interest income improved on both volume and rate increases during the first six months of 2000 as compared to the same period in 1999. Provision for loan losses No provisions were made to the reserve for loan losses in the quarters ended June 30, 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 $8.0 million for the six months ended June 30, 2000, up $845 thousand or 11.8% compared to the $7.2 million earned during the same period in 1999. Higher Financial advisor (trust and investment) fees, loan fees and insurance commissions contributed to this increase, along with increased income from electronic banking. The latter includes pre-conversion net credit card merchant fee income of $218 thousand, which amount, net of applicable expenses, has been forwarded to the purchaser of the Merchant credit card portfolio. See also comments regarding non-interest income improvements during the second quarter 2000 within this document entitled "Results of Operations - Three Months ended June 30, 2000 vs Three Months ended June 30, 1999". PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Non-interest expenses During the first half of 2000, non-interest expenses totaled $18.0 million, $2.4 million or 15.7% greater than the expenses of the comparable period last year. Salaries and benefits, the largest combined category of expense, rose $1.3 million or 15.5% to total $9.7 million for the first six months of 2000 while All other expenses increased $549 thousand reflecting one-time writeoffs of $303 thousand and an increased committment to training and education, as reported in the first quarter of 2000. Other expense categories reflect, in part, additional expenses of the insurance services operation and general increases in the cost of Bank operations in accordance with expectations. Minority interest The year-to-date minority interest on the 49% minority holding of Murray & MacDonald Insurance Services, Inc. includes some initial investment in increasing that company's ability to provide additional service to its enlarged customer base. Income taxes The combined State and Federal income tax expense was $4.4 million for the six months ended June 30, 2000 , up $561 thousand or 14.6% over the same period last year on higher pretax income. The combined effective State and Federal tax expense equalled 34.2% of pretax income thus far in 2000 as compared to 36.2% in 1999. Net income Consolidated net income was $8.5 million representing earnings per share of $0.98 for the six months ended June 30, 2000 as compared to $6.8 million or $0.75 per share for the comparable six months ended June 30, 1999. Annualized returns on average assets and average equity were 1.37% and 19.56%, respectively, for the six months ended June 30, 2000 as compared to 1.14% and 16.25%, respectively, for the six months ended June 30, 1999. (The remainder of this page intentionally left blank) PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) COMPARATIVE ANALYSIS OF SELECTED PERIOD-END ASSETS, LIABILITIES AND CAPITAL The Company had $1.28 billion of consolidated total assets, $902.7 million of deposits and $91.3 million of stockholders' equity at June 30, 2000. Its capital to assets ratio was 7.11%, exceeding all regulatory requirements. As compared to reported balances at December 31, 1999, Securities available for sale, at fair value, decreased $40.9 million or 8.8%, portfolio loans, net of reserves, increased $81.1 million or 12.2%, deposits increased $136.7 million or 17.8% and borrowed funds decreased $88.0 million or 23.9%. INVESTMENT SECURITIES The adjusted cost and estimated market values of investment securities which the Company considers to be available for sale at June 30, 2000 and December 31, 1999 were as follows:
June 30, 2000 (in thousands) ------------------------------------------------------------------------- Gross Gross Estimated Adjusted Unrealized Unrealized Market Cost Gains Losses Value ---------------- -------------- -------------- -------------- U. S. Government agency CMOs $ 154,336 $ 1,868 $ 4,243 $ 151,961 Other U. S. Government agencies 27,146 4 512 26,638 Other collateralized mortgage obligations 48,031 661 820 47,872 State and municipal obligations 18,965 --- --- 18,965 Other debt securities 176,998 640 596 177,042 ---------------- -------------- -------------- -------------- Totals $ 425,476 $ 3,173 $ 6,171 $ 422,478 ================ ============== ============== ==============
December 31, 1999 (in thousands) ------------------------------------------------------------------------- Gross Gross Estimated Adjusted 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 ================ ============== ============== ==============
Investment securities declined $40.9 million to $422.5 million at June 30, 2000, with deference to the significant loan growth. Reductions occurred in CMOs and other U.S. Government agencies while State and municipal obligations and Other debt securities increased modestly. At June 30, 2000, Other debt securities consisted of approximately $80 million floating rate and $97 million short term fixed rate securities, nearly all backed by assets other than residential mortgages. PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Sales of securities produced net gains of $49 thousand during the quarter ended June 30, 2000 compared to net gains of $4 thousand during the same period in 1999. Net gains on security sales amounted to $28 thousand and $59 thousand for the six months ended June 30, 2000 and 1999, respectively. LOANS The following is a summary of the Company's outstanding loan balances as of the dates indicated: June 30, December 31, 2000 1999 -------------- --------------- (in thousands) Mortgage loans on real estate: Residential $ 319,108 $ 290,722 Commercial 219,643 203,987 Construction 88,871 68,809 Equity lines of credit 33,365 23,036 -------------- --------------- 660,987 586,554 -------------- --------------- Other loans Commercial 82,468 77,776 Industrial revenue bonds 2,077 1,137 Consumer 10,900 9,275 -------------- --------------- 95,445 88,188 -------------- --------------- Total loans 756,432 674,742 Less: Allowance for loan losses (11,668) (11,158) -------------- --------------- Loans, net $ 744,764 $ 663,584 ============== =============== Loans held for sale $ --- $ 200,000 ============== =============== Portfolio loans increased $81.7 million or 12.1% to $756 million at June 30, 2000 as compared to December 31, 1999, led by residential mortgage loans, up $28.4 million or 9.8%. During the period, new residential mortgage volume in the residential loan category included originations of $4.5 million at fixed rates and $60.5 million at adjustable rates. Commercial and commercial real estate loans increased a combined $20.4 million or 7.3% while combined residential and commercial real estate construction loans increased $20.1 million or 29.2%. Included in this latter category are a number of new loan participations for the construction of office buildings in nearby Boston. Non performing assets and loan loss experience: As shown in the next table, non-performing assets were $3.4 million or 0.26% of total assets at June 30, 2000 compared to $3.3 million or 0.27% of total assets at December 31, 1999. All of these amounts represent non accruing loans. 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. PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
June 30, December 31, 2000 1999 ----------------- --------------- (in thousands) Nonaccrual loans $ 1,879 $ 1,777 Loans past due 90 days or more and still accruing --- --- Property from defaulted loans 1,500 1,500 --------------- ------------- Total non-performing assets $ 3,379 $ 3,277 =============== ============= Restructured troubled debt performing in accordance with amended terms, not included above $ 243 $ 626 =============== =============
The following is a summary of the activity in the reserve for loan losses for the indicated periods:
Six months ended June 30, 2000 1999 ----------------- ----------------- (in thousands) Balance at the beginning of the period $ 11,158 $ 11,108 Provisions --- --- Recoveries 567 249 ----------------- --------------- 11,725 11,357 Less: Charge-offs (57) (102) ----------------- --------------- Balance at the end of the period $ 11,668 $ 11,255 ================= ===============
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 1.54% of total loans at June 30, 2000, 1.65% at December 31, 1999 and 1.85% at June 30, 1999. Management considers the reserve to be adequate at June 30, 2000, although there can be no assurance that the reserve is adequate or that additional provisions might be necessary. The Company had outstanding committments to originate new residential and commercial mortgages of $36.7 million at June 30, 2000 and $57.0 million at December 31, 1999. Additional unadvanced funds on various loan types at June 30, 2000 are shown in the next table. (The remainder of this page intentionally left blank) PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Additional Unadvanced Loan Commitments June 30, December 31, 2000 1999 --------------- -------------- (in thousands) Commercial loans Dealer floor plan $ 11,373 $ 8,067 Lines of credit 47,122 54,735 Other 4,523 1,781 Commercial mortgage Construction 19,768 20,197 Other 1,293 613 Residential mortgage Home equity 38,879 34,734 Consumer loans Lines of credit 2,736 2,023 --------------- ------------- Total $ 125,694 $ 122,150 =============== =============
DEPOSITS The following table is a summary of deposits outstanding as of the dates indicated:
June 30, December 31, 2000 1999 --------------- --------------- (in thousands) Demand deposits $ 205,623 $ 167,624 NOW accounts 135,793 120,307 Other savings deposits 146,118 158,142 Money market accounts 152,374 138,287 Certificates of deposit greater than $100,000 78,969 60,666 Other time deposits 183,846 121,038 -------------- ------------- Total deposits $ 902,723 $ 766,064 ============== =============
Reflecting core deposit growth, the recent acquisition of branches in Wareham and Falmouth, Massachusetts and, to a lesser degree, the seasonal nature of the Cape Cod economy as discussed in "Liquidity" on page 20 herein, total deposits at June 30, 2000 were $136.7 million or 17.8% higher than total deposits at December 31, 1999. The two branch acquisitions represented approximately $58 million at June 30, 2000. Generally, the Company's strategy is to price deposits that reflect national market rates, offering higher alternative rates based on increasing amounts deposited. During the second quarter of 2000, the Bank initiated a premium offering rate of 7.20% APY for a one-year CD which has proven successful. Also during the second quarter 2000, the Company accepted $25 million brokered deposits, included in Other time deposits in the table above. Interest rates paid are frequently reviewed and are modified to reflect changing conditions. PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) 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 June 30, 2000, borrowed funds totaled $279.3 million, nearly $88 million or 23.9% lower than borrowed funds at December 31, 1999. This decrease responds to the unusually high deposit growth during the period. STOCKHOLDERS' EQUITY The Company's capital to assets ratio was 7.11% at June 30, 2000 compared to 6.96% 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 June 30, 2000:
Minimum June 30, 2000 Regulatory ------------------------------------ Guidelines Company Bank ---------------- --------------- --------------- Tier 1 leverage capital 3.00% 7.46% 6.46% Tier 1 capital to risk-weighted assets 4.00% 10.26% 8.78% Total capital to risk-weighted assets 8.00% 11.50% 10.03%
The Company's book value at June 30, 2000 was $10.60 per share compared to $9.95 per share at December 31, 1999. PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) LIQUIDITY The Bank normally experiences a seasonal swing in its liquidity each year due to the 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 Asset/Liability Management Committee ("ALCO"), a subcommittee of the Board of Directors of the Bank, the Company and the Bank monitor 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. 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 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 had not been 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 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) that were considered to be critical or 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 June 30, 2000. The Bank is also dependent on other providers in the conduct of its business, most notably for electrical power and telecommunications. Had these providers experienced Year 2000 problems, disruption of service, especially if prolonged, could have seriously effected the Bank's ability to conduct business as usual. The Company has not experienced any disruption of services 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 a customer's 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. 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 June 30, 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 The Company's annual meeting of stockholders was held on April 27, 2000 (the "Annual Meeting"). The presence, in person or by proxy, of at least a majority of the total number of issued and outstanding shares of the Company's common stock, $2.50 par value (the"Common Stock"), was necessary to constitute a quorum for the transaction of business at the Annual Meeting. There were 8,604,796 shares of Common Stock issued, outstanding and eligible to vote as of March 10, 2000. A total of 7,449,716.46 shares of Common Stock were present in person or by proxy at the Annual Meeting, constituting a quorum. At the Annual Meeting, the stockholders elected the following two individuals as Directors of the Company to serve until the 2003 annual meeting of stockholders, with the following votes cast: BROKER NON-VOTES NOMINEE FOR ABSTENTIONS AND WITHHELD - ------- --- ----------- ------------ William R. Enlow 7,321,267.46 128,449 0 Stephen B. Lawson 7,131,092.46 318,624 0 The following additional Directors of the Company continued as Directors after the Annual Meeting: John F. Aylmer, George D. Denmark, John Otis Drew, and William C. Snow. ITEM 5. Other information Not applicable PART II OTHER INFORMATION 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 June 30, 2000. EXHIBIT INDEX Exhibit Description ------- ----------- 27 Financial data schedule 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: August 11, 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 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 1 3-MOS DEC-31-2000 APR-01-2000 JUN-30-2000 42,330,849 551,715 0 0 422,478,428 0 0 756,432,235 (11,668,362) 1,284,473,077 902,723,037 166,003,529 16,116,119 113,342,581 0 0 22,652,660 68,635,151 1,284,473,077 14,718,174 7,572,025 229,134 22,519,333 5,401,427 11,077,188 11,442,145 0 49,394 9,258,801 6,632,576 6,632,576 0 0 4,353,339 0.50 0.50 3.86 1,879,000 0 243,000 10,024,361 11,158,126 57,307 567,543 11,668,362 11,668,362 0 0
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