-----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, S6fBXdZRfrq6fhBeDYD8XJ9r5e0XaDoUFXZE2looTgS3BsR6/xPsLblLwZmhGL3h mIj87xFhJ9dV2W/ACTwmWA== 0000914317-01-500122.txt : 20010516 0000914317-01-500122.hdr.sgml : 20010516 ACCESSION NUMBER: 0000914317-01-500122 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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: 1640061 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 form10q-38495.txt 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, 2001 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 [ ] 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 May 9, 2001.
TABLE OF CONTENTS Section Description Page No. - ------- ----------- -------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition 3 March 31, 2001 (Unaudited) and December 31, 2000 Consolidated Statements of Income (Unaudited) 4 Three Months Ended March 31, 2001 and 2000 Consolidated Statements of Cash Flows (Unaudited) 5 Three Months Ended March 31, 2001 and 2000 Consolidated Statements of Comprehensive Income (Unaudited) 6 Three Months Ended March 31, 2001 and 2000 Consolidated Statements of Changes in Stockholders' Equity 6 (Unaudited) Three Months Ended March 31, 2001 and 2000 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 7-16 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
PART I FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED STATEMENTS OF CONDITION
March 31, December 31, --------------------------------- 2001 2000 ---- ----- ASSETS (Unaudited) Cash and due from banks $ 35,756,373 $ 49,371,492 Short term interest-bearing deposits 23,751,264 16,843,538 Securities available for sale at fair value 492,809,319 426,742,801 Federal Home Loan Bank stock, at cost 22,125,400 22,125,400 Federal Reserve Bank stock, at cost 1,180,700 1,180,700 Total loans 879,357,642 848,490,319 Less: Reserve for loan losses (12,141,493) (12,153,944) --------------- --------------- Net loans 867,216,149 836,336,375 Loans held for sale 1,257,544 860,840 Premises and equipment 16,980,301 16,633,912 Deferred tax assets 3,204,125 4,512,589 Accrued interest receivable on securities 3,386,218 3,353,580 Principal and interest receivable on loans 4,476,001 4,331,987 Intangibles 9,159,591 9,555,425 Other assets 10,932,573 12,070,707 --------------- --------------- Total assets $ 1,492,235,558 $ 1,403,919,346 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 954,932,619 $ 973,302,664 Borrowings from the Federal Home Loan Bank 393,471,386 291,286,797 Other short-term borrowings 24,270,439 24,520,157 Current taxes payable 3,290,661 2,267,117 Interest payable on deposits and borrowings 4,847,947 4,206,555 Post retirement benefits payable 2,983,886 2,830,386 Employee profit sharing retirement and bonuses payable 795,821 2,946,642 Other liabilities 3,603,078 3,705,815 --------------- --------------- Total liabilities 1,388,195,837 1,305,066,133 --------------- --------------- Minority interest 136,603 124,435 --------------- --------------- Stockholders' equity Common stock, $1.00 par value: Authorized: 12,000,000 shares Issued: 9,061,064 9,061,064 9,061,064 Surplus 27,494,890 27,494,890 Undivided profits 73,177,294 69,896,759 Treasury stock, at cost (453,016 shares) (7,399,628) (7,399,628) Accumulated other comprehensive income 1,569,498 (324,307) --------------- --------------- Total stockholders' equity 103,903,118 98,728,778 --------------- --------------- Total liabilities and stockholders' equity $ 1,492,235,558 $ 1,403,919,346 =============== ===============
The accompanying notes are an integral part of these unaudited, consolidated financial statements. 3 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements (continued) CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2001 2000 ---- ---- Unaudited INTEREST INCOME Interest and fees on loans $ 17,134,782 $ 13,715,616 Interest on short term interest-bearing deposits 189,361 74,487 Taxable interest income on securities 8,089,562 7,663,724 Tax-exempt interest income on securities 236,997 207,958 Dividends on securities 417,942 362,838 ---------- ------------ Total interest income 26,068,644 22,024,623 ---------- ------------ INTEREST EXPENSE Interest on deposits 7,773,717 4,863,923 Interest on borrowings from the Federal Home Loan Bank 4,966,384 5,586,152 Interest on other short-term borrowings 277,084 259,125 ---------- ------------ Total interest expense 13,017,185 10,709,200 ---------- ------------ Net interest income 13,051,459 11,315,423 Provision for loan losses -- -- ----------- ------------ Net interest income after provision for loan losses 13,051,459 11,315,423 ----------- ------------ NON-INTEREST INCOME Financial Advisor fees 1,760,363 1,507,595 Deposit account service charges 501,746 488,179 Branch banking fees 717,396 714,072 Electronic banking fees 482,348 388,502 Loan servicing and other loan fees 59,672 55,584 Brokerage fees and commissions 249,120 283,545 Net gain (loss) on sales of securities 460,494 (21,092) Net gain on sales of loans 141,631 23,057 Insurance commissions 466,648 -- Other income 111,462 140,907 ----------- ------------ Total non-interest income 4,950,880 3,580,349 ----------- ------------ NON-INTEREST EXPENSE Salaries 3,945,959 3,157,318 Employee benefits 1,861,198 1,549,054 Building and equipment 1,329,847 1,117,970 Data processing 777,720 689,621 Accounting and legal fees 214,677 204,730 Other outside services 509,188 471,098 Amortization of intangibles 395,833 -- Delivery and communications 524,491 328,675 Directors' fees 85,800 87,500 Marketing and advertising 348,252 203,863 Printing and supplies 137,375 166,171 Insurance 137,470 95,820 All other expenses 408,833 610,814 ----------- ------------ Total operating expense 10,676,643 8,682,634 ---------- ------------ Minority Interest 12,169 -- ----------- ------------ Net income before taxes 7,313,527 6,213,138 Applicable income taxes 2,483,543 2,112,089 ------------ ------------ Net income $ 4,829,984 $ 4,101,049 ============ ============ Average shares outstanding 8,608,048 8,608,048 ============ ============ Basic earnings per share $ 0.56 $ 0.48 Diluted earnings per share $ 0.56 $ 0.48 Cash dividends declared $ 0.18 $ 0.16
The accompanying notes are an integral part of these unaudited, consolidated financial statements 4 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements (continued) CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, ------------------------------------ 2001 2000 ---- ---- (Unaudited) CASH PROVIDED BY OPERATING ACTIVITIES Net income $ 4,829,984 $ 4,101,049 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses -- -- Depreciation and amortization 1,069,120 539,695 Net accretion of securities (2,569,861) (4,632,731) Accretion of deferred loan fees (210,665) (102,184) Net (gain) loss on sale of investment securities (460,494) 21,092 Deferred income tax expense 284,920 975,313 Net gain on sale of loans (141,631) (23,057) Net change in: Loans held for sale (396,704) 4,700 Accrued interest receivable (176,652) (953,381) Accrued expenses and other liabilities (1,458,666) (434,653) Other, net 2,957,012 4,641,429 ------------- ------------- Net cash provided by operating activities 3,726,363 4,137,272 ------------- ------------- CASH USED BY INVESTING ACTIVITIES Net increase in loans (41,269,581) (33,058,138) Proceeds from sale of loans 10,564,810 3,648,217 Maturities of securities 81,579,045 48,937,255 Purchase of available for sale securities (161,244,214) (62,860,730) Sales of available for sale securities 19,399,620 28,637,749 Purchases of premises and equipment (1,478,813) (304,653) ------------- ------------- Net cash used by investing activities (92,449,133) (15,000,300) ------------- ------------- CASH PROVIDED BY FINANCING ACTIVITIES Net decrease in deposits (18,370,045) (8,941,544) Net increase in borrowings from the Federal Home Loan Bank 102,184,589 31,901,414 Net (decrease) increase in other short-term borrowings (249,718) 3,131,716 Cash dividends paid on common stock (1,549,449) (1,377,287) ------------- ------------- Net cash provided by financing activities 82,015,377 24,714,299 ------------- ------------- Net increase (decrease) in cash and cash equivalents (6,707,393) 13,851,271 Cash and cash equivalents at beginning of year 66,215,030 45,622,428 ------------- ------------- Cash and cash equivalents at end of period $ 59,507,637 $ 59,473,699 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for: Interest $ 12,375,792 $ 10,893,796 Income taxes 1,429,819 583,348 Non-cash transactions: Additions to property from defaulted loans -- $ 70,000 Loans to finance OREO property -- --
The accompanying notes are an integral part of these unaudited, consolidated financial statements 5 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements (continued) CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Three Months Ended March 31,
2001 2000 ---- ---- (Unaudited) Net income $ 4,829,984 $ 4,101,049 ----------- ----------- Unrealized holding gains on securities available for sale 3,691,604 893,162 Reclassification of gains on securities realized in income (460,494) 21,092 ----------- ----------- Net unrealized gains (losses) 3,231,110 914,254 Related tax effect (1,337,305) (402,469) ----------- ----------- Net other comprehensive income 1,893,805 511,785 ----------- ----------- Comprehensive income $ 6,723,789 $ 4,612,834 =========== ===========
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Three Months Ended March 31,
2001 2000 ---- ---- (Unaudited) COMMON STOCK Balance, beginning of the quarter $ 9,061,064 $ 9,061,064 ------------- ------------- Balance, March 31 9,061,064 9,061,064 ------------- ------------- SURPLUS Balance, beginning of the quarter 27,494,890 27,494,890 ------------- ------------- Balance, March 31 27,494,890 27,494,890 ------------- ------------- UNDIVIDED PROFITS Balance, beginning of the quarter 69,896,759 58,181,480 Net income 4,829,984 4,101,049 Cash dividends declared (1,549,449) (1,377,287) ------------- ------------- Balance, March 31 73,177,294 60,905,242 ------------- ------------- TREASURY STOCK Balance, beginning of the quarter (7,399,628) (7,399,628) ------------- ------------- Balance, March 31 (7,399,628) (7,399,628) ------------- ------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of the quarter (324,307) (1,688,195) Net other comprehensive income 1,893,805 511,785 ------------- ------------- Balance, March 31 1,569,498 (1,176,410) ------------- ------------- TOTAL STOCKHOLDERS' EQUITY $ 103,903,118 $ 88,885,158 ============= =============
The accompanying notes are an integral part of these 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, 2001 and 2000 (Unaudited) 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 the second quarter of 2000, the Company, through its wholly-owned subsidiary, Cape Cod Bank and Trust Company N.A., acquired 51% of the stock of Murray & MacDonald Insurance Services, Inc. of Falmouth, Massachusetts, a full service insurance Agency offering property, casualty, life, accident and health products to clients on Cape Cod. The Agency has been in business since 1972 and has license agreements with more than thirty insurance firms. As part of the transaction, Murray & MacDonald President Douglas D. MacDonald will continue as President of the Agency, and will direct all insurance activities for the Bank. In addition to the acquisition of Murray & MacDonald Insurance Services, Inc., the Company also completed its acquisition of two branch banking offices, in Falmouth and Wareham, Massachusetts, from Fleet Bank during the second quarter of 2000. These branches added approximately $55 million in deposits at a 15.5% premium, at June 30, 2000. 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 March 31, 2000 financial statements to conform to the 2001 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, 2001 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 31,2000. 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, and changes in the assumptions used in making such forward-looking statements. 7 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) 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 the largest commercial bank headquartered in Barnstable County. It offers a wide range of commercial banking services for individuals, businesses, non-profit organizations, governmental units and fiduciaries. The Bank receives substantially all of its deposits from and makes substantially all of its loans to individuals and businesses on Cape Cod, although the Bank has some loans on properties outside its market area, including some sizable participations in commercial mortgages. 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 homeowners. In addition, a substantial non-core vacation population contributes to seasonal deposit growth. (The remainder of this page intentionally left blank) 8 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (cont.)
Net Interest Income, Net Interest Margin Quarters Ended March 31, 2001 2000 Average Interest Average Average Interest Average Balance Yield Balance Yield (Dollar amounts in thousands) ASSETS Securities: Mortgage-backed securities $37,450 $ 700 7.48% $31,745 $ 650 8.18% CMOs 177,802 3,432 7.72% 214,157 3,774 7.05% U.S. Government agencies 22,291 358 6.51% 29,528 463 6.38% State and municipal obligations 22,118 251 5.98% 19,700 208 5.58% Other securities 246,053 4,193 6.91% 202,135 3,213 6.47% ------- ----- ------- ----- Total securities 505,714 8,934 7.18% 497,265 8,308 6.79% ------- ----- ------- ----- Loans: Commercial 80,275 1,821 9.20% 81,194 1,900 9.51% Commercial construction 42,139 925 8.90% 22,954 511 8.96% Residential construction 49,522 772 6.24% 46,305 711 6.07% Commercial mortgages 236,536 5,409 9.27% 210,930 4,735 9.03% Industrial revenue bonds 1,565 32 11.68% 1,125 24 11.93% Residential mortgages 400,472 7,095 7.09% 298,302 5,046 6.77% Home equity 37,971 863 9.22% 24,878 570 9.21% Consumer 8,522 218 10.23% 9,046 219 9.68% ------- ------ -------- ------ Total loans 857,002 17,135 8.06% 694,734 13,716 7.93% ------- ------ ------- ------ Total earning assets 1,362,716 26,069 7.74% 1,191,999 22,024 7.46% ------ ------ Cash and due from banks 36,813 28,590 Non-earning assets 30,964 21,247 ---------- ---------- Total assets $1,430,493 $1,241,836 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Deposits: NOW accounts $ 132,395 226 0.69% $ 111,151 219 0.79% Regular savings 143,558 1,028 2.90% 153,622 1,169 3.06% Money Market accounts 161,410 1,456 3.66% 137,690 1,151 3.36% Certificates of Deposit of 122,486 $100,000 or more 1,904 6.30% 59,590 831 5.61% Other time deposits 203,340 3,160 6.30% 118,914 1,494 5.05% ------- ----- ------- ----- Total interest bearing deposits 763,189 7,774 4.13% 580,967 4,864 3.37% ------- ----- ------- ----- Borrowings: Federal Home Loan Bank 344,518 4,966 5.85% 384,353 5,586 5.85% Other short-term borrowings 25,930 277 4.33% 20,660 259 5.04% ------ --- ------- ----- Total borrowings 370,448 5,243 5.74% 405,013 5,845 5.80% ------- --------- ------- ----- Total interest-bearing liabilities 1,133,637 13,017 4.66% 985,980 10,709 4.37% ------ ------ Demand deposits 188,873 161,576 Non-interest bearing liabilities 10,267 8,175 Stockholders' equity 97,716 86,105 ---------- ---------- Total liabilities & equity $1,430,493 $1,241,836 ========== ========== Net interest income/spread $13,052 3.08% $11,315 3.09% ======= ======= Net interest margin (NII/Avg. Earning Assets) 3.88% 3.82%
9 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 31,2001 vs March 31, 2000 Changes in Income/Expense due to ---------------------------------------------------------------------------------------------- Volume Rate Total ---------------------------------------------------------------------------------------------- (Dollar amounts in thousands) EARNING ASSETS Securities: Mortgage-backed securities $110 $ (60) $ 50 U.S. Government CMOs (662) 320 (342) U.S. Government agencies (115) 10 (105) State & municipal obligations 34 9 43 Other securities 724 256 980 ---- ---- ---- Total securities 91 535 626 ---- ---- ---- Loans: Commercial (21) (58) (79) Commercial construction 423 (9) 414 Residential construction 49 12 61 Commercial mortgages 578 96 674 Industrial revenue bonds 13 (5) 8 Residential mortgages 1,745 304 2,049 Home equity 298 (5) 293 Consumer (13) 12 (1) ---- ---- ---- Total loans 3,072 347 3,419 ----- ---- ---- Total interest income 3,163 $ 882 $4,045 ----- ----- ------ INTEREST BEARING LIABILITIES Deposits: NOW accounts $39 $(32) $ 7 Regular savings (74) (67) (141) Money Market accounts 205 100 305 Certificates of deposit of $100,000 or more 924 149 1,073 Other time deposits 1,182 484 1,666 ----- --- ----- Total interest bearing deposits 2,276 $634 2,910 ----- ------ ----- Borrowings: Federal Home Loan Bank (575) (44) (619) Other short-term borrowings 61 (44) 17 ----- ---- ---- Total borrowings 514 $ 88 (602) ----- ---- ----- Total interest bearing liabilities 1,762 546 2,308 ----- ---- ----- Net changes due to volume/rate $1,401 $336 $1,737 ====== ==== ======
10 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (cont.) Source and Use of Funds When compared to the first quarter of 2000, average interest bearing deposits were higher by 31.4% or $182.2 million in the first quarter of 2001. Significant growth occurred in time deposits with Certificates of Deposit greater than $100,000 increasing 105.5% or $62.9 million and Other time deposits increasing 71.0% or $84.4 million. This growth includes deposits acquired from Fleet during the second quarter of 2000 as well as the offering of a 7.20% APY on a one year certificate of deposit during the second and third quarters of 2000. As a result of this aggressive and popular promotion, the cost of funds was somewhat greater in the first quarter of 2001 at 4.13% compared to 3.37% in the first quarter of 2000. Non-interest bearing demand deposits increased 16.9% or $27.3 million in the first quarter of 2001 when compared to the same period in 2000. On average, securities were marginally lower by $8.4 million or 1.7% during the first quarter of 2001 when compared to the first quarter of 2000. This reduction in average balance in the securities portfolio was offset by a higher average yield of 7.18% in the first quarter of 2001 as compared to 6.79% in 2000, resulting in earnings of $8,934 thousand in 2001, an increase of $626 thousand or 7.5% over first quarter 2000 results. When compared to the first three months of 2000, total loans were higher in 2001 by 23.4% or $162.3 million. Loan growth was spearheaded by residential mortgage lending, up $102.2 million or 34.3% in a very active local market, along with increased commercial construction and mortgage lending, up nearly $45 million or 19.2%. Additionally, Home Equity loans were up $13.1 million for a 52.6% increase for the first three months of 2001 as compared to 2000. Additional funds were utilized by management to reduce Federal Home Loan Bank borrowings, down by 10.4% or $39.8 million in the first quarter of 2001 as compared to the same quarter of 2000. Net interest income Net interest income was $13.1 million for the three months ended March 31, 2001 as compared to $11.3 million for the same period in 2000 up 15.4%. The spread and net interest margin ratios were 3.08% and 3.88%, respectively, for the three months ended March 31, 2001 as compared to 3.09% and 3.82%, respectively, for the comparable 2000 period. Provision for loan losses No provisions were made to the reserve for loan losses in the quarters ended March 31, 2001 or 2000. Management believes that, upon continuing review of loan payment and quality statistics, the current reserve continues to be adequate to cover losses likely to result from loans in the current portfolio. Non-interest Income and Expense Non-interest income totaled $5.0 million for the three months ended March 31, 2001, up 38.3% compared to the $3.6 million earned during the same period in 2000. Net gains on the sale of securities as well as the addition of revenues from insurance activities contributed significantly to this increase. During the first quarter of 2001, non-interest expenses totaled $10.7 million, greater than the $8.7 million expended during the comparable period last year by $2.0 million or 23.0%. Salaries and employee benefits rose $1.1 million or 23.4%. Increased expenses in other categories include amortization of intangibles resulting from acquisitions and increased building and equipment expenses attributable to the addition of two branch offices and the new South Yarmouth headquarters. 11 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 $2.5 million for the quarter ended March 31, 2001 was 17.6% greater than the $2.1 million recorded for the same quarter in 2000, a reflection of higher pretax net income. The combined effective State and Federal tax rate was 34.0% of pretax net income for each period presented. Net income Consolidated net income was $4,829,984 representing earnings per share of $0.56 for the three months ended March 31, 2001 as compared to $4,101,049 or $0.48 per share for the comparable three months ended March 31,2000. Annualized returns on average assets and average equity were 1.35% and 19.77%, respectively, for the three months ended March 31, 2001 as compared to 1.32% and 19.32%, respectively, for the three months ended March 31,2000. COMPARATIVE ANALYSIS OF SELECTED PERIOD-END ASSETS, LIABILITIES AND CAPITAL The Company had $1.49 billion consolidated total assets, $954.9 million deposits and $103.9 million stockholders' equity at March 31, 2001. Its capital to assets ratio was 6.96%, exceeding all regulatory requirements. As compared to reported balances at December 31, 2000, gross loans increased $30.9 million or 3.6%, deposits decreased $18.4 million or 1.9% and borrowed funds increased $101.9 million or 32.3%. Investment Securities The adjusted cost and estimated market values of investment securities which the Company classified as available for sale at March 31, 2001 and December 31, 2000 were as follows:
March 31, 2001 -------------------------------------------------- Gross Gross Estimated Adjusted Unrealized Unrealized Market Cost Gains Losses Value ---- ----- ------ ----- (Dollar amounts in thousands) U.S. Government agency CMOs $173,873 $ 2,069 $ 1,871 $174,071 Other U.S. Government agencies 18,673 53 -- 18,726 Other collateralized mortgage obligations 52,986 1,067 478 53,575 State and municipal obligations 20,416 -- -- 20,416 Other debt securities 224,194 2,065 238 226,021 -------- -------- -------- -------- Totals $490,142 $ 5,254 $ 2,587 $492,809 ======== ======== ======== ========
December 31, 2000 -------------------------------------------------- Gross Gross Estimated Adjusted Unrealized Unrealized Market Cost Gains Losses Value ---- ----- ------ ----- (Dollar amounts in thousands) U.S. Government agency CMOs $140,472 $ 1,412 $ 2,437 $139,447 Other U.S. Government agencies 22,663 31 200 22,494 Other collateralized mortgage obligations 47,746 526 529 47,743 State and municipal obligations 25,479 3 -- 25,482 Other debt securities 190,946 1,484 853 191,577 -------- -------- -------- -------- Totals $427,306 $ 3,456 $ 4,019 $426,743 ======== ======== ======== ========
12 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (cont.) Investment securities available for sale increased $66.1 million, from $426.7 million at December 31, 2000 to $492.8 million at March 31, 2001. Net gains from security sales were $460 thousand during the quarter ended March 31, 2001 compared to net losses of $21 thousand during the same period in 2000. Loans The following is a summary of the Company's outstanding loan balances as of the dates indicated: March 31, December 31, ------------- ------------------ 2001 2000 ---- ---- Mortgage loans on real estate Residential $ 406,844,324 $ 393,574,418 Commercial 243,010,895 242,535,682 Construction 90,788,594 87,978,360 Equity lines of credit 39,549,432 37,377,120 Other loans Commercial 89,101,404 76,274,801 Industrial revenue bonds 1,327,833 1,602,973 Consumer 8,735,160 9,146,965 ------------- ------------- Total loans 879,357,642 848,490,319 Less: Allowance for loan losses (12,141,493) (12,153,944) ------------- ------------- Total portfolio loans, net $ 867,216,149 $ 836,336,375 ============= ============= Loans held for sale $ 1,257,544 $ 860,840 ============= ============= As shown in the table above, total loans increased $30.9 million or 3.6% to $879.4 million at March 31, 2001 as compared to December 31, 2000, with balanced growth between commercial/commercial real estate and residential mortgage loans, up $13.3 and $15.4 million, respectively. New residential mortgage originations of $23.9 million fixed rate and $55.8 million adjustable rate were achieved in the first quarter 2001. During the same period, the Company sold $10.4 million residential mortgages, producing net gains of $175.6 thousand. Non performing assets and loan loss experience As shown in the following table non-performing assets were $3.5 million or .23% of total assets at March 31, 2001 compared to $3.7 million or .26% of total assets at December 31, 2000. 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. March 31, December 31, 2001 2000 ---- ---- (Dollar amounts in thousands) Nonaccrual loans $2,006 $2,192 Loans past due 90 days or more and still accruing -- -- Property from defaulted loans 1,500 1,500 ------ ------ Total non-performing assets $3,506 $3,692 ====== ====== Restructured troubled debt performing in accordance with amended terms, not included above $ 234 $ 237 ====== ====== 13 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (cont.) The following is a summary of the activity in the reserve for loan losses for the indicated periods:
Three Months Ended March 31, ---------------------------- 2001 2000 ---- ---- (Dollar amounts in thousands) Balance, beginning of the period $ 12,154 $ 11,158 Provision for loan losses -- -- Charge-offs (98) (27) Recoveries on loans previously charged off 85 155 -------- -------- Balance, end of the period $ 12,141 $ 11,286 ======== ========
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 1.38% of total loans at March 31, 2001, 1.43% at December 31, 2000, and 1.58% at March 31,2000. Management considers the reserve to be adequate at March 31, 2001, 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 $54.9 million at March 31, 2001 and $57.8 million at December 31, 2000 which are not reflected on the consolidated statement of financial condition. Additional unadvanced loan funds are summarized as follows for the indicated periods: March 31, December 31, ---------------------------------- 2001 2000 ---- ---- Commercial loans (Dollar amounts in thousands) Dealer floor plan $ 6,579 $ 9,134 Lines of credit 48,548 46,743 Other 3,331 3,657 Commercial mortgages Construction 25,759 14,129 Other 11,056 2,896 Residential mortgages Home equity 47,709 45,733 Consumer loans Lines of credit 2,953 2,861 -------- -------- Total $145,935 $125,153 ======== ======== 14 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, ------------------------------- 2001 2000 ---- ---- Deposits Demand $195,253,185 $201,904,120 NOW 138,512,008 139,452,453 Money market 160,990,661 163,793,368 Other savings 142,255,946 143,239,002 Certificates of deposit greater than $100,000 89,544,956 96,159,335 Other time 228,375,863 228,754,386 ----------- ----------- Total deposits $954,932,619 $973,302,664 ============ ============
Reflecting somewhat the seasonal nature of Cape Cod economy as discussed in "Liquidity" on page 15 herein, total deposits at March 31, 2001 are $18.4 million or 1.89% lower than total deposits at December 31, 2000. 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, 2001, borrowed funds totaled $417.7 million, up 32.3% or $101.9 million compared to borrowed funds at December 31,2000. This increase offsets the seasonal deposit decline described under the section entitled "Deposits" above and contributes to the support of heretofore described loan growth. Does not include increase due to investment purchases, which is high % of change. Stockholders' Equity The Company's capital to assets ratio was 6.96% at March 31, 2001 compared to 7.03% at December 31, 2000. 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, 2001. 15 PART I FINANCIAL INFORMATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (cont.) Minimum Regulatory March 31 2001 -------------------- Guidelines Company Bank ---------------------------------- Tier 1 leverage capital 4.00% 6.47% 6.39% Tier 1 capital to risk-weighted assets 4.00% 9.02% 8.84% Total capital to risk-weighted assets 8.00% 10.20% 10.01% The Company's book value at March 31, 2001 was $12.07 per share compared to $11.47 per share at December 31, 2000. LIQUIDITY The Company 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. The Bank 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. 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, 2000 (the "2000 Annual Report"). For quantitative information about market risk, see Item 7A of Part II of the Company's 2000 Annual Report. There have been no material changes in the quantitative and qualitative disclosures about market risk as of March 31, 2001 from those presented in the Company's 2000 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 Change in Control agreements (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, 2001. 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 15, 2001 ------------ /s/ STEPHEN B. LAWSON, President and Chief Executive Officer --------------------------------------------------------------- Stephen B. Lawson, President and Chief Executive Officer /s/ NOAL D. REID, Chief Financial Officer and Treasurer ----------------------------------------------------------- Noal D. Reid, Chief Financial Officer and Treasurer 18 EX-10.1 2 ex10-1.txt Exhibit 10.1 CHANGE OF CONTROL AGREEMENT THIS AGREEMENT is made and entered into this 1st day of April, 2001, by and between Cape Cod Bank and Trust Company, N.A., a national banking association (the "Bank"), CCBT Financial Companies, Inc., a Massachusetts corporation (the "Company") (the Bank and the Company, collectively, the "Employers") and Robert T. Boon, a resident of Sandwich, Massachusetts ("Employee"). WITNESSETH, the Company is the holding company for the Bank; WHEREAS the Employers have determined that it is in the best interests of the Employers to allow the Employee to consider the prospect of a Change in Control (as herein defined) in an objective manner and in consideration of the services to be rendered by the Employee to the Employers and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Employers, the Employers are willing to provide, subject to the terms of this Agreement, certain benefits upon the occurrence of a Terminating Event (as herein defined) subsequent to a Change in Control. NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, the Employers and the Employee hereby agree as follows: 1. Definitions. 1.1 "Affiliate" means: 1.1.1 A member of a controlled group of corporations of which either of the Employers is a member; or 1.1.2 An unincorporated trade or business which is under common control with either of the Employers as determined in accordance with Section 414(c) of the Internal Revenue Code of 1986, as amended (henceforth the "Code") and regulations issued thereunder. For purposes hereof, a "controlled group of corporations" shall mean a controlled group of corporations as defined in Section 1563(a) of the Code determined without regard to Section 1563(a)(4) and (e)(3)(C) of the Code. 1.2 "Base Annual Salary" means the annualized value of the Employee's salary, based on the most recent pay period, prior to a Change of Control. 1.3 "Change in Duties" means: 1.3.1 A significant reduction in the nature or scope of the Employee's authority or duties from those immediately prior to the date on which a Change of Control occurs; 1.3.2 A reduction in the Employee's Base Annual Salary; 1.3.3 Exclusion from any incentive program from which the Employee was previously eligible, or which other executives with comparable duties participate in; 1.3.4 A change in location of the Employee's principal place of employment by more than fifty (50) miles; 1.4 "Change in Control" shall be deemed to have occurred in any one of the following events: 1.4.1 if there has occurred a change in control of either the Company or the Bank which the Company or the Bank would be required to report in response to Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or, if such form and the related regulations are no longer in effect, any forms or regulations promulgated by the Securities and Exchange Commission, pursuant to the Exchange Act, which are intended to serve similar purposes; or 1.4.2 A Change in Control of the Company or the Bank has occurred within the meaning of the Change in Bank Control Act, as amended and the rules and regulations promulgated thereunder; or 1.4.3 Without limitation such a Change in Control shall be deemed to have occurred at such time as: 1.4.3.1. Any "person" (as the term is used in Section 13(d) and 14(d) of the Exchange Act), or group of persons acting in concert, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of any class of equity securities of the Bank representing 50% or more of a class of equity securities except for any securities purchased by the Bank's employee stock ownership plan and trust; or 1.4.3.2. Individuals who constitute the Board of the Company on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at lease three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's shareholders was approved by the same Committee serving under an Incumbent Board, shall be, for purposes of this clause (b) considered as though he were a member of the Incumbent Board; or 1.4.3.3. A plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or similar transaction occurs in which the Company is not the resulting entity; or 1.4.3.4. A proxy statement shall be distributed soliciting proxies from stockholders of the Company, by someone other than the current management of the Company, seeking stockholder approval of a plan or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to such plan or transaction are exchanged for or converted into cash or property or securities not issued by the Company. 1.4.4 Notwithstanding the foregoing, no Change in Control shall be deemed to occur by virtue of the Bank becoming a subsidiary of the Company. 1.5 "Code" means the Internal Revenue Code of 1986, as from time to time amended. 1.6 "Constructive Termination" means the voluntary termination of employment by the Employee following a Change in Duties following a Change of Control. 1.7 "Employment Compensation" means any salary, bonus or commissions paid to the Employee as an employee (as defined in the Code) by any entity other than the Employers or their successors. If the Employee is a partner in a partnership, this definition shall include the Employee's share of partnership income. 1.8 "Exchange Act" means the Securities Exchange Act of 1934, as from time to time amended. 1.9 "Termination for Cause" means the termination of the Employee's employment with the Bank or the Company, as applicable, as a result of: 1.9.1 The Employee's failure or refusal to perform the Employee's duties occasioned by reason other than sickness or other disability of the Employee, which is not cured within ten (10) business days after written notice from the Bank or the Company, as applicable, specifying such failure or refusal has been delivered; 1.9.2 Commission by the Employee of any materially fraudulent, dishonest or other act of misconduct in the performance of the Employee's duties hereunder, other than at the specific direction of the Board of the Bank or the Company, as applicable; or 1.9.3 Conviction for any felony or crime involving moral turpitude. 1.10 "Voting Securities" means any securities which ordinarily possess the power to vote in the election of directors without the happening of any precondition or contingency. 2. Term. Subject to the provisions for earlier termination hereinafter set forth in Section 4 of this Agreement, the term of this Agreement shall commence on the date hereof and end on the day preceding the second anniversary hereof. 3. Automatic Extension. Unless the Employee receives written notification from either of the Employers of their intention not to renew this Agreement at least twelve (12) months prior to the expiration date, plus any extensions, the term of this Agreement shall automatically be extended by twelve (12) months. 4. Termination of Employment. 4.1 Termination Prior to a Change in Control: 4.1.1 Prior to a Change in Control, the Employers may terminate the Employee's employment under this Section of the Agreement for any reason. 4.1.2 If the Employee's employment is terminated pursuant to this Section 4.1, any severance policies maintained by the Bank or the Company, as applicable, shall apply and no amounts shall be payable pursuant to this Agreement. 4.2 Termination following a Change in Control: 4.2.1 If, during a period of two years following a Change in Control, the employment of the Employee is terminated by the Bank or the Company, as applicable, for any reason, other than Cause, or if the Employee is subject to Constructive Termination, benefits shall be payable under Section 5. 4.2.2 If the Employee voluntarily terminates his or her employment following a Change in Control for any reason other than Constructive Termination, no amount shall be paid pursuant to this agreement. 5. Benefit following a Change in Control. If a benefit is payable, pursuant to Section 4.2.1, the Employee shall receive, in monthly installments, payable on the first of each month, an amount equal to: 5.1 One-twelfth (1/12th) of the Employee's Base Annual Salary, less any withholding required pursuant to the Code; reduced by 5.2 Any Employment Compensation payable to the Employee for that month, whether received currently or deferred. 5.3 This benefit shall be payable for 24 months following the termination of the Employee's employment with the Bank or the Company, as applicable. 5.4 No other amounts shall be payable under this Agreement in lieu of bonuses, perquisites or other benefits maintained by the Employers, nor shall the Employee be considered to continue in the employ of the Bank or the Company, as applicable, while payments are being made pursuant to this Section 5. 5.5 Limitation on Benefits. 5.5.1 It is the intention of the Employee and of the Employers that no payments by the Employers to or for the benefit of the Employee under this Agreement or any other agreement or plan pursuant to which he is entitled to receive payments or benefits shall be non-deductible to the Employers by reason of the operation of Section 280G of the Code relating to parachute payments. Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such payments exceed the amount which can be deducted by the Employers, such payments shall be reduced to the maximum amount which can be deducted by the Employers. To the extent that payments exceeding such maximum deductible amount have been made to or for the benefit of the Employee, such excess payments shall be refunded to the Employers with interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order than no such payments shall be non-deductible to the Employers by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing the payments to bring them within the limitations of said Section 280G, the Employee shall determine which method shall be followed, provided that if the Employee fails to make such determination within forty-five days after the Employers have sent him written notice of the need for such reduction, the Employers may determine the method of such reduction in their sole discretion. 5.5.2 If any dispute between the Employers and the Employee as to any of the amounts to be determined under this Section 5.5.2, or the method of calculating such amounts, cannot be resolved by the Employers and the Employee, either the Employers or the Employee after giving three days' written notice to the other, may refer the dispute to a partner in the Boston office of a firm of independent certified public accountants selected jointly by the Employers and the Employee. The determination of such partner as to the amount to be determined under Section 5(a) and the method of calculating such amounts shall be final and binding on both the Employers and the Employee. The Employers shall bear the costs of any such determination. 6. Miscellaneous. 6.1 Agreement Supersedes. This Agreement supersedes all prior agreements and understandings by and between the Employee and the Employers and of any Affiliates of their respective directors, officers, shareholders, employees, attorneys, agents, or representatives, including any Severance Agreement, Employment Letter, Employment Terms, Non-Disclosure Agreement and /or Employment Agreement, and constitutes the entire agreement between the parties, respecting the subject matter hereof; there are no representations, warranties or other commitments other than those expressed herein. 6.2 Noncontravention. The Employee represents and warrants to the Employers that the Employee is not a party to or bound by, and the employment of the Employee by the Employers or the Employee's disclosure of any information to the Employers or their use of such information will not violate or breach any employment, retainer, consulting, license, non-competition, non-disclosure, trade secrets or other agreement between the Employee and any other person, partnership, corporation, joint venture, association or other entity. 6.3 Modification; Waiver. No modification or amendment of, or waiver under, this Agreement shall be valid unless signed in writing and signed by the Employee and the Chairman of the Board of Directors of the Bank and the Company, pursuant to expressed authority of the Board of each entity. 6.4 Indemnification. The Employee and the Employers and their Affiliates each agree to indemnify and hold the other harmless from, any and all claims, lawsuits, losses, damages, expenses, costs and liabilities, including, without limitation, court costs and attorney's fees which a party to this Agreement may sustain as a result of, or in connection with, either directly or indirectly, a breach or violation of any of the provisions of this Agreement by the other party. 6.5 Remedies. The Employee hereby agrees that if the Employee violates any provision of this Agreement, the Employers shall be entitled, if they, or either of them, so elect, to institute and prosecute proceedings at law or in equity to obtain damages with respect to such violation or to enforce the specific performance of this Agreement by the Employee or to enjoin the Employee from engaging in any activity in violation hereof. 6.6 Waiver. The waiver by either party to this Agreement of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach. 6.7 Notices. Any communication which may be required under this Agreement shall be in writing and shall be deemed to have been properly given when delivered personally at the address set forth below for the intended party during normal business hours, or when sent by U.S. registered or certified mail, return receipt requested, postage prepaid as follows: If to the Bank or Cape Cod Bank and Trust Company the Company: 307 Main Street Hyannis, MA 02601 If to the Employee: Mr. Robert T. Boon 2 Overlook Drive Sandwich, MA 02563 Notices shall be given to such other addressee or address, or both, as a particular party may from time to time request by written notice to the other party to the Agreement. Each notice, request, demand, approval or other communication which is sent in accordance with this Section shall be deemed to be delivered, given and received for all purposes of this Agreement as of two business days after the date of deposit thereof for mailing in a duly constituted U.S. post office or branch thereof, one business day after deposit with a recognized overnight courier service or upon written confirmation of receipt of any facsimile transmission. Notice given to a party hereto by any other method shall only be deemed to be delivered, given and received when actually received in writing by such party. 6.8 Binding Nature; Employment Status. This Agreement shall inure to the benefit of and be binding upon the Employers, jointly and severally, and the Employee. This is not an agreement for the employment of the Employee and shall confer no rights on the Employee except as herein expressly provided. 6.9 Governing Law. This Agreement shall be governed and construed in accordance with the laws of The Commonwealth of Massachusetts. 6.10 Allocation of Obligations. The Bank and the Company shall allocate among themselves which party shall be responsible for paying the severance payments and other benefits directed by this Agreement. The payment by either party of such severance payments and other benefits shall satisfy the obligations of the non-paying party under this Agreement. Both the Bank and the Company shall be jointly liable in the event of a failure by both parties to pay such severance payments and other benefits. 6.11 Assignment; Prior Agreements. Neither the Employers nor the Employee may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, and without such consent any attempted transfer shall be null and void and of no effect. This Agreement shall inure to the benefit of and be binding upon the Employers and the Employee, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Employee's death prior to the completion by the Employers of all payments due him under this Agreement, the Employers shall continue such payments to the Employee's beneficiary designated in writing to the Employers prior to his death (or to his estate, if he fails to make such designation). This Agreement supersedes any prior agreement covering the subject matter hereof. 6.12 Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 6.13 Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a sealed instrument as of the day and year first above written. CAPE COD BANK AND TRUST EMPLOYEE COMPANY, N.A. A national banking association By: /s/ John Otis Drew /s/ Robert T. Boon ------------------ ------------------ Name: John Otis Drew Name: Robert T. Boon Title: Chairman of the Board of Directors CCBT FINANCIAL COMPANIES, INC. By: /s/ Stephen B. Lawson ----------------------------------------- Name: Stephen B. Lawson Title: President and Chief Executive Officer EX-10.2 3 ex10-2.txt AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT THIS AMENDED AND RESTATED AGREEMENT is made and entered into this 15th day of June 2000, by and between Cape Cod Bank and Trust Company, N.A., a national banking association (the "Bank"), CCBT Financial Companies, Inc., a Massachusetts corporation (the "Company") (the Bank and the Company, collectively, the "Employers") and Robert R. Prall, a resident of Dennis, Massachusetts ("Employee"). WITNESSETH, the Company is the holding company for the Bank; WHEREAS the Employers have determined that it is in the best interests of the Employers to allow the Employee to consider the prospect of a Change in Control (as herein defined) in an objective manner and in consideration of the services to be rendered by the Employee to the Employers and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Employers, the Employers are willing to provide, subject to the terms of this Agreement, certain benefits upon the occurrence of a Terminating Event (as herein defined) subsequent to a Change in Control. WHEREAS the Employer and the Employee hereby amend and restate this Agreement to reflect the reorganization of the Bank into holding company structure, including the addition of the Company as a party to this Agreement. NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, the Employers and the Employee hereby agree as follows: 1. Definitions. 1.1 "Affiliate" means: 1.1.1 A member of a controlled group of corporations of which either of the Employers is a member; or 1.1.2 An unincorporated trade or business which is under common control with either of the Employers as determined in accordance with Section 414(c) of the Internal Revenue Code of 1986, as amended (henceforth the "Code") and regulations issued thereunder. For purposes hereof, a "controlled group of corporations" shall mean a controlled group of corporations as defined in Section 1563(a) of the Code determined without regard to Section 1563(a)(4) and (e)(3)(C) of the Code. 1.2 "Base Annual Salary" means the annualized value of the Employee's salary, based on the most recent pay period, prior to a Change of Control. 1.3 "Change in Duties" means: 1.3.1 A significant reduction in the nature or scope of the Employee's authority or duties from those immediately prior to the date on which a Change of Control occurs; 1.3.2 A reduction in the Employee's Base Annual Salary; 1.3.3 Exclusion from any incentive program from which the Employee was previously eligible, or which other executives with comparable duties participate in; 1.3.4 A change in location of the Employee's principal place of employment by more than fifty (50) miles; 1.4 "Change in Control" shall be deemed to have occurred in any one of the following events: 1.4.1 if there has occurred a change in control of either the Company or the Bank which the Company or the Bank would be required to report in response to Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or, if such form and the related regulations are no longer in effect, any forms or regulations promulgated by the Securities and Exchange Commission, pursuant to the Exchange Act, which are intended to serve similar purposes; or 1.4.2 A Change in Control of the Company or the Bank has occurred within the meaning of the Change in Bank Control Act, as amended and the rules and regulations promulgated thereunder; or 1.4.3 Without limitation such a Change in Control shall be deemed to have occurred at such time as: 1.4.3.1. Any "person" (as the term is used in Section 13(d) and 14(d) of the Exchange Act), or group of persons acting in concert, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act ) directly or indirectly, of any class of equity securities of the Bank representing 50% or more of a class of equity securities except for any securities purchased by the Bank's employee stock ownership plan and trust; or 1.4.3.2. Individuals who constitute the Board of the Company on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at lease three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's shareholders was approved by the same Committee serving under an Incumbent Board, shall be, for purposes of this clause (b) considered as though he were a member of the Incumbent Board; or 1.4.3.3. A plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or similar transaction occurs in which the Company is not the resulting entity; or 1.4.3.4. A proxy statement shall be distributed soliciting proxies from stockholders of the Company, by someone other than the current management of the Company, seeking stockholder approval of a plan or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to such plan or transaction are exchanged for or converted into cash or property or securities not issued by the Company. 1.4.4 Notwithstanding the foregoing, no Change in Control shall be deemed to occur by virtue of the Bank becoming a subsidiary of the Company. 1.5 "Code" means the Internal Revenue Code of 1986, as from time to time amended. 1.6 "Constructive Termination" means the voluntary termination of employment by the Employee following a Change in Duties following a Change of Control. 1.7 "Employment Compensation" means any salary, bonus or commissions paid to the Employee as an employee (as defined in the Code) by any entity other than the Employers or their successors. If the Employee is a partner in a partnership, this definition shall include the Employee's share of partnership income. 1.8 "Exchange Act" means the Securities Exchange Act of 1934, as from time to time amended. 1.9 "Termination for Cause" means the termination of the Employee's employment with the Bank or the Company, as applicable, as a result of: 1.9.1 The Employee's failure or refusal to perform the Employee's duties occasioned by reason other than sickness or other disability of the Employee, which is not cured within ten (10) business days after written notice from the Bank or the Company, as applicable, specifying such failure or refusal has been delivered; 1.9.2 Commission by the Employee of any materially fraudulent, dishonest or other act of misconduct in the performance of the Employee's duties hereunder, other than at the specific direction of the Board of the Bank or the Company, as applicable; or 1.9.3 Conviction for any felony or crime involving moral turpitude. 1.10 "Voting Securities" means any securities which ordinarily possess the power to vote in the election of directors without the happening of any precondition or contingency. 2. Term. Subject to the provisions for earlier termination hereinafter set forth in Section 4 of this Agreement, the term of this Agreement shall commence on the date hereof and end on the day preceding the second anniversary hereof. 3. Automatic Extension. Unless the Employee receives written notification from either of the Employers of their intention not to renew this Agreement at least twelve (12) months prior to the expiration date, plus any extensions, the term of this Agreement shall automatically be extended by twelve (12) months. 4. Termination of Employment. 4.1 Termination Prior to a Change in Control: 4.1.1 Prior to a Change in Control, the Employers may terminate the Employee's employment under this Section of the Agreement for any reason. 4.1.2 If the Employee's employment is terminated pursuant to this Section 4.1, any severance policies maintained by the Bank or the Company, as applicable, shall apply and no amounts shall be payable pursuant to this Agreement. 4.2 Termination following a Change in Control: 4.2.1 If, during a period of two years following a Change in Control, the employment of the Employee is terminated by the Bank or the Company, as applicable, for any reason, other than Cause, or if the Employee is subject to Constructive Termination, benefits shall be payable under Section 5. 4.2.2 If the Employee voluntarily terminates his or her employment following a Change in Control for any reason other than Constructive Termination, no amount shall be paid pursuant to this agreement. 5. Benefit following a Change in Control. If a benefit is payable, pursuant to Section 4.2.1, the Employee shall receive, in monthly installments, payable on the first of each month, an amount equal to: 5.1 One-twelfth (1/12th) of the Employee's Base Annual Salary, less any withholding required pursuant to the Code; reduced by 5.2 Any Employment Compensation payable to the Employee for that month, whether received currently or deferred. 5.3 This benefit shall be payable for 24 months following the termination of the Employee's employment with the Bank or the Company, as applicable. 5.4 No other amounts shall be payable under this Agreement in lieu of bonuses, perquisites or other benefits maintained by the Employers, nor shall the Employee be considered to continue in the employ of the Bank or the Company, as applicable, while payments are being made pursuant to this Section 5. 5.5 Limitation on Benefits. 5.5.1 It is the intention of the Employee and of the Employers that no payments by the Employers to or for the benefit of the Employee under this Agreement or any other agreement or plan pursuant to which he is entitled to receive payments or benefits shall be non-deductible to the Employers by reason of the operation of Section 280G of the Code relating to parachute payments. Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such payments exceed the amount which can be deducted by the Employers, such payments shall be reduced to the maximum amount which can be deducted by the Employers. To the extent that payments exceeding such maximum deductible amount have been made to or for the benefit of the Employee, such excess payments shall be refunded to the Employers with interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order than no such payments shall be non-deductible to the Employers by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing the payments to bring them within the limitations of said Section 280G, the Employee shall determine which method shall be followed, provided that if the Employee fails to make such determination within forty-five days after the Employers have sent him written notice of the need for such reduction, the Employers may determine the method of such reduction in their sole discretion. 5.5.2 If any dispute between the Employers and the Employee as to any of the amounts to be determined under this Section 5.5.2, or the method of calculating such amounts, cannot be resolved by the Employers and the Employee, either the Employers or the Employee after giving three days' written notice to the other, may refer the dispute to a partner in the Boston office of a firm of independent certified public accountants selected jointly by the Employers and the Employee. The determination of such partner as to the amount to be determined under Section 5(a) and the method of calculating such amounts shall be final and binding on both the Employers and the Employee. The Employers shall bear the costs of any such determination. 6. Miscellaneous. 6.1 Agreement Supersedes. This Agreement supersedes all prior agreements and understandings by and between the Employee and the Employers and of any Affiliates of their respective directors, officers, shareholders, employees, attorneys, agents, or representatives, including any Severance Agreement, Employment Letter, Employment Terms, Non-Disclosure Agreement and /or Employment Agreement, and constitutes the entire agreement between the parties, respecting the subject matter hereof; there are no representations, warranties or other commitments other than those expressed herein. 6.2 Noncontravention. The Employee represents and warrants to the Employers that the Employee is not a party to or bound by, and the employment of the Employee by the Employers or the Employee's disclosure of any information to the Employers or their use of such information will not violate or breach any employment, retainer, consulting, license, non-competition, non-disclosure, trade secrets or other agreement between the Employee and any other person, partnership, corporation, joint venture, association or other entity. 6.3 Modification; Waiver. No modification or amendment of, or waiver under, this Agreement shall be valid unless signed in writing and signed by the Employee and the Chairman of the Board of Directors of the Bank and the Company, pursuant to expressed authority of the Board of each entity. 6.4 Indemnification. The Employee and the Employers and their Affiliates each agree to indemnify and hold the other harmless from, any and all claims, lawsuits, losses, damages, expenses, costs and liabilities, including, without limitation, court costs and attorney's fees which a party to this Agreement may sustain as a result of, or in connection with, either directly or indirectly, a breach or violation of any of the provisions of this Agreement by the other party. 6.5 Remedies. The Employee hereby agrees that if the Employee violates any provision of this Agreement, the Employers shall be entitled, if they, or either of them, so elect, to institute and prosecute proceedings at law or in equity to obtain damages with respect to such violation or to enforce the specific performance of this Agreement by the Employee or to enjoin the Employee from engaging in any activity in violation hereof. 6.6 Waiver. The waiver by either party to this Agreement of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach. 6.7 Notices. Any communication which may be required under this Agreement shall be in writing and shall be deemed to have been properly given when delivered personally at the address set forth below for the intended party during normal business hours, or when sent by U.S. registered or certified mail, return receipt requested, postage prepaid as follows: If to the Bank or Cape Cod Bank and Trust Company the Company: 307 Main Street Hyannis, MA 02601 If to the Employee: Mr. Robert R. Prall 23 Schooner Road Dennis, MA 02638 Notices shall be given to such other addressee or address, or both, as a particular party may from time to time request by written notice to the other party to the Agreement. Each notice, request, demand, approval or other communication which is sent in accordance with this Section shall be deemed to be delivered, given and received for all purposes of this Agreement as of two business days after the date of deposit thereof for mailing in a duly constituted U.S. post office or branch thereof, one business day after deposit with a recognized overnight courier service or upon written confirmation of receipt of any facsimile transmission. Notice given to a party hereto by any other method shall only be deemed to be delivered, given and received when actually received in writing by such party. 6.8 Binding Nature; Employment Status. This Agreement shall inure to the benefit of and be binding upon the Employers, jointly and severally, and the Employee. This is not an agreement for the employment of the Employee and shall confer no rights on the Employee except as herein expressly provided. 6.9 Governing Law. This Agreement shall be governed and construed in accordance with the laws of The Commonwealth of Massachusetts. 6.10 Allocation of Obligations. The Bank and the Company shall allocate among themselves which party shall be responsible for paying the severance payments and other benefits directed by this Agreement. The payment by either party of such severance payments and other benefits shall satisfy the obligations of the non-paying party under this Agreement. Both the Bank and the Company shall be jointly liable in the event of a failure by both parties to pay such severance payments and other benefits. 6.11 Assignment; Prior Agreements. Neither the Employers nor the Employee may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, and without such consent any attempted transfer shall be null and void and of no effect. This Agreement shall inure to the benefit of and be binding upon the Employers and the Employee, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Employee's death prior to the completion by the Employers of all payments due him under this Agreement, the Employers shall continue such payments to the Employee's beneficiary designated in writing to the Employers prior to his death (or to his estate, if he fails to make such designation). This Agreement supersedes any prior agreement covering the subject matter hereof. 6.12 Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 6.13 Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a sealed instrument as of the day and year first above written. CAPE COD BANK AND TRUST EMPLOYEE COMPANY a Massachusetts Corporation By: /s/ John Otis Drew /s/ Robert R. Prall ------------------- ------------------- Name: John Otis Drew Name: Robert R. Prall Title: Chairman of the Board of Directors CCBT BANCORP, INC. By: /s/ Stephen B. Lawson --------------------- Name: Stephen B. Lawson Title: President and Chief Executive Officer DOCSC\709529.2 -----END PRIVACY-ENHANCED MESSAGE-----