ITEM 1 - BUSINESS.
The main office of Bancorp Connecticut, Inc. (the "Company") and of Southington Savings Bank (the "Bank") is located at 121 Main Street, Southington, Connecticut 06489. The telephone number is 860-628-0351.
The Company was incorporated under the laws of the State of Delaware on March 31, 1994, to operate principally as the bank holding company of the Bank. The Company acquired all of the Bank's outstanding common stock on November 17, 1994, in a one-for-one exchange with the Bank's existing shareholders. The Bank is the sole subsidiary of the Company and its principal asset.
General
The Bank is a Connecticut chartered capital stock savings bank. The Bank was organized in 1860, and in 1986 it converted from a mutual to a capital stock savings bank. The Bank is subject to supervision, examination and regulation by the Connecticut Banking Commissioner. The Bank's deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC"), which also has supervisory and regulatory authority over the Bank. The Bank is a member of the Federal Home Loan Bank (the "FHLB") of Boston. The Company is subject to regulation by the Federal Reserve Board as the registered bank holding company of the Bank.
The Bank's primary market area consists of the Town of Southington, Connecticut and, to a lesser extent, the contiguous Towns of Bristol, Cheshire and Plainville. Southington is located approximately 18 miles from Hartford, 25 miles from New Haven and 9 miles from Waterbury.
The Bank's principal business consists of attracting and accepting deposits from the general public and investing those deposits, together with funds generated by fees and other income, in various types of loans and investments, including residential loans, consumer loans, commercial loans and securities.
The Bank's business strategy is to operate primarily as an innovative full-service community financial institution, offering a wide range of consumer and commercial services. These services include checking accounts, NOW accounts, regular savings accounts, money market accounts, individual retirement accounts, savings certificates, commercial demand deposit accounts, residential real estate loans, home equity loans and lines of credit, consumer loans, secured and unsecured commercial loans, letters of credit, credit card services and cash management
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services. The Bank makes available Savings Bank Life Insurance ("SBLI"). The Bank also has a trust department which provides trust services for families and individuals, as well as corporate pension and employee benefits administration. The Bank also provides investment brokerage services through Liberty Securities Corporation, an independent broker-dealer, which sells non-deposit products, such as mutual funds, tax exempt securities and annuities.
The main focus of the Bank's lending activities is the origination of commercial and industrial loans, consumer loans and residential mortgage loans. The Bank also makes auto loans and student loans. In recent years, the Bank has concentrated its efforts on making variable rate loans or loans that reprice on a regular basis. Within the last three years, the Bank's primary residential mortgage product has been a loan with a rate fixed for an initial term of 3, 5, 7, or 10 years which adjusts annually thereafter. In the future, the Bank expects to place a greater emphasis on the growth of its commercial loan portfolio.
The Bank has procedures in place to sell selected fixed rate residential mortgages into the secondary mortgage market. The sale of fixed rate mortgages allows the Bank to generate both a higher volume of fixed rate mortgages without impairing its asset/liability management and additional service fee income. During 1996, the Bank continued to supplement its own loan originations by purchasing automobile loans and the guaranteed portion of Small Business Administration loans.
The principal sources of funds for the Bank's activities are deposit accounts, amortization and prepayment of loans, borrowings from the FHLB of Boston, repurchase and reverse repurchase agreements and funds provided from operations. The Bank's principal sources of income are interest on loans and interest and dividends on investment securities. In recent years, the Bank also has realized income from the sale of loans and investment securities. To a lesser extent, the Bank realizes other non-interest income, including income from service charges on deposit accounts, income from trust and brokerage services and income from SBLI sales.
The Bank conducts its banking operations through three full service offices, one limited purpose branch, one drive-in center, and one mortgage origination office, all of which are located in Southington. See Item 2
ITEM 2 - PROPERTIES.
The following table sets forth the location of the Bank's full service offices and other related information:
Office Location Status - ------ -------- ------ Main Office ............ 121 Main St. Owned Southington, CT
Queen Corner Office .... 900 Queen St. Owned Southington, CT
South-End Office ....... 921 Meriden Waterbury Tpke. Owned Southington, CT
Drive-In Center ........ 30 Berlin Ave. Owned Southington, CT
Since January, 1995, the Bank has operated a limited purpose branch banking facility at Southington High School, which is located at 720 Pleasant Street, Southington, Connecticut. The High School Branch processes only deposits and withdrawals and is open only during school hours. This branch is operated on a cooperative basis: the Bank supplies management and equipment, the Town of Southington provides the required space, and students staff the branch. The Bank believes that the High School Branch is the only branch bank of its kind in the State of Connecticut.
The Bank leases approximately 5,989 square feet at 98 Main Street in Southington to house the administrative offices of its audit, human resources, marketing, finance, managed assets, consumer banking and general services divisions. The lease has an expiration date of December 31, 1997, with an option to extend the lease for three (3) one year periods.
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The Bank leases approximately 1,200 square feet at 188 North Main Street in Southington for its residential mortgage origination function. The lease has an expiration date of October 31, 1998, with an option to extend the lease for three (3) one year periods.
The Bank leases sufficient space at 55 Meriden Avenue in Southington (Bradley Memorial Hospital) to support a free standing automatic teller machine. The lease has an expiration date of July 31, 2000, with no option to extend the lease.
The Bank owns an approximately 35,000 square foot lot located at 918 Meriden-Waterbury Turnpike, which is adjacent to the Bank's South-End office. The lot is undeveloped except for a residential house which the Bank leases.
The Bank also owns and is holding for future expansion three separate properties all located adjacent to its Main Office parking facilities. The properties consist of a residential home on an approximately 10,500 square foot lot located at 50 Berlin Avenue, a two-family residential home on an approximately 11,600 square foot lot located at 43-45 Vermont Avenue and an approximately 14,800 square foot undeveloped lot located at 31 Vermont Avenue. The Bank uses the residential home at 50 Berlin Avenue as a storage facility for office supplies. The two-family residence at 43-45 Vermont Avenue is leased.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS.
On April 11, 1996, a lawsuit filed by certain borrowers and a related company in 1994 against the directors and officers of the Bank was withdrawn, and all of the related foreclosure actions were resolved. The consequences of the resolution of the cases did not have a material effect on the Bank's financial condition or results of operations.
Neither the Company nor the Bank is presently a party to any legal proceedings the adverse outcome of which would likely have, in management's belief, a material effect on the Company's or the Bank's financial condition or results of operations.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of 1996, no matter was submitted to a vote of stockholders of the Company.
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PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been issued and outstanding since November 17, 1994, when the Company acquired all of the Bank's outstanding common stock in a one-for-one exchange with the Bank's existing shareholders. As of March 19, 1997, 2,557,865 shares of Common Stock were issued and outstanding and were held by approximately 1,880 shareholders of record.
The Company's Common Stock is traded in the over-the-counter market and is quoted on the National Market tier of The National Association of Securities Dealers Automated Quotation ("Nasdaq") Stock Market under the symbol "BKCT." Quarterly high and low bid prices for 1995 and 1996 are included in the 1996 Annual Report under the heading "Market Price and Dividends" and are incorporated herein by reference. Such bid prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
On February 1, 1996, the Company announced that its Board of Directors had authorized the repurchase of up to fifteen percent (15%) of its currently outstanding shares. The Company will make purchases from time to time in the open market through the period ending July 31, 1997. The Company will make the purchases with available corporate funds. The timing and amount of the Company's purchases will depend on market conditions and corporate requirements. The Company intends to hold the repurchased shares in treasury for general corporate purposes. As of February 28, 1997, a total of 210,052 shares had been repurchased since the repurchase program was authorized in 1996.
For the foreseeable future, the only substantial source of funds available to the Company for the declaration of dividends will be dividends declared and paid by the Bank on Bank common stock. As the holder of Bank common stock, the Company is entitled to receive dividends when, as and if declared by the Bank board of directors out of funds legally available therefor. The Bank may pay cash dividends out of the Bank's net profits. For purposes of this restriction, "net profits" means the remainder of all earnings from operations. Further, the total of all dividends declared by the Bank in any calendar year may not exceed the sum of the Bank's net profits for the year in question combined with its retained net profits from the preceding two calendar years. Additionally, earnings appropriated to reserves for loan losses and deducted for federal income tax purposes are not available for cash dividends without the payment of taxes at the then current income tax rates on the amount used. The Connecticut Banking Commissioner and/or the FDIC may limit the Bank's ability to pay dividends.
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The Bank has paid consecutive quarterly cash dividends since the quarter ended December 31, 1992. The Company paid its first quarterly dividend during the quarter ended March 31, 1995. No assurances can be given that further dividends will be paid or approved. Dividend history for the Company from January 1, 1995 through December 31, 1996 is included in the 1996 Annual Report under the heading "Market Price and Dividends" and is incorporated herein by reference. The Bank also paid a 20% stock dividend on June 1, 1993 and a 6-for-5 stock split effected in the form of a stock dividend on June 19, 1996.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA.
The required information is included in the 1996 Annual Report under the heading "Selected Consolidated Financial Data," and is incorporated herein by reference.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The required information is included in the 1996 Annual Report under the heading "Management's Discussion and Analysis" and is incorporated herein by reference.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The report of the Company's independent accountants and the Company's Consolidated Statements of Condition at December 31, 1996 and 1995, and the related Consolidated Statements of Income, Shareholders' Equity and Cash Flows for each of the three years in the period ended December 31, 1996, and the Notes to Financial Statements appear in the 1996 Annual Report and are incorporated herein by reference.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
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PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The required information is included in the 1997 Proxy Statement under the heading "Election of Directors" and is incorporated herein by reference.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION.
The required information is included in the 1997 Proxy Statement under the heading "Election of Directors - Executive Compensation" and is incorporated herein by reference.
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of February 28, 1997, there were no persons or groups (as that term is used in Section 13(d)(3) of the Exchange Act) known to the Company who may be deemed to own beneficially more than 5% of the Common Stock.
Certain other required information under this item is included in the 1997 Proxy Statement under the heading "Election of Directors - Stock Ownership of Directors and Officers" and is incorporated herein by reference.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The required information is included in the 1997 Proxy Statement under the headings "Election of Directors Transactions With Management", "- Certain Business Relationships", "- Indebtedness of Management and Others" and "- Compensation Committee Interlocks and Insider Participation" and is incorporated herein by reference.
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PART IV
ITEM 14
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report.
(1) Financial Statements
The following documents filed as part of this report are incorporated herein by reference from the indicated pages of the 1996 Annual Report.
Financial Statement Page or Pages ------------------- ------------- Report of Independent Accountants 17 Consolidated Statements of Condition 18 Consolidated Statements of Income 19 Consolidated Statements of Shareholders' Equity 20 Consolidated Statements of Cash Flows 21 Notes to Consolidated Financial Statements 22-39
(2) Financial Statement Schedules
All schedules to the Company's Consolidated Financial Statements required by Article 9 of Regulation S-X are included in the 1996 Annual Report or are not required under the related instructions or are inapplicable and therefore have been omitted.
(3) Exhibits
Exhibit No. Description ----------- ----------- 3.1 Certificate of Incorporation of Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-4 (Registration No. 33-77696) (the "Registration Statement"))
3.2 Bylaws of Registrant (Incorporated by reference to Exhibit 3.2 to the Registration Statement)
3.3 Certificate of Amendment of Certificate of Incorporation dated May 20, 1996 (Incorporated by reference to Exhibit 3.3 to the Registrant's Quarterly Report
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on Form 10-Q for the quarterly period ended June 30, 1996)
4.1 Instruments defining the rights of security holders (Included in Exhibits 3.1 and 3.2)
4.2 Form of Stock Certificate (Incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on Form S-8 (Registration No. 33-333-2638))
10.1* Employment Agreement dated as of January 1, 1997, by and between the Bank and Robert D. Morton (supersedes Employment Agreement dated as of January 1, 1994, by and between the Bank and Robert D. Morton that previously was incorporated by reference to Exhibit 10.1 to the Registration Statement)
10.2* Southington Savings Bank 1986 Stock Option Plan (Incorporated by reference to Exhibit 10.2 to the Registration Statement)
10.3* Southington Savings Bank 1993 Stock Option Plan (Incorporated by reference to Exhibit 10.3 to the Registration Statement)
10.4* Pension Plan of Southington Savings Bank, as amended (Incorporated by reference to Exhibit 10.4 to the Registration Statement)
10.5* Southington Savings Bank Supplemental Retirement Plan (Incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996)
11.1 Statement re computation of per share earnings
13.1 Annual Report to Security Holders
21 Subsidiaries of Registrant
23 Consent of Coopers & Lybrand L.L.P.
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24 Power of Attorney
27 Financial Data Schedule
- ------------------------ * Management contract or compensatory plan or arrangement.
THE COMPANY WILL PROVIDE A COPY OF ANY EXHIBIT LISTED ABOVE TO ANY SHAREHOLDER UPON THE WRITTEN REQUEST OF SUCH SHAREHOLDER AND UPON THE PAYMENT OF A REASONABLE FEE LIMITED TO THE COMPANY'S EXPENSES INCURRED IN FURNISHING SUCH EXHIBIT. REQUESTS SHOULD BE ADDRESSED TO LESLEY A. DEANGELO, BANCORP CONNECTICUT, INC., 121 MAIN STREET, SOUTHINGTON, CONNECTICUT 06489.
(b) The Company did not file any Report on Form 8-K during the last quarter of 1996.
(c) The exhibits required by Item 601 of Regulation S-K are filed as a separate part of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bancorp Connecticut, Inc. ------------------------- (Registrant)
Date: March 31, 1997 By /s/ Robert D. Morton ------------------------- Robert D. Morton Its President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures Title Date - ---------- ----- ----
/s/ Robert D. Morton President, March 31, 1997 ------------------------ Chief Executive Robert D. Morton Officer and Director (Principal Executive Officer)
/s/ Anthony Priore, Jr. Treasurer and March 31, 1997 ------------------------ Secretary Anthony Priore, Jr. (Principal Financial Officer and Principal Accounting Officer)
Norbert H. Beauchemin* Director March 31, 1997 - ------------------------ Norbert H. Beauchemin
Walter J. Hushak* Director March 31, 1997 - ------------------------ Walter J. Hushak
Michael J. Karabin* Director March 31, 1997 - ------------------------ Michael J. Karabin
David P. Kelley* Director March 31, 1997 - ------------------------ David P. Kelley
Frederick E. Kuhr* Director March 31, 1997 - ------------------------ Frederick E. Kuhr
Joseph J. LaPorte* Director March 31, 1997 - ------------------------ Joseph J. LaPorte
Ralph G. Mann* Director March 31, 1997 - ------------------------ Ralph G. Mann
Andrew J. Meade* Director March 31, 1997 - ------------------------ Andrew J. Meade
Frank R. Miller* Director March 31, 1997 - ------------------------ Frank R. Miller
Director - ------------------------ Anthony S. Pizzitola
Dennis J. Stanek* Director March 31, 1997 - ------------------------ Dennis J. Stanek
*By /s/ Robert D. Morton - ------------------------- Robert D. Morton Attorney-in-fact
EXHIBIT INDEX
Exhibit No. Description Page - ------- ----------- ----
3.1 Certificate of Incorporation of Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-4 (Registration No. 33-77696) (the "Registration Statement"))
3.2 Bylaws of Registrant (Incorporated by reference to Exhibit 3.2 to the Registration Statement)
3.3 Certificate of Amendment of Certificate of Incorporation dated May 20, 1996 (Incorporated by reference to Exhibit 3.3 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996)
4.1 Instruments defining the rights of security holders (Included in Exhibits 3.1 and 3.2)
4.2 Form of Stock Certificate (Incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on Form S-8 (Registration No. 33-333-2638))
10.1* Employment Agreement dated as of January 1, 1997, by and between the Bank and Robert D. Morton (supersedes Employment Agreement dated as of January 1, 1994, by and between the Bank and Robert D. Morton that previously was incorporated by reference to Exhibit 10.1 to the Registration Statement)
10.2* Southington Savings Bank 1986 Stock Option Plan (Incorporated by reference to Exhibit 10.2 to the Registration Statement)
10.3* Southington Savings Bank 1993 Stock Option Plan (Incorporated by reference to Exhibit 10.3 to the Registration Statement)
10.4* Pension Plan of Southington Savings Bank, as amended (Incorporated by reference to Exhibit 10.4 to the Registration Statement)
10.5* Southington Savings Bank Supplemental Retirement Plan (Incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30 1996)
11.1 Statement re computation of per share earnings.
13.1 Annual Report to Security Holders
21 Subsidiaries of Registrant
23 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney
27 Financial Data Schedule
- ---------------------- * Management contract or compensatory plan or arrangement.