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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 2002
-------------
Commission file number 000-23904
---------
SLADE'S FERRY BANCORP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3061936
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Slade's Ferry Avenue 02726
Somerset, Massachusetts Zip Code)
- ---------------------------------------- ----------------------
(Address of principal executive offices)
(508)675-2121
----------------------------------------------------
(Registrant's telephone number, including area code)
Check 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
past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common stock ($.01 par value) 3,907,334.821 shares as of June 30, 2002.
-----------------------------------------------------------------------
PART I
ITEM 1
Financial Statements
- --------------------
SLADE'S FERRY BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2002 December 31, 2001
----------------------------------
(Unaudited)
ASSETS:
Cash, due from banks and interest-bearing
demand deposits with other banks $ 17,675,120 $ 13,905,697
Money market mutual funds 107,157 86,613
Federal Home Loan Bank overnight deposit 10,000,000 6,000,000
Federal funds sold 10,000,000 8,700,000
-------------------------------
Cash and Cash Equivalents 37,782,277 28,692,310
Interest-bearing time deposits with other banks 200,000 100,000
Investment securities (1) 14,451,793 16,281,712
Investment securities available for sale(2) 78,687,504 79,105,537
Federal Home Loan Bank stock 1,013,400 1,013,400
Loans, net 250,837,658 248,017,635
Premises and equipment 6,289,264 6,455,837
Goodwill 2,173,368 2,173,368
Accrued interest receivable 1,750,980 1,953,989
Cash surrender value of life insurance 8,907,716 7,697,441
Other assets 3,304,520 3,269,334
-------------------------------
TOTAL ASSETS $405,398,480 $394,760,563
===============================
LIABILITIES & STOCKHOLDERS' EQUITY:
Deposits $343,432,423 $337,043,342
Federal Home Loan Bank advances 19,319,611 16,983,087
Other borrowed funds 1,214,265 465,216
Other liabilities 1,890,204 1,749,787
-------------------------------
TOTAL LIABILITIES 365,856,503 356,241,432
-------------------------------
Preferred stockholders' equity in a
subsidiary company 51,500 53,000
-------------------------------
STOCKHOLDERS' EQUITY:
Common stock 39,074 38,700
Paid in capital 27,255,306 26,761,997
Retained earnings 12,661,492 11,892,623
Accumulated other comprehensive loss (465,395) (227,189)
-------------------------------
TOTAL STOCKHOLDERS' EQUITY 39,490,477 38,466,131
-------------------------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $405,398,480 $394,760,563
===============================
- --------------------
Investment securities are to be held to maturity and have a fair
market value of $14,846,732 as of June 30, 2002 and $16,590,243 as of
December 31, 2001.
Securities classified as Available for Sale are stated at fair value
with any unrealized gains or losses reflected as an adjustment in
Stockholders' Equity.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
2
SLADE'S FERRY BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
(UNAUDITED)
6 MONTHS ENDING JUNE 30,
2002 2001
--------------------------
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $ 8,814,539 $11,215,838
Interest and dividends on investments 2,358,874 2,461,663
Other interest 150,757 474,088
--------------------------
Total interest and dividend income 11,324,170 14,151,589
--------------------------
INTEREST EXPENSE:
Interest on deposits 3,666,473 6,146,620
Interest on Federal Home Loan Bank and other borrowed funds 559,189 429,769
--------------------------
Total interest expense 4,225,662 6,576,389
--------------------------
Net interest and dividend income 7,098,508 7,575,200
Provision for loan losses 375,000 375,000
--------------------------
Net interest and dividend income
after provision for loan losses 6,723,508 7,200,200
--------------------------
OTHER INCOME:
Service charges on deposit accounts 281,629 282,319
Overdraft service charges 130,405 132,024
Gain (loss) on sales of available for sale securities, net (2,818) 0
Cash surrender value of life insurance policies income 210,275 173,187
Other income 296,744 228,513
--------------------------
Total other income 916,235 816,043
--------------------------
OTHER EXPENSE:
Salaries and employee benefits 3,559,419 3,544,121
Occupancy expense 418,445 466,914
Equipment expense 250,713 291,451
Stationery and supplies 152,559 100,717
Professional fees 186,761 217,385
Marketing expense 190,659 221,163
Other expense 864,639 913,555
--------------------------
Total other expense 5,623,195 5,755,306
--------------------------
Income before income taxes 2,016,548 2,260,937
Income taxes 546,476 676,994
--------------------------
NET INCOME $ 1,470,072 $ 1,583,943
==========================
Basic earnings per share $ 0.38 $ 0.42
==========================
Diluted earnings per share $ 0.37 $ 0.42
==========================
Basic average shares outstanding 3,891,775 3,803,755
==========================
Diluted average shares outstanding 3,922,520 3,806,017
==========================
Dividends Per Share $ 0.18 $ 0.17
==========================
Comprehensive Income (1) $ 1,231,866 $ 1,993,596
==========================
- --------------------
Calculated using the change in accumulated other comprehensive income
(loss) for the period and net income for the period.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
SLADE'S FERRY BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
(UNAUDITED)
3 MONTHS ENDING JUNE 30,
2002 2001
-------------------------
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $4,294,794 $5,449,339
Interest and dividends on investments 1,157,692 1,210,047
Other interest 91,122 279,446
-------------------------
Total interest and dividend income 5,543,608 6,938,832
-------------------------
INTEREST EXPENSE:
Interest on deposits 1,717,491 3,041,649
Interest on Federal Home Loan Bank and
other borrowed funds 295,917 219,455
-------------------------
Total interest expense 2,013,408 3,261,104
-------------------------
Net interest and dividend income 3,530,200 3,677,728
PROVISION FOR LOAN LOSSES 187,500 187,500
-------------------------
Net interest and dividend income
after provision for loan losses 3,342,700 3,490,228
-------------------------
OTHER INCOME:
Service charges on deposit accounts 140,039 141,396
Overdraft service charges 70,355 67,969
Gain (loss) on sales of available for sale securities, net 0 0
Cash surrender value of life insurance policies income 95,639 80,321
Other income 140,972 120,235
-------------------------
Total other income 447,005 409,921
-------------------------
OTHER EXPENSE:
Salaries and employee benefits 1,768,918 1,761,019
Occupancy expense 207,252 218,123
Equipment expense 125,263 147,909
Stationery and supplies 77,995 48,432
Professional fees 123,610 115,261
Marketing expense 89,680 119,565
Other expense 458,626 487,748
-------------------------
Total other expense 2,851,344 2,898,057
-------------------------
Income before income taxes 938,361 1,002,092
Income taxes 250,211 287,514
-------------------------
NET INCOME $ 688,150 $ 714,578
=========================
Basic earnings per share $ 0.18 $ 0.19
=========================
Diluted earnings per share $ 0.17 $ 0.19
=========================
Basic average shares outstanding 3,903,564 3,822,745
=========================
Diluted average shares outstanding 3,934,387 3,826,484
=========================
Dividends per share $ .09 $ .09
=========================
Comprehensive Income (1) $ 813,535 $ 855,800
=========================
- --------------------
Calculated using the change in accumulated other comprehensive income
(loss) for the period and net income for the period.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
SLADE'S FERRY BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
-------------------------
(Unaudited)
2002 2001
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,470,072 $ 1,583,943
Adjustments to reconcile net income to
net cash provided by operating activities:
Accretion, net of amortization of securities 68,504 62,306
Loss on sales of available-for-sale securities, net 2,818 0
Change in unearned income (49,170) (67,249)
Provision for loan losses 375,000 375,000
Depreciation and amortization 307,419 365,727
Increase in cash surrender value of life insurance policies (210,275) 0
Amortization of goodwill 0 113,400
Accretion, net of amortization of fair market
value adjustments 0 (5,700)
(Increase) decrease in other assets (36,726) 4,636
(Increase) decrease in prepaid expenses 76,791 (35,928)
Decrease in interest receivable 203,009 357,875
Increase (decrease) in other liabilities 34,492 (185,386)
Increase in accrued expenses 85,484 52,595
Increase (decrease) in interest payable 16,063 (34,911)
(Increase) decrease in taxes receivable 14,020 (499,866)
Decrease in minority interest in subsidiary (1,500) 0
--------------------------
Net cash provided by operating activities $ 2,356,001 $ 2,086,442
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of interest-bearing time deposit with other bank (100,000) 0
Purchases of available-for-sale securities (16,358,558) (33,526,390)
Proceeds from maturities of available-for-sale securities 16,382,314 30,608,090
Purchases of held-to-maturity securities (2,550,873) (2,138,133)
Proceeds from maturities of held-to-maturity securities 4,376,270 3,734,518
Net (increase) decrease in loans (3,168,935) 3,755,388
Recoveries of loans previously charged off 23,082 13,163
Capital expenditures (151,446) (266,913)
Proceeds from Sale of Asset 10,600 0
Investment in life insurance policies (1,000,000) (259,000)
--------------------------
Net cash used in investing activities $(2,537,546) $ 1,920,723
--------------------------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
SLADE'S FERRY BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
-------------------------
(Unaudited)
(Continued)
2002 2001
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW, money market and
savings accounts $19,458,314 $ 6,742,122
Net increase (decrease) in time deposits (13,069,233) 2,534,216
Payments on Federal Home Loan Bank Borrowings, net (1,113,476) 2,993,602
Advance on Federal Home Loan Bank Borrowings 3,450,000
Net increase (decrease) in other borrowed funds 749,049 (188,113)
Proceeds from issuance of common stock 493,683 349,773
Dividends paid (696,825) (649,140)
--------------------------
Net cash provided by financing activities 9,271,512 11,782,460
--------------------------
Net increase in cash and cash equivalents 9,089,967 15,789,625
Cash and cash equivalents at beginning of year 28,692,310 28,060,709
--------------------------
Cash and cash equivalents at end of year $37,782,277 $43,850,334
==========================
SUPPLEMENTAL DISCLOSURES;
Interest paid $ 4,209,599 $ 6,611,300
Income taxes paid $ 532,456 $ 1,176,860
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
SLADE'S FERRY BANCORP AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2002
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted
in the United States of America (GAAP) for interim financial information
and the instructions to Form 10-Q and, accordingly, do not include all of
the information and footnotes required by GAAP for complete financial
statements. In the opinion of the management of Slade's Ferry Bancorp (the
"Company"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six months ended June 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2002.
The year-end condensed consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required
by GAAP.
Note B - Accounting Policies
- ----------------------------
The accounting principles followed by Slade's Ferry Bancorp and subsidiary
and the methods of applying these principles which materially affect the
determination of financial position, results of operations, or changes in
financial position are consistent with those used at year end 2001.
The consolidated financial statements of Slade's Ferry Bancorp include its
wholly-owned subsidiary, Slade's Ferry Trust Company, and its subsidiaries,
the Slade's Ferry Realty Trust, the Slade's Ferry Securities Corporation,
Slade's Ferry Preferred Capital Corporation, and Slade's Ferry Loan
Company. All significant intercompany balances have been eliminated.
Note C - Impact of New Accounting Standards
- -------------------------------------------
FASB has issued SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." This Statement
replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities," and rescinds SFAS Statement No.
127, "Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125". SFAS No. 140 provides accounting and reporting
standards for transfers and servicing of financial assets and
extinguishments of liabilities. This Statement provides consistent
standards for distinguishing transfers of financial assets that are sales
from transfers that are secured borrowings. This Statement is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001; however, the disclosure
provisions are effective for fiscal years ending after December 15, 2000.
The adoption of this Statement did not have a material impact on the
Company's financial position or results of operation.
Statement of Financial Accounting Standards No. 141, "Business
Combinations", improves the consistency of the accounting and reporting for
business combinations by requiring that all business combinations be
7
accounted for under a single method - the purchase method. Use of the
pooling-of-interests method is no longer permitted. Statement No. 141
requires that the purchase method be used for business combinations
initiated after June 30, 2001. The adoption of SFAS No. 141 will have no
immediate effect on the Company's consolidated financial statements since
it had no pending business combinations as of December 31, 2001, or as of
the accompanying consolidated financial statements.
In June 2001, the FASB also issued SFAS No. 142, "Goodwill and Other
Intangible Assets", which is effective for fiscal years beginning after
December 15, 2001. Under prior accounting standards, goodwill resulting
from a business combination was amortized against income over its estimated
useful life. As a result of SFAS No. 142, goodwill is generally no longer
amortized as an expense after 2001, but instead will be reviewed and tested
for impairment using a fair value methodology and assessment. Goodwill
will be tested at least annually for impairment. Management does not
anticipate an impairment adjustment to the goodwill reflected in the
accompanying condensed consolidated balance sheet. The effect of adopting
SFAS No. 142 will be that the Company will cease to amortize the goodwill
balance of $2.2 Million, which will reduce amortization of goodwill by
$226,800 in 2002.
Contingency
- -----------
Several financial institutions operating in the Commonwealth of Massachusetts
with real estate investment trust subsidiaries, have recently received Notice
of Intent to Assess additional state excise taxes from the Massachusetts
Department of Revenue (the "DOR"), challenging the dividends received
deduction claimed by the institutions. The Bank has not received a Notice
of Intent to Assess tax. However, it is probable that the Bank will receive
an assessment of tax of approximately $1,500,000 from the DOR. The Bank will
vigorously contest this Notice. The Company has not recorded a loss
provision in regard to this anticipated Notice.
ITEM 2
Management's Discussion and Analysis
- ------------------------------------
Financial Condition
- -------------------
Total assets increased by $10.6 Million, or 2.7% from $394.8 Million at
December 31, 2001 to $405.4 Million at June 30, 2002. The increase of
$10.6 Million is primarily attributed to an increase in deposits of $6.4
Million, additional advances from the Federal Home Loan Bank of $2.3
Million to match fund long term fixed rate loans, and an increase in other
borrowed funds in the form of Treasury Tax and Loan deposits of $.7
Million. The remaining $1.0 Million increase was derived from
stockholders' equity.
During the second quarter of 2002, loan demand continued to improve as both
consumer and commercial borrowers continued to take advantage of the lower
interest rate environment that prevailed throughout 2001 and the first six
months of 2002. Although there was a large loan payoff in the first
quarter of 2002, new loan requests and commitments increased throughout the
first six months resulting in a net increase in loans of $2.8 Million. The
combined investment portfolio decreased by $2.3 Million from $95.4 Million
reported as of December 31, 2001 to $93.1 Million at June 30, 2002.
The increase in deposits of $6.4 Million, additional Federal Home Loan
advances of $2.3 Million, increases in other borrowed funds and
stockholders' equity of $1.7 Million, combined with the $2.3 Million
decrease in investments, provided the liquidity to fund the increases in
loans, cash due from banks, the combined Federal Home Loan Bank overnight
deposit and Federal Funds Sold, and an additional $1.0 Million investment
in Bank Owned Life Insurance.
The investment portfolio represents the second largest component of the
Company's assets and consists of securities in the Available-for-Sale
category and securities in the Held-to-Maturity category. The designation
of which category the security is to be classified as is determined at the
time of the purchase of the investment instrument.
The Held-to-Maturity category consists predominately of securities issued
by states of the United States and political subdivisions of states. The
Company has the positive intent and ability to hold these securities to
maturity. In managing the Held-to-Maturity portfolio, the Company seeks to
maximize its return and maintain consistency to meet short and long term
liquidity forecasts by purchasing securities with maturities laddered
8
within a short-term period of 1-3 years, a mid-term period of 3-5 years,
and some securities extending out to 10 years. The Company does not
purchase investments with off-balance sheet characteristics, such as swaps,
options, futures, and other hedging activities that are called derivatives.
The main objective of the investment policy is to provide adequate
liquidity to meet reasonable declines in deposits and any anticipated
increases in the loan portfolio, to provide safety of principal and
interest, to generate earnings adequate to provide a stable income, and to
fit within the overall asset/liability management objectives of the
Company.
Investment Securities are securities that the Company will hold to maturity
and are carried at amortized cost on the balance sheet, and are summarized
as follows as of June 30, 2002.
Amortized Gross Unrealized Gross Unrealized
(Dollars in Thousands) Cost Basis Holding Gains Holding Losses Fair Value
- -----------------------------------------------------------------------------------------------------------
Debt securities issued by the U. S.
Treasury and other U. S.
Government corporations and
Agencies $ 0 $ 0 $ 0 $ 0
Debt securities issued by states of the
United States and political
subdivisions of the states 14,449 399 4 14,844
Mortgage-backed securities 2 0 0 2
Other debt securities 1 0 0 1
- ---------------------------------------------------------------------------------------------------------
Total $14,452 $399 $ 4 $14,847
=========================================================================================================
Securities in the Available-for-Sale category are securities that the
Company intends to hold for an indefinite period of time, but not
necessarily to maturity. These securities may be sold in response to
interest rate changes, liquidity needs or other factors. Any unrealized
gains or losses, net of taxes, are reflected in Stockholders' Equity as a
separate component.
Investments in Available-for-Sale securities are carried at fair value on
the balance sheet and are summarized as follows as of June 30, 2002.
Gains in Losses in
Accumulated Accumulated
Other Other
Amortized Comprehensive Comprehensive
(Dollars in Thousands) Cost Basis Income Income Fair Value
- ------------------------------------------------------------------------------------------------
Debt securities issued by the U. S.
Treasury and other U. S.
Government corporations and
agencies $31,719 $ 533 $ 8 $32,244
Marketable Equities 5,394 180 1,818 3,756
Mortgage-backed securities 39,103 600 15 39,688
Corporate Bonds 2,932 81 13 3,000
- -----------------------------------------------------------------------------------------------
Total $79,148 $1,394 $1,854 $78,688
===============================================================================================
Effect on Stockholders' Equity as of June 30, 2002:
(In Whole Dollars)
Unrealized loss on Available-for-Sale Securities $ 460,236
Less tax effect (101,087)
---------
Net unrealized loss on Available-for-Sale Securities $ 359,149
=========
9
The Available-for-Sale category at June 30, 2002 had net unrealized losses
net of taxes of $359,149, of which $708,304 are net unrealized gains (net
of tax) attributed to securities of the U.S. Treasury, other U.S.
Government corporations and agencies, corporate bonds, and mortgage-backed
securities, and $1,067,453 are net unrealized losses (net of tax)
attributable to marketable equity securities.
Securities of the U.S. Treasury, U.S. Government corporations and agencies,
and mortgage-backed securities have little or no credit risk, other than
being sensitive to changes in interest rates; and if held-to-maturity,
these securities will mature at par. The Company amortizes premiums and
accretes discounts over the life of the security.
Marketable equity securities, however, have a greater risk as they are
subject to rapid market fluctuations. These securities are constantly
monitored and evaluated to determine their suitability for sale or
retention in the portfolio. Management minimizes its risk by limiting the
total amount invested into marketable equity securities to 6.5% of the
total investment portfolio. At June 30, 2002, the amount invested in
marketable equity securities was 5.8% of the total investment portfolio
distributed over various business sectors.
INFORMATION WITH RESPECT TO NONACCRUAL AND PAST DUE LOANS
AT JUNE 30, 2002 AND 2001 AND DECEMBER 31, 2001 AND 2000
At June 30, At December 31,
- ----------------------------------------------------------------------------------------------
(Dollars in Thousands) 2002 2001 2001 2000
- ----------------------------------------------------------------------------------------------
Nonaccrual Loans $ 684 $2,332 $1,138 $2,415
Loans 90 days or more past due and
still accruing 0 19 444 335
Real estate acquired by foreclosure
or substantively repossessed 0 0 0 0
Percentage of nonaccrual loans to total gross loans 0.27% 0.93% 0.45% 0.94%
Percentage of nonaccrual loans, restructured loans,
and real estate acquired by foreclosure or
substantively repossessed to total assets 0.17% 0.58% 0.29% 0.62%
Percentage of allowance for loan losses
to nonaccrual loans 811.11% 219.55% 481.90% 197.76%
The $0.7 Million in nonaccrual loans as of June 30, 2002 consists of $0.5
Million of real estate mortgages and $0.2 Million attributed to commercial
loans. Nonaccrual loans include restructured loans of $177,000 at June 30,
2002.
The Company's nonperforming assets as a total decreased by $0.9 Million from
$1.6 Million reported on December 31, 2001 to $0.7 Million as of June 30,
2002. The Company considers nonaccrual loans, loans past due 90 days or more
but still accruing, and real estate acquired by foreclosure or substantively
repossessed as nonperforming assets. Nonaccrual loans, which is the largest
component of nonperforming assets, decreased by $454,571 during the six
months ending June 30, 2002. Loans 90 day or more but still accruing
decreased by $443,882 during the first six months of 2002.
The percentage of nonaccrual loans to total gross loans decreased from
0.45% reported at year end 2001 to 0.27% at June 30, 2002 due to a decrease
in the nonaccrual category. The percentage of nonaccrual loans and real
estate acquired by foreclosure or substantively repossessed to total assets
decreased due to the decrease in nonaccrual loans.
10
INFORMATION WITH RESPECT TO INTEREST ON NONACCRUAL AND PAST DUE
LOANS AT JUNE 30, 2002 AND 2001 AND DECEMBER 31, 2001 AND 2000
At June 30, At December 31,
- -----------------------------------------------------------------------------------
(Dollars in Thousands) 2002 2001 2001 2000
- -----------------------------------------------------------------------------------
Nonaccrual Loans $684 $2,332 $1,138 $2,415
Interest income that would have been recorded
under original terms 60 122 109 228
Interest income recorded during the period 42 22 6 22
The Company stops accruing interest on a loan once it becomes past due 90
days or more unless there is adequate collateral and the financial
condition of the borrower is sufficient. When a loan is placed on a
nonaccrual status, all previously accrued but unpaid interest is reversed
and charged against current income. Interest is thereafter recognized in
that category only when payments are received and the loan becomes current.
Loans in the nonaccrual category will remain in that category until the
possibility of collection no longer exists, the loan is paid off or becomes
current. When a loan is determined to be uncollectible, it is then charged
off against the Allowance for Loan Losses.
Statement of Financial Accounting Standards No. 114 "Accounting by
Creditors for Impairment of a Loan" applies to all loans except large
groups of smaller-balance homogeneous loans that are collectively evaluated
for impairment, loans measured at fair value or at a lower of cost or fair
value, leases, and debt securities as defined in Statement 115. Statement
114 requires that impaired loans be valued at the present value of expected
future cash flows discounted at the loan's effective interest rate or as a
practical expedient, at the loan's observable market value of the
collateral if the loan is collateral dependent. Smaller balance
homogeneous loans are considered by the Company to include consumer
installment loans and credit card loans.
At June 30, 2002, there were $2,844,763 of loans which the Company has
determined to be impaired, with a related allowance for credit losses of
$571,158. Loans deemed to be impaired decreased substantially from the
$7,521,689 reported as of December 31, 2001. At year end 2001, impaired
loans included one large loan relationship of $2,556,000; but as of June
30, 2002, payments continue to be current and this loan has been removed
from impairment status. In addition, principal reductions, loan payoffs,
charged off balances, loan upgrades, and a change in our impairment
identification methodology are other factors resulting in a decrease of
impaired loans. Management is not aware of any other loans that pose a
potential credit risk, or where the loans are current but the borrowers are
experiencing financial difficulty.
There were no other loans classified for regulatory purposes at June 30,
2002 that management reasonably expects will materially impact future
operating results, liquidity or capital resources.
11
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Six Months Years Ended
At June 30, At December 31,
- --------------------------------------------------------------------------
(Dollars in Thousands) 2002 2001 2001 2000
- --------------------------------------------------------------------------
Balance at January 1 $5,484 $4,776 $4,776 $3,766
- --------------------------------------------------------------------------
Charge-offs:
Commercial (288) (30) (73) (194)
Real estate - construction 0 0 (0) 0
Real estate - mortgage (20) 0 (0) (23)
Installment/consumer (26) (14) (28) (138)
- --------------------------------------------------------------------------
Total Charge-offs (334) (44) (101) (355)
- --------------------------------------------------------------------------
Recoveries:
Commercial 10 7 14 50
Real estate - construction 0 0 0 0
Real estate - mortgage 11 0 29 92
Installment/consumer 2 6 16 23
- --------------------------------------------------------------------------
Total Recoveries 23 13 59 165
- --------------------------------------------------------------------------
Net Charge-offs (311) (31) (42) (190)
- --------------------------------------------------------------------------
Additions charged to operations 375 375 750 1,200
- --------------------------------------------------------------------------
Balance at end of period $5,548 $5,120 $5,484 $4,776
==========================================================================
Ratio of net charge-offs to
average loans outstanding (0.13%) (.012%) (0.02%) (0.08%)
The Allowance for Loan Losses at June 30, 2002 was $5,548,309, compared to
$5,484,519 at year end 2001. The Allowance for Loan Losses as a percentage
of outstanding loans was 2.17% at June 30, 2002, and 2.16% at December 31,
2001.
The Bank provided $750,000 in 2001, $1,200,000 in 2000, and $375,000 in the
six months ended June 30, 2002 to the Allowance for Loan Losses. Loans
charged off were $101,000 in 2001, $355,000 in 2000, and $334,000 in the six
months ended June 30, 2002. Recoveries on loans previously charged off were
$59,000 in 2001, $165,000 in 2000, and $23,000 in the six months ended June
30, 2002. Management believes that the Allowance for Loan Losses of
$5,548,309 is adequate to absorb any losses that are estimated to occur, due
to the Bank's strong collateral position and the current asset quality.
The level of the Allowance for Loan Losses is evaluated by management and
encompasses several factors. These factors include but are not limited to
recent trends in the nonperforming loans, the adequacy of the assets that
collateralize the nonperforming loans, the level of nonaccrual loans,
current economic conditions in the market area, and various other external
and internal factors. During 2000, management made the decision to change
the methodology and guidelines used in calculating the adequate level of
loan loss reserves. Increasing credit risk due to a higher commercial real
estate loan portfolio and a rising interest rate environment are
responsible for the review and change in the methodology and guidelines.
Management's assessment of the adequacy of the Allowance for Loan Losses is
reviewed by regulators, the Company's independent accountants, and outside
loan review consultants.
12
This table shows an allocation of the allowance for loan losses as of the
end of each of the periods indicated.
June 30, 2002 December 31, 2001 December 31, 2000
--------------------------------------------------------------------------
Percent of Percent of Percent of
Loans in Loans in Loans in
Each Each Each
Category Category Category
to Total to Total to Total
Amount Loans Amount Loans Amount Loans
--------------------------------------------------------------------------
(Dollars in Thousands)
Domestic:
Commercial (5) $1,617(1) 16.04% $1,629(1) 17.91% $1,466(1) 19.66%
Real estate - Construction 65 4.61 41 2.99 47 3.36
Real estate - mortgage 3,700(2) 76.02 3,585(2) 74.77 2,970(2) 71.91
Consumer(3) 166(4) 3.33 229(4) 4.33 293(4) 5.07
-----------------------------------------------------------------------
$5,548 100.00% $5,484 100.00% $4,776 100.00%
=======================================================================
- --------------------
Includes amounts specifically reserved for impaired loans of $507,940
as of June 30, 2002, $780,029 as of December 31, 2001, and $281,248
as of December 31, 2000 as required by Financial Accounting Standard
No. 114, Accounting for Impairment of Loans.
Includes amounts specifically reserved for impaired loans of $46,521
as of June 30, 2002, $413,663 as of December 31, 2001, and $132,911
as of December 31, 2000 as required by Financial Accounting Standard
No. 114, Accounting for Impairment of Loans.
Includes consumer, obligations of states and political subdivisions
and other.
Includes amounts specifically reserved for impaired loans of $16,697
as of June 30, 2002, $1,632 as of December 31, 2001, and $10,398 as
of December 31, 2000 as required by Financial Accounting Standard No.
114, Accounting for Impairment of Loans.
Includes commercial, financial, agricultural and nonprofit loans.
The loan portfolio's largest segment of loans is commercial real estate
loans, which represent 57% of gross loans. Residential real estate,
represents 19% of gross loans. The Company requires a loan to value ratio
of 80% in both commercial and residential mortgages. These mortgages are
secured by real properties which have a readily ascertainable appraised
value.
Generally, commercial real estate loans have a higher degree of credit risk
than residential real estate loans because they depend primarily on the
success of the business. When granting these loans, the Company evaluates
the financial statements of the borrower(s), the location of the real
estate, the quality of management, and general economic and competitive
conditions. When granting a residential mortgage, the Company reviews the
borrower(s) repayment history on past debts, and assesses the borrower(s)
ability to meet existing obligations and payments on the proposed loans.
Commercial loans consist of loans predominantly collateralized by
inventory, furniture and fixtures, and accounts receivable. In assessing
the collateral for this type of loan, management applies a 40% liquidation
value to inventories, 25% to furniture, fixtures and equipment; and 60% to
accounts receivable. Commercial loans represent 19% of the loan portfolio.
Consumer loans are generally unsecured credits and represent 3% of the
total loan portfolio. These loans have a higher degree of risk than
residential mortgage loans. The underlying collateral of a secured
consumer loan
13
tends to depreciate in value. Consumer loans are typically made based on
the borrower's ability to repay the loan through continued financial
stability. The Company endeavors to minimize risk by reviewing the
borrower's repayment history on past debts, and assessing the borrower's
ability to meet existing obligations on the proposed loans.
The allocation of the Allowance for Loan Losses is based on management's
judgement of potential losses in the respective portfolios. While
management has allocated reserves to various portfolio segments, the
Allowance is general in nature and is available for the portfolio in its
entirety.
Results of Operations
- ---------------------
The Company's performance of operations is dependent on net interest and
dividend income, which is the difference between interest income earned on
loans and investments and interest expense paid on deposits and borrowed
funds. The level of net interest income achieved is significantly impacted
by several factors such as economic conditions, interest rates,
asset/liability management, and corporate strategic planning. Net interest
and dividend income for the six months ending June 30, 2002 decreased by
$476,692 to $7,098,508 when compared to $7,575,200 recorded during the same
period in 2001. Total interest and dividend income decreased by $2,827,419
partially offset by a decrease in total interest expense of $2,350,727.
Although our net interest margin stabilized during the first six months of
2002, the series of reductions in interest rates throughout 2001 impacted
our net interest margin, as a result of loan and investment repricing at
lower interest rates due to refinancing and prepayments.
The Provision for Loan Losses is a charge against earnings and funds the
Allowance for Loan Losses. It is management's desire to maintain the
Allowance for Loan Losses at a level that is adequate to absorb future
possible charge-offs of loans deemed to be uncollectible. The Bank's
provision during the six-month period ending June 30, 2002 was $375,000,
the same amount provided during the same period in 2001.
Total Other Income increased by $100,192 for the first six months in 2002,
when compared to the same period in 2001. Service charges on both deposit
accounts and overdrafts combined decreased slightly by $2,309. The Bank
realized a $2,818 loss on the sale of one security during the first six
months of 2002. There were no losses or gains realized during the same
period in 2001. There was an increase of $37,088 in the cash surrender
value of life insurance policies income associated with both the Directors'
and Executive Officers' life insurance programs. The purchase of additional
policies during 2001continues to generate additional earnings and in June,
2002 another $1,000,000 of Executive Officers life insurance was purchased.
The line item Other Income increased by $68,231 when compared to the first
six months of 2001. These income items represent earnings derived from
safe deposit box rentals, checkbook printing revenue, exchange and
commission fees, customer investment commission fees, ATM/debit card usage
fees, and recoveries of previously recorded losses relating to check fraud.
The category Total Other Expense, made up of various noninterest expenses,
decreased by $132,111 to $5,623,195 recorded during the first six months
ending June 30, 2002, compared to $5,755,306 reported for the same period
in 2001. Salaries and employee benefits increased by $15,298 due to
general wage adjustments and staff additions. Occupancy and equipment
expenses combined totaled $669,158 during the first half of 2002, compared
to $758,365 in 2001, a decrease of $89,207. The mild winter experienced
during the first quarter of 2002 contributed to lower utility and snow
removal costs. The expenses for stationery and supplies increased by
$51,842 from $100,717 reported during the first six months in 2001 to
$152,559 in 2002. This increase was a result of additional cost for
stationery and envelopes required for marketing and business development.
Professional service fees decreased by $30,624 from the first six months of
2001 compared to 2002. This decrease reflects cost associated with legal
and consulting services and collection and
14
repossession expenses. Marketing expenses attributed to production and
media costs for television and radio commercials, print advertising and
other direct marketing decreased by $30,504.
The following table sets forth the components of the line item Other
Expense. This table reflects a decrease of $29,122 to $458,626 from
$487,748 for the three month period ending June 30, 2002 and a decrease of
$48,916 to $864,639 from $913,555 for the six month period ending June 30,
2002 when compared to June 30, 2001.
Three Months Six Months
----------------------------------------------------------------------
2002 2001 Variance 2002 2001 Variance
----------------------------------------------------------------------
Amortization of Goodwill $ 0 $ 56,700 $(56,700) $ 0 $113,400 $(113,400)
Communications 82,523 83,283 (760) 163,764 166,195 (2,431)
Committee Fees 46,800 47,300 (500) 93,350 88,210 5,140
Other Miscellaneous Expenses 329,303 300,465 28,838 607,525 545,750 61,775
----------------------------------------------------------------------
$458,626 $487,748 $(29,122) $864,639 $913,555 $ (48,916)
======================================================================
The decrease in Other Expense of $48,916 for the first six months of 2002 was
primarily due to a decrease of $113,400 in amortization expense pertaining to
goodwill, due to the implementation of SFAS No. 142 previously mentioned,
partially offset by an increase of $61,775 in various other miscellaneous
expenses, which includes approximately $40,000 of stock appreciation rights
exercised.
Income before income taxes was $2,016,548 for the six-month period ending
June 30, 2002 compared to $2,260,937 reported for the same period in the
prior year. Taxes totaled $546,476 down by $130,518 when compared to
$676,994 reported for the same period in 2001. Net Income of $1,470,072
was down by $113,871 for the first half of 2002 compared to $1,583,943 in
the same period in 2001. Diluted earnings per share for six months ending
June 30, 2002 was $0.37 compared to $0.42 reported in 2001.
The results of operations for the second quarter in 2002 indicates that the
net interest and dividend income decreased by $147,528 to $3,530,200 from
$3,677,728 reported for the same period in 2001. Total interest and
dividend income decreased by $1,395,224 partially offset by total interest
expense of $1,247,696. The Provision for Loan Losses for three months
ending June 30, 2002 remained the same as provided during the same period
in 2001.
Total Other Income in the three months ended June 30, 2002 increased by
$37,084. Service charges on deposit accounts and overdraft charges combined
increased slightly by $1,029. The cash surrender value of bank owned life
insurance policies income increased by $15,318 due to the purchase of
additional policies. The line item Other Income increased by $20,737 from
$120,235 recorded during the second quarter of 2001, to $140,972 reported for
the same period in 2002.
Total Other Expenses in the three months ended June 30, 2002 decreased by
$46,713. Salaries and benefits increased by $7,899 related to general wage
increases due to annual performance evaluations, and staff additions.
Occupancy and equipment expense combined decreased by $33,517. Stationery
and supplies expense increased by $29,563 due to additional cost for
stationery, envelopes, and other office supplies. Professional fees
increased by $8,349 primarily due to the management assessment performed
during the second quarter of 2002. Marketing expenses decreased by $29,885.
The item Other Expense decreased by $29,122 due to a decrease of $56,700 in
amortization expense of goodwill, partially offset by an increase of $28,838
in other miscellaneous expenses.
Income before taxes for the second quarter in 2002 decreased by $63,731
from $1,002,092 reported in 2001, to $938,361 this year. Associated
applicable income taxes also decreased by $37,303 from 2001 to 2002. The
net income for the three-month period ending June 30, 2002 was $688,150, or
a decrease of 3.7%, when compared to $714,578 earned in the second quarter
of 2001. Diluted earnings per share were $0.17 compared to $0.19 per share
for the same period in 2001.
15
Liquidity
- ---------
The Company's principal sources of funds are customer deposits, loan
amortization, loan payoffs, and the maturities of investment securities.
Through these sources, funds are provided for customer withdrawals from
their deposit accounts, loan originations, drawdowns on loan commitments,
acquisition of investment securities and other normal business activities.
Investors' capital also provides a source of funding.
The largest source of funds is provided by depositors. The largest
component of the Company's deposit base is reflected in the Time Deposit
category. The Company does not participate in brokered deposits. Deposits
are obtained from consumers and commercial customers within the Bank's
community reinvestment area, being Bristol County, Massachusetts and
several abutting towns in Rhode Island.
The Company also has the ability to borrow funds from correspondent banks,
the Federal Home Loan Bank, as well as the Federal Reserve Bank of Boston
by pledging various investment securities as collateral. During the second
quarter in 2001 and 2002, the Bank was not required to borrow short-term
funds to meet current liquidity needs. Tax payments made by our customers
which are owed to the Federal Reserve Bank Treasury
Tax and Loan account are classified as short-term borrowings. As of June
30, 2002, there is also $19,319,611 in advances from the Federal Home Loan
Bank representing the match funding program that is available to qualified
borrowers and an investment growth strategy transaction.
Excess available funds are invested on a daily basis as Federal Funds Sold
and can be withdrawn daily. The Bank attempts through its cash management
strategies to maintain a level of Federal Funds Sold to further enhance its
liquidity, providing funds to meet lending and other cash requirements.
Liquidity represents the ability of the Bank to meet its funding
requirements. In assessing the appropriate level of liquidity, the Bank
considers deposit levels, lending requirements, and investment maturities
in light of prevailing economic conditions. Through this assessment, the
Bank manages its liquidity level to optimize earnings and respond to
fluctuations in customer borrowing needs.
At June 30, 2002, the Bank's liquidity ratio stood at 36.6%, slightly
higher than the 34.9% level reported at December 31, 2001. The liquidity
ratio is determined by dividing the Bank's short-term assets (cash and due
from banks, interest-bearing deposits due from other banks, securities, and
federal funds sold) by the Bank's total deposits. Management believes the
Bank's liquidity to be adequate to meet the current and presently
foreseeable needs of the Bank.
Capital
- -------
As of June 30, 2002, the Company had total capital of $39,490,477. This
represents an increase of $1,024,346 from $38,466,131 reported on December
31, 2001. The increase in capital was a combination of several factors.
Additions consisted of six months earnings of $1,470,072 and transactions
originating through the Dividend Reinvestment Program whereby 4,495.581
shares were issued for cash contributions of $64,536, 22,310.316 shares
were issued for $334,078 in lieu of cash dividend payments, and 10,604
shares were issued due to stock options exercised. These additions were
offset by dividends paid of $701,203.
Also, affecting capital is accumulated other comprehensive income (loss)
which reflects net unrealized gains or losses, net of taxes, on securities
classified as Available-for-Sale and the minimum pension liability
adjustment. On December 31, 2001 the Available-for-Sale portfolio had
unrealized losses, net of taxes, of $120,943, and on June 30, 2002, as a
result of current market values, the portfolio reflects unrealized losses,
net of taxes, of $359,149. There was no change in the minimum pension
liability adjustment of $106,246, net of taxes, recorded December 31, 2001.
16
Under the requirements for Risk Based and Leverage Capital of the federal
banking agencies, a minimum level of capital will vary among banks based on
safety and soundness of operations. Risk Based Capital ratios are
calculated with reference to risk-weighted assets, which include both on
and off balance sheet exposure.
At June 30, 2002 the actual Risk Based Capital of the Bank was $31,944,000
for Tier 1 Capital, exceeding the minimum requirements of $10,740,080 by
$21,203,920. Total Capital of $35,300,000 exceeded the minimum
requirements of $21,480,160 by $13,819,840 and Leverage Capital of
$31,944,000 exceeded the minimum requirements of $15,719,640 by
$16,224,360. In addition to the "minimum" capital requirements, "well
capitalized" standards have also been established by the Federal Banking
Regulators.
The table below illustrates the capital ratios of the Company and the Bank
on June 30, 2002 and at December 31, 2001.
Well June 30, 2002 December 31, 2001
Capitalized ----------------- -----------------
Requirement Bancorp Bank Bancorp Bank
- --------------------------------------------------------------------------------
Total Capital (to Risk
Weighted Assets) >10% 15.43% 13.15% 14.43% 12.55%
- --------------------------------------------------------------------------------
Tier 1 Capital (to Risk
Weighted Assets) > 6% 14.18% 11.90% 13.18% 11.29%
- --------------------------------------------------------------------------------
Leverage Capital (to
Average Assets) > 5% 9.60% 8.13% 8.98% 7.74%
- --------------------------------------------------------------------------------
Under the revised informal agreement entered into with the Massachusetts
Commissioner of Banks and the Federal Deposit Insurance Corporation,
effective January 17, 2002, the Bank is required to maintain a seven (7)
percent Tier I Leverage Capital ratio. As of June 30, 2002, this ratio was
8.13% compared to 7.74% at year-end 2001.
In addition to meeting the required levels, the Company and the Bank's
capital ratios meet the criteria of the "well capitalized" category
established by the federal banking agencies as of June 30, 2002.
ITEM 3
Quantitative and Qualitative Disclosure of Market Risk
- ------------------------------------------------------
Interest Rate Risk
- ------------------
Volatility in interest rates requires the Company to manage interest rate
risk that arises from the differences in the timing of repricing of assets
and liabilities. The Company considers interest rate risk, the exposure of
earnings to adverse movements in interest rates, to be a significant market
risk as it could potentially have an affect on the Company's financial
condition and results of operation.
The Company's Asset-Liability Management Committee, comprised of the Bank's
Executive Management team, has the responsibility of managing interest rate
risk, and monitoring and adjusting the difference between interest-
sensitive assets and interest-sensitive liabilities ("GAP" position) within
various time periods.
17
Management's objective is to reduce and control the volatility of its net
interest margin by managing the relationship of interest-earning assets and
interest-bearing liabilities. In order to manage this relationship, the
committee utilizes a GAP report prepared on a monthly basis. The GAP
report indicates the differences or gap between interest-earning assets and
interest-bearing liabilities in various maturity or repricing time periods.
This, in conjunction with certain assumptions, and other related factors,
such as anticipated changes in interest rates and projected cash flows from
loans, investments and deposits, provides management a means of evaluating
interest rate risk.
In addition to the GAP report, the Company also uses an analysis to measure
the exposure of net interest income to changes in interest rates over a
relatively short (i.e., 12 months) time frame. The analysis projects
future interest income and expenses from the Company's earning assets and
interest-bearing liabilities. Depending on the GAP position, the Company's
policy limit on interest rate risk specifies that if interest rates were to
change immediately up or down 200 basis points, estimated net interest
income for the next twelve months should not decline by more than ten
percent. The following table reflects the Company's estimated exposure as
a percentage of estimated net interest income for the next twelve months,
assuming an immediate change in interest rates:
Estimated Exposure as a
Rate Change Percentage of Net Interest Income
(Basis Points) June 30, 2002
---------------------------------------------------
+200 (2.87)%
-200 (5.02)%
The model used to monitor earnings-at-risk provides management a
measurement tool to assess the effect of changes in interest rates on the
Company's current and future earnings. The 10% limit established by the
Company provides an internal tolerance level to control interest rate risk
exposure.
18
Part II
Other Information
ITEM 4
The Annual Meeting of the Company's stockholders was held on April 9, 2001
with the following matters being voted upon and with the indicated results.
Proposal One - Election of Class One Directors
- ----------------------------------------------
The following five individuals were re-elected to serve as directors of the
Company until the 2005 Annual Meeting of stockholders, and until their
successors are elected and qualified.
VOTES
- --------------------------------------------------------
Nominee For Against
- --------------------------------------------------------
Donald T. Corrigan 2,558,212 8,672
Lawrence J. Oliveira DDS 2,561,787 5,097
Peter Paskowski 2,558,212 8,672
Kenneth R. Rezendes Jr. 2,538,607 28,277
Charles Veloza 2,558,212 8,672
Proposal Two - Election of Clerk/Secretary
- ------------------------------------------
The following individual was reelected by the stockholders to serve as
Clerk/Secretary until the next annual meeting of the stockholders, and
until his successor is elected and qualified.
VOTES
- --------------------------------------------------------
Nominee For Against
- --------------------------------------------------------
Attorney Peter G. Collias 2,563,225 3,659
The following additional directors continued their terms in office after
the meeting.
Thomas B. Almy Peter G. Collias
Melvyn A. Holland William Q. MacLean Jr.
Francis A. Macomber Majed Mouded MD
Shaun O'Hearn Sr. William J. Sullivan
David F. Westgate
19
PART II
Other Information
ITEM 6
Exhibits and Reports on Form 8-K
- --------------------------------
(a) Exhibits: See exhibit index.
(b) Reports on Form 8-K: A report on Form 8-K dated February 7, 2002 was
filed with the Securities and Exchange Commission reporting under
Item 5 the announcement of the early retirement as of March 29, 2002
of James D. Carey, President and Chief Executive Officer of the Bank
and Executive Vice President of the Company.
20
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
3.1 Articles of Incorporation of Slade's Ferry Bancorp
as amended (1)
3.2 By-laws of Slade's Ferry Bancorp as amended (2)
10.1 Slade's Ferry (formerly Weetamoe) Bancorp 1996 Stock
Option Plan (as amended) (3)
10.2 Noncompetition Agreement between Slade's Ferry Trust
Company and Edward S. Machado (A substantially
identical contract exists with Peter Paskowski) (4)
10.3 Supplemental Executive Retirement Agreement between
Slade's Ferry (formerly Weetamoe) Bancorp and
Donald T. Corrigan (5)
10.4 Supplemental Executive Retirement Agreement between
Slade's Ferry (formerly Weetamoe) Bancorp and James
D. Carey (2)
10.5 Supplemental Executive Retirement Agreement between
Slade's Ferry (formerly Weetamoe) Bancorp and
Manuel J. Tavares (2)
10.6 Swansea Mall Lease (4)
10.7 Form of Director Supplemental Retirement Program
Director Agreement, Exhibit I thereto (Slade's
Ferry Trust Company Director Supplemental Retirement
Program Plan) and Endorsement Method Split Dollar
Plan Agreement thereunder for Thomas B. Almy.
(Similar forms of agreement entered into between
Slade's Ferry Trust Company and the other directors) (6)
10.8 Form of Directors' Paid-up Insurance Policy for
Thomas B. Almy (part of the Director Supplemental
Retirement Program). (Similar forms of policy entered
into by Company for other directors). (7)
10.9 Form of Officers' Paid-up Endorsement Method Split
Dollar Plan Agreement and Insurance Policies for
Janice Partridge (Similar forms of policies entered
into by Company for its President and other Vice
Presidents) (8)
99.1 Certification of Periodic Report
- --------------------
Incorporated by reference to the Registrant's Registration Statement
on Form SB-2 filed with the Commission on April 14, 1997.
Incorporated by reference to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1996.
Incorporated by reference to the Registrant's Form 10-Q for the
quarter ended June 30, 1999.
Incorporated by reference to the Registrant's Registration Statement
on Form S-4 File No. 33-32131
Incorporated by reference to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1994.
Incorporated by reference to the Registrant's Form 10-Q for the
quarter ended March 31,1999
Incorporated by reference to the Registrant's Form 10-QSB for the
quarter ended June 30, 1998.
Incorporated by reference to the Registrant's Form 10-Q for the
quarter ended June 30, 2000.
21
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.
SLADE'S FERRY BANCORP
------------------------------------
(Registrant)
August 12, 2002 /s/ Kenneth R. Rezendes
- --------------------- ------------------------------------
(Date) (Signature) Kenneth R. Rezendes
President/Chief
Executive Officer
August 12, 2002 /s/ Donald T. Corrigan
- --------------------- ------------------------------------
(Date) (Signature) Donald T. Corrigan
Chairman of the
Board of Directors
August 12, 2002 /s/ Edward Bernardo Jr.
- --------------------- ------------------------------------
(Date) (Signature) Edward Bernardo Jr.
Vice President/Treasurer
Chief Financial Officer/
Chief Accounting Officer
22