Farmers & Mechanics Reports a 69% Increase in Second Quarter Profits.MIDDLETOWN Middletown, cities, United States Middletown. 1 Industrial city (1990 pop. 42,762), Middlesex co., central Conn., on the west bank of the Connecticut River; settled 1650, inc. 1784, town and city consolidated 1923. , Conn.--(BUSINESS WIRE)--July 12, 1995--Farmers & Mechanics Bank The Mechanics Bank, founded in 1905, is a financial service company based in the San Francisco Bay Area. The bank has $2.644 billion in assets and 33 branches in Contra Costa, Alameda, San Francisco, Sacramento, Napa, El Dorado, Marin, and Placer Counties. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : FMCT FMCT Fissile Material Cutoff Treaty FMCT Fargo Moorhead Community Theatre FMCT Forward Model Checking Technique FMCT Fire Line Meter and Compound Torrent ) reported net income for the second quarter of $654,000, or $.39 per share, which is a 69% increase from net income of $387,000, or $.23 per share in the second quarter of 1994. For the first half of 1995, net income was $1,028 million, or $.62 per share, representing a 41% increase from net income of $730,000, or $.44 per share, in the first half of 1994. Net income before taxes increased by 219% and 181%, respectively, for the first quarter and first half of 1995 versus the comparable periods in 1994. Reported net income for the second quarter and first half of 1995 reflected no tax expense or benefit, whereas $182,000 and $364,000 of tax benefit was included in the results for the second quarter and first half of 1994, respectively. Commenting on first half results, John F. Beckert, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated that "increased profits and improved investment portfolio performance have raised the book value of FMCT common stock to $18.47 per share." Beckert said, however, that "management will expand its efforts in the second half of the year to increase productivity and substantially reduce nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. to produce stronger core earnings." The favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating results achieved in the second quarter of 1995, as compared to the same period in 1994, were the result of increased net interest income and gains on the sale of assets which more than offset a higher loan loss provision. Net interest income was 12% above the year-earlier level primarily due to the balance sheet restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). in early 1994 and the resulting benefit from subsequent increases in interest rates. Second quarter net interest income was 3% lower than the record quarterly high established in the first quarter of 1995, as the decrease in U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. rates reduced the income on adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. securities and newly deployed funds while interest expense reflected competitive pressures which continue to produce higher funding costs as lower-yielding time deposits are renewed. The net interest margin was 3.92% for the second quarter of 1995 versus 3.77% for the same quarter of 1994 and 4.08% for the first quarter of 1995. Increased total non-interest income was primarily attributable to gains on asset sales. Most of the gains were associated with the sale of servicing rights on residential mortgage loans serviced for investors. The profit represented nearly all of the projected net income to be derived by the Bank from servicing these loans over their expected remaining life, which became more uncertain due to the recent declines in mortgage rates and the relatively high weighted average rate of the portfolio. Other net gains were related to the sale of investments and mortgage loans, during the June June: see month. bond market rally, to fund a growing loan pipeline and modestly reconfigure To change the status of something. the available-for-sale portfolio. Service charges and other income in the second quarter of 1995 were unchanged from the comparable period in 1994. Service charges rebounded by 29% from the level of the past two quarters due to pricing changes implemented on March 1, 1995. Other income in the second quarter began to reflect revenues from new business initiatives that more than offset lower levels of late charges on delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. loans. Reported total non-interest expense in the second quarter of 1995 was 1% above last year's level. Adjusting for last year's net gain attributable to changes in the Bank's defined benefit plan Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan and a partially offsetting additional REO reo Noun NZ a language [Maori] provision, the total was actually 5% lower than the same period last year. Basic operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are generally within the range of recent quarters with few exceptions. Staff expenses were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by deferral deferral - Waiting for quiet on the Ethernet. of expenses associated with the significant increase in the level of residential first and second mortgage loan origination's (required under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 91). Other expenses were relatively higher due to increased advertising of deposit and loan products. The net expense of REO operations and the provision for REO losses was 67% below the comparable quarter in 1994 and have declined to the lowest levels in several years. The provision for loan losses in the second quarter of $660,000 reflected management's decision to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. the allowance for loan losses for a like amount of net charge-offs. This maintains the reserve at a level that should provide adequate loan coverage consistent with the methodology applied over the past several years. Total nonperforming assets (NPAs) were $21.9 million, or 4.31% of total assets at June 30, 1995. This level was 24% lower than the comparable period last year and 3% lower than at March 31, 1995. REO decreased to $12.7 million at the end of the second quarter of 1995, a 29% improvement from a year earlier and 6% below the level at the end of the first quarter. The Bank disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of $1.7 million of REO in the second quarter of 1995, or 13% of the March 31, 1995 balance, but $.9 million of properties were acquired through foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. . Nonperforming loans (NPLs), a subset A group of commands or functions that do not include all the capabilities of the original specification. Software or hardware components designed for the subset will also work with the original. of NPAs, were $9.2 million at quarter-end, which was 16% lower than the prior year and 2% above the balance on March 31, 1995. The allowance for loan losses was maintained at $5.6 million, a level which equates to 1.81% of total loans, 61% of NPLs and 212% of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. net charge-offs. A further measure of asset quality is the absolute and relative measure of loan delinquencies. At June 30, 1995, loans delinquent 30-89 days declined to $4.8 million, or 1.6% of total loans, from $8.3 million at June 30, 1994. This represented the lowest quarter-end level of delinquencies in at least five years. Total assets at June 30, 1995 were $507.8 million, 5.9% above the year earlier level. Total deposits reached $476.5 million, which was 6.7% higher than the comparable period in 1994. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $30.6 million, or $18.47 per share. The Bank's Tier 1 leverage capital was 6.00% at June 30, 1995 and Risk-Based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. was 11.54%. Both ratios exceed regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. contained in the Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. under which the Bank is operating. Founded in 1858, Farmers & Mechanics bank is a Connecticut-chartered, FDIC-insured savings bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. headquartered in Middletown that serves Middlesex, Hartford, Tolland and New London New London, city (1990 pop. 24,540), New London co., SE Conn., on the Thames River near its mouth on Long Island Sound; laid out 1646 by John Winthrop, inc. 1784. counties through its 12 banking offices. The Bank is the second largest depository institution Depository institution A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. in Middlesex County For the traditional county of England, see Middlesex. For other uses, see Middlesex (disambiguation). Middlesex County is the name of six counties in North America:
Selected Financial Data (Unaudited) Farmers & Mechanics Bank and Subsidiaries
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
Operating data (in thousands) Net interest income $4,651 $4,163 $9,458 $8,454 Provision for loan losses 660 41 1,213 261 Non-interest income 1,205 579 1,776 2,003 Non-interest expense 4,542 4,496 8,993 9,830 Net income before taxes 654 205 1,028 366 Income tax expense (benefit) - (182) - (364) Net income 654 387 1,028 730 Per Share Data Earnings per share $ 0.39 $ 0.23 $ 0.62 $ 0.44 Book value at period end 18.47 17.65 18.47 17.65 Common stock price High 18.25 15.50 18.25 15.50 Low 14.50 11.75 14.38 9.75 Close 16.25 15.25 16.25 15.25 Key Ratios Net interest margin 3.92% 3.77% 3.99% 3.84% Return on average assets 0.52 0.32 0.41 0.31 Return on average equity 8.89 5.29 7.22 4.97 Tier I leverage capital 6.00 6.26 6.00 6.26 Nonperforming assets/Total assets, at period end 4.31 5.98 4.31 5.98 -0-
Farmers & Mechanics Bank & Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands except per share data)
Three months ended Six months ended
June 30, June 30,
1995 1994 Change 1995 1994 Change
Interest income $9,126 $7,627 $1,499 $18,062 $15,434 $2,628 Interest expense 4,475 3,464 1,011 8,604 6,980 1,624 Net interest income 4,651 4,163 488 9,458 8,454 1,004 Provision for loan losses 660 41 619 1,213 261 952 Net interest income after provision for loan losses 3,991 4,122 (131) 8,245 8,193 52
Non-interest income
Service charges 382 378 4 679 770 (91)
Other income 212 213 (1) 481 500 (19)
Gains (losses) on
asset sales 611 (12) 623 616 733 (117)
Total non-interest
income 1,205 579 626 1,776 2,003 (227)
Non-interest expense
Salaries and benefits 1,917 1,105 812 3,922 2,936 986
Occupancy 371 375 (4) 711 745 (34)
Equipment 215 181 34 426 397 29
Fees and services 977 990 (13) 1,772 1,944 (172)
Data processing services 192 197 (5) 404 405 (1)
Office expenses 177 149 28 348 297 51
Other expenses 246 152 94 407 284 123
Provision for REO losses 305 873 (568) 642 1,800 (1,158)
Net expense of REO
operations 142 474 (332) 361 1,022 (661)
Total non-interest
expense 4,542 4,496 46 8,993 9,830 (837)
Net income before taxes 654 205 449 1,028 366 662
Income tax benefit - (182) 182 - (364) 364
Net income $ 654 $ 387 $ 267 $ 1,028 $ 730 $ 298
Net income per share $ 0.39 $ 0.23 $ 0.62 $ 0.44 Average shares outstanding 1,655,501 1,653,125 1,655,212 1,653,125 -0-
Farmers & Mechanics Bank and Subsidiaries
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, Dec. 31, June 30,
1995 1994 1994
(in thousands)
Assets
Cash and due from banks $ 8,760 $ 8,850 $ 7,900
Overnight investments 21,919 13,032 24,687
Total cash and cash
equivalents 30,679 21,882 32,587
Investment securities held- to-maturity (market values: $67,802 at June 30, 1995; $56,293 at Dec. 31, 1994; $49,928 at June 30, 1994) 68,492 61,381 52,784 Investment securities available-for-sale 72,651 76,131 45,198 Total investment securities 141,143 137,512 97,982 Loans Permanent residential mortgage loans 169,705 165,223 168,182 Permanent commercial mortgage loans 76,217 79,077 80,307 Construction/land development loans 12,908 13,562 15,431 Home equity lines of credit 29,982 35,968 39,809 Consumer loans 17,746 14,627 15,368 Other commercial loans 3,489 2,853 2,889 Gross loans 310,047 311,310 321,986 Less: Net deferred fees and interest (903) (971) (1,100) Loans, net of deferred fees and interest 309,144 310,339 320,886 Less: Allowance for loan losses (5,600) (6,000) (6,118) Net loans 303,544 304,339 314,768 Premises and equipment, net 11,636 11,752 11,684 Real estate owned 12,714 14,389 17,788 Other assets 8,064 6,692 4,465 Total assets $507,780 $496,566 $479,274
Liabilities
Deposits
Demand deposits $28,038 $29,345 $26,560
Interest bearing
transaction deposits 21,037 20,250 18,922
Money market deposits 97,263 85,912 67,725
Savings deposits 99,814 108,869 116,326
Time deposits 230,313 224,472 216,967
Total deposits 476,465 468,848 446,500
Borrowings 266 186 3,186 Other liabilities 468 373 414 Total liabilities 477,199 469,407 450,100
Shareholders' equity
Serial preferred stock, no
par value. Authorized
2,000,000 shares; none
outstanding -- -- --
Common stock, $.01 par value.
Authorized 8,000,000 shares;
1,655,550 issued and
outstanding at June 30,
1995; 1,654,425 at Dec. 31,
1994; and 1,653,125 at June
30, 1994 17 16 16
Paid-in capital 14,634 14,623 14,610
Retained earnings 16,497 15,469 15,432
Net unrealized loss on
securities available-for-
sale (567) (2,949) (884)
Total shareholders' equity 30,581 27,159 29,174
Total liabilities and
shareholders' equity $507,780 $496,566 $479,274
CONTACT: Farmers & Mechanics Bank Joel E. Hyman, 203/346-9677 |
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