U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , D.C. 20549
___________________
F O R M 10 - QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the Quarterly Period Ended June 30, 2003
Commission file number 0-49784
SOUTHERN CONNECTICUT BANCORP, INC.
(Name of Small Business Issuer as Specified in Its Charter)
Connecticut 06-1594123
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
215 Church Street
New Haven, Connecticut 06510
(Address of Principal Executive Offices) (Zip Code)
(203) 782-1100
--------------
(Issuer's Telephone Number)
The number of shares of the issuer's Common Stock, par value $.01 per share,
outstanding as of August 11, 2003: 966,667
-------
Transitional Small Business Disclosure Format
Yes __ No X
Table of Contents
Part I
Financial Information
Page
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 2003 (unaudited) and December 31, 2002 3
Consolidated Statements of Operations
for the three and six months ended June 30, 2003
and 2002 (unaudited) 4
Consolidated Statements of Changes in
Shareholders' Equity for the six months ended June 30, 2003
and 2002 (unaudited) 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 2003 and 2002 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Item 3. Controls and Procedures 18
Part II
Other Information
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibit Index 21
-2-
PART I
Financial Information
Item 1. Financial Statements
SOUTHERN CONNECTICUT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2003 (unaudited) and December 31, 2002
2003 2002
Assets
Cash and due from banks $ 2,074,508 $1,245,010
Federal funds sold 927,000 1,144,000
Short-term investments 1,419,175 662,419
------------------------------------
Cash and cash equivalents 4,420,683 3,051,429
------------------------------------
Available for sale securities 11,361,211 9,501,492
Federal Home Loan Bank Stock 21,500 500
Loans receivable (net of allowance for loan losses of
$313,702 in 2003 and $232,000 in 2002) 27,880,453 19,049,212
Accrued interest receivable 153,703 187,672
Premises and equipment, net 3,549,106 3,052,921
Other assets 646,658 656,889
------------------------------------
Total assets $ 48,033,314 $ 35,500,115
====================================
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest bearing deposits $ 8,379,199 $6,401,759
Interest bearing deposits 28,574,613 18,591,172
------------------------------------
Total deposits 36,953,812 24,992,931
Capital lease obligations 1,191,283 1,191,852
Repurchase agreements 199,119 822,259
Accrued expenses and other liabilities 1,931,454 178,489
Deferred tax liability - 39,905
------------------------------------
Total liabilities 40,275,668 27,225,436
------------------------------------
Commitments and Contingencies - -
Stockholders' Equity
Preferred stock, no par value; 500,000 shares authorized;
none issued
Common stock, par value $.01; 5,000,000, shares authorized;
966,667 shares issued and outstanding 9,667 9,667
Additional paid-in capital 10,705,382 10,705,382
Accumulated deficit (2,915,564) (2,502,915)
Accumulated other comprehensive (loss) income - net unrealized
gain (loss)on available for sale securities (41,839) 62,545
------------------------------------
Total stockholders' equity 7,757,646 8,274,679
------------------------------------
Total liabilities and stockholders' equity $ 48,033,314 $ 35,500,115
====================================
See Notes to Consolidated Financial Statements.
-3-
SOUTHERN CONNECTICUT BANCORP,INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 2003 and 2002 (unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------------------- ------------------------------
2003 2002 2003 2002
Interest Income
Interest and fees on loans $ 522,719 $ 191,401 $ 959,107 $ 261,565
Interest on securities 49,872 64,522 131,801 93,132
Interest on federal funds sold and
short-term investments 16,493 39,128 22,442 83,425
----------- ----------- ----------- -----------
Total interest income 589,084 295,051 1,113,350 438,122
----------- ----------- ----------- -----------
Interest Expense
Interest on deposits 92,762 66,681 185,226 116,639
Interest on capital lease obligations 42,124 31,995 84,082 63,801
Interest on repurchase agreements 619 -- 1,421 --
----------- ----------- ----------- -----------
Total interest expense 135,505 98,676 270,729 180,440
----------- ----------- ----------- -----------
Net interest income 453,579 196,375 842,621 257,682
Provision for Loan Losses 23,500 52,000 86,400 70,000
Net interest income after
----------- ----------- ----------- -----------
provision for loan losses 430,079 144,375 756,221 187,682
----------- ----------- ----------- -----------
Noninterest Income:
Service charges and fees 28,478 14,082 46,558 17,920
Gains on sale of securities available for sale 5,000 -- 44,505 --
----------- ----------- ----------- -----------
Total noninterest income 33,478 14,082 91,063 17,920
----------- ----------- ----------- -----------
Noninterest Expense
Salaries and benefits 385,239 212,317 681,872 384,055
Professional services 49,810 101,442 115,452 165,848
Occupancy and equipment 93,453 37,714 168,038 75,809
Advertising and promotional expense 18,317 19,091 37,501 35,000
Data processing and other outside services 47,799 28,560 86,809 52,945
Forms, printing and supplies 17,726 10,669 29,905 18,153
Other operating expenses 79,679 49,819 140,356 88,545
----------- ----------- ----------- -----------
Total noninterest expenses 692,023 459,612 1,259,933 820,355
----------- ----------- ----------- -----------
Net loss $ (228,466) $ (301,155) $ (412,649) $ (614,753)
=========== =========== =========== ===========
Basic and Diluted Loss per Share $ (0.24) $ (0.31) $ (0.43) $ (0.64)
=========== =========== =========== ===========
Dividends per Share $ -- $ -- $ -- $ --
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
-4-
SOUTHERN CONNECTICUT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Six Months Ended June 30, 2003 and 2002 (unaudited)
Accumulated
Additional Other
Number Common Paid-in Accumulated Comprehensive
of Shares Stock Capital Deficit Income (Loss) Total
-----------------------------------------------------------------------------------------
Balance December 31, 2001 966,667 $ 9,667 $10,705,382 $(1,118,902) $ -- $ 9,596,147
Net Loss and total comprehensive loss -- -- -- (614,753) -- (614,753)
--------------------------------------------------------------------------------------
Balance June 30, 2002 966,667 $ 9,667 $10,705,382 $(1,733,655) $ -- $ 8,981,394
======================================================================================
Balance December 31, 2002 966,667 $ 9,667 $10,705,382 $(2,502,915) $ 62,545 $ 8,274,679
Comprehensive Loss:
Net Loss (412,649) (412,649)
Unrealized holding loss on available
for sale securities (104,384) (104,384)
-----------
Total comprehensive loss (517,033)
--------------------------------------------------------------------------------------
Balance June 30, 2003 966,667 $ 9,667 $10,705,382 $(2,915,564) $ (41,839) $ 7,757,646
======================================================================================
See Notes to Consolidated Financial Statements.
-5-
SOUTHERN CONNECTICUT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2003 and 2002 (unaudited)
Six Months Ended
June 30,
-----------------------------------
Cash Flows From Operations 2003 2002
---- ----
Net Loss $ (412,649) $ (614,753)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Amortization and accretion of premiums and discounts on Investments, net 9,323 29,907
Paydowns on mortgage backed securities -
Gains on sale of available for sale securities (44,405) -
Provision for loan losses 86,400 70,000
Depreciation and amortization 96,346 48,591
Changes in assets and liabilities
Increase (decrease) in deferred loan fees 45,094 (1,494)
Decrease (increase) in accrued interest receivable 33,969 (75,120)
Decrease (increase) in other assets 10,231 (12,894)
Increase (decrease) in accrued expenses and other liabilities 453,536 (38,092)
-----------------------------------
Net cash provided by (used in) operating activities 277,845 (593,855)
-----------------------------------
Cash Flows From Investing Activities
Purchases of available for sale securities (9,628,661) (5,285,841)
Purchases of Federal Home Loan Bank Stock (21,000) -
Proceeds from maturities of available for sale securities 5,176,452 -
Proceeds from sales of available for sale securities 3,558,000 -
Principal repayments on mortgage backed securities 224,712
Net increase in loans receivable (8,962,735) (9,711,665)
Purchases of premises and equipment (592,531) (16,148)
-----------------------------------
Net cash used in investing activities (10,245,763) (15,013,654)
-----------------------------------
Cash Flows From Financing Activities
Net increase in demand, savings and money market deposits 12,030,386 9,524,555
Net (decrease) increase in certificates of deposit (69,505) 1,577,551
(Decrease) increase in repurchase agreements (623,140) 404,824
Principal payments on capital lease obligations (569) -
-----------------------------------
Net cash provided by financing activities 11,337,172 11,506,930
-----------------------------------
Net increase (decrease) in cash and cash equivalents 1,369,254 (4,100,579)
Cash and cash equivalents
Beginning 3,051,429 10,436,331
-----------------------------------
Ending $4,420,683 $6,335,752
===================================
Supplemental disclosures of cash flow information:
Cash paid during the period for: 2003 2002
---- ----
Interest $ 262,788 $162,612
===================================
Income taxes $ - $ -
===================================
Supplemental disclosures of non-cash investing
and financing activities:
Liability incurred for investment security purchase $1,300,000 $ -
===================================
See Notes to Consolidated Financial Statements.
-6-
Southern Connecticut Bancorp, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Nature of Operations
Southern Connecticut Bancorp, Inc. (the "Company"), a Connecticut
corporation, is a bank holding company incorporated on November 8, 2000 for the
purpose of forming, and becoming the sole shareholder of, The Bank of Southern
Connecticut (the "Bank"). The Bank provides a full range of banking services to
commercial and consumer customers, primarily concentrated in the New Haven
County area of Connecticut, through its main office in New Haven, Connecticut
and branch offices in New Haven (Amity) and Branford, Connecticut.
Note 2. Basis of Financial Statement Presentation
The consolidated balance sheet at December 31, 2002 has been derived
from the audited consolidated financial statements of Bancorp at that date, but
does not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements.
The accompanying consolidated unaudited financial statements as of and
for the three months and six months ended June 30, 2003 and June 30, 2002 and
related notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, certain information and
note disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted. The accompanying consolidated financial statements
and notes thereto should be read in conjunction with the audited financial
statements of Bancorp and notes thereto as of December 31, 2002.
The accompanying unaudited consolidated financial information reflects,
in the opinion of management, all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the interim periods presented.
The results of operations for the three months and six months ended June 30,
2003 are not necessarily indicative of the results of operations that may be
expected for all of 2003.
Note 3. Available Borrowings
During the quarter ended March 31, 2003, the Bank obtained
secured and unsecured lines of credit with other financial institutions with
total available borrowings of $4,400,000. There are no borrowings against these
lines as of June 30, 2003.
Note 4. Commitments and Contingencies
The Company entered into an employment agreement (the "President
Agreement") with the new President of the Bank effective in February 2003, and
expiring on December 31, 2004. The President Agreement provides for a base
salary and an annual bonus as determined by the Board of Directors. The
President Agreement also provides for vacation and various insurance benefits
and reimbursement for automobile, travel, entertainment, club dues and
Bank-related education and convention expenses. Also, under the President
Agreement, the Company intends to issue to the President options to purchase
20,000 shares of the Company's stock under the terms of the Company's 2002 Stock
Option Plan.
The Bank is being sued by former President and Chief Operating officer Gary D.
Mullin for breach of contract in connection with Mr. Mullin's dismissal for
cause. Pursuant to Mr. Mullin's employment agreement with the Bank, the matter
is in arbitration. Mr. Mullin notified the Bank of his claim in March 2003. The
only parties to the dispute are the Bank and Mr. Mullin. Mr. Mullin is seeking
$500,000 for alleged economic loss, plus attorney's fees. The Bank is seeking
attorney's fees. The matter is currently pending. Bancorp believes that the
former president's claims are without merit and Bancorp intends to defend this
case vigorously.
-7-
Note 5. Income (Loss) Per Share
The Company is required to present basic income (loss) per share and
diluted income (loss) per share in its statements of operations. Basic per share
amounts are computed by dividing net income (loss) by the weighted average
number of common shares outstanding. Diluted per share amounts assume exercise
of all potential common stock in weighted average shares outstanding, unless the
effect is antidilutive.
For the three month and six month periods ended June 30, 2003 and 2002,
common stock equivalents have been excluded from the computation of the net loss
per share because the inclusion of such equivalents is antidilutive. Weighted
average shares outstanding for the three months and six months ended June 30,
2003 and 2002 are presented as follows:
June 30
---------------------------
2003 2002
----- ----
Three month period ended 966,667 966,667
Six month period ended 966,667 966,667
Note 6. Other Comprehensive Income
Other comprehensive income, which is comprised solely of the change in
unrealized gains and losses on available for sale securities, is as follows:
Three Months Ended
June 30, 2003
-------------------------------------------
Before-Tax Net-of-Tax
Amount Taxes Amount
-------------------------------------------
Unrealized holding losses arising during the period $ (40,823) $ 1,383 ($39,440)
Less: Reclassification adjustment for gains
recognized in net income (5,000) 169 (4,831)
-------------------------------------------
Unrealized holding loss on available for sale
securities, net of taxes $ (45,823) $ 1,552 $(44,271)
===========================================
Six Months Ended
June 30, 2003
-------------------------------------------
Before-Tax Net-of-Tax
Amount Taxes Amount
-------------------------------------------
Unrealized holding losses arising during the period $ (99,784) $ 27,597 $(72,187)
Less: Reclassification adjustment for gains
recognized in net income (44,505) 12,308 (32,197)
-------------------------------------------
Unrealized holding loss on available for sale
securities, net of taxes $ (144,289) $ 39,905 $(104,384)
===========================================
There were no elements of comprehensive income during the three months and six
months ended June 30, 2002.
-8-
Note 7. Stock Based Compensation
During the six months ended June 30, 2003, the company granted 155,761
stock options to employees and directors at exercise prices ranging from $8.00
to $8.50 per share.
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation", encourages all entities to adopt a fair value
based method of accounting for employee stock compensation plans, whereby
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," whereby compensation cost is the excess, if any, of the quoted
market price of the stock at the grant date (or other measurement date) over the
amount an employee must pay to acquire the stock. Stock options issued to
employees and directors under the Company's stock option and warrant plans have
no intrinsic value at the grant date, and under Opinion No. 25 no compensation
cost is recognized for them. During 2002, the Company adopted SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure, an
Amendment of FASB Statement No. 123." The Company has elected to continue with
the accounting methodology in Opinion No. 25 and, as a result, has provided pro
forma disclosures of net loss and earnings per share and other disclosures, as
if the fair value based method of accounting had been applied.
Had compensation cost for issuance of such options and warrants been
recognized based on the fair values of awards on the grant dates, in accordance
with the method described in SFAS No. 123, reported net loss and per share
amounts for the three months and six months ended June 30, 2003 would have been
increased to the pro forma amounts shown below:
For the three months and six months ended June 30, 2003
Three Months Ended Six Months Ended
June 30, 2003 June 30, 2003
-------------------- -----------------
Net loss as reported $ (228,466) $ (412,649)
Deduct: total stock based employee
compensation expense determined under fair value based
method for all awards, net of related tax effects (46,079) (82,350)
-------------------- -----------------
Pro forma net loss $ (274,545) $ (494,999)
==================== =================
Basic dilutd loss per share:
As reported $ (0.24) $ (0.43)
==================== =================
Pro forma $ (0.28) $ (0.51)
==================== =================
Note 8. Bank Application and Capital Raising
On June 10, 2003, the board directors of the Company, approved the
establishment of a new commercial bank in New London, Connecticut and plan to
raise between $10 million to $15 million capital by Bancorp.
On July 2, 2003, the Company submitted an application to the State of
Connecticut, Department of Banking ("Department"), for the establishment by
Bancorp of a new commercial bank in New London, Connecticut. The application was
subsequently temporarily withdrawn to complete additional information requested
by the Department.
On August 7, 2003, the application, including the completed additional
information, was resubmitted.
-9-
Item 2. Management's Discussion and Analysis or Plan of Operation
(a) Plan of Operation
Southern Connecticut Bancorp, Inc. ("Bancorp"), a Connecticut
corporation, was incorporated on November 8, 2000 to serve as a bank holding
company. Bancorp owns one hundred percent of the capital stock of The Bank of
Southern Connecticut ("Bank"), a state chartered bank in New Haven, Connecticut,
which commenced operations on October 1, 2001 after receiving its Final
Certificate of Authority from the Connecticut Banking Commissioner and its
deposit insurance from the Federal Deposit Insurance Corporation ("FDIC").
Bancorp invested $10,000,000 of the net proceeds of its July 26, 2001 stock
offering to purchase the capital stock of the Bank and an additional $360,000 to
cover the Bank's pre-opening deficit. The $10,000,000 of initial equity capital
for the Bank required under the Bank's Temporary Certificate of Authority
substantially exceeded the statutory minimum equity capital for a new
Connecticut bank of $5,000,000. Bancorp chose a holding company structure
because it provides flexibility that would not otherwise be available. For
example, Bancorp could acquire additional banks, establish de novo banks and
other businesses, including mortgage companies, leasing companies, insurance
agencies and small business investment companies. Bancorp may in the future
decide to engage in additional businesses permitted to bank holding companies or
financial holding companies. Before Bancorp could acquire interests in other
banks, establish de novo banks or expand into other businesses, it may need to
obtain regulatory approvals and might need additional capital.
Bancorp has leased a free-standing building located at 215 Church
Street, New Haven, Connecticut, located in the central business and financial
district of New Haven. It has assigned this lease to the Bank, and the Bank has
assumed all rights and obligations under this lease. Both Bancorp and the Bank
operate from this facility. On October 7, 2002 the Bank opened a new branch
office in Branford, Connecticut at West Main Street and Summit Place. On August
15, 2002 the Bank also purchased a building at 1475 Whalley Avenue in the
Westville section of New Haven for a branch office site which was opened on
March 24, 2003.
The following table sets forth the location of the Bank's branch
offices and other related information:
Office Location Status
------ -------- -------
Main Office 215 Church Street, New Haven, Connecticut Leased
Branford Office 445 West Main Street, Branford, Connecticut Leased
Amity Office 1475 Whalley Avenue, New Haven, Connecticut Owned
On July 2, 2003, the Company submitted an application to the State of
Connecticut, Department of Banking ("Department"), for the establishment by
Bancorp of a new commercial bank in New London, Connecticut. The application was
subsequently temporarily withdrawn to complete additional information requested
by the Department, including a three year balance sheet and income statement
forecast for the proposed new bank.
On August 7, 2003, The application, including the completed additional
information, was resubmitted to the Department. Bancorp expects the new bank to
be operating by the end on the third quarter of 2004.
Bancorp expects to raise $10 to $15 million in new capital of which $6
million will be used to fund the start up of the new bank.
Management believes that Bancorp's short-term assets have sufficient
liquidity to cover potential fluctuations in deposit accounts and loan demand
and to meet other anticipated operating cash requirements.
-10-
For a more detailed discussion of Bancorp's liquidity, see Liquidity on
page 16 of this Form 10-QSB. Currently, other than the potential start up of a
new bank in 2004,as previously discussed, there are no plans involving the
significant purchase or sale of property or equipment in the next twelve months.
Outside of staffing the new branches, Bancorp does not anticipate a significant
change in the number of its employees.
The Bank does not expect to compete with large institutions for the
primary banking relationships of large corporations, but it competes for niches
in this business segment and for the consumer business of employees of such
entities. The Bank focuses on small to medium-sized businesses, professionals
and individuals and their employees. This focus includes retail, service,
wholesale distribution, manufacturing and international businesses. The Bank
attracts these customers based on relationships and contacts which the Bank's
directors and management have within and beyond the Bank's primary service area.
Greater New Haven is currently served by approximately 70 offices of
commercial banks, none of which is headquartered in New Haven. In addition, New
Haven Savings Bank, a mutual savings bank, has 16 branches in the New Haven
market. All of these banks are substantially larger than the Bank expects to be
in the near future and are able to offer products and services which may be
impracticable for the Bank to provide at this time.
There are numerous banks and other financial institutions serving the
communities surrounding New Haven which also draw customers from New Haven,
posing significant competition for the Bank to attract deposits and loans. The
Bank also experiences competition from out-of-state financial institutions.
Bancorp will have to obtain customers from the customer base of such existing
banks and financial institutions and from growth in New Haven and the
surrounding area. Many of such banks and financial institutions are well
established and well capitalized, allowing them to provide a greater range of
services (including trust services) than the Bank will be able to offer in the
near future.
Intense market demands, economic pressures and significant legislative
and regulatory actions have eroded banking industry classifications which were
once clearly defined and have increased competition among banks and other
financial institutions. Market dynamics and legislative and regulatory changes
impacting banks and other financial institutions have resulted in a number of
new competitors offering services historically offered only by commercial banks;
non-bank corporations offering services traditionally offered only by banks;
increased customer awareness of product and service differences among
competitors; and increased merger activity.
Additional legislative and regulatory changes may affect the Bank in
the future; however, the nature of such changes and the effect of their
implementation cannot be assessed. New rules and regulations may, among other
things, revise limits on interest rates on various categories of deposits and
may limit or influence interest rates on loans. Monetary and fiscal policies of
the United States government and its instrumentalities, including the Federal
Reserve, significantly influence the growth of loans, investments and deposits.
The present bank regulatory scheme is undergoing significant change both as it
affects the banking industry itself and as it affects competition between banks
and non-bank financial institutions.
The Bank currently offers products and services described as "core"
products and services which are more completely described below. Through
correspondent and other relationships, it is expected that the Bank will be able
to help our customers meet all of their banking needs, including obtaining
services which the Bank may not offer directly.
The Bank is seeking to establish a sound base of core deposits,
including checking accounts, money market accounts, savings accounts, sweep
accounts, NOW accounts and a variety of certificates of deposits and IRA
accounts. To attract deposits, the Bank is employing an aggressive marketing
plan in its service area and
-11-
features a broad product line and rates and services competitive with those
offered in the New Haven market. The primary sources of deposits have been and
are expected to be, residents of, and businesses and their employees located in,
New Haven and the surrounding communities. The Bank is obtaining these deposits
through personal solicitation by its officers and directors, outside programs
and advertisements published and / or broadcasted in the local media.
Deposits and the Bank's equity capital are the sources of funds for
lending and investment activities. Repayments on loans, investment income and
proceeds from the sale and maturity of investment securities will also provide
additional funds for these purposes. While scheduled principal repayments on
loans and investment securities are a relatively predictable source of funds,
deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions and competition. The Bank expects to manage the
pricing of deposits to maintain a desired deposit balance. The Bank offers
drive-in teller services, wire transfers and safe deposit services.
The Bank's loan strategy is to offer a broad range of loans to
businesses and individuals in its service area, including commercial and
business loans, personal loans, mortgage loans, home equity loans, automobile
loans and education loans. The Bank has received lending approval status from
the Small Business Administration ("SBA") to enable it to make SBA loans to both
the Greater New Haven business community and companies throughout the State of
Connecticut. Our marketing focus on small to medium-size businesses and
professionals may result in an assumption of certain lending risks that are
different from or greater than those which would apply to loans made to larger
companies or consumers. Commercial loans generally entail certain additional
risks because repayment is usually dependent on the success of the enterprise.
The Bank seeks to manage the credit risk inherent in its loan portfolio through
credit controls and loan diversification. Prior to approving a loan the Bank
evaluates: the credit histories of potential borrowers; the value and liquidity
of available collateral; the purpose of the loan; the source and reliability of
funds for repayment and other factors considered relevant in the circumstances.
Loans are made on a variable or fixed rate basis with fixed rate loans
limited to five year terms. All loans are approved by the Bank's management and
the Loan Committee of the Bank's Board of Directors. At the present time, the
Bank is not purchasing participation in loans nor is it syndicating or
securitizing loans. The Bank may consider participation in multi-bank loans for
companies in its service area. Commercial loans and commercial real estate loans
may be written for terms of up to twenty years. Loans to purchase or refinance
commercial real estate are collateralized by the subject real estate. Loans to
local businesses are generally supported by the personal guarantees of the
principal owners and are carefully underwritten to determine appropriate
collateral and covenant requirements.
Other services provided currently or to be provided include, cashier's
checks, money orders, travelers checks, bank by mail, direct deposit and U. S.
Savings Bonds. The Bank is associated with a shared network of automated teller
machines that its customers are able to use throughout Connecticut and other
regions. The Bank does not currently expect to offer trust services but may
offer trust services through a joint venture with a larger institution. To offer
trust services in the future, the Bank would need the approval of the
Connecticut Banking Commissioner.
Another significant activity for the Bank is maintaining an investment
portfolio. Although granting a variety of loans to generate interest income and
loan fees is an important aspect of the Bank's business plan, the aggregate
amount of loans will be subject to maintaining a satisfactory loan-to-deposit
ratio. The Bank's overall portfolio objective is to maximize the long-term total
rate of return through active management of portfolio holdings taking into
consideration estimated asset/liability and liquidity needs, tax equivalent
yields and maturities. Permissible investments include debt securities such as
U. S. Government securities, government sponsored agency securities, municipal
bonds, domestic certificates of deposit that are insured by
-12-
the FDIC, mortgage-backed securities and collateralized mortgage obligations.
The Bank expects that investments in equity securities will be very limited. The
Bank's current investment portfolio is limited to U. S. government obligations
which have been classified as available for sale. Accordingly, the principal
risk associated with the Banks current investing activities is market risk
(variations in value resulting from general changes in interest rates) rather
than credit risk.
Overall, the Bank's plan of operation is focused on responsible growth
and pricing of deposits and loans, and investment in high quality U. S.
government securities to achieve a net interest margin sufficient to cover
operating expenses, achieve profitable operations and maintain liquidity.
Currently, the Bank has 22 full-time and two part-time employees. Most
routine day-to-day banking transactions are performed at the Bank by its
employees. However, the Bank has entered into a number of arrangements for
banking services such as correspondent banking, data processing and armored
carriers.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summary
Bancorp had a net loss of $228,466 (or a loss per share of $0.24) for
the quarter ended June 30, 2003, compared to a net loss of $301,155 (or a loss
per share of $0.31) for the quarter ended June 30, 2002. On a year-to-date
basis, Bancorp had a net loss of $412,649 (or a loss per share of $0.43) for the
six months ended June 30, 2003, compared to a net loss of $614,753 (or a loss
per share of $0.64) for the six months ended June 30, 2002.
Financial Condition
Assets
Since commencing operations on October 1, 2001, Bancorp has reached
total assets of $48.0 million at June 30, 2003, an increase of $12.5 million
(35%) from $35.5 million in assets as of December 31, 2002. Earning assets
reached $41.9 million, increasing $11.3 million (37%) during the first six
months of 2003.
Bancorp has maintained liquidity by maintaining balances in overnight
Federal funds sold and money market mutual funds to provide funding for higher
yielding loans as they are approved and closed. As of June 30, 2003, Federal
funds sold were $.9 million and money market mutual fund balances were $1.4
million. In addition, Bancorp has invested $11.4 million in U.S Government
Agency securities classified as available for sale with maturities ranging from
one month to 19 years.
Investments
Available for sale securities increased $1.9 million from December 31,
2002 resulting from increases in deposits that were not invested in new loans
due to lower than anticipated loan growth.
Loans
The net loan portfolio increased $8.8 million (46%) from $19.0 million
at December 31, 2002 to $27.8 million at June 30, 2003. The loan to deposit
ratio as of June 30, 2003 was 76%. As this ratio increases toward the targeted
80% to 85% range, it is expected that the higher yielding loans versus Federal
funds sold, money market funds and investments will produce an increasingly
positive impact on net interest spread. No significant loan concentrations have
developed during this early stage of building the loan portfolio.
Critical Accounting Policy
In the ordinary course of business, Bancorp has made a number of
estimates and assumptions relating to reporting results of operations and
financial condition in preparing its financial statements in conformity with
accounting principals
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generally accepted in the United States of America. Actual results could differ
significantly from those estimates under different assumptions and conditions.
Bancorp believes the following discussion addresses Bancorp's only critical
accounting policy, which is the policy that is most important to the portrayal
of Bancorp's financial condition and results and requires management's most
difficult, subjective and complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain
Allowance for Loan Losses
The allowance for loan losses, a material estimate susceptible to
significant change in the near-term, is established as losses are estimated to
have occurred through a provision for losses charged against operations, and is
maintained at a level that management considers adequate to absorb losses in the
loan portfolio. Management's judgment in determining the adequacy of the
allowance is inherently subjective and is based on the evaluation of individual
loans, pools of homogeneous loans, the known and inherent risk characteristics
and size of the loan portfolios, the assessment of current economic and real
estate market conditions, estimates of the current value of underlying
collateral, past loan loss experience, review of regulatory authority
examination reports and evaluations of specific loans and other relevant
factors. Loans, including impaired loans, are charged against the allowance for
loan losses when management believes that the uncollectibility of principal is
confirmed. Any subsequent recoveries are credited to the allowance for loan
losses when received. In connection with the determination of the allowance for
loan losses, management obtains appraisals for significant properties, when
considered necessary.
Based on this evaluation, management believes the allowance for loan
losses of $313,702 at June 30, 2003, which represents 1.11% of gross loans
outstanding, is adequate, under prevailing economic conditions, to absorb losses
on existing loans. At December 31, 2002, the allowance for loan losses was
$232,000 or 1.20% of gross loans outstanding.
Analysis of Allowance for Loan Losses
2003 2002
---- ----
Balance at beginning of period $ 232,000 $ 12,000
-
Charge-offs (4,698)
- -
Provision charged to operations 86,400 120,000
---------- ----------
Balance at end of period $ 313,702 $ 232,000
========== ==========
Non-Accrual, Past Due and Restructured Loans
The following table presents non-accruing and past due loans:
(Thousands of dollars) June 30, 2003 December 31, 2002
----------------------------------------------------------------------------------------------------
Loans delinquent over 90 days still accruing $ $
- -
Non-accruing loans 16,000 -
-----------------------------------------
Total $ 16,000 $ -
=========================================
% of Total Loans 0.06% 0.00%
% of Total Assets 0.03% 0.00%
Potential Problem Loans
At June 30, 2003, the Bank had no loans, other than disclosed in the
table above, as to which management has significant doubts as to the ability of
the borrower to comply with the present repayment terms.
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Deposits
The earning asset growth for the six months ended June 30, 2003 has
been funded primarily by deposit growth within Bancorp's market area. Deposits
reached $37.0 million at June 30, 2003, an increase of $12.0 million (48%) from
$25.0 million as of December 31, 2002. The mix of deposits as of June 30, 2003
and December 31, 2002 appears in the table below. Bancorp does not have any
brokered deposits.
June 30, 2003 December 31, 2002
--------------------------------- -----------------------------
Balance Mix Balance Mix
------- --- ------- ---
Noninterest bearing deposits: $ 8,379,199 22.7% $6,401,759 25.6%
------------------- ------------ ---------------- ----------
Interest bearing deposits:
Checking 4,397,346 11.9% 2,351,847 9.4%
Money Market 16,009,227 43.3% 8,858,585 35.5%
Savings 1,886,238 5.1% 1,029,433 4.1%
------------------- ------------ ---------------- ----------
Checking, money market & savings 22,292,811 60.3% 12,239,865 49.0%
------------------- ------------ ---------------- ----------
CD'S under $100,000 2,921,699 7.9% 2,610,756 10.4%
CD'S of $100,000 or more 3,360,103 9.1% 3,740,551 15.0%
----------------------------------------------------------------
Time deposits 6,281,802 17.0% 6,351,307 25.4%
------------------- ------------ ---------------- ----------
Interest bearing deposits 28,574,613 77.3% 18,591,172 74.4%
------------------- ------------ ---------------- ----------
Total deposits $ 36,953,812 100.0% $ 24,992,931 100.0%
=================== ============ ================ ==========
Other
The $496,000 increase in premises and equipment, net, from December 31,
2002 primarily reflects the building improvements and the purchase of furniture
and equipment for the Amity branch which opened in March 2003.
Repurchase agreements decreased from December 31, 2002 due to less
activity in these customer accounts.
The decrease in accrued interest receivable is due to the timing of
interest received on investment securities which have quarterly or semi annual
payments of interest. This decrease was partially offset by increases in accrued
interest on loans and investments due to increased loan and investment volume.
The increase in Accrued Expenses and Other Liabilities is primarily due
to the recording of two investment security purchases totaling $1.3 million on
the trade date in June which did not settle until July.
Results of Operations
De Novo banks in Connecticut have reached profitability on average
within three to four years after commencement of operations. The Company
anticipates that the Bank will reach profitability within that time frame.
Net Interest Income
For the quarter ended June 30, 2003, net interest income was $453.6
thousand versus $196.4 thousand for the same period in 2002, a $257.2 thousand
or 131% increase. This was the result of an $18.4 million increase in average
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earning assets, primarily average loans of $20.3 million partially offset by a
decrease in lower yielding short term investments of $1.8 million.
The yield on average interest earning assets for the three months ended
June 30, 2003 was 5.74% versus 5.24% for same period in 2002. The cost of
average interest bearing liabilities was 1.86% for the three months ended June
30, 2003 versus 3.16% for the same period in 2002.
For the six months ended June 30, 2003, net interest income was $842.6
thousand versus $257.7 thousand for the same period in 2002, a $584.9 thousand
or 227% increase. This was the result of a $17.0 million increase in average
earning assets, primarily loans of $19.8 million and investments of $2.1
million, partially offset by a decrease in lower yielding short term investments
of $3.3 million and federal funds sold of $1.6 million.
The yield on average interest earning assets for the six months ended
June 30, 2003 was 6.02% versus 4.41% for same period in 2002. The cost of
average interest bearing liabilities was 2.07% for the first six months of 2003
versus 3.38% for the same period in 2002.
Provision for Loan Losses
The $28.5 thousand decrease in the provision for loan losses from $52.0
thousand for the three months ended June 30, 2002 to $23.5 thousand for the
three months ended June 30, 2003 is primarily the result of the continued
refinement of the Bank's allowance for loan losses methodology.
The $16.4 thousand increase in the provision for loan losses for the
six months ended June 30, 2003 versus the six months ended June 30, 2002 is due
primarily to the increase in loan volume.
Noninterest Income
The $19.4 thousand increase in noninterest income for the second
quarter of 2003 versus 2002 is the result of increased deposit volume and
activity, and a gain on the sale of an available for sale security.
The $73.1 thousand increase in noninterest income for the six months
ended June 30, 2003 versus 2002 is the result of increased deposit volume and
activity, and a $44.5 thousand gain on the sale of securities.
Noninterest Expense
Total noninterest expense was $692.0 thousand for the second quarter of
2003 versus $459.6 thousand for the same period in 2002, an increase of $232.4
thousand or 51%. The increase in expense is due to the growth in the Bancorp's
loan and deposit volume as well as the addition of the Branford office in late
2002 and the Amity office in March of 2003, requiring additional staffing and
other operating expenses.
Total noninterest expense was $1.3 million for the six months ended
June 30, 2003 versus $820.4 thousand for the same period in 2002, an increase of
$439.5 thousand or 54%. The increase in expense is due to the growth in the
Bancorp's loan and deposit volume as well as the addition of the Branford office
in late 2002 and the Amity office in March of 2003, requiring additional
staffing and other operating expenses.
Professional services decreased for the three month and six month
periods ended June 30, 2003 versus the same periods in 2002 by $51.6 thousand
and $50.4 thousand, respectively. The decrease is primarily the result of hiring
Michael M. Ciaburri as President and Chief Operating Officer of the Bank as of
February 12, 2003 who had worked up to that point as a consultant to the bank
developing new loan volume.
Liquidity
Bancorp's liquidity position as of June 30, 2003 and December 31, 2002
consisted of liquid assets totaling $15.3 million and $12.6 million,
respectively. This represents 31.2% and 35.4% of total assets at
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March 31, 2003 and December 31, 2002, respectively. The liquidity ratio is
defined as the percentage of liquid assets to total assets. The following
categories of assets as described in the accompanying balance sheet are
considered liquid assets: Cash and due from banks, federal funds sold,
short-term investments, held to maturity securities maturing in one year or less
and securities available for sale. Liquidity is a measure of Bancorp's ability
to generate adequate cash to meet financial obligations. The principal cash
requirements of a financial institution are to cover downward fluctuations in
deposits and increases in its loan portfolio.
Capital
The following table illustrates the Bank's regulatory capital ratios
at:
June 30, 2003 December 31, 2002
------------- -----------------
Leverage Ratio 16.55% 23.76%
Tier 1 Risk - Based Capital Ratio 21.05% 31.52%
Total Risk - Based Capital Ratio 21.92% 32.43%
Capital adequacy is one of the most important factors used to determine
the safety and soundness of individual banks and the banking system. Based on
the above ratios, the Bank is considered to be "well capitalized" under
applicable regulations. To be considered "well capitalized" an institution must
generally have a leverage capital ratio of at least 5%, a Tier 1 risk-based
capital ratio of at least 6% and a total risk-based capital ratio of at least
10%.
Bancorp is also considered to be well capitalized under the regulatory
framework specified by the Federal Reserve Bank. Bancorp's actual and required
ratios are not substantially different from those shown above.
Market Risk
Market risk is defined as the sensitivity of income to fluctuations in
interest rates, foreign exchange rates, equity prices, commodity prices and
other market-driven rates or prices. Based upon on the nature of the Company's
business, market risk is primarily limited to interest rate risk, which is the
impact that changing interest rates have on current and future earnings.
Bancorp's goal is to maximize long-term profitability, while minimizing
its exposure to interest rate fluctuations. The first priority is to structure
and price Bancorp's assets and liabilities to maintain an acceptable interest
rate spread, while reducing the net effect of changes in interest rates. In
order to reach an acceptable interest rate spread, Bancorp must generate loans
and seek acceptable long-term investments to replace the lower yielding balances
in Federal Funds sold and short-term investments. The focus also must be on
maintaining a proper balance between the timing and volume of assets and
liabilities re-pricing within the balance sheet. One method of achieving this
balance is to originate variable loans for the portfolio to offset the
short-term re-pricing of the liabilities. In fact, a number of the interest
bearing deposit products have no contractual maturity. Customers may withdraw
funds from their accounts at any time and deposits balances may therefore run
off unexpectedly due to changing market conditions.
The exposure to interest rate risk is monitored by the Asset and
Liability Management Committee ("ALCO") consisting of senior management
personnel and selected members of the Board of Directors. ALCO reviews the
interrelationships within the balance sheet to maximize net interest income
within acceptable levels of risk. ALCO reports to the Board of Directors on a
quarterly basis regarding the status of ALCO activities within the Company.
Impact of Inflation and Changing Prices
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Bancorp's financial statements have been prepared in terms of
historical dollars, without considering changes in relative purchasing power of
money over time due to inflation. Unlike most industrial companies, virtually
all of the assets and liabilities of a financial institution are monetary in
nature. As a result, interest rates have a more significant impact on a
financial institution's performance than the effect of general levels of
inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services. Notwithstanding this
fact, inflation can directly affect the value of loan collateral, in particular,
real estate. Inflation, or disinflation, could significantly affect Bancorp's
earnings in future periods.
"Safe Harbor" Statement Under Private Securities Litigation Reform Act of 1995
Certain statements contained in Bancorp's public reports, including
this report, and in particular in this "Management's Discussion and Analysis or
Plan of Operation", may be forward looking and subject to a variety of risks and
uncertainties. These factors include, but are not limited to, (1) changes in
prevailing interest rates which would affect the interest earned on Bancorp's
interest earning assets and the interest paid on its bearing liabilities, (2)
the timing of re-pricing of Bancorp's interest earning assets and interest
bearing liabilities, (3) the effect of changes in governmental monetary policy,
(4) the effect of changes in regulations applicable to Bancorp and the conduct
of its business, (5) changes in competition among financial service companies,
including possible further encroachment of non-banks on services traditionally
provided by banks and the impact of recently enacted federal legislation, (6)
the ability of competitors which are larger than Bancorp to provide products and
services which it is impracticable for Bancorp to provide, (7) the effect of
Bancorp's opening of branches, (8) the effect of any decision by Bancorp to
engage in any business not historically permitted to it. Other such factors may
be described in Bancorp's filings with the SEC.
Although Bancorp believes that it offers the loan and deposit products
and has the resources needed for success, future revenues and interest spreads
and yields cannot be reliably predicted. These trends may cause Bancorp to
adjust its operations in the future. Because of the foregoing and other factors,
recent trends should not be considered reliable indicators of future financial
results or stock prices.
Item 3. Controls and Procedures
(a) Evaluation of disclosure controls and procedures
Bancorp's Chairman and Chief Executive Officer, President and Chief
Operating Officer, and Vice President and Controller, and the Bank's President
and Chief Operating Officer, have concluded that Bancorp's disclosure controls
and procedures are effective. This conclusion is based on the above-referenced
officers' evaluation of such controls and procedures as of the end of the
quarter for which this report is filed.
(b) Changes in Internal Controls
There have not been any changes in Bancorp's internal control over
financial reporting that have materially effected or are reasonably likely to
materially effect, the Bank's internal control over financial reporting.
PART II
Other Information
Item 1. Legal Proceedings
Bancorp's wholly-owned subsidiary, The Bank of Southern Connecticut
("Bank"), is being sued by former President and Chief Operating officer Gary D.
Mullin for breach of contract in connection with Mr. Mullin's dismissal for
cause. Pursuant to Mr. Mullin's employment agreement with the Bank, the matter
is in arbitration. Mr. Mullin notified the Bank of his claim in March 2003. The
only parties to the dispute are the Bank and Mr. Mullin. Mr. Mullin is seeking
-18-
$500,000 for alleged economic loss, plus attorney's fees. The Bank is seeking
attorney's fees. The matter is currently pending. Bancorp believes that the
former president's claims are without merit and Bancorp intends to defend this
case vigorously.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Bancorp held its annual meeting of shareholders for 2003 on May 6, 2003.
Two items were voted on at that meeting- the re-election of two directors, G.
Leon Jacobs and Joshua H. Sandman, each for a three (3) year term; and the
ratification of the selection of McGladrey & Pullen, LLP as independent
accountants for Bancorp for the year ending December 31, 2003. Each matter
passed. Director nominee Jacobs received 944,696 votes "For", 2,000 votes
"WITHELD", and there were 0 broker non-votes. Director nominee Sandman received
942,796 votes "FOR", 3,900 "WITHELD", and there were 0 broker-non-votes. With
respect to the ratification of the selection of McGladrey & Pullen, LLP, 937,921
votes were cast "FOR" and 7,950 votes were cast "AGAINST" the proposition, and
there were 0 broker non-votes and 825 abstentions.
Item 5. Other Information
On July 8, 2003, the Board of Directors of Bancorp meeting appointed
Michael M. Ciaburri President and Chief Operating Officer of Bancorp, effective
immediately.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
---------
No. Description
---- ------------
3(i) Amended and Restated Certificate of Incorporation of the Issuer
(incorporated by reference to Exhibit 3(i) to Issuer's Quarterly Report
on Form 10-QSB dated June 30, 2002)
3(ii) By-Laws of the Issuer (incorporated by reference to Exhibit 3(ii) to
the Issuer's Registration Statement on Form SB-2 (No. 333-59824))
10.1 Lease, dated as of August 17, 2000, between 215 Church Street, LLC and
the Issuer (incorporated by reference to Exhibit 10.1 to the Issuer's
Registration Statement on Form SB-2 (No. 333-59824))
10.2 Letter agreement dated January 3, 2001 amending the Lease between 215
Church Street, LLC and the Issuer (incorporated by reference to Exhibit
10.2 to the Issuer's Registration Statement on Form SB-2 (No.
333-59824))
10.3 First Amendment to Lease dated March 30, 2001 between 215 Church
Street, LLC and the Issuer (incorporated by reference to Exhibit 10.3
to the Issuer's Registration Statement on Form SB-2 (No. 333-59824))
10.4 Second Amendment to Lease dated March 31, 2001 between 215 Church
Street, LLC and the Issuer (incorporated by reference to Exhibit 10.4
to the Issuer's Registration Statement Form SB-2 (No.
333-59824))
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10.5 Assignment of Lease dated April 11, 2001 between the Issuer and The
Bank of Southern Connecticut (incorporated by reference to Exhibit 10.5
to the Issuer's Registration Statement on Form SB-2 (No. 333-59824))
10.6 Employment Agreement dated as of January 23, 2001, between The Bank of
Southern Connecticut, the Issuer and Joseph V. Ciaburri (incorporated
by reference to Exhibit 10.6 to the Issuer's Registration Statement on
Form SB-2 (No. 333-59824))
10.7 Employment Agreement dated as of March 29, 2001 between The Bank of
Southern Connecticut, and Gary D. Mullin (incorporated by reference to
Exhibit 10.7 to the Issuer's Registration Statement on Form SB-2 (No.
333-59824))
10.8 Issuer's 2001 Stock Option Plan (incorporated by reference to Exhibit
10.8 to the Issuer's Registration Statement on Form SB-2 (No.
333-59824))
10.9 Issuer's 2001 Warrant Plan (incorporated by reference to Exhibit 10.9
to the Issuer's Registration Statement on Form SB-2 (No. 333-59824))
10.10 Sublease dated January 1, 2001 between Michael Ciaburri, d/b/a Ciaburri
Bank Strategies and The Bank of Southern Connecticut (incorporated by
reference to Exhibit 10.10 to the Issuer's Registration Statement on
Form SB-2 (No. 333-59824))
10.11 Sublease dated January 1, 2001 between Laydon and Company, LLC and The
Bank of Southern Connecticut (incorporated by reference to Exhibit
10.11 to the Issuer's Registration Statement on Form SB-2 (No.
333-59824))
10.12 Issuer's 2001 Supplemental Warrant Plan (incorporated by reference
to Exhibit 10.12 to Issuer's Annual Report on Form 10-KSB dated March
29, 2002)
10.13 Issuer's 2002 Stock Option Plan (incorporated by reference to Appendix
B to Issuer's Definitive Proxy Statement dated April 18, 2002).
10.14 Employment Agreement dated as of February 12, 2003, between The Bank of
Southern Connecticut and Michael M. Ciaburri. (incorporated by reference
to Exhibit 10.14 to Issuer's Form 10-QSB dated May 14, 2003).
31.1 Section 302 Certification by Chairman and Chief Executive Officer.
31.2 Section 302 Certification by President and Chief Operating Officer.
31.3 Section 302 Certification by Vice President and Controller.
32.1 Section 906 Certification by Chairman and Chief Executive Officer.
32.2 Section 906 Certification by President and Chief Operating Officer.
32.3 Section 906 Certification by Vice President and Controller.
(b) Reports on Form 8-K
-------------------
The issuer filed one report on Form 8-K during the quarter
ended June 30, 2003:
Dated June 11, 2003, disclosing the decision by Bancorp's
Board of Directors to approve the approve the establishment by
Bancorp of a new commercial bank in New London, Connecticut
and a capital raising by Bancorp. Both the establishment of
the new bank and the capital raising are subject to prior
regulatory approval.
-20-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SOUTHERN CONNECTICUT BANCORP, INC.
By: /S/ Joseph V. Ciaburri
------------------------
Name: Joseph V. Ciaburri
Title: Chairman & Chief Executive Officer
Date: August 14, 2003
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Exhibit Index
31.1 Section 302 Certification by Chairman and Chief Executive Officer. (filed herewith)
31.2 Section 302 Certification by President and Chief Operating Officer. (filed herewith)
31.3 Section 302 Certification by Vice President and Controller. (filed herewith)
32.1 Section 906 Certification by Chairman and Chief Executive Officer. (filed herewith)
32.2 Section 906 Certification by President and Chief Operating Officer. (filed herewith)
32.3 Section 906 Certification by Vice President and Controller. (filed herewith)
-22-