-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RjBVl9+2IJTR6lOHgjTodGeNM1NyQlbsO/J6DZvMKvBqqatz/wdvLrKCzKoVSqc4 hs/3DHTUEpKy4AzTyh8xsg== 0000915656-97-000007.txt : 19970328 0000915656-97-000007.hdr.sgml : 19970328 ACCESSION NUMBER: 0000915656-97-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES SAVINGS FINANCIAL CORP /CT/ CENTRAL INDEX KEY: 0000846801 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 061259026 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-27219 FILM NUMBER: 97565064 BUSINESS ADDRESS: STREET 1: 123 BROAD ST STREET 2: BOX 2980 CITY: NEW BRITAIN STATE: CT ZIP: 06050 BUSINESS PHONE: 8602247771 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission File Number December 31, 1996 34-0-18162 People's Savings Financial Corp. (Exact name of registrant as specified in its charter) Connecticut 06-1259026 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 123 Broad Street, New Britain, Connecticut 06053 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (203)224-7771 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $1.00 per share (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 ninety days. X Yes _____ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Page 1 of 29 pages. The Exhibit Index is found at page 24. The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing sale price of such stock on February 28, 1997 was $52,066,519. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Outstanding at Class February 28, 1997 Common Stock, par value $1.00 per share 1,905,863 DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated by reference in this Annual Report on Form 10-K as indicated herein. Part of Form 10-K Document into which incorporated 1996 Annual Report to Shareholders I and II Proxy Statement for the 1997 Annual III Meeting of Stockholders (to be filed within 120 days of December 31, 1996) (the "Proxy Statement") TABLE OF CONTENTS Page PART I Item 1 - Business......................................... 1 Item 2 - Properties....................................... 20 Item 3 - Legal Proceedings................................ 20 Item 4 - Submission of Matters to a Vote of Security Holders......................................... 21 - Executive Officers of the Registrant............. 21 PART II Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters.................... 21 Item 6 - Selected Financial Data......................... 22 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.. 22 Item 8 - Financial Statements and Supplementary Data..... 22 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........ 23 PART III Item 10 - Directors and Executive Officers of the Registrant..................................... 23 Item 11 - Executive Compensation.......................... 23 Item 12 - Security Ownership of Certain Beneficial Owner and Management................................. 23 Item 13 - Certain Relationships and Related Transactions.. 23 PART IV Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K............................ 24 PART I Item 1 - Business The principal executive offices of People's Savings Financial Corp. (the "Company") and of Peoples Savings Bank & Trust (the "Bank") are located at 123 Broad Street, New Britain, Connecticut 06053. The telephone number of the Company and the Bank is (203)224-7771. The Company was organized as a corporation under the laws of the State of Connecticut on February 22, 1989, to operate principally as a bank holding company for the Bank. The Bank's shareholders approved the acquisition by the Company of all of the outstanding common stock of the Bank (the "Bank Common Stock") in exchange for shares of common stock of the Company (the "Company Common Stock"). The Bank is the principal asset of the Company. The Bank was originally organized in 1907 as a Connecticut-chartered mutual savings bank, and converted to a Connecticut-chartered capital stock savings bank on August 27, 1986. The Bank currently offers general banking services, including accepting deposits from the general public and lending or investing those funds and also offers trust services. In addition to its main office, the Bank operates eight banking branches located in New Britain, Southington, Newington, Rocky Hill, Plainville, and Meriden, Connecticut. Principal Market Area The Bank's principal market encompasses the City of New Britain and the Towns of Berlin, Newington, Southington, Rocky Hill, Plainville and Meriden. Although traditionally servicing the banking needs of New Britain's Polish community, the Bank has expanded its customer base over the past several years. The Bank intends to continue to focus its marketing efforts in the next several years on other segments of the New Britain community and upon residents of other towns in its market area. The City of New Britain is evolving from a primarily industrial economy to an industrial-commercial-service economy. The surrounding communities are largely residential but also have significant industrial and commercial activities. The transfer of several major manufacturing facilities to other areas of the country continues to affect adversely the New Britain area labor market. Lending and Investment Activities The Bank provides personalized financial services to its existing customers and intends to achieve growth by increasing its customer base in New Britain and by increasing its services to, and expanding its customer base in, the communities surrounding New Britain. The Bank's principal business consists of attracting deposits from the public and using such deposits, with other funds, to make various types of loans and investments. A substantial portion of the loans and investments originated over the last five years has been on a short-term or variable-rate basis, although origination of more traditional fixed-rate mortgage loans increased during the low interest rate environment in 1993. The Bank has originated more adjustable rate loans with the rise in interest rates during 1994 through 1996. Many of theses adjustable rate loans are fixed over a term of 3, 5, 7, or 10 years and then adjust annually after the fixed period. Fixed rate mortgages and loans are originated with 8 to 30 year maturities. The Bank sold the majority of the 30-year fixed rate mortgages which it originated during 1994 through 1996 in order to reduce the Bank's interest rate risk exposure. The Bank's activities in this regard will vary in degree from time to time depending upon investment opportunities, economic and rate conditions, liability strategy and the Bank's efforts to maintain an adequate net interest spread. Since the conversion to a capital stock savings bank, the Bank has regulated its efforts to increase future deposit growth based on its assessment of the profitability of the investment options then available for such funds. The Bank also seeks to expand existing and develop additional fee-based services. Current fee-based product lines include mortgage originations, selling and servicing mortgages (the income from which is not considered a significant part of the Bank's operations), checking accounts, and Savings Bank Life Insurance. During 1993, the Bank also added a Trust Department and an Investment Services Department to increase fee income. In November 1994, the Bank purchased the New Meriden Trust Co., a trust company with $179,000,000 in trust assets from the FDIC. In May, 1995 the Bank opened a trust office in Middletown, CT. Trust assets grew to $385 million at December 31, 1996. Average Balance Sheets; Analysis of Net Interest Income; and Analysis of Changes in Interest Income and Interest Expense The supplementary information required by Item I of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to average balance sheets; an analysis of net interest income; and an analysis of increases and decreases in interest income and expense in terms of changes in volume and interest rates appears on pages 19 and 20 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. Lending Activities The supplementary information required by Item III.A. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to the composition of the loan portfolio appears on page 11 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. In order to diversify its loan products the Bank established a commercial loan department to provide traditional commercial loans and Small Business Administration loans. The void resulting from industry consolidation and downsizing has created an opportunity for the Bank to respond to the credit needs of small and medium size business in a timely manner with practical and effective solutions. The Bank hired a team of experienced commercial lending officers to build a conservative, high-quality commercial loan portfolio. As of December 31, 1996, the commercial mortgage portfolio totaled approximately $8.0 million, representing 3.1% of the Bank's total loan portfolio. The lending activities of the Bank are heavily influenced by economic trends affecting the availability of funds and by general interest rate levels. In originating loans, the Bank must compete with other savings banks, savings and loan associations, commercial banks, mortgage companies, insurance companies and other financial intermediaries. Residential Mortgage Loans. The Bank actively solicits residential mortgage loan applications from existing customers, builders and Realtors. Almost all of the Bank's residential mortgage loans are made to borrowers who occupy the properties securing their loans. While the Bank is authorized to make loans secured by real estate located either within or outside the State of Connecticut, its policy is to concentrate on loans secured by properties located within Connecticut, particularly in its primary market area. The Bank originates residential real estate loans through all nine of its offices. The Bank's mortgage originations increased by 42% from 1995 to 1996; 1995 was a historically low volume year. As of December 31, 1996 residential mortgage loans were 78.0% of the Bank's total loans. For its own portfolio, the Bank originates adjustable-rate and selected fixed-rate first mortgage loans secured by residential properties. The Bank has sold a significant portion of its 30-year and 20-year fixed-rate mortgage loans originated during 1995 and 1996. Points are charged on all residential mortgage loans unless the borrower elects to pay a higher interest rate to offset points. During 1994 the Bank started offering adjustable-rate loans that are fixed for the first three, five or seven years and then adjust every year after the fixed period. In 1995 the Bank started offering adjustable-rate loans that are fixed for the first ten years and then adjust every year after the fixed period. Adjustable-rate mortgages carry an interest rate cap which limits the Bank's ability to vary the rate at the time of adjustment and over the life of the loan. The annual interest rate cap is 2% and the lifetime cap is 6%, although the Bank in the past had an adjustable rate mortgage loan program with an 8% lifetime cap. Interest rate caps limit both increases and decreases in rate. The Bank bases its adjustable-rate mortgages on indices that are best matched to the repricing of its liabilities. Fixed-rate first mortgage loans constituted approximately 34.5% of net loans as of December 31, 1996, down from 37.3% as of December 31, 1995. The volume of first mortgage loan originations since 1991 is shown in the following table:
Year Ended Number of Total Loans December 31, Loans Originated 1992 795 81,485,000 1993 721 73,072,000 1994 432 47,237,000 1995 305 35,338,000 1996 419 50,133,000
Despite the benefits of adjustable-rate mortgages to the Bank's asset/liability management program, they do pose potential additional risks, primarily because as interest rates rise, the underlying payments by the borrower rise, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. It is difficult to quantify the risks resulting from increased costs to the borrower as a result of periodic repricing of adjustable-rate mortgages. The risk associated with holding fixed rate mortgages in the Bank's loan portfolio is that during periods of rising interest rates, their value decreases and the initial positive spread over the Bank's cost of funds may become negative. The benefits of holding fixed rate mortgages include a larger initial positive spread, increased cash flows and the average life of the loans are usually shorter than the stated maturity. In its residential real estate lending, the Bank follows the underwriting requirements of Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. The Bank lends up to 95% of the appraised value of owner-occupied property and up to 70% of the value of non-owner-occupied property. Under a special program for first time home buyers the Bank has lent up to 97% of the appraised value of the owner-occupied property. Residential borrowers are required to obtain private mortgage insurance covering any excess on loans with over 80% loan-to-value ratios. All conventional first mortgages include "due-on-sale" clauses, which give the lender the right to declare a loan immediately due and payable in the event the borrower sells or otherwise disposes of the real property that secures the loan. Loans Held for Sale. At December 31, 1996, loans held for sale totaled $1,150,000, with a market value of $1,143,000. Commercial Loans. As of December 31, 1996, commercial loans totaled $888,000, compared to $519,000 at December 31, 1995. Commercial loans constituted 0.3% of the Bank's total loans as of December 31, 1996. The Bank is authorized to make Small Business Administration (SBA) loans. The Bank's commercial mortgage loans are directly originated and consist of loans made on multifamily homes (more than four units) and loans collateralized by non-residential properties. Commercial mortgage loans collateralized by non-residential properties as of December 31, 1996 totaled $8.0 million, compared to $5.9 million as of December 31, 1995. Commercial mortgage loans collateralized by non-residential properties constituted 3.1% of total loans as of December 31, 1996. Loans made on multifamily homes constituted 1.4% of total loans, or $3.6 million, as of December 31, 1996, compared to $3.9 million at December 31, 1995. The Bank lends up to 80% of the appraised value of commercial property. Generally, the average size of commercial mortgage loans is approximately $500,000, with the current balance of the largest loan totaling $720,000. Construction Loans. As of December 31, 1996, residential construction loans totaled approximately $4.2 million, or 1.6% of the Bank's total loans, compared to $3.9 million, or 1.6% of total loans as of December 31, 1995. The Bank's residential construction loan investments are generally short-term (1-2 years) and are presently limited to residential properties in Connecticut. Construction loan applications are underwritten as if they were applications for permanent financing, obviating the need for a commitment for permanent financing at the close of the construction period. As of December 31, 1996, commercial construction loans totaled approximately $3.3 million, or 1.3% of total loans. Consumer Loans. Connecticut savings banks are authorized by statute to invest their assets in secured and unsecured consumer loans without limitation. Connecticut savings banks may also invest their assets, without restriction as to a percentage of assets, in lines of credit, overdraft loans, and credit card outstandings. The Bank's consumer loans include home improvement loans, automobile and boat loans and loans to pay for medical or vacation expenses. In October of 1994 the Bank started offering its own MasterCard and Visa credit cards. The Bank originates both fixed and adjustable rate second mortgage loans for its own portfolio and offers a variable rate pre-approved consumer line of credit product secured by the equity in the consumer's home. Total consumer loans (excluding credit card loans) increased from $30.8 million at December 31, 1995 to $35.7 million at December 31, 1996. Although not classified as collateral loans, approximately 99% of the Bank's installment loans are secured by mortgages on real property or security interests in personal property. Collateral loans, secured by either regular savings accounts, marketable securities, or certificates of deposit, amounted to approximately $2.2 million at December 31, 1996 and approximately $1.9 million at December 31, 1995. Credit card loans totaled $1.2 million at December 31, 1996 as compared to $1.3 million at December 31, 1995. Interest Rates. Interest rates charged by the Bank on its loans are primarily determined by the cost of funds to the Bank, competitors' rates and comparable investment alternatives available to the Bank. Federal law preempts state usury limits on interest, origination fees and all related charges for federally related mortgage loans secured by first liens on residential real property, and no action has been taken by the Connecticut legislature (as permitted by Federal law) to reimpose such state limits. The supplementary information required by Item III.B. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to maturities and sensitivities of loans to changes in interest rates appears on page 15 and 16 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and isincorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. Loan Commitments. The Bank's commitments to make mortgage loans on existing residential and commercial real property are made for periods of up to 120 days from the date of commitment. Such commitments are generally made at the market rate of interest prevailing at the time that the commitment is made to the customer. The rate on the commitment is guaranteed for a period of 60 days. Loan Origination Fees and Other Fees. In addition to interest earned on loans, the Bank receives loan origination fees for originating residential and commercial mortgage loans. These fees, commonly called "points", are paid by borrowers from their own funds and are not netted from the face amount of a mortgage loan. Loan origination fees and certain direct loan origination costs are deferred and the net amount amortized as an adjustment of the loan's yield over the life of the loan. Origination fees on loans sold by the Bank are taken into income currently. The Bank also receives other fees and charges relating to existing loans, which include primarily late charges. In connection with its mortgage loan origination activities, the Bank also receives application fees. These fees do not constitute a material source of income to the Bank. Risk Elements in the Loan Portfolio. The Bank's loans are regularly reviewed by management. If contractually due principal and interest payments on any loan are not received 15 days after the due date of the overdue payment, the Bank institutes monitored efforts to restore such loan to current status. Loans are classified as non-accrual and placed on a cash basis for purposes of income recognition when the collectibility of interest and principal becomes uncertain. All loans past due 90 days are treated as non-accrual loans. Continued unsuccessful collection efforts lead to initiation of foreclosure or other legal proceedings. Properties carried as foreclosed real estate have either been acquired through foreclosure or by deed in lieu of foreclosure, and is carried at the lower of (1) carrying value of loan, including costs of foreclosure, or (2) estimated fair value of the real estate acquired less estimated cost to sell. At the time of foreclosure, the excess, if any, of the loan value over the estimated fair value of the property acquired is charged to the allowance for loan losses. Subsequent to the time of foreclosure, reductions in the carrying value of foreclosed properties due to further declines in fair value or losses on their sale are recognized through charges to foreclosed real estate expense. Costs relating to the subsequent development or improvement of the property are capitalized; and holding costs are charged to foreclosed real estate expense in the period in which they are incurred. The supplementary information required by Item III.C. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to the discussion and statistical disclosure of non-accrual, past due and restructured loans appears on pages 12 and 13 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. The Company has not made loans to borrowers outside the United States. At December 31, 1996, there were no concentrations of loans exceeding 10% of total loans. A concentration of loans is defined as an amount loaned to multiple borrowers engaged in similar activities which would cause them to be similarly affected by economic or other conditions. Potential problem loans are not disclosed as non-accrual, 90 days past due, or restructured, but are loans which are monitored because of known information about possible credit problems of borrowers or because they are more than 30 days but less than 90 days past due. Management assesses the potential for loss on these loans when evaluating the adequacy of the allowance for loan losses on a regular basis. As of December 31, 1996, monitored loans not disclosed as non-accrual, 90 days past due, or restructured that were current totaled $567,000 ($305,000 residential real estate loans, and $262,000 commercial real estate loans); monitored loans 30 days delinquent totaled $2,442,000 ($2,101,000 residential real estate loans, $268,000 second mortgage loans, $53,000 commercial real estate loans, and $20,000 installment loans); and monitored loans 60 day's delinquent totaled $1,183,000 ($1,127,000 residential real estate loans, $33,000 second mortgage loans, and $23,000 installment loans). Please see People's Savings Financial's 1996 Annual Report under the section Management's Discussion an Analysis of Financial Condition and Results of Operation beginning on page 9 for further discussion. Summary of Loan Loss Experience Management's determination as to the adequacy of the allowance for loan losses takes into account a variety of factors, including (a) management's analysis of individual loans and the overall risk characteristics of the loan portfolio, (b) past loan loss experience, (c) the results of the statutorily mandated examination of the loan portfolio by regulatory agencies and independent reviews and evaluations of loans by the Loan Committee of the Bank's Board of Directors, (d) current and expected economic conditions, and (e) other relevant factors. The supplementary information required by Items IV.A. and IV.B. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to an analysis of the allowance for loan losses and an allocation for loan losses by loan category appears on pages 12 and 13 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. Investment Activities Savings banks chartered in the State of Connecticut have authority to make a wide range of investments deemed to be prudent by their boards of directors. Subject to various restrictions, they may own commercial paper, bonds of government agencies (including states and municipalities), corporate bonds, mutual fund shares, debt and equity obligations issued by creditworthy entities (whether traded on public securities exchanges or placed privately for investment purposes) and interests in real estate located within or outside Connecticut without limitations as to use. It has been the Bank's practice to utilize a variety of investment vehicles to better match deposit maturities. In addition to providing for liquidity requirements, the Bank maintains investment portfolios to employ funds not currently required for its various lending activities. Having a portion of assets in short-term securities has proved beneficial to the Bank during periods of rapidly rising interest rates. During such periods, as short- term securities mature, the proceeds can be reinvested in securities at market rates. In a declining rate environment, loans are likely to have higher yields than debt securities. Management considers the overall rate-sensitivity of the Bank's earning assets when investing in securities. In 1996, Bank investment purchases totaled $118,535,504. The portfolio's Mortgage Backed sector increased to $119,544,177, or 25% of assets, from 12% in 1995 with the purchase of $80,203,000 in fixed and adjustable securities. Mortgage Backed Securities offer yields competitive in the current bond market, with monthly cashflows of principal and interest making them more appealing than bonds for liquidity purposes. The current weighted average life of the entire Mortgage Backed portfolio is 7 years. In addition, $31,516,929 of Federal Agency bonds were purchased increasing that portfolio to 59,387,551, or 12% of assets, proportionate in composition to 1995. A majority of the purchases consisted of higher yielding bonds with 3 to 5 year maturities and call options. The Bank is compensated for call options by a higher yield. The supplementary information required by Item II.A. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to the maturity and composition of the Bank's investment portfolio appears on pages 10 and 11 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. At December 31, 1996, the Bank had invested approximately $15.6 million, or 3.2% of its assets, in marketable preferred and common stocks and mutual funds. This portion of the Bank's portfolio generates dividend income and also may produce capital gains and losses. Dividends received by the Bank are entitled to the 70% dividends-received deduction on federal income taxes. The Bank had net gains from the sale of equity securities of $7,000 in 1996. The Bank sold no equity securities during 1995. In the event of a decline in the market for equity securities, the value of the Bank's equity portfolio, and hence its capital, may be reduced. During the past five years, the largest amount that the Bank had invested at any one time in the equity securities of a single company was $730,000. The investment in this company was sold in 1994. See "Federal Reserve System Regulation" below for further discussion relating to this investment. The Federal Deposit Insurance Corporation Improvement Act of 1991, which is discussed in detail below under the caption "Regulation and Supervision", generally limits the equity investments of state non-member banks to investments which are permissible for a national bank. An insured state bank is also prohibited from engaging as principal in any type of activity that is not permissible for a national bank, unless the Federal Deposit Insurance Corporation (the "FDIC") determines that the activity would not pose a significant risk to the insurance fund and the bank is in compliance with applicable capital standards. As of December 19, 1992, a subsidiary of a state bank may not engage as principal in an activity which is not permissible for a subsidiary of a national bank, unless the same conditions are met. See "FDIC Regulation" below for further discussion relating to these investment and activities limitations. Deposits and Other Sources of Funds Deposits. Deposits have traditionally been the Bank's major source of funds, and will continue to be a major source of funds in the foreseeable future. However, the Bank does borrow from the Federal Home Loan Bank and may rely on borrowings form the FHLB in the future (if available), and repurchase agreements, as long as interest rates are favorable. See "Borrowing" below. The Bank also derives funds from loan amortizations, loan prepayments, interest and dividend income and sales of assets deemed appropriate by Bank management. The Bank offers a wide variety of retail deposit accounts designed to attract both short- and long-term funds. Time deposits were the primary source of new funds for the Bank during 1996 due to customer preference and the rate structure of the Bank's deposit products, and represent the largest component of deposits (representing 63.6% of total deposits at December 31, 1996). Certificates of deposit currently offered by the Bank have maturities that range from 91 days to five years. The Bank also offers tax-deferred retirement savings programs (IRA accounts and Simplified Employee Pension Plans) and other types of plans for its customers. In determining the rate of interest to pay on deposits, the Bank considers its cash flow requirements, rates paid by competitors and the Bank's income and growth objectives. Management expects competition for deposits in the Bank's market area to continue for the foreseeable future. As of December 31, 1996, the aggregate amount of savings accounts at the Bank was $105.4 million and the interest rate paid on such accounts was 2.0%. The Bank's deposit marketing strategy includes continually monitoring rates to insure competitiveness while providing a high level of service at all of the branch offices. Branch employees participate in sales training programs. The Bank has been able to attract reasonable deposit growth without having to match the most competitive rates being offered in its market area. Substantially all of the Bank's depositors are residents of the Bank's market area and contiguous communities. The Bank has not solicited deposits outside Connecticut, nor has it solicited deposits through deposit brokers. The supplementary information required by Item V.A. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to average amounts of, and average rates paid on, deposits appears on page 14 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. The decrease in average savings deposits from 1995 to 1996 was due to customer preference and the rate structure of deposit products. The Bank believes that its high capital ratios and financial strength have attracted new deposit customers. The increase in average time deposits from 1995 to 1996 was the result of customer preference and the rate structure of deposit products. The overall increase in average rates paid on certificates of deposit from 1995 to 1996 is consistent with CD rates in the Bank's market area. The supplementary information required by Item V.D. of "Guide 3. Statistical Disclosure by Bank Holding Companies" relating to the maturity distributions of time certificates of deposit issued in amounts of $100,000 or more appears on page 14 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. Such information should be read in conjunction with the related financial statements and notes thereto incorporated by reference herein under Item 8. Borrowing. The Bank has been a member of the Federal Home Loan Bank ("FHLB") of Boston since 1980, and as a member may borrow from the FHLB to secure additional funds. At December 31, 1996, the Bank had outstanding $49.8 million in loans from the FHLB of Boston, an increase of $30.8 million from $19.0 million outstanding at December 31, 1995. The primary reason for the increase was borrowing to fund investment securities purchases. Borrowing from the FHLB of Boston may be at interest rates and under terms and conditions which vary from time to time. The Bank also has access to a pre-approved line of credit with the FHLB of Boston of $8,042,000, and has sufficient qualified collateral to borrow up to an additional $233 million. This arrangement allows the Bank to obtain advances from the FHLB of Boston rather than relying on commercial bank lines of credit. The Bank's interest expense on advances was $1,513,000, $1,253,000, and $1,455,000, for the years ended December 31, 1996, 1995 and 1994, respectively. The Bank also has repurchase agreement lines totaling $70 million, of which it had drawn $21.5 million. The $21.5 million was drawn in order to purchase investment securities. At December 31, 1996 the Bank had $48.5 million in unused repurchase agreement lines with various brokers. Competition The Bank's most direct competition for deposits has historically come from other thrift institutions and commercial banks located in its principal market area, many of which have greater resources than the Bank. There are numerous other banks, credit unions and financial institutions located in the City of New Britain and surrounding areas that also compete with the Bank. The Bank faces significant additional competition for investors' funds from short- term money market funds of securities firms and other financial institutions and from other corporate and government securities yielding higher interest rates than those paid by the Bank. This increased competition has, and is expected to continue to have, an effect on the Bank's cost of funds. However, the Bank has not experienced and does not expect to experience any substantial adverse effect on the stability of its deposit base as a result of increased competition. The Bank competes for deposits by offering depositors a high degree of personal service, convenient locations and hours, and other services. The Bank does not rely upon any individual or entity for a material portion of its deposits, nor has it obtained any deposits through deposit brokers. A substantial portion of the Bank's customer and deposit base traditionally has been and continues to be the large Polish community in New Britain. The Bank's competition for real estate loans comes principally from mortgage banking companies, other thrift institutions, commercial banks, insurance companies and other institutional lenders. The Bank competes for loan originations primarily through the interest rates and loan fees it charges and the efficiency and quality of services it provides borrowers, real estate brokers and builders. Factors that affect competition include, among other things, the general availability of lendable funds and credit, general and local economic conditions, current interest rate levels, and volatility in the mortgage markets. Competition is expected to increase as a result of legislation adopted in recent years at the Federal and State of Connecticut levels which effectively provide, subject to minimal limitations, for full interstate banking and branching. As a result of this legislation and increasingly aggressive merger activity in the Company's market area, competition from larger institutions with resources much greater than the Company's, is expected to continue into the future. Certain legislative and regulatory proposals that could affect the Company and the Bank and the banking business in general are pending, or may be introduced, before the United States Congress, the Connecticut General Assembly, and various governmental agencies. These proposals include measures that may further alter the structure, regulation, powers, and competitive relationship of financial institutions and that may subject the Company and the Bank to increased regulation, disclosure, and reporting requirements. In addition, the various banking regulatory agencies frequently propose rules and regulations to implement and enforce existing legislation. It cannot be predicted whether or in what form any legislation or regulations will be enacted or the extent to which the business of the Company and the Bank will be affected thereby. Employees As of December 31, 1996, the Company and the Bank employed 139 employees, 114 of whom are full-time, including 31 officers. Management considers the Bank's relations with its employees to be good. The Bank's employees are not represented by any collective bargaining group. REGULATION AND SUPERVISION Connecticut Regulation As a state-chartered capital stock savings bank, the Bank is subject to applicable provisions of Connecticut law and the regulations adopted thereunder by the Connecticut Banking Commissioner (the "Commissioner"). The Commissioner administers Connecticut banking laws, which contain comprehensive provisions for the regulation of savings banks. The Bank derives its lending and investment powers from these laws, and is subject to periodic examination by and reporting to the Commissioner. Savings banks in Connecticut are empowered by statute to conduct a general banking business and to exercise all incidental powers necessary thereto. Subject to limitations expressed in the statutes, permissible activities include taking savings and time deposits, including NOW checking accounts, paying interest on such deposits and accounts, accepting demand deposits, the sale of annuities and, ususally through a subsidiary, the sale of securities products, making loans on residential and other real estate, making consumer and commercial loans, exercising trust powers, investing, with certain limitations, in equity securities and debt obligations of banks and corporations, and issuing credit cards. In addition, savings banks may engage in certain other enumerated activities, including the establishment of an insurance department to sell life insurance and annuities. Connecticut savings banks, in general, have powers identical to those enjoyed by Connecticut commercial banks. The Bank is prohibited by Connecticut banking law from paying dividends, except from its net profits. Net profits are defined as the remainder of all earnings from current operations. The total of all dividends declared by the Bank in any calendar year may not, unless specifically approved by the Commissioner, exceed the total of its net profits of that year combined with its retained net profits of the preceding two years. These provisions limit the amount of dividends payable to stockholders of the Company, since dividends received from the Bank are the primary source of funds for the Company to pay dividends. As of December 31, 1996, approximately $2,529,000 was available for payment of dividends by the Bank to the Company. Under Connecticut banking law, no person may acquire the beneficial ownership of more than 10%, or 25% or more in certain cases, of any class of voting securities of a bank chartered by the State of Connecticut or having its principal office in Connecticut or a bank holding company thereof unless the Commissioner approves such acquisition. Full statewide branching is available to all Connecticut depository institutions. This legislation expands the branching opportunities of the Bank to other towns while allowing virtually unrestricted branching expansion by other institutions into New Britain. See "Competition" above for a discussion of Connecticut interstate banking statutes. FDIC Regulation The Bank's deposit accounts are insured by the FDIC, up to a maximum of $100,000 per insured depositor. The FDIC issues regulations, conducts periodic examinations, requires the filing of reports and generally supervises the operations of its insured banks. The approval of the FDIC is required prior to any merger or consolidation or the establishment or relocation of an office facility. This supervision and regulation is intended primarily for the protection of depositors. Any insured bank which does not operate in accordance with or conform to FDIC regulations, policies and directives may be sanctioned for noncompliance. Under FDIC regulations, the Bank is a member of the Bank Insurance Fund ("BIF") and is required to pay annual insurance premiums, currently 0.00% of its deposits. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (the "Improvement Act"), the FDIC has adopted regulations establishing a risk-based assessment system for insurance premiums. Under this system, a depository institution's semi-annual assessment will fall within a range of 0.00% to 0.27% of domestic deposits, based in part on the probability that the deposit insurance fund will incur a loss with respect to that institution. In setting assessments for a bank, the FDIC is required to take into account the revenue needs of the insurance fund and to set the assessments in a manner that will be sufficient to maintain the insurance fund's required reserve ratio. Insured depository institutions are required to file with the FDIC certified statements containing all information required by the FDIC for the determination of the semi-annual assessment. Each institution has been or will be notified of its risk classification based on its capital ratios. The FDIC has the authority to assess penalties against an institution that fails to make an accurate certified statement. These provisions of the Improvement Act have not affected the Bank's assessment. Under this system, the Bank, as a well capitalized institution, is required currently to pay annual insurance premiums of 0.00% of its deposits. The FDIC also requires FDIC-insured, state-chartered banks that are not members of the Federal Reserve System to meet certain minimum capital requirements. The FDIC amended its minimum requirements for capital as a percentage of total assets to define capital in a manner consistent with the risk-based capital categories described below and to require a minimum leverage standard of 3 percent Tier 1 (or core) capital to total assets (as defined in FDIC regulations) for the most highly rated banks that are not anticipating or experiencing any significant growth. All other state banks that are not members of the Federal Reserve System would be required to meet a minimum leverage ratio that is at least 100 to 200 basis points above this minimum -- that is, an absolute minimum leverage ratio of not less than 4 percent for those banks that are not highly rated or that are anticipating or experiencing significant growth. "Tier 1 capital" is generally defined as common stockholders' equity, minority interests in consolidated subsidiaries and non-cumulative perpetual preferred stock. Tier 1 capital generally excludes goodwill and other intangibles and investments in subsidiaries that the FDIC determines should be deducted from capital. As of December 31, 1996, the Bank's leverage ratio was approximately 9.50%, exceeding the FDIC requirements. The FDIC has also adopted supplementary capital regulations based on international risk-based capital standards. The other United States bank regulatory agencies have also adopted similar guidelines based on these international standards. The guidelines, as adopted, supplement the minimum leverage ratios described in the immediately preceding paragraph. The guidelines set forth (i) a definition of "capital" for risk-based capital purposes; (ii) a system for calculating risk-weighted assets by assigning assets and certain off-balance sheet items to broad risk categories; and (iii) a schedule, including transitional arrangements during a phase-in period, for achieving a minimum supervisory ratio of capital to risk- weighted assets. In general, the risk-weighting imposes "zero percent" risk-weighting for cash; balances due from Federal Reserve banks; direct claims on (including securities), and the portions of claims unconditionally guaranteed by, the United States treasury and United States government agencies; and gold bullion; "twenty percent" for cash items in the process of collection; all claims on, and portions of claims guaranteed by, United States depository institutions, United States government agencies and United States government-sponsored agencies; general obligation claims on, and the portions of claims that are guaranteed by, the full faith and credit of states or other political subdivisions of the United States; and the portions of claims that are collateralized by securities issued or guaranteed by the United States treasury, governmental agencies or government-sponsored agencies; "fifty percent" for loans fully secured by first liens on one to four family residential properties written in accordance with prudent underwriting standards and certain privately issued mortgage-backed securities; and "one hundred percent" risk-weighting for assets not included in one of the other categories, including fixed assets, premises, other real estate owned and equity investments. Basically, the higher percentage of riskier assets an institution has, the more capital it must have to satisfy the risk-based guidelines; the lower the risk, the lower the required capital. The guidelines do not address other bank "risk" areas, such as interest rate, liquidity, funding and market risks, the quality and level of earnings, investment or loan portfolio concentrations, the quality of loans and investments, the effectiveness of loan and investment policies and management's ability to monitor and control financial and operating risks. The current minimum risk-based ratio is 8%. The Bank's total risk-based ratio as of December 31, 1996 was 18.46%. The Bank does not believe that the implementation of the risk-based guidelines has had or will have a material adverse effect on its prospective business or require capital-raising efforts in the foreseeable future. In January 1995, the risk-based capital standards were amended to require analysis of the Bank's and Company's concentration of credit risks and certain risks from non-traditional activities in assessing the institution's overall capital adequacy. The Improvement Act increased the supervisory powers of the FDIC and the other federal regulatory agencies with regard to undercapitalized depository institutions, and changed the capital rules applicable to the Company and the Bank. As of December 19, 1992, banking regulators adopted regulations which define five capital categories of institutions: institutions that are well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The purpose of these categories is to allow federal regulatory agencies to monitor undercapitalized institutions more closely in order to take appropriate and prompt regulatory action to minimize the potential for significant loss to the deposit insurance fund. Institutions in the first two categories will operate with few restrictions. Institutions in the other three categories may be required to raise additional capital, curtail growth, limit interest rates paid, divest subsidiaries and limit executive compensation. Regulators are also empowered to remove top management and call for new elections of directors. The Improvement Act also allows for the appointment of a conservator or receiver of an insured depository institution if the institution is undercapitalized and either has no reasonable prospect of becoming adequately capitalized, fails to become adequately capitalized as required, or fails to submit or materially implement a capital plan. In addition, the Improvement Act requires a holding company of a failing institution to guarantee that the institution will comply with a capital restoration plan to the extent of 5% of the institution's total assets or the amount needed to achieve the required minimum capital levels. See page 17 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Capital". The Bank is currently categorized as a "well capitalized" institution under the Improvement Act. After notice and hearing, FDIC insurance of deposits may be terminated by the FDIC upon a finding by the FDIC that the insured institution has engaged in unsafe or unsound practices or is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule or order of, or conditions imposed by, the FDIC. Neither the Company nor the Bank is aware of any practice, condition or violation that might lead to termination of its deposit insurance. The Improvement Act also generally limits the activities and equity investments of FDIC-insured, state-chartered banks to those that are permissible for national banks. These restrictions became effective on December 19, 1992, although the restrictions dealing with equity investments became effective upon enactment of the Improvement Act on December 19, 1991. In October 1992, the FDIC issued final regulations to implement the restrictions on equity investments and indicated its intention to propose regulations addressing the activities limitations at a later date. Under the regulations dealing with equity investments, an insured state bank generally may not acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. In addition, an insured state bank (i) that is located in a state which authorized as of September 30, 1991 investment in common or preferred stock listed on a national securities exchange ("listed stock") or shares of a registered investment company ("registered shares"), and (ii) which during the period beginning September 30, 1990 through November 26, 1991 ("measurement period") made or maintained investments in listed stocks and registered shares, may retain whatever shares that were lawfully acquired or held prior to December 19, 1991 and continue to acquire listed stock and registered shares, provided that the bank does not convert its charter to another form or undergo one of four types of specified transactions which generally deal with changes in control. In order to acquire or retain any listed stock or registered shares, however, the bank must file a one-time notice with the FDIC which meets specified requirements and which sets forth the bank's intention to acquire and retain stocks or shares, and the FDIC must determine that acquiring or retaining the listed stocks or registered shares will not pose a significant risk to the deposit insurance fund of which the bank is a member. The Bank filed a notice of intention to invest in listed stocks and registered shares with the FDIC on December 11, 1992. On March 15, 1993, the FDIC granted its approval to the Bank to continue to hold or acquire listed stocks and registered shares, subject to the following conditions: (a) the maximum investment in listed stocks and registered shares may not exceed 100% of the Bank's Tier 1 capital; (b) the Bank must follow reasonable procedures limiting concentrations in listed stocks and registered shares so as to provide for diversification of risk; and (c) the FDIC may alter, suspend or withdraw its approval should any development warrant such action. At December 31, 1996, the Bank held $.2 million of listed stocks and registered shares. The Community Reinvestment Act of 1977 ("CRA") was enacted to encourage every financial institution to help meet the credit needs of its entire community, including low and moderate-income neighborhoods, consistent with the institution's safe and sound operation. Under CRA, state and federal regulators are required, when examining financial institutions and when considering applications for approval of certain merger, acquisition or other transactions, to take into account the institution's record in helping to meet the credit needs of its entire community, including low and moderate-income neighborhoods. In reviewing an institution's CRA record for this purpose, state and federal regulators will consider reports of regulatory examination, comments received from interested members of the public or community groups, and the description of the institution's CRA activities in its publicly available CRA statement, supplemented, as necessary, by the institution. The Federal Reserve Board has the power to disapprove proposed merger or acquisition transactions involving banking organizations that are deemed by the Federal Reserve Board to have unsatisfactory examination records of CRA compliance. Following its most recent CRA examination as of August 24, 1995, the Bank received a "Satisfactory" rating regarding its compliance with CRA. Federal Reserve System Regulation Federal Reserve Board regulations require the Bank to maintain reserves against its transaction accounts and non-personal time deposits. These regulations generally require that reserves of 3% be maintained against transaction accounts (other than non-personal time deposits and Eurocurrency liabilities) totaling $54.0 million or less (except that $4.2 million in the transaction accounts is exempt from the reserve requirement) and a reserve of 10% be maintained against that portion of total transaction accounts in excess of $54.0 million. These amounts and percentages are subject to further adjustment by the Federal Reserve Board. The Bank also has authority to borrow from the Federal Reserve Bank of Boston "discount window." The Federal Reserve Board's capital adequacy guidelines for bank holding companies are similar to the FDIC leverage ratio requirements described above. This standard establishes a minimum level of Tier 1 capital to total assets of 3% for all bank holding companies with consolidated assets of $150 million or more. Except with respect to the most highly-rated institutions, this standard requires bank holding companies to maintain an additional cushion of 100 to 200 basis points depending upon the institution's financial condition and risk profile. Additionally, the Federal Reserve Board has adopted risk-based capital guidelines, similar to those adopted by the FDIC as described above, that are applicable to all bank holding companies. Management believes that the Company currently is, and expects to continue to be, in full compliance with applicable capital requirements. The Company is subject to regulation by the Federal Reserve Board as a registered bank holding company. The Bank Holding Company Act of 1956, as amended (the "BHCA"), under which the Company is registered, limits the types of companies that the Company may acquire or organize and the activities in which it or they may engage. In general, the Company and its subsidiaries are prohibited from engaging in or acquiring direct control of any company engaged in non-banking activities unless such activities are so closely related to banking or managing or controlling banks or savings associations as to be a proper incident thereto. Subject to various limitations, the Federal Reserve Board has determined by regulation a number of activities that qualify without the need for specific FRB approval. The Company believes that neither it nor the Bank is engaged in any activities which would be prohibited under the BHCA. Under the BHCA, the Company is required to obtain the prior approval of the Board of Governors of the Federal Reserve System to acquire, with certain exceptions, more than 5% of the outstanding voting stock of any bank, to acquire all or substantially all of the assets of a bank or to merge or consolidate with another bank holding company. Under the BHCA, the Company, the Bank and any other subsidiaries are prohibited from engaging in certain tying arrangements in connection with any extension of credit or provision of any property or services. The Bank is also subject to certain restrictions imposed by the Federal Reserve Act on issuing any extension of credit to the Company or any of its subsidiaries, or making any investments in the stock or other securities thereof, and on the taking of such stock or securities as collateral for loans to any borrower. The Company is required under the BHCA to file an annual report of its operations with the Federal Reserve Board, and it and the Bank and any other subsidiaries are subject to examination by the Federal Reserve Board. In addition, the Company, as a bank holding company, is required to register with, submit reports to and be examined by the Commissioner under the Connecticut Bank Holding Company and Bank Acquisition Act. Effect of Government Policy Banking is a business that has historically depended primarily on interest rate differentials. In general, the difference between the interest rates received by the Bank on loans to its customers and securities held in the Bank's portfolio and the interest rate paid by the Bank on its deposits and its other borrowings will comprise the major portion of the Bank's earnings. The value and yields of its assets and the rates paid on its liabilities are sensitive to changes in prevailing market rates of interest. Thus, the earnings and growth of the Bank will be influenced by general economic conditions, the monetary and fiscal policies of the federal government, and policies of regulatory agencies, particularly the Federal Reserve Board, which implement national monetary policy. The nature and impact of any future changes in monetary policies is beyond the control of the Bank and cannot be predicted. The FDIC is required to conduct annual FDIC examinations of all insured depository institutions unless they are well or adequately capitalized, not less than $250 million in assets, and have an "outstanding" composite condition (or "good" if a bank has less than $100 million in assets); such institutions may be examined every eighteen months. The Improvement Act also requires each insured depository institution to submit a publicly available annual audit report to its federal regulators. The report is required to be prepared in accordance with generally accepted accounting principles and to contain any information that federal regulators may require. The report must contain management's statement of its responsibilities for preparing financial statements, establishing and maintaining internal controls, complying with banking laws and regulations and assessing the institution's results in these areas during the past year. The institution's independent public accountants must also attest to, and report separately on, management's statement. The federal regulatory agencies are also required to adopt regulations requiring each insured depository institution to have an independent audit made of its financial statements. These audited financial statements will be included in the institution's annual reports. The Company and the Bank have always had an annual independent audit. As discussed above, the Improvement Act allows the regulatory agencies to take prompt regulatory action for institutions falling into one of the lower three of five capital categories (see "FDIC Regulation") and restricts an institution's ability to accept brokered deposits unless the institution is well capitalized. Restrictions on loans to insiders are also strengthened under the Improvement Act. Total aggregate loans to all insiders (including directors and executive officers) and their related interests are generally restricted to the amount of a bank's unimpaired capital and surplus. Unimpaired capital and surplus is defined by regulation to mean the sum of (1) the bank's total equity capital as reported on the bank's most recent consolidated report of condition, (2) any subordinated notes and debentures approved as an addition to the bank's capital structure by the appropriate federal banking agency, and (3) any valuation reserves created by charges to the bank's income as reported on its most recent consolidated report of condition. The Federal Reserve Board may, by regulation, make the restrictions on aggregate loans to insiders more stringent. In addition, certain restrictions on types and amounts of loans that can be made to executive officers of financial institutions have been added to federal regulations in addition to the existing restrictions in state law on loans to executive officers. Loans to individual directors, executive officers, principal shareholders and their related interests also may not exceed specified percentages of the Bank's unimpaired capital and surplus (generally, 15% for loans not "fully secured", and 10% additional for loans that are "fully secured", with certain limited exceptions). Because the level of the Bank's loans to insiders is significantly below the amount permitted under the Improvement Act, the Company does not expect these regulations to adversely impact the Company or the Bank. The Improvement Act has also resulted in federal regulatory agencies adopting regulations setting forth safety and soundness standards relating to internal controls, information systems and internal audit systems; loan documentation; credit underwriting; interest rate exposure; asset growth; and officers and employees compensation, fees and benefits. The Bank and the Company do not expect these regulations will materially adversely affect them. The regulations establish a standard for the ratio of classified assets to total capital and loan loss allowances at no greater than 100%; and an earnings/capital standard which provides that a bank's capital will be sufficient if the bank's last four quarters of earnings history, projected over the next four quarters, would leave the bank with capital meeting the applicable minimum capital requirements. If the FDIC were to find that the Bank violated either of the standards, the Bank would be required to submit a compliance plan, which must be approved by the FDIC, describing the steps it would take to cure the deficiency. However, the Company and the Bank currently comply with and expect to continue to comply with these standards. The present bank regulatory scheme has undergone and continues to undergo significant change, both as it affects the banking industry itself and as it affects competition between banks and non-banking financial institutions. There have been significant regulatory changes in the bank merger and acquisition area, in the products and services banks can offer, and in the non-banking activities in which bank holding companies can engage. Banks are now actively competing with other types of depository institutions and with non-bank financial institutions, such as money market funds, brokerage firms, insurance companies, and other financial services enterprises. It is not possible at this time to assess what impact these changes in the regulatory scheme will ultimately have on the Bank. Item 2 - Properties In addition to the main office of the Company and the Bank, located at 123 Broad Street, New Britain, Connecticut, the Bank has eight banking branches located in New Britain, Southington, Newington, Rocky Hill, Plainville, and Meriden, Connecticut. The Bank also maintains a trust office in Middletown, Connecticut as well as in the Lafayette Square and the Meriden branch offices. The following table sets forth certain information regarding the Bank's banking offices.
Owned Lease or Expiration Office Location Leased Date Main Office 123 Broad Street Owned N/A New Britain, CT 06050 Farmington Avenue 553 Farmington Avenue Owned N/A New Britain, CT 06050 Columbus Plaza 150 Columbus Boulevard Leased October 1999 New Britain, CT 06050 Lafayette Square 450 Main Street Leased July 2001 New Britain, CT 06050 Southington Office 405 Queen Street Leased August 2002 Southington, CT 06489 Newington Office 36 Fenn Road Leased January 2003 Newington, CT 06111 Rocky Hill Office 2270 Silas Deane Highway Owned N/A Rocky Hill, CT 06067 Plainville Office 275C New Britain Avenue Leased June 2004 Plainville, CT 06062 Middletown Trust 49 Main Street Leased April 1998 Office Middletown, CT 06457 Meriden Office 834 Broad Street Leased November 2000 Meriden, CT 06450
Total lease payments for all of the Bank's leased offices for 1995 amounted to $468,211. Item 3 - Legal Proceedings There are no pending legal proceedings to which the Company or the Bank is a party, other than ordinary routine litigation in the normal course of business. No such proceeding is material to the Company or the Bank. Item 4 - Submission of Matters to a Vote of Security Holders During the fourth quarter of 1996, no matter was submitted to a vote of shareholders of the Company. Executive Officers of the Registrant The following persons are the executive officers of the Company: Richard S. Mansfield, age 56, has been the President and Chief Executive Officer and a director of the Company since its incorporation in February 1989. Mr. Mansfield has been President and Chief Executive Officer and a director of the Bank since 1986 and was Executive Vice President and Vice President in charge of mortgage lending at the Bank since 1980. Mr. Mansfield's 1996 employment agreement with the Bank provides for a term of three years with automatic one year renewals each January 1st, unless either party gives written notice of his or its intention not to extend the agreement. John G. Medvec, age 49, has been the Executive Vice President and Treasurer of the Company since its incorporation in February 1989. Mr. Medvec has been Executive Vice President and Treasurer of the Bank since 1986 and has served in various executive positions with the Bank since 1971. Mr. Medvec's 1996 employment agreement with the Bank provides for a term of three years with automatic one year renewals each January 1st, unless either party gives written notice of his or its intention not to extend the agreement. There is no relationship by blood, marriage or adoption between any executive officer or director of the Company and any other executive officer or director of the Company. PART II Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters As of February 28, 1997, the Company had 1,905,863 shares of Common Stock issued and outstanding and approximately 1,312 shareholders of record. The Company's stock is traded over-the-counter and is quoted on The NASDAQ National Market under the symbol "PBNB". The market price information regarding the Company Common Stock and the information relating to the payment of dividends required by Item 5 appears on pages 46 and 47 of the Company's 1996 Annual Report to Shareholders under the captions "Common Stock Information" and "Dividend Policy", and is incorporated herein by reference. Dividends are paid by the Company from its assets, which are mainly provided by dividends from the Bank. However, certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances and such restrictions may materially limit the Company's ability to pay dividends to its shareholders. Connecticut capital stock savings banks, such as the Bank, may not declare cash dividends in excess of "net profits". "Net profits" are statutorily defined as "the remainder of all earnings from current operations." In addition, the total of all cash dividends declared in any calendar year may not, without the specific approval of the Commissioner, exceed the total of its net profits of that year combined with its retained net profits of the preceding two years. The present intention of the Board of Directors of the Company is to continue the practice of declaring and paying cash dividends on a quarterly basis. However, the payment and size of any future Company dividend will depend on the future earnings of the Company and the Bank. Item 6 - Selected Financial Data The information required by Item 6 appears on page 1 of the Company's 1996 Annual Report to Shareholders under the caption "Selected Financial Highlights", and is incorporated by reference herein. Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations The information required by Item 7 appears on pages 9 through 22 of the Company's 1996 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", and is incorporated by reference herein. See Note 18 "Recent Accounting Pronouncements" on page 44 of the Company's 1996 Annual Report to Shareholders and the caption notes to the Consolidated Financial Statements contained therein. Item 8 - Financial Statements and Supplementary Data The information required by Item 8 is indexed in Item 14 of this Annual Report on Form 10-K, and portions thereof appearing on pages 23 through 46 of the Company's 1996 Annual Report to Shareholders are incorporated by reference herein. Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. PART III Item 10 - Directors and Executive Officers of the Registrant The information required by Item 10 relating to the identification of directors and executive officers of the Company and their business experience appears on pages 3 through 14 of the Company's definitive Proxy Statement dated March 21, 1997 under the caption "Election of a Class of Directors (Proposal 1) - Information on Nominees and Directors", and in Part I of this Annual Report on Form 10-K under the caption "Executive Officers of the Registrant", and is incorporated by reference herein. Item 11 - Executive Compensation The information required by Item 11 relating to the compensation paid and benefits provided to directors and executive officers of the Company appears on pages 8 through 14 of the Company's definitive Proxy Statement under the captions "Election of a Class of Directors (Proposal 1) - Compensation of Directors" and "Election of a Class of Directors (Proposal 1) - Compensation of Executive Officers", and is incorporated by reference herein. Item 12 - Security Ownership of Certain Beneficial Owners and Management The information required by Item 12 relating to the ownership of the Company's securities by certain beneficial owners and management appears on pages 2 through 7 of the Company's definitive Proxy Statement under the captions "Principal Stockholders", "Election of a Class of Directors (Proposal 1) - Information on Nominees and Directors" and "Election of a Class of Directors (Proposal 1) - Ownership of Shares by Directors and Officers", and is incorporated by reference herein. Item 13 - Certain Relationships and Related Transactions The information required by Item 13 relating to transactions between the Company and management, directors and certain beneficial owners of the Company's securities appears on pages 12 through 15 of the Company's definitive Proxy Statement under the caption "Transactions with Management and Others", and is incorporated by reference herein. PART IV Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents, filed as part of this report, are included herein or are incorporated by reference from the indicated pages of the Company's 1996 Annual Report to Shareholders: 1. Financial Statements: Page(s) in Annual Report Report of Independent Auditors 23 Consolidated Balance Sheets 24 Consolidated Statements of Income 25 Consolidated Statements of Stockholders' Equity 26 Consolidated Statements of Cash Flows 27 Notes to Consolidated Financial Statements 28-46 2. Financial Statement Schedules: All Schedules not required or inapplicable have been omitted. 3. Exhibits: Exhibit No. Description 3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). 3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 (No. 33-27219) filed on February 23, 1989). 4 Instruments Defining the Rights of Security Holders are filed as Exhibits 3.1 and 3.2. *10.6 Pension Plan of The People's Savings Bank of New Britain, as amended (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-4 (No. 33-27219) filed on February 23, 1989). *10.9 Change of Control Agreement, dated as of September 23, 1991, between the Bank and Edward E. Bohnwagner, III (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.10 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Walter D. Blogoslawski, as amended January 1, 1987 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.11 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Matthew P. Duksa, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.12 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Stanley P. Filewicz, as amended January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.13 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Robert A. Gryboski, M.D., as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.14 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Edward Januszewski, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.15 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Roland L. LeClerc, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.16 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Walter J. Liss, as amended January 1, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.17 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Henry R. Poplaski, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.18 Directors' Voluntary Deferral Agreement, dated January 20, 1987, between the Bank and Anthony R. Puskarz, Jr. (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991) *10.19 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Eugene M. Rosol, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.20 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Chester S. Sledzik, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.21 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Robert A. Story, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.22 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Joseph A. Welna, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.23 People's Savings Financial Corp. Dividend Reinvestment Plan and Stock Purchase Plan (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for this fiscal year ended December 31, 1992). *10.24 People's Savings Financial Corp. Savings and Investment Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). *10.25 Change of Control Agreement, dated as of January 17, 1995, between the Bank and Daniel Hurley (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). *10.26 Change of Control Agreement, dated as of January 17, 1995, between the Bank and Earl Young (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). *10.27 The People's Savings Financial Corp. 1995 Stock Option and Incentive Plan for Outside Directors (incorporated by reference to Exhibit A to the Company's Proxy Statement for the 1995 Annual meeting of Stockholders). *10.28 The People's Savings Financial Corp. 1995 Stock Option and Incentive Plan (for Employees) (incorporated by reference to Exhibit B to the Company's Proxy Statement for the 1995 Annual meeting of Stockholders). *10.29 Employment Agreement dated November 19, 1996 between the Bank and Richard S. Mansfield. *10.30 Employment Agreement dated November 19, 1996 between the Bank and John G. Medvec. *10.31 Employment Agreement dated November 19, 1996 between the Bank and Teresa Sasinski. *10.32 Change of Control Agreement, dated as of November 19, 1996 between the Bank and Richard S. Mansfield. *10.33 Change of Control Agreement, dated as of November 19, 1996 between the Bank and John G. Medvec. *10.34 Change of Control Agreement, dated as of November 19, 1996 between the Bank and Teresa Sasinski. 11 Statement Concerning Computation of Per Share Earnings 13 Annual Report to Shareholders for the Year Ended December 31, 1996 (previously filed) 21 Subsidiaries of the Registrant 24 Consent of Independent Accountants 25 Power of Attorney 27 Financial Data Schedule *Management contracts or compensatory plans, contracts or arrangements. (b) Reports on Form 8-K. No report on Form 8-K was filed during the fourth quarter of 1996. (c) The exhibits required by Item 601 of Regulation S-K are filed as a separate part of this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PEOPLE'S SAVINGS FINANCIAL CORP. By /s/ Richard S. Mansfield Richard S. Mansfield President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Richard S. Mansfield President and Chief March 18, 1997 Richard S. Mansfield Executive Officer (Principal Executive Officer) /s/ John G. Medvec Executive Vice March 18, 1997 John G. Medvec President and Treasurer (Principal Financial Officer and Principal Accounting Officer) * Director March 18, 1997 Joseph A. Welna * Director March 18, 1997 Robert A. Gryboski * Director March 18, 1997 Walter J. Liss * Director March 18, 1997 Robert A. Story * Director March 18, 1997 Walter D. Blogoslawski * Director March 18, 1997 Stanley P. Filewicz * Director March 18, 1997 Roland L. LeClerc * Director March 18, 1997 Chester S. Sledzik * Director March 18, 1997 Henry Poplaski * Director March 18, 1997 A. Richard Puskarz, Jr. By /s/ John G. Medvec John G. Medvec Attorney-in-Fact EXHIBIT INDEX Exhibit Page Number Description Number 3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). 3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 (No. 33-27219) filed on February 23, 1989). 4 Instruments Defining the Rights of Security Holders are filed as Exhibits 3.1 and 3.2. *10.6 Pension Plan of The People's Savings Bank of New Britain, as amended (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-4 (No. 33-27219) filed on February 23, 1989). *10.9 Change of Control Agreement, dated as of September 23, 1991, between the Bank and Edward E. Bohnwagner, III (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.10 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Walter D. Blogoslawski, as amended January 1, 1987 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.11 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Matthew P. Duksa, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.12 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Stanley P. Filewicz, as amended January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.13 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Robert A. Gryboski, M.D., as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.14 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Edward Januszewski, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.15 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Roland L. LeClerc, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.16 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Walter J. Liss, as amended January 1, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.17 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Henry R. Poplaski, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.18 Directors' Voluntary Deferral Agreement, dated January 20, 1987, between the Bank and Anthony R. Puskarz, Jr. (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.19 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Eugene M. Rosol, as amended January 1, 1987 and January 20, 1987 (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.20 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Chester S. Sledzik, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.21 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Robert A. Story, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.22 Directors' Voluntary Deferral Agreement, dated January 1, 1985, between the Bank and Joseph A. Welna, as amended January 1, 1987, January 20, 1987 and February 10, 1989 (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). *10.23 People's Savings Financial Corp. Dividend Reinvestment Plan and Stock Purchase Plan (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992). *10.24 People's Savings Financial Corp. Savings and Investment Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). *10.25 Change of Control Agreement, dated as of January 17, 1995, between the Bank and Daniel Hurley (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). *10.26 Change of Control Agreement, dated as of January 17, 1995, between the Bank and Earl Young (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). *10.27 The People's Savings Financial Corp. 1995 Stock Option and Incentive Plan for Outside Directors. Incentive Plan for Outside Directors (incorporated by reference to Exhibit A to the Company's Proxy Statement for the 1995 Annual meeting of Stockholders). *10.28 The People's Savings Financial Corp. 1995 Stock Option and Incentive Plan for Outside Directors. Incentive Plan (for Employees), (incorporated by reference to Exhibit B to the Company's Proxy Statement for the 1995 Annual meeting of Stockholders). *10.29 Employment Agreement dated November 19, 1996 between the Bank and Richard S. Mansfield. *10.30 Employment Agreement dated November 19, 1996 between the Bank and John G. Medvec. *10.31 Employment Agreement dated November 19, 1996 between the Bank and Teresa Sasinski. *10.32 Change of Control Agreement dated as of November 19, 1996 between the Bank and Richard S. Mansfield. *10.33 Change of Control Agreement dated as of November 19, 1996 between the Bank and John G. Medvec. *10.32 Change of Control Agreement dated as of November 19, 1996 between the Bank and Teresa Sasinski. 11 Statement Concerning Computation of Per Share Earnings 13 Annual Report to Shareholders for the Year Ended December 31, 1996 (previously filed) 21 Subsidiaries of the Registrant 24 Consent of Independent Auditors 25 Power of Attorney 27 Financial Data Schedule ____________________ * Management contracts or compensatory plans, contracts or arrangements. EX-10.29 2 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this ____ day of October, 1996, by and between The People's Savings Bank of New Britain, a Connecticut savings bank with its principal office and place of business in New Britain, Connecticut ("Employer") and Richard S. Mansfield, a resident of Wolcott, Connecticut ("Employee"). W I T N E S S E T H WHEREAS, Employee and Employer are parties to an Employment Agreement dated as of August 1, 1986 (the "Prior Agreement") which, among other things, provides certain benefits to Employee upon a change in control of Employer; and WHEREAS, Employee and Employer have entered into a Change in Control Agreement dated as of the date hereof (the "Change in Control Agreement"), the provisions of which are intended to supersede the change in control provisions in the Prior Agreement; and WHEREAS, Employee and Employer desire to amend and restate the Prior Agreement, upon the terms and conditions set forth herein, to delete from the Prior Agreement such change in control provisions and to make clear the terms under which Employee desires to remain in the employ of Employer, and under which the Employer desires to continue to employ Employee. NOW THEREFORE, in consideration of the promises and the mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby mutually covenant and agree as follows: 1. Employment. Employer hereby agrees to employ Employee as President and Chief Executive Officer of Employer for the Term of Employment, as defined in Section 2.1, and Employee accepts said employment and agrees to serve in such capacity upon the terms and conditions hereinafter set forth. 2. Definitions. 2.1 "Term of Employment" shall mean the period commencing with the date hereof and ending on December 31, 1999. The Term of Employment shall automatically be extended on each January 1 hereafter by adding an additional year to the then remaining period of employment without further notice or action of the parties; provided that either party may serve written notice to the other at least three (3) months prior to any such January 1 of its desire that the period of employment not be further automatically extended as provided herein, in which event there shall thereafter be no such further automatic extensions of the Term of Employment. Notwithstanding the foregoing, the Term of Employment shall end one (1) day after the occurrence of any of the following events: (a) Employee's termination for "Cause" (as defined in Section 2.3); (b) unilateral termination of Employee's employment by Employee other than as permitted under Section 5.2; (c) unilateral termination of Employee's employment by Employer prior to a Change of Control as defined in a Change in Control Agreement; (d) the death of Employee; or (e) the "permanent disability" of Employee (as defined in Section 2.2); (f) Payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 2.2 Employee's "permanent disability," as this phrase is used throughout this Agreement, shall mean Employee's disability as defined under the long-term disability insurance policy of Employer as in effect from time to time. 2.3 "Cause," as this term is used throughout this Agreement, shall mean: (a) Employee's failure to be available to work on a full-time basis in the position set forth in Section 1 hereof other than as a result of a permanent disability, if such failure shall not have been cured by Employee within thirty (30) days after receipt from Employer of written notice of a claimed breach by Employee; or (b) willful material misconduct by Employee, including, but not limited to, the commission by Employee of a felony or the perpetration by Employee of a common law fraud upon Employer, in the case of (a) or (b) above, as determined in good faith by a vote of at least 75% of the members of Employer's Board of Directors. 2.4 A "Person" shall include natural person, corporation, or other entity. When two (2) or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of Employer common stock, such partnership, syndicate, or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Securities Exchange Act of 1934 Rule 13d-3, 17 C.F.R. Section 240.13d-3. 3. Duties of Employment. Employee agrees that, so long as he shall be employed by Employer, Employee shall perform all duties assigned or delegated to him under the By- Laws of Employer or from time to time by the Board of Directors of Employer consistent with his position as a senior executive officer of Employer, and shall perform all acts and services customarily associated with such position, devoting his full time, best efforts and attention to the advancement of the interests and business of Employer. Employee shall not be engaged in or concerned with any other duties or pursuits which are competitive or inconsistent with the interests and business of Employer. It is understood that Employee may have directorships which may, from time to time, require minor portions of his time, but which shall not interfere or be inconsistent with his duties hereunder. 4. Compensation. During the Term of Employment, Employer shall pay to Employee as compensation for the services to be rendered by him hereunder the following: (a) Employer shall pay to Employee a base salary at the rate of $171,252.00 per year, or such larger sum as the Board of Directors of Employer may from time to time determine (the "Base Rate"). Such compensation shall be payable in accordance with normal payroll practices of Employer. (b) In addition, Employee shall receive an annual increase in the Base Rate at each normal pay adjustment date during such Term of Employment, but no later than one (1) year from the date of Employee's last increase and annually thereafter during such Term of Employment, of not less than the percentage increase in the cost-of-living since Employee's last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau of Labor Statistics, except that no such increase shall be made at any time during which a salary freeze applicable to all executive employees of Employer generally may be in effect. (c) Employer shall provide life insurance on the life of Employee in an amount equal to twice the Base Rate, payable to a beneficiary selected by Employee, and shall provide comprehensive health insurance and Major Medical coverage for Employee comparable to such coverage provided for officers of Employer generally. Employer shall also provide Employee with long-term disability insurance coverage. Employee shall be eligible to participate in the pension plan of Employer in accordance with the terms thereof. (d) Except as otherwise set forth herein, if Employee should be prevented from performing his duties by reason of illness or incapacity or for any other cause for an aggregate of six months in any one year, then Employer shall not be obligated to pay Employee any salary or bonus for any period of absence (except for absence during paid vacation as provided herein) in excess of the aggregate of six months in any such year. 5. Termination of Employment. 5.1 If Employee's employment is unilaterally terminated by Employer during the Term of Employment, for any reason other than the reasons provided in Section 2.3 hereof, Employee shall be entitled to receive, and Employer shall be obligated to pay to Employee, the following amounts: (a) severance pay in an amount equal to the salary compensation of Employee defined in Sections 4(a) and 4(b) hereof for an additional twelve (12) months at the then current rate, from which shall be subtracted only the amount, if any, payable to Employee under any then effective severance pay plan of Employer (which, for purposes hereof, shall not include any amount payable to Employee pursuant to the Change in Control Agreement), the foregoing net amount to be paid in cash in the month next following Employee's termination of employment. (b) an amount equal to the aggregate amounts that Employer would have contributed on behalf of Employee under Employer's Deferred Profit Sharing Plan, if any such plan shall be in effect, for an additional twelve (12) months had Employee continued in the employ of Employer for such additional twelve (12) months and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Employee had made contributions to said plan in the period, not exceeding three (3) fiscal years of Employer, preceding Employee's termination; (c) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Employee under the Retirement Plan of Employer (the "Plan") if Employee had been continued in the employ of Employer for an additional twelve (12) months and had received compensation at least equal to that specified in Section 4 of this Agreement until such time and (ii) the annual pension benefit actually payable to Employee under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; (d) to the extent that any form of compensation previously granted to Employee, such as, by way of example only, restricted stock or performance share awards, shall not be fully vested or shall require additional service as an employee at the time of the termination of Employee's employment, Employee shall be credited with additional service for an additional twelve (12) months; (e) for an additional twelve (12) months, Employee shall also continue to participate in all life, health, disability and similar insurance plans and programs of Employer to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Employer and Employee paying the same portion of the cost of each such plan or program as existed at the time of Employee's termination. In the event that Employee's continued participation in any group plans and programs is not permitted, then in lieu thereof, Employer shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Employee; provided that Employer shall not be obligated to pay for any such individual coverage more than three (3) times Employer's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Employer shall pay to Employee for such additional twelve (12) month period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Employer for such insurance on Employee's behalf over the three (3) fiscal years of Employer preceding the termination of his employment; and (f) Employee shall continue to receive for an additional twelve (12) months such perquisites as he was receiving at the time of the termination of his employment. 5.2 Employee shall have the right during the Term of Employment, at his sole option, by thirty (30) days' advance written notice to the Board of Directors of Employer, to terminate his services hereunder upon the occurrence of any action by Employer which (i) significantly reduces Employee's job responsibilities, (ii) results in a significant worsening of Employee's work conditions, or (iii) requires a relocation by Employee to a place of work outside of New Britain, Connecticut. Termination of Employee's services under this Section 5.2 shall be deemed a unilateral, involuntary termination of employment by Employer and shall be governed by the provisions of Section 5.1 hereof. Subject to the provisions of Section 7, Employee shall have no further obligation under this Agreement. 5.3 Employee shall have no duty to mitigate damages in the event of a termination under the terms of Sections 5.1 or 5.2 or in the event of his permanent disability under Section 5.4, and if he voluntarily obtains other employment (including self-employment), any compensation or profits received or accrued, directly or indirectly, from such other employment shall not reduce or otherwise affect the obligations of Employer to make payments hereunder. 5.4 If the employment of Employee shall terminate during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had he remained in the employ of Employer for an additional twelve (12) months reduced by the amount of disability insurance payments made to Employee under any policy or plan maintained by Employer, shall continue to be made to him for an additional twelve (12) months, or until he shall no longer be considered permanently disabled under Section 2.2, if earlier. If Employee shall die following a termination of his employment under Section 5.1 or 5.2, or following a termination during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had he lived for a period of twelve (12) months following the termination of his employment shall be made instead to such beneficiary as Employee shall have designated in writing. To the extent that neither Employee nor his designee shall live for such twelve (12) month period following the termination of Employee's employment, after the death of the second of them to die, said payments shall be made to the estate of such person. If Employee shall die without a beneficiary designation in effect, said payments shall be made to Employee's estate. 5.5 If the employment of Employee shall terminate at a time other than during the Term of Employment, or if said employment shall terminate for any of the reasons provided in Section 2.3 hereof, or if Employee shall unilaterally terminate his employment other than as permitted under Section 5.2, all payments that would have been due to Employee under this Agreement on or after the date of such termination shall cease, and Employer shall have no further obligations under this Agreement other than for amounts accrued but not paid as of the date of such termination. 6. Other Benefits 6.1 During the Term of Employment while actively employed, Employee shall be entitled to and shall be included in any employee welfare or pension benefit plan or program of Employer available generally to the employees of Employer to the extent that he is eligible to participate under the general provisions of such plans. 6.2 During the Term of Employment while actively employed, Employee shall be entitled each year to a vacation of at least four (4) weeks, and during such time his compensation shall be paid in full. The period of vacation selected each year shall be with the approval of the Employer. Vacation time which is not taken by the Employee in any year may be deferred and taken in the first quarter of the following year or, at the option of the Employer, shall be purchased by the Employer at a per diem rate calculated on the basis of Employee's then base salary. 7. Confidential Information Employee understands that in the course of his employment by Employer, Employee will receive confidential information concerning the business or purposes of Employer, and which Employer desires to protect. Employee agrees that he will not at any time during or after the Term of Employment reveal to anyone outside Employer or use for his own benefit any such information that has been designated as confidential by Employer or understood by Employee to be confidential without specific written authorization by Employer. Employee further agrees not to use any such confidential information or trade secrets in competing with Employer at any time during or after his employment by Employer. 8. Covenants by Employee Not to Compete With Employer (a) Upon termination of Employee's employment by Employer for any reason (other than a termination pursuant to Sections 5.1 or 5.2 of this Agreement), Employee covenants and agrees that he will not at any time during the period of one (1) year from and after such termination directly or indirectly in any manner or under any circumstances or conditions whatsoever be or become interested, as an individual, partner, principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other business similar to the business of Employer or in any way in competition with the business of Employer within any of the City of New Britain and the Towns of Berlin, Meriden, Newington, Rocky Hill, Southington and Plainville, all in the State of Connecticut. For purposes of this section (a), "Employer" shall be limited to the People's Savings Bank of New Britain, and the "business of Employer" shall be limited to its business as a Connecticut savings bank, and any other lines of business developed or entered into by it, its holding company Peoples Savings Financial Corp., or any subsidiary of the foregoing, during the term of this Agreement, but shall not include lines of business of any successor or affiliated corporation in which Employee is not directly involved. (b) Employee hereby acknowledges that his services are unique and extraordinary, and are not readily replaceable, and hereby expressly agrees that Employer in enforcing the covenants contained in this Section, in addition to any other remedies provided for herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction to an injunction restraining him in the event of a breach, actual or threatened, of the agreements and covenants contained in this Paragraph. (c) The parties hereto believe that the restrictive covenants of this Section are reasonable. However, if at any time it shall be determined by any court of competent jurisdiction that this Section or any portion of it, as written, is unenforceable because the restrictions are unreasonable, the parties hereto agree that such portions as shall have been determined to be unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions reasonable in the determination of such court, and said covenants, as so modified, shall be enforceable between the parties to the same extent as if such amendments had been made prior to the date of any alleged breach of said covenants. 9. Termination Upon Change of Control. Notwithstanding anything contained herein to the contrary, this Agreement shall terminate and be of no further force and effect upon the payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 10. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person to Employee or to the Secretary of Employer, or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee, to his last known address as carried on the personnel records of Employer, and, in the case of Employer, to the corporate headquarters, attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party. 11. Successors and Assigns The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer, including, without limitation, any corporation, individual or other person or entity which may acquire all or substantially all of the assets and business of Employer, or of any division of Employer for which Employee has primary management responsibility, or with or into which Employer may be consolidated or merged or any surviving corporation in any merger involving Employer. All references in this Agreement to Employer shall be deemed to include all such successors and assigns and, upon the occurrence of any event giving rise to any Person becoming a successor or assign bound hereunder by the Agreement, Employer shall be thereby relieved of any further obligation or liability under this Agreement, except for any amounts due and payable to Employee under the provisions hereof immediately prior to the occurrence of such event. 12. Arbitration. Any dispute which may arise between the parties hereto shall be submitted to binding arbitration in accordance with the Rules of the American Arbitration Association; provided that any such dispute shall first be submitted to Employer's Board of Directors in an effort to resolve such dispute without resort to arbitration. In any dispute which is submitted to arbitration, the attorney's fees of the prevailing party shall be paid by the other party. 13. Severability If any of the terms or conditions of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, such term or condition shall be deemed severable from the remainder of this Agreement, and the other terms and conditions of this Agreement shall continue to be valid and enforceable. 14. Construction. This Agreement shall be construed under the laws of the State of Connecticut. Words of masculine gender mean and include correlative words of the feminine gender. Section headings are for convenience only and shall not be considered a part of the terms and provisions of the Agreement. IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by a duly authorized officer and Employee has hereunto set his hand, this ____ day of October, 1996. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By Its RICHARD S. MANSFIELD EX-10.30 3 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this ____ day of October, 1996, by and between The People's Savings Bank of New Britain, a Connecticut savings bank with its principal office and place of business in New Britain, Connecticut ("Employer") and John G. Medvec, a resident of Newington, Connecticut ("Employee"). W I T N E S S E T H WHEREAS, Employee and Employer are parties to an Employment Agreement dated as of August 1, 1986 (the "Prior Agreement") which, among other things, provides certain benefits to Employee upon a change in control of Employer; and WHEREAS, Employee and Employer have entered into a Change in Control Agreement dated as of the date hereof (the "Change in Control Agreement"), the provisions of which are intended to supersede the change in control provisions in the Prior Agreement; and WHEREAS, Employee and Employer desire to amend and restate the Prior Agreement, upon the terms and conditions set forth herein, to delete from the Prior Agreement such change in control provisions and to make clear the terms under which Employee desires to remain in the employ of Employer, and under which the Employer desires to continue to employ Employee. NOW THEREFORE, in consideration of the promises and the mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby mutually covenant and agree as follows: 1. Employment. Employer hereby agrees to employ Employee as Executive Vice President and Treasurer of Employer for the Term of Employment, as defined in Section 2.1, and Employee accepts said employment and agrees to serve in such capacity upon the terms and conditions hereinafter set forth. 2. Definitions. 2.1 "Term of Employment" shall mean the period commencing with the date hereof and ending on December 31, 1999. The Term of Employment shall automatically be extended on each January 1 hereafter by adding an additional year to the then remaining period of employment without further notice or action of the parties; provided that either party may serve written notice to the other at least three (3) months prior to any such January 1 of its desire that the period of employment not be further automatically extended as provided herein, in which event there shall thereafter be no such further automatic extensions of the Term of Employment. Notwithstanding the foregoing, the Term of Employment shall end one (1) day after the occurrence of any of the following events: (a) Employee's termination for "Cause" (as defined in Section 2.3); (b) unilateral termination of Employee's employment by Employee other than as permitted under Section 5.2; (c) unilateral termination of Employee's employment by Employer prior to a Change of Control as defined in a Change in Control Agreement; (d) the death of Employee; or (e) the "permanent disability" of Employee (as defined in Section 2.2); (f) Payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 2.2 Employee's "permanent disability," as this phrase is used throughout this Agreement, shall mean Employee's disability as defined under the long-term disability insurance policy of Employer as in effect from time to time. 2.3 "Cause," as this term is used throughout this Agreement, shall mean: (a) Employee's failure to be available to work on a full-time basis in the position set forth in Section 1 hereof other than as a result of a permanent disability, if such failure shall not have been cured by Employee within thirty (30) days after receipt from Employer of written notice of a claimed breach by Employee; or (b) willful material misconduct by Employee, including, but not limited to, the commission by Employee of a felony or the perpetration by Employee of a common law fraud upon Employer, in the case of (a) or (b) above, as determined in good faith by a vote of at least 75% of the members of Employer's Board of Directors. 2.4 A "Person" shall include natural person, corporation, or other entity. When two (2) or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of Employer common stock, such partnership, syndicate, or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Securities Exchange Act of 1934 Rule 13d-3, 17 C.F.R. Section 240.13d-3. 3. Duties of Employment. Employee agrees that, so long as he shall be employed by Employer, Employee shall perform all duties assigned or delegated to him under the By-Laws of Employer or from time to time by the Board of Directors of Employer consistent with his position as a senior executive officer of Employer, and shall perform all acts and services customarily associated with such position, devoting his full time, best efforts and attention to the advancement of the interests and business of Employer. Employee shall not be engaged in or concerned with any other duties or pursuits which are competitive or inconsistent with the interests and business of Employer. It is understood that Employee may have directorships which may, from time to time, require minor portions of his time, but which shall not interfere or be inconsistent with his duties hereunder. 4. Compensation. During the Term of Employment, Employer shall pay to Employee as compensation for the services to be rendered by him hereunder the following: (a) Employer shall pay to Employee a base salary at the rate of $129,012.00 per year, or such larger sum as the Board of Directors of Employer may from time to time determine (the "Base Rate"). Such compensation shall be payable in accordance with normal payroll practices of Employer. (b) In addition, Employee shall receive an annual increase in the Base Rate at each normal pay adjustment date during such Term of Employment, but no later than one (1) year from the date of Employee's last increase and annually thereafter during such Term of Employment, of not less than the percentage increase in the cost-of-living since Employee's last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau of Labor Statistics, except that no such increase shall be made at any time during which a salary freeze applicable to all executive employees of Employer generally may be in effect. (c) Employer shall provide life insurance on the life of Employee in an amount equal to twice the Base Rate, payable to a beneficiary selected by Employee, and shall provide comprehensive health insurance and Major Medical coverage for Employee comparable to such coverage provided for officers of Employer generally. Employer shall also provide Employee with long-term disability insurance coverage. Employee shall be eligible to participate in the pension plan of Employer in accordance with the terms thereof. (d) Except as otherwise set forth herein, if Employee should be prevented from performing his duties by reason of illness or incapacity or for any other cause for an aggregate of six months in any one year, then Employer shall not be obligated to pay Employee any salary or bonus for any period of absence (except for absence during paid vacation as provided herein) in excess of the aggregate of six months in any such year. 5. Termination of Employment. 5.1 If Employee's employment is unilaterally terminated by Employer during the Term of Employment, for any reason other than the reasons provided in Section 2.3 hereof, Employee shall be entitled to receive, and Employer shall be obligated to pay to Employee, the following amounts: (a) severance pay in an amount equal to the salary compensation of Employee defined in Sections 4(a) and 4(b) hereof for an additional twelve (12) months at the then current rate, from which shall be subtracted only the amount, if any, payable to Employee under any then effective severance pay plan of Employer (which, for purposes hereof, shall not include any amount payable to Employee pursuant to the Change in Control Agreement), the foregoing net amount to be paid in cash in the month next following Employee's termination of employment. (b) an amount equal to the aggregate amounts that Employer would have contributed on behalf of Employee under Employer's Deferred Profit Sharing Plan, if any such plan shall be in effect, for an additional twelve (12) months had Employee continued in the employ of Employer for such additional twelve (12) months and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Employee had made contributions to said plan in the period, not exceeding three (3) fiscal years of Employer, preceding Employee's termination; (c) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Employee under the Retirement Plan of Employer (the "Plan") if Employee had been continued in the employ of Employer for an additional twelve (12) months and had received compensation at least equal to that specified in Section 4 of this Agreement until such time and (ii) the annual pension benefit actually payable to Employee under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; (d) to the extent that any form of compensation previously granted to Employee, such as, by way of example only, restricted stock or performance share awards, shall not be fully vested or shall require additional service as an employee at the time of the termination of Employee's employment, Employee shall be credited with additional service for an additional twelve (12) months; (e) for an additional twelve (12) months, Employee shall also continue to participate in all life, health, disability and similar insurance plans and programs of Employer to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Employer and Employee paying the same portion of the cost of each such plan or program as existed at the time of Employee's termination. In the event that Employee's continued participation in any group plans and programs is not permitted, then in lieu thereof, Employer shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Employee; provided that Employer shall not be obligated to pay for any such individual coverage more than three (3) times Employer's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Employer shall pay to Employee for such additional twelve (12) month period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Employer for such insurance on Employee's behalf over the three (3) fiscal years of Employer preceding the termination of his employment; and (f) Employee shall continue to receive for an additional twelve (12) months such perquisites as he was receiving at the time of the termination of his employment. 5.2 Employee shall have the right during the Term of Employment, at his sole option, by thirty (30) days' advance written notice to the Board of Directors of Employer, to terminate his services hereunder upon the occurrence of any action by Employer which (i) significantly reduces Employee's job responsibilities, (ii) results in a significant worsening of Employee's work conditions, or (iii) requires a relocation by Employee to a place of work outside of New Britain, Connecticut. Termination of Employee's services under this Section 5.2 shall be deemed a unilateral, involuntary termination of employment by Employer and shall be governed by the provisions of Section 5.1 hereof. Subject to the provisions of Section 7, Employee shall have no further obligation under this Agreement. 5.3 Employee shall have no duty to mitigate damages in the event of a termination under the terms of Sections 5.1 or 5.2 or in the event of his permanent disability under Section 5.4, and if he voluntarily obtains other employment (including self-employment), any compensation or profits received or accrued, directly or indirectly, from such other employment shall not reduce or otherwise affect the obligations of Employer to make payments hereunder. 5.4 If the employment of Employee shall terminate during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had he remained in the employ of Employer for an additional twelve (12) months reduced by the amount of disability insurance payments made to Employee under any policy or plan maintained by Employer, shall continue to be made to him for an additional twelve (12) months, or until he shall no longer be considered permanently disabled under Section 2.2, if earlier. If Employee shall die following a termination of his employment under Section 5.1 or 5.2, or following a termination during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had he lived for a period of twelve (12) months following the termination of his employment shall be made instead to such beneficiary as Employee shall have designated in writing. To the extent that neither Employee nor his designee shall live for such twelve (12) month period following the termination of Employee's employment, after the death of the second of them to die, said payments shall be made to the estate of such person. If Employee shall die without a beneficiary designation in effect, said payments shall be made to Employee's estate. 5.5 If the employment of Employee shall terminate at a time other than during the Term of Employment, or if said employment shall terminate for any of the reasons provided in Section 2.3 hereof, or if Employee shall unilaterally terminate his employment other than as permitted under Section 5.2, all payments that would have been due to Employee under this Agreement on or after the date of such termination shall cease, and Employer shall have no further obligations under this Agreement other than for amounts accrued but not paid as of the date of such termination. 6. Other Benefits 6.1 During the Term of Employment while actively employed, Employee shall be entitled to and shall be included in any employee welfare or pension benefit plan or program of Employer available generally to the employees of Employer to the extent that he is eligible to participate under the general provisions of such plans. 6.2 During the Term of Employment while actively employed, Employee shall be entitled each year to a vacation of at least four (4) weeks, and during such time his compensation shall be paid in full. The period of vacation selected each year shall be with the approval of the Employer. Vacation time which is not taken by the Employee in any year may be deferred and taken in the first quarter of the following year or, at the option of the Employer, shall be purchased by the Employer at a per diem rate calculated on the basis of Employee's then base salary. 7. Confidential Information Employee understands that in the course of his employment by Employer, Employee will receive confidential information concerning the business or purposes of Employer, and which Employer desires to protect. Employee agrees that he will not at any time during or after the Term of Employment reveal to anyone outside Employer or use for his own benefit any such information that has been designated as confidential by Employer or understood by Employee to be confidential without specific written authorization by Employer. Employee further agrees not to use any such confidential information or trade secrets in competing with Employer at any time during or after his employment by Employer. 8. Covenants by Employee Not to Compete With Employer (a) Upon termination of Employee's employment by Employer for any reason (other than a termination pursuant to Sections 5.1 or 5.2 of this Agreement), Employee covenants and agrees that he will not at any time during the period of one (1) year from and after such termination directly or indirectly in any manner or under any circumstances or conditions whatsoever be or become interested, as an individual, partner, principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other business similar to the business of Employer or in any way in competition with the business of Employer within any of the City of New Britain and the Towns of Berlin, Meriden, Newington, Rocky Hill, Southington and Plainville, all in the State of Connecticut. For purposes of this section (a), "Employer" shall be limited to the People's Savings Bank of New Britain, and the "business of Employer" shall be limited to its business as a Connecticut savings bank, and any other lines of business developed or entered into by it, its holding company Peoples Savings Financial Corp., or any subsidiary of the foregoing, during the term of this Agreement, but shall not include lines of business of any successor or affiliated corporation in which Employee is not directly involved. (b) Employee hereby acknowledges that his services are unique and extraordinary, and are not readily replaceable, and hereby expressly agrees that Employer in enforcing the covenants contained in this Section, in addition to any other remedies provided for herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction to an injunction restraining him in the event of a breach, actual or threatened, of the agreements and covenants contained in this Paragraph. (c) The parties hereto believe that the restrictive covenants of this Section are reasonable. However, if at any time it shall be determined by any court of competent jurisdiction that this Section or any portion of it, as written, is unenforceable because the restrictions are unreasonable, the parties hereto agree that such portions as shall have been determined to be unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions reasonable in the determination of such court, and said covenants, as so modified, shall be enforceable between the parties to the same extent as if such amendments had been made prior to the date of any alleged breach of said covenants. 9. Termination Upon Change of Control. Notwithstanding anything contained herein to the contrary, this Agreement shall terminate and be of no further force and effect upon the payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 10. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person to Employee or to the Secretary of Employer, or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee, to his last known address as carried on the personnel records of Employer, and, in the case of Employer, to the corporate headquarters, attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party. 11. Successors and Assigns The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer, including, without limitation, any corporation, individual or other person or entity which may acquire all or substantially all of the assets and business of Employer, or of any division of Employer for which Employee has primary management responsibility, or with or into which Employer may be consolidated or merged or any surviving corporation in any merger involving Employer. All references in this Agreement to Employer shall be deemed to include all such successors and assigns and, upon the occurrence of any event giving rise to any Person becoming a successor or assign bound hereunder by the Agreement, Employer shall be thereby relieved of any further obligation or liability under this Agreement, except for any amounts due and payable to Employee under the provisions hereof immediately prior to the occurrence of such event. 12. Arbitration. Any dispute which may arise between the parties hereto shall be submitted to binding arbitration in accordance with the Rules of the American Arbitration Association; provided that any such dispute shall first be submitted to Employer's Board of Directors in an effort to resolve such dispute without resort to arbitration. In any dispute which is submitted to arbitration, the attorney's fees of the prevailing party shall be paid by the other party. 13. Severability If any of the terms or conditions of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, such term or condition shall be deemed severable from the remainder of this Agreement, and the other terms and conditions of this Agreement shall continue to be valid and enforceable. 14. Construction. This Agreement shall be construed under the laws of the State of Connecticut. Words of masculine gender mean and include correlative words of the feminine gender. Section headings are for convenience only and shall not be considered a part of the terms and provisions of the Agreement. IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by a duly authorized officer and Employee has hereunto set his hand, this ____ day of October, 1996. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By Its JOHN G. MEDVEC EX-10.31 4 EMPLOYMENT AGREEMENT THIS AGREEMENT is made and entered into as of this ____ day of __________, 1996, by and between The People's Savings Bank of New Britain, a Connecticut savings bank with its principal office and place of business in New Britain, Connecticut ("Employer") and Teresa Sasinski, a resident of Kensington, Connecticut ("Employee"). W I T N E S S E T H WHEREAS, Employee has been and continues to be employed by Employer in a management capacity; and WHEREAS, Employer desires to secure the services of Employee on the terms set forth herein; and WHEREAS, Employee is willing to enter into this Agreement on said terms and thereby to continue to work for Employer pursuant to said terms; and WHEREAS, Employee and Employer have entered into a Change of Control Agreement as of the date hereof (the "Change of Control Agreement") the provisions of which are intended to be in addition to, and not in conflict with, this Agreement. NOW THEREFORE, in consideration of the promises and the mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby mutually covenant and agree as follows: 1. Employment. Employer hereby agrees to employ Employee as Senior Vice President and Corporate Secretary of Employer for the Term of Employment, as defined in Section 2.1, and Employee accepts said employment and agrees to serve in such capacity upon the terms and conditions hereinafter set forth. 2. Definitions. 2.1 "Term of Employment" shall mean the period commencing with the date hereof and ending on December 31, 1999. The Term of Employment shall automatically be extended on each January 1 hereafter by adding an additional year to the then remaining period of employment without further notice or action of the parties; provided that either party may serve written notice to the other at least three (3) months prior to any such January 1 of its desire that the period of employment not be further automatically extended as provided herein, in which event there shall thereafter be no such further automatic extensions of the Term of Employment. Notwithstanding the foregoing, the Term of Employment shall end one (1) day after the occurrence of any of the following events: (a) Employee's termination for "Cause" (as defined in Section 2.3); (b) unilateral termination of Employee's employment by Employee other than as permitted under Section 5.2; (c) unilateral termination of Employee's employment by Employer prior to a Change of Control as defined in a Change in Control Agreement; (d) the death of Employee; or (e) the "permanent disability" of Employee (as defined in Section 2.2); (f) Payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 2.2 Employee's "permanent disability," as this phrase is used throughout this Agreement, shall mean Employee's disability as defined under the long-term disability insurance policy of Employer as in effect from time to time. 2.3 "Cause," as this term is used throughout this Agreement, shall mean: (a) Employee's failure to be available to work on a full-time basis in the position set forth in Section 1 hereof other than as a result of a permanent disability, if such failure shall not have been cured by Employee within thirty (30) days after receipt from Employer of written notice of a claimed breach by Employee; or (b) willful material misconduct by Employee, including, but not limited to, the commission by Employee of a felony or the perpetration by Employee of a common law fraud upon Employer, in the case of (a) or (b) above, as determined in good faith by a vote of at least 75% of the members of Employer's Board of Directors. 2.4 A "Person" shall include natural person, corporation, or other entity. When two (2) or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of Employer common stock, such partnership, syndicate, or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Securities Exchange Act of 1934 Rule 13d-3, 17 C.F.R. Section 240.13d-3. 3. Duties of Employment. Employee agrees that, so long as she shall be employed by Employer, Employee shall perform all duties assigned or delegated to her under the By-Laws of Employer or from time to time by the Board of Directors of Employer consistent with her position as a senior executive officer of Employer, and shall perform all acts and services customarily associated with such position, devoting her full time, best efforts and attention to the advancement of the interests and business of Employer. Employee shall not be engaged in or concerned with any other duties or pursuits which are competitive or inconsistent with the interests and business of Employer. It is understood that Employee may have directorships which may, from time to time, require minor portions of her time, but which shall not interfere or be inconsistent with her duties hereunder. 4. Compensation. During the Term of Employment, Employer shall pay to Employee as compensation for the services to be rendered by her hereunder the following: (a) Employer shall pay to Employee a base salary at the rate of $77,000 per year, or such larger sum as the Board of Directors of Employer may from time to time determine (the "Base Rate"). Such compensation shall be payable in accordance with normal payroll practices of Employer. (b) In addition, Employee shall receive an annual increase in the Base Rate at each normal pay adjustment date during such Term of Employment, but no later than one (1) year from the date of Employee's last increase and annually thereafter during such Term of Employment, of not less than the percentage increase in the cost-of-living since Employee's last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau of Labor Statistics, except that no such increase shall be made at any time during which a salary freeze applicable to all executive employees of Employer generally may be in effect. (c) Employer shall provide life insurance on the life of Employee in an amount equal to twice the Base Rate, payable to a beneficiary selected by Employee, and shall provide comprehensive health insurance and Major Medical coverage for Employee comparable to such coverage provided for officers of Employer generally. Employer shall also provide Employee with long-term disability insurance coverage. Employee shall be eligible to participate in the pension plan of Employer in accordance with the terms thereof. (d) Except as otherwise set forth herein, if Employee should be prevented from performing her duties by reason of illness or incapacity or for any other cause for an aggregate of six months in any one year, then Employer shall not be obligated to pay Employee any salary or bonus for any period of absence (except for absence during paid vacation as provided herein) in excess of the aggregate of six months in any such year. 5. Termination of Employment. 5.1 If Employee's employment is unilaterally terminated by Employer during the Term of Employment, for any reason other than the reasons provided in Section 2.3 hereof, Employee shall be entitled to receive, and Employer shall be obligated to pay to Employee, the following amounts: (a) severance pay in an amount equal to the salary compensation of Employee defined in Sections 4(a) and 4(b) hereof for an additional twelve (12) months at the then current rate, from which shall be subtracted only the amount, if any, payable to Employee under any then effective severance pay plan of Employer (which, for purposes hereof, shall not include any amount payable to Employee pursuant to the Change in Control Agreement), the foregoing net amount to be paid in cash in the month next following Employee's termination of employment. (b) an amount equal to the aggregate amounts that Employer would have contributed on behalf of Employee under Employer's Deferred Profit Sharing Plan, if any such plan shall be in effect, for an additional twelve (12) months had Employee continued in the employ of Employer for such additional twelve (12) months and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Employee had made contributions to said plan in the period, not exceeding three (3) fiscal years of Employer, preceding Employee's termination; (c) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Employee under the Retirement Plan of Employer (the "Plan") if Employee had been continued in the employ of Employer for an additional twelve (12) months and had received compensation at least equal to that specified in Section 4 of this Agreement until such time and (ii) the annual pension benefit actually payable to Employee under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; (d) to the extent that any form of compensation previously granted to Employee, such as, by way of example only, restricted stock or performance share awards, shall not be fully vested or shall require additional service as an employee at the time of the termination of Employee's employment, Employee shall be credited with additional service for an additional twelve (12) months; (e) for an additional twelve (12) months, Employee shall also continue to participate in all life, health, disability and similar insurance plans and programs of Employer to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Employer and Employee paying the same portion of the cost of each such plan or program as existed at the time of Employee's termination. In the event that Employee's continued participation in any group plans and programs is not permitted, then in lieu thereof, Employer shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Employee; provided that Employer shall not be obligated to pay for any such individual coverage more than three (3) times Employer's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Employer shall pay to Employee for such additional twelve (12) month period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Employer for such insurance on Employee's behalf over the three (3) fiscal years of Employer preceding the termination of her employment; and (f) Employee shall continue to receive for an additional twelve (12) months such perquisites as she was receiving at the time of the termination of her employment. 5.2 Employee shall have the right during the Term of Employment, at her sole option, by thirty (30) days' advance written notice to the Board of Directors of Employer, to terminate her services hereunder upon the occurrence of any action by Employer which (i) significantly reduces Employee's job responsibilities, (ii) results in a significant worsening of Employee's work conditions, or (iii) requires a relocation by Employee to a place of work outside of New Britain, Connecticut. Termination of Employee's services under this Section 5.2 shall be deemed a unilateral, involuntary termination of employment by Employer and shall be governed by the provisions of Section 5.1 hereof. Subject to the provisions of Section 7, Employee shall have no further obligation under this Agreement. 5.3 Employee shall have no duty to mitigate damages in the event of a termination under the terms of Sections 5.1 or 5.2 or in the event of her permanent disability under Section 5.4, and if she voluntarily obtains other employment (including self-employment), any compensation or profits received or accrued, directly or indirectly, from such other employment shall not reduce or otherwise affect the obligations of Employer to make payments hereunder. 5.4 If the employment of Employee shall terminate during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had she remained in the employ of Employer for an additional twelve (12) months reduced by the amount of disability insurance payments made to Employee under any policy or plan maintained by Employer, shall continue to be made to her for an additional twelve (12) months, or until she shall no longer be considered permanently disabled under Section 2.2, if earlier. If Employee shall die following a termination of her employment under Section 5.1 or 5.2, or following a termination during the Term of Employment by reason of the permanent disability of Employee, all payments that would have been due to Employee under this Agreement had she lived for a period of twelve (12) months following the termination of her employment shall be made instead to such beneficiary as Employee shall have designated in writing. To the extent that neither Employee nor her designee shall live for such twelve (12) month period following the termination of Employee's employment, after the death of the second of them to die, said payments shall be made to the estate of such person. If Employee shall die without a beneficiary designation in effect, said payments shall be made to Employee's estate. 5.5 If the employment of Employee shall terminate at a time other than during the Term of Employment, or if said employment shall terminate for any of the reasons provided in Section 2.3 hereof, or if Employee shall unilaterally terminate her employment other than as permitted under Section 5.2, all payments that would have been due to Employee under this Agreement on or after the date of such termination shall cease, and Employer shall have no further obligations under this Agreement other than for amounts accrued but not paid as of the date of such termination. 6. Other Benefits 6.1 During the Term of Employment while actively employed, Employee shall be entitled to and shall be included in any employee welfare or pension benefit plan or program of Employer available generally to the employees of Employer to the extent that she is eligible to participate under the general provisions of such plans. 6.2 During the Term of Employment while actively employed, Employee shall be entitled each year to a vacation of at least four (4) weeks, and during such time her compensation shall be paid in full. The period of vacation selected each year shall be with the approval of the Employer. Vacation time which is not taken by the Employee in any year may be deferred and taken in the first quarter of the following year or, at the option of the Employer, shall be purchased by the Employer at a per diem rate calculated on the basis of Employee's then base salary. 7. Confidential Information Employee understands that in the course of her employment by Employer, Employee will receive confidential information concerning the business or purposes of Employer, and which Employer desires to protect. Employee agrees that she will not at any time during or after the Term of Employment reveal to anyone outside Employer or use for her own benefit any such information that has been designated as confidential by Employer or understood by Employee to be confidential without specific written authorization by Employer. Employee further agrees not to use any such confidential information or trade secrets in competing with Employer at any time during or after her employment by Employer. 8. Covenants by Employee Not to Compete With Employer (a) Upon termination of Employee's employment by Employer for any reason (other than a termination pursuant to Sections 5.1 or 5.2 of this Agreement), Employee covenants and agrees that she will not at any time during the period of one (1) year from and after such termination directly or indirectly in any manner or under any circumstances or conditions whatsoever be or become interested, as an individual, partner, principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other business similar to the business of Employer or in any way in competition with the business of Employer within any of the City of New Britain and the Towns of Berlin, Meriden, Newington, Rocky Hill, Southington and Plainville, all in the State of Connecticut. For purposes of this section (a), "Employer" shall be limited to the People's Savings Bank of New Britain, and the "business of Employer" shall be limited to its business as a Connecticut savings bank, and any other lines of business developed or entered into by it, its holding company Peoples Savings Financial Corp., or any subsidiary of the foregoing, during the term of this Agreement, but shall not include lines of business of any successor or affiliated corporation in which Employee is not directly involved. (b) Employee hereby acknowledges that her services are unique and extraordinary, and are not readily replaceable, and hereby expressly agrees that Employer in enforcing the covenants contained in this Section, in addition to any other remedies provided for herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction to an injunction restraining her in the event of a breach, actual or threatened, of the agreements and covenants contained in this Paragraph. (c) The parties hereto believe that the restrictive covenants of this Section are reasonable. However, if at any time it shall be determined by any court of competent jurisdiction that this Section or any portion of it, as written, is unenforceable because the restrictions are unreasonable, the parties hereto agree that such portions as shall have been determined to be unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions reasonable in the determination of such court, and said covenants, as so modified, shall be enforceable between the parties to the same extent as if such amendments had been made prior to the date of any alleged breach of said covenants. 9. Termination Upon Change of Control. Notwithstanding anything contained herein to the contrary, this Agreement shall terminate and be of no further force and effect upon the payment in full to Employee of the "Severance Amount" as provided for in the Change in Control Agreement. 10. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person to Employee or to the President of Employer, or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee, to her last known address as carried on the personnel records of Employer, and, in the case of Employer, to the corporate headquarters, attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party. 11. Successors and Assigns The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer, including, without limitation, any corporation, individual or other person or entity which may acquire all or substantially all of the assets and business of Employer, or of any division of Employer for which Employee has primary management responsibility, or with or into which Employer may be consolidated or merged or any surviving corporation in any merger involving Employer. All references in this Agreement to Employer shall be deemed to include all such successors and assigns and, upon the occurrence of any event giving rise to any Person becoming a successor or assign bound hereunder by the Agreement, Employer shall be thereby relieved of any further obligation or liability under this Agreement, except for any amounts due and payable to Employee under the provisions hereof immediately prior to the occurrence of such event. 12. Arbitration. Any dispute which may arise between the parties hereto shall be submitted to binding arbitration in accordance with the Rules of the American Arbitration Association; provided that any such dispute shall first be submitted to Employer's Board of Directors in an effort to resolve such dispute without resort to arbitration. In any dispute which is submitted to arbitration, the attorney's fees of the prevailing party shall be paid by the other party. 13. Severability If any of the terms or conditions of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, such term or condition shall be deemed severable from the remainder of this Agreement, and the other terms and conditions of this Agreement shall continue to be valid and enforceable. 14. Construction. This Agreement shall be construed under the laws of the State of Connecticut. Words of masculine gender mean and include correlative words of the feminine gender. Section headings are for convenience only and shall not be considered a part of the terms and provisions of the Agreement. IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by a duly authorized officer and Employee has hereunto set her hand, this ____ day of __________, 1996. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By Its TERESA SASINSKI EX-10.32 5 CHANGE IN CONTROL AGREEMENT THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October , 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a banking corporation organized and existing by virtue of the laws of the State of Connecticut (the "Bank"), and RICHARD S. MANSFIELD (the "Executive"). WHEREAS, the Executive is currently rendering services to the Bank pursuant to an Employment Agreement dated August 1, 1986 containing "change in control" provisions, as amended and restated by an Amended and Restated Employment Agreement dated as of the date hereof which does not contain "change in control" provisions (the "Employment Agreement"); WHEREAS, the Bank considers the performance and dedication of its management team to be significant for its overall corporate strategy and to be essential to protecting and enhancing the best interests of the Bank and its sole shareholder, People's Savings Financial Corp. (the "Company"); WHEREAS, the banking industry is a dynamic one with independent public institutions subject to unexpected changes in ownership; WHEREAS, the performance by the Executive of services to the Bank may be negatively affected by his uncertainty over the possibility of a change in ownership of the Bank or the Company and the possible affect thereof on his employment with the Bank; and WHEREAS, the Bank wishes to additionally mitigate the fears of the Executive regarding a potential ownership change, so as to avoid any negative effect on his performance of services to the Bank, and in that interest the Bank desires to afford certain additional protections to the Executive upon the occurrence of certain events as specified herein. NOW, THEREFORE, to further the above recited corporate objective, and for other good and valuable consideration, the receipt and adequacy of which each party hereby acknowledges, the Bank and the Executive agree as follows: 1. (a) If, at any time while the Executive is a full-time officer of the Bank or the Company, there is a "Change of Control" of the Bank or the Company, the Executive shall be entitled to receive a severance payment (the "Severance Amount") in consideration of services previously rendered to the Bank. The Severance Amount shall be made as a lump sum cash payment and shall be equal to three (3) times the greater of the following: (A) the Executive's compensation from the Bank and the Company (the "Compensation") for services rendered for the last full calendar year immediately preceding the Change of Control, or (B) the Executive's average annual Compensation with respect to the three (3) most recent calendar years ending before the date on which the Change of Control occurs. Compensation as described above shall include the amount of base salary and bonus, if any, paid to the Executive for services rendered for the time period in question pursuant to the Employment Agreement, including any and all of said amounts as may have been deferred by the Executive under Bank deferral plans, if any, and shall include long-term compensation which, by its terms, is accelerated upon a Change of Control or, if not, shall by this Agreement be so accelerated and determined as the present value (determined at the discount rate provided in Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended, or its successor provision) of any cash or non-cash long-term incentive compensation (whether in the form of performance units or otherwise) previously awarded to the Executive but not yet paid, measured at the time of award with the assumption that the award would be 100% earned over the performance period. In addition to the above, Executive shall receive or be paid (1) an amount equal to the aggregate amounts that Bank would have contributed on behalf of Executive under Executive's Deferred Profit Sharing or 401-K Plan, if any such plan shall be in effect upon the Change of Control, for an additional three-year period from the Change of Control (plus estimated earnings thereon) as if Executive had continued in the employ of Bank for that period and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Executive had made contributions to said plan in the period, not exceeding three (3) fiscal years of Bank, preceding the Change of Control; (2) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Executive under the Retirement Plan of Bank (the "Plan") if Executive had been continued in the employ of Bank for an additional three-year period from the Change of Control and had received compensation at least equal to that determined pursuant to Paragraph 1(a) above, and (ii) the annual pension benefit actually payable to Executive under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; and (3) for a period of three years following the Change of Control, Executive shall also continue to participate in all life, health, disability and similar insurance plans and programs of Bank to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Bank and Executive paying the same portion of the cost of each such plan or program as existed at the time of Executive's termination. In the event that Executive's continued participation in any group plans and programs is not permitted, then in lieu thereof, Bank shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Executive; provided that Bank shall not be obligated to pay for any such individual coverage more than three (3) times Bank's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Bank shall pay to Executive annually for such remaining three year period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Bank for such insurance on Executive's behalf over the three (3) fiscal years of Bank preceding the Change of Control, which amount shall be pro-rated for any fraction of a year. The foregoing subparagraphs (1), (2) and (3) shall also be considered part of the "Severance Amount" for the purposes of this Agreement. (b) It is expressly understood and agreed that payment of the Severance Amount may include amounts which are deemed to be "excess parachute payments" under Section 280G of the Internal Revenue Code of 1986, as amended. In that event, the Bank agrees to pay Executive an additional cash payment (the "Additional Payment") in the amount of the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, on the Executive for that portion of the Severance Amount which is deemed to be an excess parachute payment (if any). The Additional Payment shall be determined and paid once upon the determination of the Severance Amount under Paragraph 1(a) above. (c) Payment of the Severance Amount and Additional Payment under this Section 1 shall be paid in full by Bank, Company and/or its or their successors or assigns within ninety (90) days following the date of the Change of Control and shall not be reduced by any compensation which the Executive may receive from the Bank or the Company or from other employment with another employer should Executive's employment with the Bank or the Company terminate. (d) "Change of Control" shall be deemed to have occurred if: (1) a Person (as defined below) directly or indirectly or acting through one (1) or more other persons owns, controls, or has power to vote ten percent (10%) or more of the voting common stock of the Company, or a Person other than the Company directly or indirectly or acting through one (1) or more other persons owns, controls, or has the power to vote ten percent (10%) or more of the voting common stock of the Bank; or (2) a Person acquires or agrees to acquire all or substantially all of the assets and business of the Bank or the Company; or (3) a Person controls in any manner the election of a majority of the directors of the Company or a Person other than the Company controls in any manner the election of a majority of the directors of the Bank; or (4) the Board of Directors of the Company determines that a Person directly or indirectly exercises a controlling influence over the management or policies of Company. Notwithstanding the foregoing, a "Change-in-Control" shall not be deemed to have occurred if (i) a majority of the directors of the Company or the Bank, as applicable, in office prior to the events described in (a), (b) or (c) above shall so vote not later than thirty (30) days following the event and (ii) the Employee shall so agree in writing. A "Person" shall include a natural person, corporation, or other entity. When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of Bank capital stock, such partnership, syndicate or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d- 3, or their successor provision(s). The filing of a Form 13D or 13G by a Person shall not in and of itself be deemed a Change of Control. (e) If, after a Change of Control of the Bank or the Company, the Executive incurs any fees and expenses of counsel to enforce this Agreement, the Bank agrees to pay such fees and expenses to the Executive. The Executive's choice of counsel and his/her decision to retain counsel shall be in his/her discretion, provided any such fees and expenses must be reasonable. (f) Notwithstanding any other provision of this Agreement or of any other agreement, understanding or compensation plan, the Bank shall not be obligated to pay any amounts the payment of which violate restrictions imposed, or which may in the future be imposed, on such payments by the Bank pursuant to Section 18(k)(1) of the Federal Deposit Insurance Act, or any regulations or orders which are or may be promulgated thereunder; nor shall any payments be made which would constitute an "unsafe or unsound banking practice" pursuant to 12 U.S.C. Section 1818(b). (g) The calculation of the Severance Amount shall be performed by the Bank's independent auditing firm at the time of Change of Control, or such other qualified party in the Bank's discretion; provided that, if the Severance Amount so determined is later challenged successfully by the Executive, by court decision or negotiation with the Bank, the Bank shall be additionally liable for all costs and expenses incurred by the Executive in that challenge, including reasonable attorney fees. (h) This Agreement shall survive and continue for as long as the Executive is a full-time officer of the Bank or the Company. (i) This Agreement does not constitute an agreement for the employment of the Executive and shall not give the Executive any right to be retained in the service or employ of the Bank or the Company. 2. This Agreement contains the entire agreement between the parties with respect to the subject matter herein, and there are no other repre- sentations, warranties, conditions or agreements relating to the subject matter of this Agreement. 3. This Agreement may not be changed orally but only by an agreement in writing duly executed on behalf of the party against which enforcement of any waiver, change, modification, consent or discharge is sought. 4. This Agreement shall be binding upon and inure to the benefit of the Bank, Company and the Executive and their respective successors, assigns, heirs and legal representatives. Without otherwise limiting the foregoing, "Bank" and "Company" as used herein shall refer to any successor institution whether by merger, consolidation, acquisition or otherwise. 5. Each of the parties agrees to execute all further instruments and documents and to take all further action as the other party may reasonably request in order to effectuate the terms and purposes of this Agreement. 6. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. 7. This Agreement shall be construed pursuant to and in accordance with the laws of the State of Connecticut. 8. If any term or provision of this Agreement is held or deemed to be invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By_____________________________________ Name: Title: EXECUTIVE __________________________________ Richard S. Mansfield EX-10.33 6 CHANGE IN CONTROL AGREEMENT THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October , 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a banking corporation organized and existing by virtue of the laws of the State of Connecticut (the "Bank"), and JOHN G. MEDVEC (the "Executive"). WHEREAS, the Executive is currently rendering services to the Bank pursuant to an Employment Agreement dated August 1, 1986 containing "change in control" provisions, as amended and restated by an Amended and Restated Employment Agreement dated as of the date hereof which does not contain "change in control" provisions (the "Employment Agreement"); WHEREAS, the Bank considers the performance and dedication of its management team to be significant for its overall corporate strategy and to be essential to protecting and enhancing the best interests of the Bank and its sole shareholder, People's Savings Financial Corp. (the "Company"); WHEREAS, the banking industry is a dynamic one with independent public institutions subject to unexpected changes in ownership; WHEREAS, the performance by the Executive of services to the Bank may be negatively affected by his uncertainty over the possibility of a change in ownership of the Bank or the Company and the possible affect thereof on his employment with the Bank; and WHEREAS, the Bank wishes to additionally mitigate the fears of the Executive regarding a potential ownership change, so as to avoid any negative effect on his performance of services to the Bank, and in that interest the Bank desires to afford certain additional protections to the Executive upon the occurrence of certain events as specified herein. NOW, THEREFORE, to further the above recited corporate objective, and for other good and valuable consideration, the receipt and adequacy of which each party hereby acknowledges, the Bank and the Executive agree as follows: 1. (a) If, at any time while the Executive is a full-time officer of the Bank or the Company, there is a "Change of Control" of the Bank or the Company, the Executive shall be entitled to receive a severance payment (the "Severance Amount") in consideration of services previously rendered to the Bank. The Severance Amount shall be made as a lump sum cash payment and shall be equal to three (3) times the greater of the following: (A) the Executive's compensation from the Bank and the Company (the "Compensation") for services rendered for the last full calendar year immediately preceding the Change of Control, or (B) the Executive's average annual Compensation with respect to the three (3) most recent calendar years ending before the date on which the Change of Control occurs. Compensation as described above shall include the amount of base salary and bonus, if any, paid to the Executive for services rendered for the time period in question pursuant to the Employment Agreement, including any and all of said amounts as may have been deferred by the Executive under Bank deferral plans, if any, and shall include long-term compensation which, by its terms, is accelerated upon a Change of Control or, if not, shall by this Agreement be so accelerated and determined as the present value (determined at the discount rate provided in Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended, or its successor provision) of any cash or non-cash long-term incentive compensation (whether in the form of performance units or otherwise) previously awarded to the Executive but not yet paid, measured at the time of award with the assumption that the award would be 100% earned over the performance period. In addition to the above, Executive shall receive or be paid (1) an amount equal to the aggregate amounts that Bank would have contributed on behalf of Executive under Executive's Deferred Profit Sharing or 401-K Plan, if any such plan shall be in effect upon the Change of Control, for an additional three-year period from the Change of Control (plus estimated earnings thereon) as if Executive had continued in the employ of Bank for that period and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Executive had made contributions to said plan in the period, not exceeding three (3) fiscal years of Bank, preceding the Change of Control; (2) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Executive under the Retirement Plan of Bank (the "Plan") if Executive had been continued in the employ of Bank for an additional three-year period from the Change of Control and had received compensation at least equal to that determined pursuant to Paragraph 1(a) above, and (ii) the annual pension benefit actually payable to Executive under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; and (3) for a period of three years following the Change of Control, Executive shall also continue to participate in all life, health, disability and similar insurance plans and programs of Bank to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Bank and Executive paying the same portion of the cost of each such plan or program as existed at the time of Executive's termination. In the event that Executive's continued participation in any group plans and programs is not permitted, then in lieu thereof, Bank shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Executive; provided that Bank shall not be obligated to pay for any such individual coverage more than three (3) times Bank's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Bank shall pay to Executive annually for such remaining three year period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Bank for such insurance on Executive's behalf over the three (3) fiscal years of Bank preceding the Change of Control, which amount shall be pro-rated for any fraction of a year. The foregoing subparagraphs (1), (2) and (3) shall also be considered part of the "Severance Amount" for the purposes of this Agreement. (b) It is expressly understood and agreed that payment of the Severance Amount may include amounts which are deemed to be "excess parachute payments" under Section 280G of the Internal Revenue Code of 1986, as amended. In that event, the Bank agrees to pay Executive an additional cash payment (the "Additional Payment") in the amount of the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, on the Executive for that portion of the Severance Amount which is deemed to be an excess parachute payment (if any). The Additional Payment shall be determined and paid once upon the determination of the Severance Amount under Paragraph 1(a) above. (c) Payment of the Severance Amount and Additional Payment under this Section 1 shall be paid in full by Bank, Company and/or its or their successors or assigns within ninety (90) days following the date of the Change of Control and shall not be reduced by any compensation which the Executive may receive from the Bank or the Company or from other employment with another employer should Executive's employment with the Bank or the Company terminate. (d) "Change of Control" shall be deemed to have occurred if: (1) a Person (as defined below) directly or indirectly or acting through one (1) or more other persons owns, controls, or has power to vote ten percent (10%) or more of the voting common stock of the Company, or a Person other than the Company directly or indirectly or acting through one (1) or more other persons owns, controls, or has the power to vote ten percent (10%) or more of the voting common stock of the Bank; or (2) a Person acquires or agrees to acquire all or substantially all of the assets and business of the Bank or the Company; or (3) a Person controls in any manner the election of a majority of the directors of the Company or a Person other than the Company controls in any manner the election of a majority of the directors of the Bank; or (4) the Board of Directors of the Company determines that a Person directly or indirectly exercises a controlling influence over the management or policies of Company. Notwithstanding the foregoing, a "Change-in-Control" shall not be deemed to have occurred if (i) a majority of the directors of the Company or the Bank, as applicable, in office prior to the events described in (a), (b) or (c) above shall so vote not later than thirty (30) days following the event and (ii) the Employee shall so agree in writing. A "Person" shall include a natural person, corporation, or other entity. When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of Bank capital stock, such partnership, syndicate or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d- 3, or their successor provision(s). The filing of a Form 13D or 13G by a Person shall not in and of itself be deemed a Change of Control. (e) If, after a Change of Control of the Bank or the Company, the Executive incurs any fees and expenses of counsel to enforce this Agreement, the Bank agrees to pay such fees and expenses to the Executive. The Executive's choice of counsel and his/her decision to retain counsel shall be in his/her discretion, provided any such fees and expenses must be reasonable. (f) Notwithstanding any other provision of this Agreement or of any other agreement, understanding or compensation plan, the Bank shall not be obligated to pay any amounts the payment of which violate restrictions imposed, or which may in the future be imposed, on such payments by the Bank pursuant to Section 18(k)(1) of the Federal Deposit Insurance Act, or any regulations or orders which are or may be promulgated thereunder; nor shall any payments be made which would constitute an "unsafe or unsound banking practice" pursuant to 12 U.S.C. Section 1818(b). (g) The calculation of the Severance Amount shall be performed by the Bank's independent auditing firm at the time of Change of Control, or such other qualified party in the Bank's discretion; provided that, if the Severance Amount so determined is later challenged successfully by the Executive, by court decision or negotiation with the Bank, the Bank shall be additionally liable for all costs and expenses incurred by the Executive in that challenge, including reasonable attorney fees. (h) This Agreement shall survive and continue for as long as the Executive is a full-time officer of the Bank or the Company. (i) This Agreement does not constitute an agreement for the employment of the Executive and shall not give the Executive any right to be retained in the service or employ of the Bank or the Company. 2. This Agreement contains the entire agreement between the parties with respect to the subject matter herein, and there are no other repre- sentations, warranties, conditions or agreements relating to the subject matter of this Agreement. 3. This Agreement may not be changed orally but only by an agreement in writing duly executed on behalf of the party against which enforcement of any waiver, change, modification, consent or discharge is sought. 4. This Agreement shall be binding upon and inure to the benefit of the Bank, Company and the Executive and their respective successors, assigns, heirs and legal representatives. Without otherwise limiting the foregoing, "Bank" and "Company" as used herein shall refer to any successor institution whether by merger, consolidation, acquisition or otherwise. 5. Each of the parties agrees to execute all further instruments and documents and to take all further action as the other party may reasonably request in order to effectuate the terms and purposes of this Agreement. 6. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. 7. This Agreement shall be construed pursuant to and in accordance with the laws of the State of Connecticut. 8. If any term or provision of this Agreement is held or deemed to be invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By_____________________________________ Name: Title: EXECUTIVE __________________________________ John G. Medvec EX-10.34 7 CHANGE IN CONTROL AGREEMENT THIS CHANGE IN CONTROL AGREEMENT (the "Agreement"), made as of October , 1996, by and between THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN, a banking corporation organized and existing by virtue of the laws of the State of Connecticut (the "Bank"), and TERESA SASINSKI (the "Executive"). WHEREAS, the Executive is currently rendering services to the Bank pursuant to an at will employment relationship, but also under a Change in Control Agreement dated September 18, 1991; WHEREAS, the Bank considers the performance and dedication of its management team to be significant for its overall corporate strategy and to be essential to protecting and enhancing the best interests of the Bank and its sole shareholder, People's Savings Financial Corp. (the "Company"); WHEREAS, the banking industry is a dynamic one with independent public institutions subject to unexpected changes in ownership; WHEREAS, the performance by the Executive of services to the Bank may be negatively affected by his uncertainty over the possibility of a change in ownership of the Bank or the Company and the possible affect thereof on his employment with the Bank; and WHEREAS, the Bank wishes to additionally mitigate the fears of the Executive regarding a potential ownership change, so as to avoid any negative effect on his performance of services to the Bank, and in that interest the Bank desires to afford certain additional protections to the Executive upon the occurrence of certain events as specified herein. NOW, THEREFORE, to further the above recited corporate objective, and for other good and valuable consideration, the receipt and adequacy of which each party hereby acknowledges, the Bank and the Executive agree as follows: 1. (a) If, at any time while the Executive is a full-time officer of the Bank or the Company, there is a "Change of Control" of the Bank or the Company, the Executive shall be entitled to receive a severance payment (the "Severance Amount") in consideration of services previously rendered to the Bank. The Severance Amount shall be made as a lump sum cash payment and shall be equal to three (3) times the greater of the following: (A) the Executive's compensation from the Bank and the Company (the "Compensation") for services rendered for the last full calendar year immediately preceding the Change of Control, or (B) the Executive's average annual Compensation with respect to the three (3) most recent calendar years ending before the date on which the Change of Control occurs. Compensation as described above shall include the amount of base salary and bonus, if any, paid to the Executive for services rendered for the time period in question pursuant to the Employment Agreement, including any and all of said amounts as may have been deferred by the Executive under Bank deferral plans, if any, and shall include long-term compensation which, by its terms, is accelerated upon a Change of Control or, if not, shall by this Agreement be so accelerated and determined as the present value (determined at the discount rate provided in Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended, or its successor provision) of any cash or non-cash long-term incentive compensation (whether in the form of performance units or otherwise) previously awarded to the Executive but not yet paid, measured at the time of award with the assumption that the award would be 100% earned over the performance period. In addition to the above, Executive shall receive or be paid (1) an amount equal to the aggregate amounts that Bank would have contributed on behalf of Executive under Executive's Deferred Profit Sharing or 401-K Plan, if any such plan shall be in effect upon the Change of Control, for an additional three-year period from the Change of Control (plus estimated earnings thereon) as if Executive had continued in the employ of Bank for that period and made contributions under said plan at a rate, as a percentage of salary, equal to the average rate at which Executive had made contributions to said plan in the period, not exceeding three (3) fiscal years of Bank, preceding the Change of Control; (2) supplemental pension benefits equal to the difference between (i) the annual pension benefit that would have been payable to Executive under the Retirement Plan of Bank (the "Plan") if Executive had been continued in the employ of Bank for an additional three-year period from the Change of Control and had received compensation at least equal to that determined pursuant to Paragraph 1(a) above, and (ii) the annual pension benefit actually payable to Executive under the Plan, such supplemental pension benefits to be payable at the same time and in the same manner as benefits under the Plan; and (3) for a period of three years following the Change of Control, Executive shall also continue to participate in all life, health, disability and similar insurance plans and programs of Bank to the extent that such continued participation is possible under the general terms and provisions of such plans and programs, with Bank and Executive paying the same portion of the cost of each such plan or program as existed at the time of Executive's termination. In the event that Executive's continued participation in any group plans and programs is not permitted, then in lieu thereof, Bank shall acquire, with the same cost sharing, individual insurance policies providing comparable coverage for Executive; provided that Bank shall not be obligated to pay for any such individual coverage more than three (3) times Bank's cost of such group coverage; and provided further, if any such individual coverage is unavailable, then Bank shall pay to Executive annually for such remaining three year period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by Bank for such insurance on Executive's behalf over the three (3) fiscal years of Bank preceding the Change of Control, which amount shall be pro-rated for any fraction of a year. The foregoing subparagraphs (1), (2) and (3) shall also be considered part of the "Severance Amount" for the purposes of this Agreement. (b) It is expressly understood and agreed that payment of the Severance Amount may include amounts which are deemed to be "excess parachute payments" under Section 280G of the Internal Revenue Code of 1986, as amended. In that event, the Bank agrees to pay Executive an additional cash payment (the "Additional Payment") in the amount of the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, on the Executive for that portion of the Severance Amount which is deemed to be an excess parachute payment (if any). The Additional Payment shall be determined and paid once upon the determination of the Severance Amount under Paragraph 1(a) above. (c) Payment of the Severance Amount and Additional Payment under this Section 1 shall be paid in full by Bank, Company and/or its or their successors or assigns within ninety (90) days following the date of the Change of Control and shall not be reduced by any compensation which the Executive may receive from the Bank or the Company or from other employment with another employer should Executive's employment with the Bank or the Company terminate. (d) "Change of Control" shall be deemed to have occurred if: (1) a Person (as defined below) directly or indirectly or acting through one (1) or more other persons owns, controls, or has power to vote ten percent (10%) or more of the voting common stock of the Company, or a Person other than the Company directly or indirectly or acting through one (1) or more other persons owns, controls, or has the power to vote ten percent (10%) or more of the voting common stock of the Bank; or (2) a Person acquires or agrees to acquire all or substantially all of the assets and business of the Bank or the Company; or (3) a Person controls in any manner the election of a majority of the directors of the Company or a Person other than the Company controls in any manner the election of a majority of the directors of the Bank; or (4) the Board of Directors of the Company determines that a Person directly or indirectly exercises a controlling influence over the management or policies of Company. Notwithstanding the foregoing, a "Change-in-Control" shall not be deemed to have occurred if (i) a majority of the directors of the Company or the Bank, as applicable, in office prior to the events described in (a), (b) or (c) above shall so vote not later than thirty (30) days following the event and (ii) the Employee shall so agree in writing. A "Person" shall include a natural person, corporation, or other entity. When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of Bank capital stock, such partnership, syndicate or group shall be considered a Person. Beneficial ownership shall be determined under the then current provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, Reg. Section 240.13d- 3, or their successor provision(s). The filing of a Form 13D or 13G by a Person shall not in and of itself be deemed a Change of Control. (e) If, after a Change of Control of the Bank or the Company, the Executive incurs any fees and expenses of counsel to enforce this Agreement, the Bank agrees to pay such fees and expenses to the Executive. The Executive's choice of counsel and his/her decision to retain counsel shall be in his/her discretion, provided any such fees and expenses must be reasonable. (f) Notwithstanding any other provision of this Agreement or of any other agreement, understanding or compensation plan, the Bank shall not be obligated to pay any amounts the payment of which violate restrictions imposed, or which may in the future be imposed, on such payments by the Bank pursuant to Section 18(k)(1) of the Federal Deposit Insurance Act, or any regulations or orders which are or may be promulgated thereunder; nor shall any payments be made which would constitute an "unsafe or unsound banking practice" pursuant to 12 U.S.C. Section 1818(b). (g) The calculation of the Severance Amount shall be performed by the Bank's independent auditing firm at the time of Change of Control, or such other qualified party in the Bank's discretion; provided that, if the Severance Amount so determined is later challenged successfully by the Executive, by court decision or negotiation with the Bank, the Bank shall be additionally liable for all costs and expenses incurred by the Executive in that challenge, including reasonable attorney fees. (h) This Agreement shall survive and continue for as long as the Executive is a full-time officer of the Bank or the Company. (i) This Agreement does not constitute an agreement for the employment of the Executive and shall not give the Executive any right to be retained in the service or employ of the Bank or the Company. 2. This Agreement contains the entire agreement between the parties with respect to the subject matter herein, and there are no other repre- sentations, warranties, conditions or agreements relating to the subject matter of this Agreement. 3. This Agreement may not be changed orally but only by an agreement in writing duly executed on behalf of the party against which enforcement of any waiver, change, modification, consent or discharge is sought. 4. This Agreement shall be binding upon and inure to the benefit of the Bank, Company and the Executive and their respective successors, assigns, heirs and legal representatives. Without otherwise limiting the foregoing, "Bank" and "Company" as used herein shall refer to any successor institution whether by merger, consolidation, acquisition or otherwise. 5. Each of the parties agrees to execute all further instruments and documents and to take all further action as the other party may reasonably request in order to effectuate the terms and purposes of this Agreement. 6. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. 7. This Agreement shall be construed pursuant to and in accordance with the laws of the State of Connecticut. 8. If any term or provision of this Agreement is held or deemed to be invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. THE PEOPLE'S SAVINGS BANK OF NEW BRITAIN By_____________________________________ Name: Title: EXECUTIVE __________________________________ Teresa Sasinski EX-11 8
People's Savings Financial Corp. COMPUTATION OF NET INCOME PER COMMON SHARE (in thousands except per share amounts) Year ended December 31, 1996 1995 1994 Net income - primary and fully diluted $4,014 $3,389 $3,565 Weighted Average Common Stock and Common Equivalent Stock Weighted average common stock outstanding 1,910 1,954 1,996 Assumed conversion (as of the beginning of each period or upon issuance during a period) of stock options outstanding at the end of each period 45 33 26 Weighted average common stock outstanding - primary 1,955 1,987 2,022 Weighted average common stock outstanding 1,910 1,954 1,996 Assumed conversion (as of the beginning of each period or upon issuance during a period) of stock options outstanding at the end of each period 65 35 26 Weighted average common stock outstanding - fully diluted 1,975 1,989 2,022 Earnings Per Common and Common Equivalent Share Primary $2.05 $1.71 $1.76 Fully diluted $2.03 $1.70 $1.76
EX-22 9 Subsidiaries of the Registrant Peoples Savings Bank & Trust 123 Broad Street New Britain, CT 06053 People's Savings Financial Services, Inc. 123 Broad Street New Britain, CT 06053 EX-24 10 Consent of Independent Accountants We consent to the incorporation by reference in the registration statements of People's Savings Financial Corp. and Subsidiary (the "Corporation") on Form S-8 (File Nos. 33-55936) and 33-55940) of our report dated January 21, 1997, on our audit of the consolidated financial statements of the Corporation as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995, and 1994, which is incorporated by reference in this Annual Report on Form 10-K. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand Hartford, Connecticut March 18, 1997 EX-25 11 POWER OF ATTORNEY We the undersigned officers and directors of People's Savings Financial Corp., hereby severally constitute Richard S. Mansfield, and John G. Medvec and each of them singly, our true and lawful attorneys with full power of substitution, to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K of People's Savings Financial Corp. for the fiscal year ended December 31, 1996, and generally to do all such things in our name and behalf in our capacities as officers and directors to enable People's Savings Financial Corp. to comply with the provisions of the Securities Exchange Act of 1934, as amended, all requirements of the Securities and Exchange Commissioner, and all requirements of any other applicable law of regulation, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Annual Report. Signature Title Date /s/Richard S. Mansfield President & Chief Executive March 18, 1997 Officer /s/John G. Medvec Executive Vice President March 18, 1997 /s/Joseph A. Welna Chairman of the Board March 18, 1997 and Director /s/Robert A. Gryboski Director March 18, 1997 /s/Walter J. Liss Director March 18, 1997 /s/Robert A. Story Director March 18, 1997 /s/Walter D. Blogoslawski Director March 18, 1997 Stanley P. Filewicz Director March 18, 1997 /s/Roland L. LeClerc Director March 18, 1997 Chester S. Sledzik Director March 18, 1997 /s/Henry Poplaski Director March 18, 1997 /s/A. Richard Puskarz Director March 18, 1997 EX-27 12
9 This schedule contains summary financial information extracted from the registrant's December 31, 1996 audited balance sheet, income statement and cash flow statement, and notes threto, and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1996 DEC-31-1996 5,113,000 0 4,509,000 0 171,667,000 28,513,000 28,015,000 258,833,000 1,577,000 482,394,000 358,060,000 71,250,000 6,883,000 0 0 0 2,543,000 43,658,000 482,394,000 19,557,000 10,479,000 485,000 30,521,000 14,436,000 16,428,000 14,093,000 938,000 (20,000) 9,814,000 5,996,000 5,996,000 0 0 4,014,000 2.05 2.03 3.41 1,549,000 0 0 0 1,578,000 998,000 59,000 1,577,000 1,327,000 0 250,000
-----END PRIVACY-ENHANCED MESSAGE-----