<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number 0-24694
ENTERPRISE FEDERAL BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 31-1396726
- ------------------------------------------------- -------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
117 Mill Street
Lockland, Ohio 45215
- ------------------------------------------------- -------------------------
(Address of principal executive office) (Zip Code)
</TABLE>
(513) 821-1297
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of May 1, 1996
there were issued and outstanding 2,069,328 shares of the Registrant's Common
Stock, par value $.01 per share.
<PAGE> 2
ENTERPRISE FEDERAL BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
(As of March 31, 1996 (unaudited) and September 30, 1995) 1
Consolidated Statements of Earnings for the three and six months
ended March 31, 1996 (unaudited) and 1995 (unaudited) 2
Consolidated Statements of Cash Flows for the six
months ended March 31, 1996 (unaudited) and 1995 (unaudited) 3
Notes to unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES
</TABLE>
-i-
<PAGE> 3
Enterprise Federal Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS March 31, September 30,
1996 1995
--------------- ----------------
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 560 $ 588
Federal funds sold 1,500 9,000
Interest-bearing deposits in other financial institutions 3,058 1,082
-------- --------
Cash and cash equivalents 5,118 10,670
Mortgage-backed securities available for sale - at market 61,604 72,022
Loans receivable - net 130,334 110,830
Office premises and equipment - at depreciated cost 3,254 2,054
Federal Home Loan Bank stock - at cost 2,032 1,545
Accrued interest receivable on loans 205 83
Accrued interest receivable on mortgage-backed securities 326 417
Accrued interest receivable on investment and interest-bearing
deposits --- 2
Goodwill and other intangible assets 65 80
Prepaid expenses and other assets 493 220
Prepaid Federal income taxes --- 15
-------- --------
Total assets $203,431 $197,938
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $139,708 $127,687
Advances from Federal Home Loan Bank 30,000 30,000
Advances by borrowers for taxes and insurance 178 190
Accrued interest payable 342 376
Other liabilities 1,207 825
Deferred Federal income taxes 271 386
Accrued Federal income taxes 255 ---
-------- --------
Total liabilities 171,961 159,464
Commitments --- ---
Stockholders' equity
Preferred stock, no par value, 1,000,000 shares authorized,
none issued and outstanding --- ---
Common stock, $.01 par value, 4,000,000 shares authorized,
2,268,596 outstanding at September 30, 1995 23 23
Additional paid-in capital 22,207 28,633
Less 183,381 shares of treasury stock - at cost (2,898) (1,413)
Less shares acquired by employee stock benefit plans (3,334) (3,452)
Unrealized gain on securities designated as available for sale 192 388
Retained earnings - restricted 15,280 14,295
-------- --------
Total stockholders' equity 31,470 38,474
-------- --------
Total liabilities and stockholders' equity $203,431 $197,938
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-1-
<PAGE> 4
Enterprise Federal Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended March 31, Ended March 31,
--------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $2,592 $2,049 $4,933 $4,125
Mortgage-backed securities 994 639 2,179 1,040
Investment securities -- 39 -- 54
Interest-bearing deposits and other 181 187 389 476
------ ------- ------ ------
Total interest income 3,767 2,914 7,501 5,695
Interest expense:
Deposits 1,699 1,331 3,393 2,705
Borrowings 596 41 1,185 41
------ ------- ------ ------
Total interest expense 2,295 1,372 4,578 2,746
Net interest income 1,472 1,542 2,923 2,949
Provision for loan losses 30 -- 30 --
------ ------- ------ ------
Net interest income after provision for loans losses 1,442 1,542 2,893 2,949
Other operating income:
Gain on sales of securities 205 110 831 110
Other 24 22 55 41
------ ------- ------ ------
Total other operating income 229 132 886 151
------ ------- ------ ------
Operating expenses:
Employee compensation and benefits 583 496 1,242 959
Occupancy and equipment 92 73 160 130
Federal deposit insurance premiums 73 68 142 136
Franchise taxes 115 112 233 154
Date processing 35 34 68 66
Amortization of intangible assets 8 8 16 16
Other 53 104 211 243
------ ------- ------ ------
Total operating expenses 959 895 2,072 1,704
------ ------- ------ ------
Earnings before income taxes 712 779 1,707 1,396
Federal income taxes 243 265 613 480
------ ------- ------ ------
Net earnings $ 469 $ 514 $1,094 $ 916
====== ======= ====== ======
Earnings per share $ .24 $ .23 $ .55 N/A
====== ======= ====== ======
</TABLE>
-2-
<PAGE> 5
Enterprise Federal Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
-------------------------------
1996 1995
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 1,094 $ 916
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Amortization of discounts and premiums on loans, investments and
mortgage-backed securities - net (43) 28
Amortization of deferred loan origination fees (113) (65)
Depreciation and amortization 58 55
Provision for losses on loans 30 --
Federal Home Loan Bank stock dividends (64) (32)
Gain on sale of securities (831) (110)
Increase (decrease) in cash due to change in:
Accrued interest receivable (29) (113)
Prepaid expense and other assets (273) 247
Accrued interest payable (34) 80
Other liabilities 382 (161)
Federal income taxes
Current 255 259
Deferred (100) (9)
-------- --------
Net cash provided by operating activities 332 1,095
Cash flows provided by (used in) investing activities:
Purchase of investment securities -- (7,447)
Sale of investment securities -- 4,967
Purchase of mortgage-backed securities (36,535) (31,650)
Sale of mortgage-backed securities 45,598 5,374
Principal repayments of mortgage-backed securities 2,150 2,714
Loan principal repayments 8,856 5,077
Loan disbursements (28,277) (10,095)
Purchase of office premises and equipment (1,242) (148)
Purchase of FHLB Stock (423) --
--------- --------
Net cash used in investing activities (1,242) (31,208)
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposit accounts 12,021 (38,201)
Borrowed money -- 10,000
Advances by borrowers for taxes and insurance (12) 4
Net proceeds of stock issuance -- 26,355
Capital distribution (6,535) --
Purchase of treasury shares (1,485) --
-------- --------
Net cash provided by (used in) financing activities 3,989 (842)
Net decrease in cash and cash equivalents (5,552) (30,955)
Cash and cash equivalents at beginning of period 10,670 36,465
-------- --------
Cash and cash equivalents at end of period $ 5,118 $ 5,510
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 245 $ 219
======== ========
Interest on deposits and borrowings $ 2,329 $ 2,666
======== ========
</TABLE>
-3-
<PAGE> 6
ENTERPRISE FEDERAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
Note 1 - Basis of Presentation
Enterprise Federal Bancorp Inc. (the "Corporation") was
incorporated under Ohio law in April 1994 by Enterprise
Federal Savings and Loan Association (the "Association") in
connection with the conversion of the Association from a
federally chartered mutual savings and loan association to a
federally chartered stock savings bank, to be known as
Enterprise Federal Savings Bank (the "Savings Bank"), the
issuance of the Association's stock to the Corporation and the
offer and sale of the Corporation's common stock by the
Corporation (the "Conversion"). Upon consummation of the
Conversion on October 14, 1994, the Corporation became the
unitary holding company for the Savings Bank. The financial
statements for the periods prior to October 14, 1994 presented
herein are those of Enterprise Federal Savings and Loan
Association prior to the Conversion.
The accompanying unaudited consolidated financial statements
of the Corporation have been prepared in accordance with
instructions to Form 10-Q. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. However, such information reflects all
adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim
periods.
The results of operations for the six months ended March 31,
1996 are not necessarily indicative of the results to be
expected for the year ending September 30, 1996. The
unaudited consolidated financial statements and notes thereto
should be read in conjunction with the audited financial
statements and notes thereto for the year ended September 30,
1995, contained in the Corporation's 1995 Annual Report.
Note 2 - Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Corporation and the Savings Bank. All
significant intercompany items have been eliminated.
-4-
<PAGE> 7
Note 3 - Earnings Per Share
Earnings per share for the three and six months ended March
31, 1996 were calculated assuming 1,954,167 and 1,989,091
shares were issued and outstanding during the periods.
Earnings per share for the three months ended March 31, 1995
were calculated assuming 2,234,782 shares were issued and
outstanding during the period. Earnings per share for the six
month period ended March 31, 1995 is not applicable, as the
Conversion was not completed until October 14, 1994.
Note 4 - Effects of Recent Accounting Pronouncements
In May 1993, the Financial Accounting Standards Board ("FASB")
adopted Statement of Financial Accounting Standards ("SFAS")
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," affecting the accounting for investments
in all debt and equity securities, which are to be classified
in one of three categories for fiscal years beginning after
December 15, 1993. Securities that an institution has the
positive intent and ability to hold to maturity are to be
reported at amortized cost. Securities that are bought and
held principally for the purpose of selling them in the near
term are to be classified as trading securities and reported
at fair value, with unrealized gains and losses included in
earnings. Other securities are to be classified as securities
available for sale and reported at fair value, with unrealized
gains and losses excluded from earnings and reported as a
separate component of stockholders' equity. The Corporation
adopted SFAS No. 115 in fiscal 1995. At March 31, 1996,
stockholders' equity includes $192,000 of unrealized gains on
securities designated as available for sale, net of related
tax effects.
-5-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Corporation's assets totalled $203.4 million at March 31, 1996
compared to $197.9 million at September 30, 1995. This $5.5 million or 2.8%
increase was primarily due to a $19.5 million or 17.6% increase in loans
receivable, net. Total liabilities amounted to $172.0 million at March 31,
1996 compared to $159.5 million at September 30, 1995. This increase was
primarily due to a $12.0 million or 9.4% increase in deposits. The increase in
loans receivable was funded with repayments and sales proceeds from the
Corporation's mortgage-backed securities portfolio and increased deposit
inflow. Total stockholders' equity decreased $7.0 million or 18.2% to $31.5
million at March 31, 1996 compared to $38.5 million at September 30, 1995. The
decrease in stockholders' equity was due primarily to the payment of a $3.00
per share distribution on November 3, 1995 to stockholders of record on October
25, 1995. Such distribution amounted to approximately $6.5 million in the
aggregate and is primarily reflected as a reduction in additional paid-in
capital. Such reduction was partially offset by net income of $1.1 million
during the six months ended March 31, 1996.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
NET INCOME. The Corporation's net income amounted to $469,000 for the
three months ended March 31, 1996 compared to $514,000 for the comparable
period in 1995. The $45,000 or 8.8% increase was due primarily to a decrease
in net interest income and an increase in total operating expenses which were
partially offset by an increase in total other operating income.
NET INTEREST INCOME. Net interest income before provision for loan
losses decreased $70,000 or 4.5% to $1.5 million for the three months ended
March 31, 1996 compared to the same period in 1995. Net interest income is
determined by the Corporation's interest rate spread (i.e., the difference
between the yields earned on its interest-earning assets and the rates paid on
its interest-bearing liabilities) and the relative amounts of interest-earning
assets and interest-bearing liabilities. The decrease in net interest income
was due to a decrease in the interest rate spread which more than offset the
increase in the ratio of interest-earning assets to interest-bearing
liabilities. The increase in interest-earning assets was primarily due to the
investment of net proceeds from the Conversion and the leveraging of the
Corporation's capital. The decrease in the interest rate spread was primarily
due to the use of FHLB advances to leverage the Corporation's capital and the
temporary investment of such funds in lower yielding mortgage-backed
securities. However, the Corporation has recently experienced increased loan
demand and has funded higher rate loans with repayments and sales proceeds from
its mortgage-backed securities portfolio.
-6-
<PAGE> 9
INTEREST INCOME. Interest income amounted to $3.8 million for the
three months ended March 31, 1996 compared to $2.9 million for the same period
in 1995. The increase of $853,000 or 29.2% was primarily due to an increase in
interest income on loans of $543,000 or 26.5% to $2.6 million for the 1996
period compared to the 1995 period. Such increase was primarily due to an
increase in the average balance of such assets due to increased loan demand.
In addition, interest income on mortgage-backed securities increased $355,000
or 55.6% during the 1996 period. The increase in interest income on such
assets primarily resulted from an increase in the average balance of
mortgage-backed securities due to the investment of a portion of the net
proceeds from the Conversion in such assets as well as the use of borrowings to
fund purchases of such assets.
INTEREST EXPENSE. Interest expense increased $923,000 or 67.3% to
$2.3 million for the three months ended March 31, 1996 compared to the same
period in 1995 as a result of an increase in interest expense on both deposits
and borrowed money. Interest expense on deposits increased $368,000 or 27.6%
due to an increase in the average balance of and rates paid on deposits.
Interest expense on borrowed money increased $555,000 primarily due to an
increase in the average balance of such liabilities.
OTHER OPERATING INCOME. Other operating income amounted to $229,000
and $110,000 during the three months ended March 31, 1996 and 1995,
respectively. The $97,000 increase during the 1996 period was primarily due to
increased gains on sales of securities.
OPERATING EXPENSES. Operating expenses increased $64,000 or 7.2% to
$959,000 for the three months ended March 31, 1996 compared to $895,000 for the
three months ended March 31, 1995. Such increase was primarily due to an
$87,000 or 17.5% increase in employee compensation and benefits. The increase
in employee compensation and benefits was due to increased pension plan expense
and expenses of the Employee Stock Ownership Plan and Management Recognition
Plan adopted in connection with the Conversion.
FEDERAL INCOME TAXES. Federal income taxes amounted to $243,000 and
$265,000 for the three months ended March 31, 1996 and 1995, respectively,
resulting in effective tax rates of 34.1% and 34.0%, respectively.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND 1995
NET INCOME. The Corporation's net income amounted to $1.1 million for
the six months ended March 31, 1996 compared to $916,000 for the comparable
period in fiscal 1995. The $178,000 or 19.4% increase was due primarily to an
increase in total other operating income.
NET INTEREST INCOME. Net interest income before provision for loan
losses decreased $26,000 or 1.0% for the six months ended March 31, 1996
compared to the same period in fiscal 1995. The decrease in net interest
income was due to a decrease in the interest rate spread which more than offset
the increase in the ratio of interest-earning assets to interest-
-7-
<PAGE> 10
bearing liabilities. The increase in interest-earning assets was primarily due
to the investment of net proceeds from the Conversion and the leveraging of the
Corporation's capital. The decrease in the interest rate spread was primarily
due to the use of FHLB advances to leverage the Corporation's capital and the
temporary investment of such funds in lower yielding mortgage-backed
securities. However, the Corporation has recently experienced increased loan
demand and has funded higher rate loans with repayments and sales proceeds from
its mortgage-backed securities portfolio.
INTEREST INCOME. Interest income amounted to $7.5 million for the six
months ended March 31, 1996 compared to $5.7 million for the same period in
fiscal 1995. The increase of $1.8 million or 31.7% was primarily due to an
increase in interest income on loans of $808,000 or 19.6% to $4.9 million for
the fiscal 1996 period compared to the fiscal 1995 period. Such increase was
primarily due to an increase in the average balance of such assets due to
increased loan demand. In addition, interest income on mortgage-backed
securities increased $1.1 million or 109.5% during the fiscal 1996 period. The
increase in interest income on such assets primarily resulted from an increase
in the average balance of mortgage-backed securities due to the investment of a
portion of the net proceeds from the Conversion in such assets as well as the
use of borrowings to fund purchases of such assets.
INTEREST EXPENSE. Interest expense increased $1.8 million or 66.7% to
$4.6 million for the six months ended March 31, 1996 compared to the same
period in fiscal 1995 as a result of an increase in interest expense on both
deposits and borrowed money. Interest expense on deposits increased $688,000
or 25.4% due to an increase in the average balance of and rates paid on
deposits. Interest expense on borrowed money increased $1.1 million primarily
due to an increase in the average balance of such liabilities.
OTHER OPERATING INCOME. Other operating income amounted to $886,000
and $151,000 during the six months ended March 31, 1996 and 1995, respectively.
The $735,000 increase during the fiscal 1996 period was primarily due to
increased gains on sales of securities.
OPERATING EXPENSES. Operating expenses increased $368,000 or 21.6% to
$2.1 million for the six months ended March 31, 1996 compared to $1.7 million
for the six months ended March 31, 1995. Such increase was primarily due to a
$283,000 or 29.5% increase in employee compensation and benefits. The increase
in employee compensation and benefits was due to increased pension plan expense
and expenses of the Employee Stock Ownership Plan and Management Recognition
Plan adopted in connection with the Conversion.
FEDERAL INCOME TAXES. Federal income taxes amounted to $613,000 and
$480,000 for the six months ended March 31, 1996 and 1995, respectively,
resulting in effective tax rates of 35.9% and 34.4%, respectively.
-8-
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of funds are deposits, repayments,
prepayments and maturities of outstanding loans and mortgage-backed securities
and funds provided from operations. While scheduled loan and mortgage-backed
securities repayments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by the movement of interest
rates in general, economic conditions and competition. The Corporation manages
the pricing of its deposits to maintain a deposit balance deemed appropriate
and desirable. In addition, the Corporation invests excess funds in FHLB
overnight deposits and other short-term interest-earning assets which provide
liquidity to meet lending requirements. As an additional source of funds, the
Corporation has borrowed funds from the FHLB of Cincinnati and has access to
the Federal Reserve Bank discount window. At March 31, 1996, the Corporation
had $30.0 million of FHLB advances outstanding.
Liquidity management is both a daily and long term function. Excess
liquidity is generally invested in short-term investments such as FHLB of
Cincinnati overnight deposits. On a longer-term basis, the Corporation
maintains a strategy of investing in various mortgage-backed securities and
lending products. During the six month periods ended March 31, 1996 and 1995,
the Corporation used its sources of funds primarily to meet its ongoing
commitments to pay maturing savings certificates and savings withdrawals, fund
loan commitments and maintain its portfolio of mortgage-backed securities. At
March 31, 1996, the total approved loan commitments outstanding amounted to
$4.4 million. At the same time, the Corporation had $3.5 million of
commitments under unused lines and letters of credit and the unadvanced portion
of construction loans approximated $3.4 million. Certificates of deposit
scheduled to mature in one year or less at March 31, 1996 totaled $42.5
million. Management of the Corporation believes that the Corporation has
adequate resources, including principal prepayments and repayments of loans and
mortgage-backed securities, to fund all of its commitments to the extent
required. In addition, although the Corporation has extended commitments to
fund loans or lines and letters of credit, historically, the Corporation has
not been required to fund all of its outstanding commitments. Management
believes that a significant portion of maturing deposits will remain with the
Corporation.
The Savings Bank is required by the Office of Thrift Supervision
("OTS") to maintain average daily balances of liquid assets and short-term
liquid assets (as defined) in amounts equal to 5% and 1%, respectively, of net
withdrawable deposits and borrowings payable in one year or less to assure its
ability to meet demand for withdrawals and repayments of short-term borrowings.
The liquidity requirements may vary from time to time at the direction of the
OTS depending upon economic conditions and deposit flows. The Savings Bank
generally maintains a liquidity ratio of between 5% and 10% of its net
withdrawable deposits and borrowings payable in one year or less. The Savings
Bank's average monthly liquidity ratio and short-term liquid assets ratio for
March 1996 was 6.85%. As of March 31, 1996, the Savings Bank's regulatory
capital substantially exceeded all regulatory capital
-9-
<PAGE> 12
requirements with tangible, core and risk-based capital ratios of 13.6%, 13.6%
and 26.6%, respectively, compared to regulatory requirements of 1.5%, 3.0% and
8.0%, respectively.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements of the Corporation and related
notes represented herein have been prepared in accordance with generally
accepted accounting principles which require the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.
Unlike most industrial companies, substantially all of the assets and
liabilities of financial institutions are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the
prices of goods and services, since such prices are affected by inflation to a
larger extent than interest rates. In the current interest rate environment,
liquidity and the maturity structure of the Corporation's assets and
liabilities are critical to the maintenance of acceptable performance levels.
RECAPITALIZATION OF SAIF AND RELATED LEGISLATIVE PROPOSALS
The deposits of the Savings Bank are currently insured by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation ("FDIC"). Both the SAIF and the Bank Insurance Fund ("BIF"), the
federal deposit insurance fund that covers commercial bank deposits, are
required by law to attain and thereafter maintain a reserve ratio of 1.25% of
insured deposits. The BIF has achieved a fully funded status in contrast to
the SAIF and the FDIC recently reduced the average deposit insurance premium
paid by BIF-insured commercial banks to a level substantially below the average
premium paid by SAIF-insured institutions.
In late 1995, the FDIC approved a final rule regarding deposit
insurance premiums which, effective with the semiannual premium assessment on
January 1, 1996, reduced deposit insurance premiums for BIF member institutions
to zero (subject to an annual minimum of $2,000) for institutions in the lowest
risk category. Deposit insurance premiums for SAIF members were maintained at
their existing levels (23 basis points for institutions in the lowest risk
category). Accordingly, in the absence of further legislative action, until
the SAIF attains a reserve ratio of 1.25% of insured deposits, SAIF members
such as the Savings Bank will be competitively disadvantaged as compared to
commercial banks due to this premium differential. It is anticipated that,
under present conditions, it will be at least several years before the SAIF
reaches a reserve ratio of 1.25% of insured deposits.
The U.S. House of Representatives and Senate had actively considered
legislation which would have eliminated the premium differential between
SAIF-insured institutions
-10-
<PAGE> 13
and BIF-insured institutions by recapitalizing the SAIF's reserves to the
required ratio. The legislation had been, for some time, included as part of a
fiscal 1996 federal budget bill, but was eliminated prior to the bill being
enacted on April 26, 1996. In light of the legislation's elimination and the
uncertainty of the legislative process generally, management cannot predict
whether legislation reducing SAIF premiums and/or imposing a special one-time
assessment will be adopted, or, if adopted, the amount of the assessment, if
any, that would be imposed on the Savings Bank.
-11-
<PAGE> 14
ENTERPRISE FEDERAL BANCORP, INC. AND SUBSIDIARY
PART II
Item 1. Legal Proceedings
Neither the Corporation nor the Savings Bank is involved in
any pending legal proceedings other than non-material legal
proceedings occurring in the ordinary course of business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
-12-
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERPRISE FEDERAL BANCORP, INC.
Date: May 15, 1996 By: /s/Otto L. Keeton
------------------------------------------
Otto L. Keeton
President and Chief Executive Officer
Date: May 15, 1996 By: /s/Thomas J. Noe
------------------------------------------
Thomas J. Noe
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION (AS OF MARCH 31, 1996 AND SEPT. 30, 1995) AND
CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE AND SIX MONTHS ENDED MARCH 31,
1996 AND 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
ENDED MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 560
<INT-BEARING-DEPOSITS> 3,058
<FED-FUNDS-SOLD> 1,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 61,604
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 130,334
<ALLOWANCE> 353
<TOTAL-ASSETS> 203,431
<DEPOSITS> 139,708
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,253
<LONG-TERM> 30,000
0
0
<COMMON> 23
<OTHER-SE> 31,447
<TOTAL-LIABILITIES-AND-EQUITY> 203,431
<INTEREST-LOAN> 2,592
<INTEREST-INVEST> 1,175
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,767
<INTEREST-DEPOSIT> 1,699
<INTEREST-EXPENSE> 2,295
<INTEREST-INCOME-NET> 1,472
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 205
<EXPENSE-OTHER> 959
<INCOME-PRETAX> 712
<INCOME-PRE-EXTRAORDINARY> 712
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 469
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
<YIELD-ACTUAL> 2.93
<LOANS-NON> 29
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 29
<ALLOWANCE-OPEN> 323
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 353
<ALLOWANCE-DOMESTIC> 30
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
