<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ENTERPRISE FEDERAL BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
January 3, 1997
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Enterprise Federal Bancorp, Inc. which will be held at the
Marriott Hotel, 11320 Chester Road, Sharonville, Ohio on Wednesday, January 29,
1997 at 10:00 a.m., Eastern Time. The matters to be considered by stockholders
at the Annual Meeting are described in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. We urge you to mark, sign, and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Enterprise Federal Bancorp,
Inc. are sincerely appreciated.
Sincerely,
/s/ OTTO L. KEETON
Otto L. Keeton
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
ENTERPRISE FEDERAL BANCORP, INC.
7810 TYLERSVILLE SQUARE DRIVE
WEST CHESTER, OHIO 45069
(513) 755-4600
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 29, 1997
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Annual Meeting") of Enterprise Federal Bancorp, Inc. (the "Company") will be
held at the Marriott Hotel, 11320 Chester Road, Sharonville, Ohio on Wednesday,
January 29, 1997 at 10:00 a.m., Eastern Time, for the following purposes, all
of which are more completely set forth in the accompanying Proxy Statement:
(1) To elect three directors for a two-year term or until their
successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Grant
Thornton as the Company's independent auditors for the fiscal year ending
September 30, 1997; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof. Management is not aware of any other
such business.
The Board of Directors has fixed December 27, 1996 as the voting
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournment thereof. Only those
stockholders of record as of the close of business on that date will be
entitled to vote at the Annual Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ OTTO L. KEETON
Otto L. Keeton
President and Chief Executive Officer
West Chester, Ohio
January 3, 1997
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY
BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
- --------------------------------------------------------------------------------
<PAGE> 4
ENTERPRISE FEDERAL BANCORP, INC.
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 29, 1997
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Enterprise Federal Bancorp, Inc. (the
"Company"), which acquired all of the stock of Enterprise Federal Savings Bank
(the "Bank") issued in connection with the Bank's conversion from mutual to
stock form in October 1994 (the "Conversion"). Proxies are being solicited on
behalf of the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at the Marriott Hotel,
11320 Chester Road, Sharonville, Ohio on Wednesday, January 29, 1997 at 10:00
a.m., Eastern Time, and at any adjournment thereof for the purposes set forth
in the Notice of Annual Meeting of Stockholders. This Proxy Statement is first
being mailed to stockholders on or about January 3, 1997.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the nominees for director described herein,
for ratification of the appointment of Grant Thornton for fiscal 1996 and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice
thereof (Edith P. Mayer, Secretary, Enterprise Federal Bancorp, Inc., 7810
Tylersville Square Drive, West Chester, Ohio 45069); (ii) submitting a
duly-executed proxy bearing a later date; or (iii) appearing at the Annual
Meeting and giving the Secretary notice of his or her intention to vote in
person. Proxies solicited hereby may be exercised only at the Annual Meeting
and any adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on December 27,
1996 ("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 2,025,828 shares of Common Stock issued and
outstanding and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the meeting. Directors are
elected by a plurality of the votes cast with a quorum present. Abstentions
are considered in determining the presence of a quorum and will not affect the
plurality vote
<PAGE> 5
2
required for the election of directors. The affirmative vote of the holders of
a majority of the total votes present in person or by proxy at the Annual
Meeting is required to ratify the appointment of the independent auditors.
Because of the required vote, abstentions will have the effect of a vote
against this proposal. Under rules of the New York Stock Exchange, the
proposal for ratification of the auditors is considered a "discretionary" item
upon which brokerage firms may vote in their discretion on behalf of their
clients if such clients have not furnished voting instructions and for which
there will not be "broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors of the Company shall be divided into two classes if the Board
consists of six, seven or eight members, or into three classes if the Board
consists of nine or more members. One class is to be elected annually. The
Board of Directors currently consists of six members, therefore, the Board is
divided into two classes and directors are elected for a term of two years.
Stockholders of the Company are not permitted to cumulate their votes for the
election of directors.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption, and all nominees
currently serve as directors of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
The three persons who receive the greatest number of votes of the
holders of Common Stock represented in person or by proxy at the Annual Meeting
will be elected directors of the Company.
The following tables present information concerning the nominees for
director of the Company and each director whose term continues, including
tenure as a director of the Bank.
<PAGE> 6
3
NOMINEES FOR DIRECTOR FOR TWO YEAR TERM EXPIRING IN 1998
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
- -------------------------- --------- ------------------------------------------ ------------
<S> <C> <C> <C>
Otto L. Keeton 62 Chairman of the Board, President and 1970
Chief Executive Officer of the Company
and, since 1984, of the Bank; Between
1959 and 1984 served the Bank in
various capacities, including Chief
Loan Officer and Chief Operating
Officer.
Terrell G. Marty 57 Director; Owner of Terry G. Marty CLC 1983
& Associates, Inc., an insurance sales
and management firm located in
Cincinnati, Ohio.
Steven A. Wilson 51 Director; President and Chief 1987
Operating Officer of The Bases Group
(BBI Marketing Services, Inc.), a
marketing firm located in Covington,
Kentucky.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE
NOMINEES FOR DIRECTOR.
<PAGE> 7
4
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
- -------------------------- --------- ------------------------------------------ ------------
<S> <C> <C> <C>
Michael R. Meister 54 Director, Vice President and Chief 1993
Operating Officer of the Company and,
since 1969, of the Bank; Between 1969
and 1994 served as Treasurer of the
Bank.
William H. Kreeger 71 Director; Presently retired; From 1968 1976
to 1990 employed by Brown Publishing
Company, a newspaper publishing and
printing company, located in Urbana,
Ohio.
Edith P. Mayer 67 Director and Corporate Secretary; 1979
Presently retired.
</TABLE>
- ---------------------
(1) As of September 30, 1996.
<PAGE> 8
5
STOCKHOLDER NOMINATIONS
Article X.D of the Company's Articles of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder
who has complied with the notice provisions in that section. In order for a
stockholder of the Company to make any such nominations, he or she shall give
notice thereof in writing, delivered or mailed by first class mail to the
Secretary of the Company not less than thirty days nor more than sixty days
prior to any such meeting; provided, however, that if less than forty days'
notice of the meeting is given to stockholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the Company not later
than the close of the tenth day following the day on which notice of the
meeting was mailed to stockholders. Each such notice given by a stockholder
with respect to nominations for the election of directors shall set forth (i)
the name, age, business address and, if known, residence address of each
nominee, and (iii) the number of shares of stock of the Company which are
beneficially owned by each such nominee. In addition, the stockholder making
such nomination shall promptly provide any other information reasonably
requested by the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF THE BANK AND COMPANY
The Board of Directors of the Company meets on a quarterly basis and
the Board of Directors of the Bank meets on a monthly basis and may have
additional special meetings upon the request of the Chairman or a majority of
the Directors. During the fiscal year ended September 30, 1996, the Board of
Directors of the Company met four times and the Board of Directors of the Bank
met 12 times. No director attended fewer than 75% of the total number of Board
meetings or committee meetings on which he served that were held during this
period. The Board of Directors of the Company has not yet established any
committees. The Board of Directors of the Bank has established an Audit
Committee and an Executive Committee.
Audit Committee. The Audit Committee, which consists of the entire
Board, reviews the records and affairs of the Bank, engages the Bank's external
auditors and reviews their reports. The Audit Committee met once during fiscal
1996.
Executive Committee. The Executive Committee is authorized to
exercise all the authority of the Board of Directors in the management of the
Bank between Board meetings except as otherwise provided in the Bank's Bylaws.
The Executive Committee, which consists of the President and any two outside
directors, met 12 times in fiscal 1996.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal
occupations during the last five years for the two executive officers of the
Company and the Bank who do not serve as directors.
<PAGE> 9
6
Steven M. Pomeroy. Age 45. Mr. Pomeroy is Vice President of the
Company. Mr. Pomeroy has served the Bank as a Vice President and Loan Officer
since 1987.
Thomas J. Noe. Age 36. Mr. Noe is Vice President, Chief Financial
Officer and Treasurer of the Company. Mr. Noe joined the Bank as Vice
President, Chief Financial Officer and Treasurer in January 1994. From March
1992 to January 1994, Mr. Noe served as Vice President, Chief Financial Officer
and Treasurer for Blue Ash Building and Loan Company located in Blue Ash, Ohio.
From January 1983 to March 1992, Mr. Noe was a principal in the firm Kennedy,
Kraft, Dreyer and Noe, certified public accountants, located in Cincinnati,
Ohio.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), who or which was
known to the Company to be the beneficial owner of more than 5% of the issued
and outstanding Common Stock, (ii) the directors of the Company, (iii) certain
executive officers of the Company, and (iv) all directors and executive
officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
Name of Beneficial Owner December 27, 1996(1)
- -------------------------------------------------------------------- ------------------------------------
No. %
----------------------- -----------
<S> <C> <C>
Enterprise Federal Bancorp, Inc. 181,487(2) 9.0%
Employee Stock Ownership Plan Trust
7810 Tylersville Square Drive
West Chester, Ohio 45069
Directors:
Otto L. Keeton 77,264(2)(3) 3.8
Michael R. Meister 68,771(4) 3.4
Terrell G. Marty 44,514(2)(5) 2.2
Edith P. Mayer 8,269(6) 0.4
Steven A. Wilson 40,291(2)(7) 2.0
William H. Kreeger 12,626(8) 0.6
Executive Officer:
Thomas J. Noe 89,589(9) 4.4
Steven M. Pomeroy 27,345(10) 1.4
All directors and executive officers 18.2
of the Company and the Bank as a 368,669(2)(11)
group (8 persons)
</TABLE>
(Footnotes on following page)
<PAGE> 10
7
- ---------------
* Represents less than 1% of the outstanding Common Stock.
(1) For purposes of this table, pursuant to rules promulgated under the
1934 Act, an individual is considered to beneficially own shares of
Common Stock if he or she directly or indirectly has or shares (1)
voting power, which includes the power to vote or to direct the voting
of the shares; or (2) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, an individual has sole voting power and sole investment
power with respect to the indicated shares. Shares which may be
acquired by the exercise of stock options which are exercisable within
60 days of the Voting Record Date are deemed to be beneficially owned
by the holder and are outstanding for the purpose of computing the
percentages of Common Stock beneficially owned by the respective
individual and group.
(2) The Enterprise Federal Bancorp, Inc. Employee Stock Ownership Plan
Trust ("Trust") was established pursuant to the Enterprise Federal
Bancorp, Inc. Employee Stock Ownership Plan ("ESOP") by an agreement
between the Company and Otto Keeton, Terrell Marty and Steven Wilson,
who act as trustees of the ESOP ("Trustees"). As of the Voting Record
Date, 121,597 shares held in the Trust were unallocated, and 59,890
shares held in the Trust had been allocated to the accounts of
participating employees. Under the terms of the ESOP, the Trustees
must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees, and allocated shares for
which employees do not give instructions will be voted in the same
ratio on any matter as to those shares for which instructions are
given. Unallocated shares held in the ESOP will be voted by the ESOP
Trustees in accordance with their fiduciary duties as trustees. The
amount of Common Stock beneficially owned by each individual trustee
or all directors and executive officers as a group does not include
the shares held by the Trust.
(3) Includes 30,860 shares held jointly with Mr. Keeton's wife, 2,496
shares held individually by Mr. Keeton's wife, 9,096 shares held in
the individual's account in the ESOP, and 22,686 shares which may be
acquired upon the exercise of stock options exercisable within sixty
(60) days of the Voting Record Date.
(4) Includes 11,538 shares held jointly with Mr. Meister's wife, 11,538
shares held individually by Mr. Meister's wife, 8,487 shares held in
the individual's account in the ESOP, and 18,149 shares which may be
acquired upon the exercise of stock options exercisable within sixty
(60) days of the Voting Record Date.
(Footnotes continued on following page)
<PAGE> 11
8
- ---------------
(5) Includes 11,538 shares held jointly with Mr. Marty's wife, 11,538
shares held by Mr. Marty's children, 3,500 shares held by Mr. Marty as
trustee for his retirement plan, and 3,857 shares which may be
acquired upon the exercise of stock options exercisable within sixty
(60) days of the Voting Record Date.
(6) Includes 308 shares held jointly with Ms. Mayer's daughter, 1,891
shares held individually by Ms. Mayer's husband, and 3,857 shares
which may be acquired upon the exercise of stock options exercisable
within sixty (60) days of the Voting Record Date.
(7) Includes 11,670 shares held individually by Mr. Wilson's wife, and
3,857 shares which may be acquired upon the exercise of stock options
exercisable within sixty (60) days of the Voting Record Date.
(8) Includes 3,045 shares held individually by Mr. Kreeger's wife, and
3,857 shares which may be acquired upon the exercise of stock options
exercisable within sixty (60) days of the Voting Record Date.
(9) Includes 23,076 shares held jointly with Mr. Noe's wife, 23,191 shares
held individually by Mr. Noe's wife, 5,611 shares held in Mr. Noe's
individual retirement account ("IRA"), 1,795 shares held in an IRA for
Mr. Noe's wife, 811 shares held by Mr. Noe's children, 6,596 shares
held in the individual's account in the ESOP, and 11,343 shares which
may be acquired upon the exercise of stock options exercisable within
sixty (60) days of the Voting Record Date.
(10) Includes 2,310 shares held jointly with Mr. Pomeroy's wife, 2,399
shares held in an IRA for Mr. Pomeroy's wife, 300 shares held by Mr.
Pomeroy's children, 5,200 shares held in the individual's account in
the ESOP, and 11,343 shares which may be acquired upon the exercise of
stock options exercisable within sixty (60) days of the Voting Record
Date.
(11) Includes 78,949 shares which may be acquired by directors and
executive officers as a group upon the exercise of stock options
exercisable within sixty (60) days of the Voting Record Date and
29,379 shares allocated to the accounts of directors and executive
officers as a group in the ESOP.
<PAGE> 12
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank for services rendered in all
capacities during the indicated periods to the President and Chief Executive
Officer of the Bank and other executive officers of the Bank whose total
compensation during the last fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------ -----------------------------
Other All
Name and Annual Stock Number of Other
Principal Position Year Salary(1) Bonus Compensation(1) Grants(2) Options(3) Compensation(4)
- ----------------------- -------- ------------- --------- ------------------ -------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Otto L. Keeton 1996 $172,200 $93,000 $ --- $ --- --- $73,824
President and 1995 162,200 56,000 --- 277,891 56,714 36,912
Chief Executive 1994 154,008 52,000 --- --- --- ---
Officer
Michael R. Meister 1996 130,400 77,000 --- --- --- 73,824
Vice President and 1995 119,958 38,000 --- 222,325 45,372 36,912
Chief Operating 1994 109,417 34,000 --- --- --- ---
Officer
Thomas J. Noe 1996 88,100 68,000 --- --- --- 73,824
Vice President, 1995 80,501 28,273 --- 138,964 28,358 36,912
Chief Financial 1994 50,488 --- --- --- --- ---
Officer and
Treasurer
Steven M. Pomeroy 1996 64,700 25,000 --- --- --- 52,000
Vice President 1995 61,600 23,700 --- 138,964 28,358 26,000
and Loan Officer 1994 58,500 22,500 --- --- --- ---
</TABLE>
- ---------------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named executive officers. Includes directors fees
where applicable. In the opinion of management of the Bank, the costs
to the Bank of providing such benefits to the named executive officers
during the year ended September 30, 1996 did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus reported for
the individual.
(2) Represents the grant of restricted Common Stock pursuant to the
Company's Recognition and Retention Plan and Trust, which were deemed
to have had the indicated value at the date of grant and which had a
fair market value of $408,330, $326,682, $204,192 and $204,192 for
Messrs. Keeton, Meister, Noe and Pomeroy, respectively, at September
30, 1996. The awards vest at the rate of 20% a year over a five year
period commencing on the first anniversary of the date of grant.
(Footnotes continued on following page)
<PAGE> 13
10
- ------------
(3) Consists of awards granted pursuant to the Company's 1994 Stock Option
Plan which options vest and are exercisable at the rate of 20% a year
over a five year period commencing on the first anniversary of the
date of grant.
(4) Consists of amounts allocated during the respective periods pursuant
to the ESOP based on the market price per share on the date of
allocation.
STOCK OPTIONS
No options were granted to the named executive officers during the
year ended September 30, 1996.
The following table discloses the options exercised for the year ended
September 30, 1996, and held at year-end, by the Chief Executive Officer and
the named executive officers:
<TABLE>
<CAPTION>
Shares Acquired Value Number of Options at Value of Options at
Name On Exercise Realized September 30, 1996 September 30, 1996(1)
- ------------------- ------------------ ------------- ----------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------ --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Otto L. Keeton --- --- 11,343 45,371 $55,297 $221,184
Michael R. Meister --- --- 9,074 36,298 44,236 176,953
Thomas J. Noe --- --- 5,672 22,686 27,651 110,594
Steven M. Pomeroy --- --- 5,672 22,686 27,651 110,594
</TABLE>
- --------------
(1) Based on a per share market price of $14.125 at September 30, 1996.
DIRECTOR'S COMPENSATION
Directors of the Company receive no compensation. During fiscal 1996,
members of the Board of Directors of the Bank received $1,800 per month for
serving on the Board of Directors and any of its committees and the Corporate
Secretary (who is also a director) received an additional $100 per month for
performing secretarial services.
EMPLOYMENT AGREEMENTS
The Company and the Bank (collectively the "Employers") have entered
into employment agreements with each of Messrs. Keeton, Meister, Noe and
Pomeroy. The Employers have agreed to employ such individuals for a term of
three years in their current respective positions. The term of each employment
agreement shall be extended each year.
<PAGE> 14
11
The employment agreements are terminable with or without cause by the
Employers. The officer shall have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death,
provided, however, that (i) in the event that the officer terminates his
employment because of failure of the Employers to comply with any material
provision of the employment agreement or (ii) the employment agreement is
terminated by the Employers other than for cause, disability, retirement or
death or by the officer as a result of certain adverse actions which are taken
with respect to the officer's employment following a Change in Control of the
Company, as defined, each officer will be entitled to a cash severance amount
equal to 2.99 times his base salary.
A Change in Control is generally defined in the employment agreement
to include (i) the acquisition by any person of 25% or more of the Company's
outstanding voting securities and (ii) a change in a majority of the directors
of the Company during any two-year period without the approval of at least
two-thirds of the persons who were directors of the Company at the beginning of
such period.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Code, then such payments and benefits received thereunder shall be
reduced, in the manner determined by the employee, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
being non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control
of the employer occurred. Recipients of excess parachute payments are subject
to a 20% excise tax on the amount by which such payments exceed the base
amount, in addition to regular income taxes, and payments in excess of the base
amount are not deductible by the employer as compensation expense for federal
income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
BENEFITS
Employee Stock Ownership Plan and Trust. The Company has established
the ESOP for employees of the Company and the Bank. Full-time employees of the
Company and the Bank who have been credited with at least 1,000 hours of
service during a twelve month period and who have attained age 21 are eligible
to participate in the ESOP.
<PAGE> 15
12
The ESOP borrowed $2.4 million from the Company to purchase 181,487
shares of Common Stock issued in the Conversion. The loan to the ESOP will be
repaid principally from the Company's and the Bank's contributions to the ESOP
over a period of ten years, and the collateral for the loan is Common Stock
purchased by the ESOP. The Company may, in any plan year, make additional
discretionary contributions for the benefit of plan participants in either cash
or shares of Common Stock, which may be acquired through the purchase of
outstanding shares in the market or from individual stockholders, upon the
original issuance of additional shares by the Company or upon the sale of
treasury shares by the Company. Such purchases, if made, would be funded
through additional borrowing by the ESOP or additional contributions from the
Company. The timing, amount and manner of future contributions to the ESOP
will be affected by various factors, including prevailing regulatory policies,
the requirements of applicable laws and regulations and market conditions.
Shares purchased by the ESOP with proceeds of the loan are held in a
suspense account and released on a pro rata basis as debt service payments are
made. Discretionary contributions to the ESOP and shares released from the
suspense account are allocated among participants on the basis of compensation.
Forfeitures are reallocated among remaining participating employees and may
reduce any amount the Company might otherwise have contributed to the ESOP.
Participants will vest in their right to receive their account balance within
the ESOP, starting with completion of their fifth year of service. In the case
of a "change in control," as defined, however, participants will become
immediately fully vested in their account balances. Benefits may be payable
upon retirement, early retirement, disability or separation from service. The
Company's contributions to the ESOP are not fixed, so benefits payable under
the ESOP cannot be estimated.
Messrs. Marty, Wilson and Keeton serve as trustees of the ESOP Trust.
Under the ESOP, the trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and allocated
shares for which employees do not give instructions, and unallocated shares,
will be voted in the same ratio on any matter as to those shares for which
instructions are given.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans or extensions of credit to executive officers and directors
must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the general public and must not involve more than the normal risk of repayment
on present other unfavorable features. All of the Bank's loans to its
directors and executive officers were originally made in the ordinary course of
business at substantially the same terms, including interest rates and
collateral, as those prevailing at the time of the loans for comparable
transactions with other persons and did not involve more than the normal risk
of collectability or other unfavorable features.
<PAGE> 16
13
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Grant Thornton,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending September 30, 1997, and further
directed that the selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by Grant Thornton that neither the firm
nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Grant Thornton will have one or more
representatives at the Annual Meeting who will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF GRANT THORNTON AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 1997.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the nest annual meeting of stockholders of
the Company, which is scheduled to be held in January 1998, must be received at
the principal executive offices of the Company, 7810 Tylersville Square Drive,
West Chester, Ohio, 45069, Attention: Edith P. Mayer, Secretary, no later than
September 6, 1997. If such proposal is in compliance with all of the
requirements of Rule 14a-8 under the 1934 Act, it will be included in the proxy
statement and set forth on the form of proxy issued for such annual meeting of
stockholders. It is urged that any such proposals be sent certified mail,
return receipt requested.
Stockholders proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before the annual meeting pursuant to Article X.D of the Company's
Articles of Incorporation, which provides that proposals for any new business
to be taken up at any annual or special meeting of stockholders may be made by
the Board of Directors of the Company or by any stockholder of the Company
entitled to vote generally in the election of directors. In order for a
stockholder of the Company to make any such proposals, he or she shall give
notice thereof in writing, delivered or mailed by first class mail to the
Secretary of the Company not less than thirty days nor more than sixty days
prior to any such meeting; provided, however, that if less than forty days'
notice of the meeting is given to stockholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the Company not later
than the close of the tenth day following on which notice of the meeting was
mailed to stockholders. Each such notice given by a stockholder to the
Secretary with respect to business proposals to bring before a meeting shall
set forth in writing as to each matter: (i) a brief description of the business
desired to be brought before the meeting and the reasons
<PAGE> 17
14
for conducting such business at the meeting; (ii) the name and address, as they
appear on the Company's books, of the stockholder proposing such business;
(iii) the class and number of shares of the Company which are beneficially
owned by the stockholder; and (iv) any material interest of the stockholder in
such business.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended September 30, 1996 accompanies this Proxy Statement. Such annual report
is not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR FISCAL 1996 REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE 1934 ACT. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO
EDITH P. MAYER, SECRETARY, ENTERPRISE FEDERAL BANCORP, INC., 7810 TYLERSVILLE
SQUARE DRIVE, WEST CHESTER, OHIO 45069. THE FORM 10-K IS NOT PART OF THE PROXY
SOLICITATION MATERIALS.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement.
However, if any other matter should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgement of the persons voting the
proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
<PAGE> 18
<TABLE>
<CAPTION>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE ENTERPRISE FEDERAL BANCORP, INC.
<S> <C>
WITH- FOR ALL
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD 1. ELECTION OF DIRECTORS FOR HOLD EXCEPT
OF DIRECTORS OF ENTERPRISE FEDERAL BANCORP, INC. [ ] [ ] [ ]
("COMPANY") FOR USE AT THE ANNUAL MEETING OF Nominees for two-year term:
STOCKHOLDERS TO BE HELD ON JANUARY 29, 1997 AND OTTO L. KEETON, TERRELL G. MARTY AND STEVEN A. WILSON
AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
of December 27, 1996, hereby authorizes the Board of Directors NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME
of the Company or any successors thereto as proxies will full IN THE SPACE PROVIDED BELOW.
powers of substitution, to represent the undersigned at the
Annual Meeting of Stockholders of the Company to be held at the -------------------------------------------------------------
Marriott Hotel, 11320 Chester Road, Sharonville, Ohio, on January FOR AGAINST ABSTAIN
29, 1997 at 10:00 a.m., Eastern Time, and at any adjournment of 2. PROPOSAL to ratify the appoint- [ ] [ ] [ ]
said meeting, and thereat to act with respect to all votes that ment of Grant Thornton as the
the undersigned would be entitled to cast, if personally present, Company's independent auditors
as follows: for the fiscal year ending
September 30, 1997.
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE
|----------------------| BOARD OF DIRECTORS, FOR PROPOSAL 2, AND OTHERWISE AT THE
Please be sure to sign and date |Date | DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY
this Proxy in the box below. | | TIME PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.
|--------------------------------------------------------------|
| | PLEASE SIGN THIS EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS
| | PROXY CARD. WHEN SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE
| | GIVE TITLE. WHEN SHARES ARE HELD JOINTLY, ONLY ONE HOLDER NEED
| | SIGN.
|---Stockholder sign above-----Co-holder (if any) sign above---|
| |
- -|- -|-
| |
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
ENTERPRISE FEDERAL BANCORP, INC.
|------------------------------------------------------------------------------|
| PLEASE ACT PROMPTLY |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
|------------------------------------------------------------------------------|
<PAGE> 19
[PHOTO] `We're like a lot of thrifts in the area, in that we're looking at
ways to expand our operation and become even more competitive to deal with the
future.'--OTTO KEETON
[PHOTO]
The Cincinnati Enquirer/Tony Jones
Otto Keeton, chief executive of Enterprise Federal Savings Bank in West Chester,
expects big changes for thrifts as they look for ways to compete against banks
and other financial-services institutions. TOP: Enterprise Federal's
headquarters, in West Chester.
EAT -- OR BE EATEN
Smaller thrifts live by Darwinian theory:
Find a niche and grow, or big banks will take them over
<TABLE>
<CAPTION>
GREATER CINCINNATI'S BY JEFF MCKINNEY THRIFTS THAT CONVERTED FROM
BIGGEST THRIFTS The Cincinnati Enquirer MUTUALS TO STOCK OWNERSHIP
<S> <C> <C>
YEAR NATIONALLY OHIO
The largest thrifts in South- These are good days for the thrift 1996* 63 10
western Ohio and Northern Ken- industry, but Otto Keeton still feels 1995 97 5
tucky based on asset size: compelled to prepare his Enterprise 1994 97 12
Federal Savings Bank in West Chester 1993 104 12
-Fidelity Financial of Ohio, for a fight. 1992 70 9
Norwood, $495 million.* 1991 48 4
With a new set of rules for the
-US BanCorp, Cincinnati, industry as well as new players looking * --as of Nov. 19
$367 million. for their piece of the financial-services
pie, Mr. Keeton figures his trade is THRIFTS BUYING THRIFTS
-Glenway, Financial Corp., about to undergo some of the biggest
Cincinnati, $284 million. changes in his 35-year career. Notable acquisitions of savings and loans
by other S&Ls in Southwestern Ohio:
-Winton Financial Corp., Indeed, industry experts acknowledge
Cincinnati, $283 million.* that thrifts like Mr. Keeton's will no -WESTERN OHIO FINANCIAL of Springfield
longer be able to just rely on selling home acquired SEVEN HILLS FINANCIAL of Cincinnati
-Enterprise Federal Bancorp, mortgages and certificates of deposit -- Nov. 14 for $11 million.
West Chester, $235 million. staples of the savings and loan industry
-- and still remain competitive with other -FIDELITY FINANCIAL OF OHIO in Norwood
-First Franklin Corp., Cincin- growing financial players. purchased CIRCLE FINANCIAL CORP. of
nati, $218 million. Sharonville Oct. 11 for $28 million.
"We're like a lot of thrifts in the area,
-OHSL Financial Corp., in that we're looking at ways to expand our -WESTERN OHIO FINANCIAL of Springfield
Cincinnati, $217 million. operation and become even more competitive to bought MAYFLOWER FINANCIAL CORP., based
deal with the future," said Mr.Keeton, whose in Cincinnati, March 29 for $10 million.
-Suburban Bancorporation thrift, with $235 million in assets, will
Inc., Cincinnati, $209 million. consider acquisitions as an option for growth. -WINTON FINANCIAL CORP., based in
Cincinnati, acquired Cincinnati-based BLUE
-Westwood Homestead Thrifts such as Enterprise Federal, which CHIP SAVINGS BANK Jan. 4 for $4.6 million.
Financial Corp., Cincinnati, $120 survived the massive S&L failures during the
million. late 1980s, are now at a crossroads. -CITFED BANCORP, INC. of Dayton, Ohio,
purchased PSB HOLDING CORP. in Xenia
-Fort Thomas Financial Corp., Thrifts are reaping their strongest profits March 1, 1995, for $58 million.
Fort Thomas, $88.8 million. ever. They're enjoying capital levels that
give them the capability to expand or make
*Includes Fidelity Financial's acquisitions. They also are getting some
acquisition of Circle Financial Corp. relief on the regulatory front to cut their
and Winton Financial's purchase of costs and allow them to act more like banks.
Blue Chip Savings Bank.
Yet those same factors have made them more
</TABLE>
<PAGE> 20
12 SUNDAY, DECEMBER 1, 1996 BUSINESS
- --------------------------------------------------------------------------------
THRIFTS: FINDING A NICHE
CONTINUED FROM PAGE 11
attractive as takeover targets of banks looking to grow. Thrifts' earnings are
being squeezed by narrowing margins in their bread-and-butter mortgage
business, and many don't offer the electronic services that are the wave
financial institutions are riding in an effort to lure demanding customers.
In addition, thrift executives are being pressured by investors to
provide higher returns -- an increasingly difficult task in a business sphere
filled with rival brokerages, banks, mutual funds and mortgage companies.
Some industry executives argue that there will always be a place for
the thrifts -- particularly those that can capitalize on providing personalized
service for customers intimidated by larger institutions.
But whatever happens, Mr. Keeton thinks that the thrift industry will
be cut in half in the next five to 10 years. There are 2,000 thrifts operating
nationally -- 38 of them in Greater Cincinnati.
Industry analysts point to these other developments that could set the
stage for a new round of thrift and bank mergers as they position themselves for
survival:
-- Congress passed a law in late September that is designed to merge by
1999 the two funds that insure thrift and bank deposits. But that merger cannot
occur until bank and thrift operating charters are combined, meaning that
thrifts would be forced to convert to a bank charter of some form. The
Treasury Department has until March 31 to deliver a report to Congress on
consolidating charters.
-- Until the Charters are made one, thrifts will be restricted from
shifting deposits into the Bank Insurance Fund, which would allow them to avoid
the steeper fees charged by the Savings Association Insurance Fund (SAIF).
-- The law required the nation's thrifts to pay a one-time assessment of
$4.7 billion combined to help recapitalize SAIF by the end of this month. That
fee will substantially reduce the annual amount thrifts pay for deposit
insurance. In turn, that is expected to boost their earnings, making their
franchises more attractive to banks or larger thrifts as takeover candidates.
-- With that ruling, thrifts will pay 6 cents for every $100 in deposits,
compared with 23 cents paid previously. Despite that rate decline, banks pay
just 1.5 cents for every $100 in deposits because their insurance fund is
healthy. The differential puts thrifts at a competitive disadvantage.
-- In August, Congress removed a big obstacle in an effort to see bank and
thrift charters merged by relieving the nation's thrifts of a $3 billion tax
burden. The new "bad debt reserves" law would remove a burdensome liability if
thrifts are required to accept bank charters as part of the insurance fund
rescue.
Thomas F. Theurkauf, a thrift analyst at Keefe, Bruyette and Woods in
New York, said the bad-debt reserves law is significant because it would
substantially reduce the costs of a thrift's conversion to a bank or a bank's
acquisition of a thrift. The reason: The newly converted thrift or acquirer
would not be forced to carry the liability on their books.
LOSING MORTGAGE BUSINESS
At the same time, Mr. Theurkauf said, thrift's primary business --
providing mortgage loans -- is slowly being eroded by national mortgage and
commercial banks.
According to the U.S. Department of Housing and Urban Development,
thrifts' share of mortgage originations for one- to four-family housing in 1980
totaled 49 percent, vs. 22 percent for mortgage companies and 22 percent for
banks.
But in 1995, thrifts' share of the mortgage business dropped to 19
percent. Meanwhile, mortgage companies' chunk of the market ballooned to 56
percent, and banks increased their share to 24 percent.
And there are other forces at work.
Mr. Theurkauf predicted that the Office of Thrift Supervision (OTS),
the savings and loan industry's regulator, will be merged into the Office of the
Comptroller of the Currency, which oversees almost 2,900 of the country's
national banks.
According to the OTS, the thrift industry is the healthiest ever, with
the institutions benefiting largely from a booming economy that has helped spur
mortgage lending. The industry has posted 20 consecutive quarters of strong
earnings, including record profits of $3.7 billion during the first six months
of this year.
Tristate thrifts are no exception. Many have reported double-digit
profit gains in recent years because of strong loan demand, higher net interest
income and increased service fees from mortgage originations.
In addition, about 500 thrifts nationally have converted from mutual to
stock ownership between 1991 and late November, raising about $11.4 billion in
new capital, according to SNL Securities, a Charlottesville, Va., investment
research firm that monitors the banking industry. Thrifts that converted now
account for about 90 percent of the savings and loan industry's assets.
More than 50 thrifts in Ohio have converted to stock ownership during
the past five years, raising about $655 million. Many converted primarily to
raise money to expand, introduce new products, enter new lines of business or
make acquisitions.
Of the 38 thrifts in the Greater Cincinnati area, 17 have converted to
stock ownership since 1991, according to the TriState League of Financial
Institutions, a local trade group.
TOO MUCH CAPITAL
Charles Crowley, a managing director of financial services at McDonald
& Co. Securities in Cleveland, said the conversions often leave thrifts with
excess capital or equity on their balance sheets. It has forced them to put that
money to use by making acquisitions or give it back to investors in the form of
higher dividends or repurchasing their stock.
But some thrifts have allowed competitors to buy them because they had
too much capital and couldn't provide an adequate return to investors. Others
have used the extra capital to expand or buy thrifts to give their investors
stronger returns.
For example, Kentucky Enterprise Bancorp Inc., once one of the
Tristate's largest thrifts with about $300 million in assets, put itself up for
sale in 1995 because it had excessive capital after converting to stock
ownership. The thrift was acquired by Cincinnati-based Fifth Third Bancorp for
$98.6 million.
Mr. Crowley suggested that a dearth or oversupply of capital might have
played a role in the 16 cases of thrifts acquiring thrifts in the Tristate since
1994. Five of those deals were in Ohio, including Cincinnati-based Fidelity
Financial of Ohio's $28 million acquisition in April of Circle Financial Corp.
of Sharonville. The deal made Fidelity Financial the city's largest thrift with
almost $500 million in assets.
SEEKING MORE DEALS
And Fidelity Federal is hungry for more deals.
John Reusing, Fidelity Federal's chief executive, said the institution
still has the capital it needs to put to use to improve its profitability. Mr.
Reusing said one option is to use the money to shop for acquisitions,
particularly for thrifts with assets of $50 million to $100 million.
"We're very flexible right now," Mr. Reusing said. "We must continue
growing and leverage our capital to get our shareholders a decent return."
Fidelity Federal's crosstown rival, Enterprise Federal, also will
consider acquisitions to grow, Mr. Keeton said.
The thrift, which had $120 million in assets two years ago, today has
$235 million in assets. That growth came from an expansion of its loan product
line, an increase in its mortgage-backed securities portfolio and a 25 percent
boost in its customer base through aggressive marketing; Enterprise Federal runs
five branch offices in Greater Cincinnati.
But Mr. Keeton also is confident that Enterprise Federal and
other area thrifts can survive the changes and remain independent.
The key: Maintain relationships with loyal customers, serve a niche
clientele and offer stockholders above-average returns.
"These are going to be some of the biggest changes we're ever going to
see, but there always will be room for a thrift that offers good personalized
service," Mr. Keeton said.
Terri Reyering Abar, a partner at the law firm Vorys, Sater, Seymour
and Pease, and a specialist in mergers and acquisitions in the
financial-services industry, agreed.
She said there will continue to be a place for thrifts no matter what
type of charter they operate under. Ms. Abar said most of those businesses will
remain small and offer loan and deposit products to a targeted customer base,
and they will still be perceived as thrifts.
"Many of these institutions will be able to function because they have
a particular clientele they cater to," she said.
