SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________
FORM 10-QSB
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-25484
AMTRUST CAPITAL CORP.
_______________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 35-1940250
___________________________ ______________________________
(State or other jurisdiction of (I.R.S. Employer Identification number)
incorporation or organization)
20 W. Fifth Street, Peru, Indiana 46970
_______________________________________________________
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (317) 472-1991
Check here whether the issuer (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 reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ x ] No [ ]
As of September 30, 1996, there were 527,859 shares of the Registrant's
common stock outstanding.
Transitional Small Disclosure (check one): Yes [ ] No [ x ]
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated condensed balance sheet at
September 30, 1996 and June 30, 1996
(Unaudited) ......................................... 3
Consolidated condensed statement of income for
the three months ended September 30, 1996 and 1995
(Unaudited) ......................................... 4
Consolidated condensed statement of changes in
stockholders' equity for the three months ended
September 30, 1996 and 1995 (Unaudited) ............. 5
Consolidated condensed statement of cash flows for
the three months ended September 30, 1996 and 1995
(Unaudited) ......................................... 6
Notes to unaudited consolidated condensed financial
statements .......................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ...................................14
Item 2. Changes in Securities ...............................14
Item 3. Defaults Upon Senior Securities .....................14
Item 4. Submission of Matters to a Vote of Security Holders..14
Item 5. Other Information ...................................14
Item 6. Exhibits and Reports on Form 8-K ....................14
Signatures ..........................................15
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED BALANCE SHEET
September 30, June 30,
1996 1996
---------- ----------
(UNAUDITED)
ASSETS
CASH AND DUE FROM BANKS $ 646,001 $ 1,128,289
INTEREST-BEARING DEPOSITS 870,874 617,842
INVESTMENT SECURITIES
AVAILABLE FOR SALE 11,961,485 11,919,170
HELD TO MATURITY 2,446,543 2,612,885
---------- ----------
TOTAL INVESTMENT SECURITIES 14,408,028 14,532,055
MORTGAGE LOANS HELD FOR SALE 598,765 1,508,611
LOANS 51,660,714 50,294,720
ALLOWANCE FOR LOAN LOSSES (494,375) (494,375)
---------- ----------
NET LOANS 51,166,339 49,800,345
PREMISES AND EQUIPMENT 1,126,399 1,124,519
FEDERAL HOME LOAN BANK OF
INDIANAPOLIS STOCK 1,050,000 1,050,000
CASH SURRENDER VALUE-LIFE
INSURANCE POLICIES 1,110,528 1,100,203
INTEREST RECEIVABLE 494,229 378,648
DEFERRED INCOME TAX BENEFITS 266,976 326,650
CURRENT INCOME TAX REFUNDABLE 69,972 22,105
OTHER ASSETS 299,315 302,400
---------- ----------
TOTAL ASSETS $ 72,107,426 $ 71,891,667
========== ==========
LIABILITIES
DEPOSITS 47,236,150 44,561,525
ADVANCES FROM FHLB OF
INDIANAPOLIS 16,898,466 19,500,036
INTEREST PAYABLE 141,285 83,030
OTHER LIABILITIES 683,806 535,787
---------- ----------
TOTAL LIABILITIES 64,959,707 64,680,378
---------- ----------
STOCKHOLDERS' EQUITY
PREFERRED STOCK ($.01 PAR VALUE)
AUTHORIZED AND UNISSUED--350,000 SHARES
COMMON STOCK ($.01 PAR VALUE)
AUTHORIZED--1,750,000 SHARES
ISSUED--580,064 SHARES 5,801 5,801
PAID IN CAPITAL 4,178,218 4,178,218
RETAINED EARNINGS-SUBSTANTIALLY
RESTRICTED 4,079,082 4,167,860
UNEARNED ESOP SHARES --
39,445 SHARES (315,554) (315,554)
TREASURY STOCK AT COST --
52,205 SHARES (535,299) (535,299)
NET UNREALIZED LOSS ON SECURITIES
AVAILABLE, NET OF TAX (264,529) (289,737)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 7,147,719 7,211,289
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 72,107,426 $ 71,891,667
========== ==========
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP AND SIBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
__________ __________
(UNAUDITED)
INTEREST INCOME
LOANS RECEIVABLE $ 1,018,353 $ 967,123
SECURITIES, INCLUDING DIVIDENDS 271,746 162,563
INTEREST BEARING DEPOSITS 10,536 35,248
---------- ----------
1,300,635 1,164,934
---------- ----------
INTEREST EXPENSE
DEPOSITS 530,662 597,913
ADVANCES FROM FEDERAL
HOME LOAN BANK 271,390 135,816
---------- ----------
802,052 733,729
---------- ----------
NET INTEREST INCOME 498,583 431,205
PROVISION FOR LOSSES ON LOANS 0 0
---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOSSES ON LOANS 498,583 431,205
---------- ----------
OTHER INCOME
SERVICE CHARGES ON DEPOSIT
ACCOUNTS 18,957 26,665
GAINS (LOSSES) ON SALE OF
INVESTMENT SECURITIES 0 14,063
LOANS HELD FOR SALE 44,191 54,928
LOAN FEES AND SERVICE CHARGES 14,380 23,322
ANNUITY COMMISSIONS AND
OTHER FEES 49,260 886
OTHER INCOME 23,527 13,264
---------- ----------
150,315 133,128
---------- ----------
OTHER EXPENSES
SALARIES AND EMPLOYEE BENEFITS 252,314 229,532
NET OCCUPANCY EXPENSES 32,476 33,793
EQUIPMENT EXPENSES 25,691 24,657
DATA PROCESSING FEES 25,560 28,256
DEPOSIT INSURANCE EXPENSE 324,933 7,308
LEGAL FEES 15,768 16,719
CUSTOMER DEPOSIT ACCOUNT EXPENSES 16,791 12,979
ADVERTISING AND PROMOTION 3,901 9,602
PRINTING AND OFFICE SUPPLIES 11,193 14,806
OTHER EXPENSES 100,003 80,113
---------- ----------
808,630 457,765
---------- ----------
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (159,732) 106,568
INCOME TAX EXPENSE (BENEFIT) (70,953) 45,973
---------- ----------
NET INCOME (LOSS) $ (88,779) $ 60,595
======== ========
NET INCOME (LOSS) PER SHARE (0.17) 0.10
WEIGHTED AVERAGE SHARES OUTSTANDING 527,859 580,064
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
__________ __________
(UNAUDITED)
BEGINNING BALANCE $ 7,211,289 $ 7,637,135
CHANGE IN NET UNREALIZED GAINS
(LOSSES) ON SECURITIES 25,209 17,855
NET INCOME (88,779) 60,595
---------- ---------
ENDING BALANCE $ 7,147,719 $ 7,715,585
========== =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
_________ _________
(UNAUDITED)
NET INCOME (LOSS) $ (88,779) $ 60,595
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
PREMIUM AND DISCOUNT AMORTIZATION, NET (143) 16,911
DEPRECIATION AND AMORTIZATION 25,212 23,182
GAINS ON SALES OF INVESTMENT SECURITIES AVAILABLE
FOR SALE 0 (14,063)
DEFERRED INCOME TAX BENEFIT 43,139 (5,151)
CURRENT INCOME TAX REFUNDABLE (47,867) 34,228
LOANS ORIGINATED FOR SALE (465,389) 3,606,143)
PROCEEDS FROM SALES AND PAYDOWNS ON LOANS HELD
FOR SALE 1,419,427 3,433,895
(GAINS) ON SALES OF LOANS HELD FOR SALE (44,191) (54,928)
CHANGE IN:
INTEREST RECEIVABLE AND OTHER ASSETS (112,496) (60,681)
CASH SURRENDER VALUE OF LIFE INSURANCE
POLICIES (10,325) (10,890)
INTEREST PAYABLE AND OTHER LIABILITIES 206,274 152,184
---------- ----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 924,862 (30,861)
---------- ----------
INVESTING ACTIVITIES:
NET CHANGE IN INTEREST-BEARING DEPOSITS (253,032) 913,665
PURCHASES OF SECURITIES AVAILABLE FOR SALE (11,095) (1,000,000)
PAYMENTS ON SECURITIES 0 331,670
PAYMENTS ON SECURITIES AVAILABLE FOR SALE 0 46,957
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE 0 3,014,063
PAYMENTS ON SECURITIES HELD TO MATURITY 177,008 804,720
NET CHANGE IN LOANS (1,365,994) (177,705)
PURCHASE OF PREMISES AND EQUIPMENT (27,092) (22,704)
---------- ----------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (1,480,205) 3,910,666
---------- ----------
FINANCING ACTIVITIES:
NET CHANGE IN NOW, SAVINGS AND CERTIFICATES
OF DEPOSIT 2,674,625 (2,600,853)
PROCEEDS FROM FHLB ADVANCES 2,316,570 750,000
REPAYMENT OF FHLB ADVANCES (4,918,140) (2,500,000)
---------- ----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 73,055 (4,350,853)
---------- ----------
NET CHANGE IN CASH (482,288) (471,048)
CASH, BEGINNING OF YEAR 1,128,289 1,129,259
---------- ----------
CASH, END OF YEAR $ 646,001 $ 658,211
========= =========
ADDITIONAL CASH FLOW AND SUPPLEMENTARY INFORMATION
INTEREST PAID $ 743,797 $ 652,854
INCOME TAX PAID 85,000 0
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of AmTrust Capital Corp. (the "Company") and its subsidiary,
AmericanTrust Federal Savings Bank (the "Bank") and should be read in
conjunction with the Company's most recent annual report.
The significant accounting policies followed by the Company and Bank for
interim financial reporting are consistent with the accounting policies followed
for annual financial reporting except for the change in method of accounting
discussed more fully in Note 2.
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB and, therefore,
do not include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the financial statements reflect all adjustments necessary to
present fairly the Company's financial position as of September 30, 1996 and
results of operations for the three month periods ending September 30, 1996
and 1995. The results of operations for the three months ended September 30,
1996 are not necessarily indicative of the results of operations which may be
expected for the fiscal year ended June 30, 1997.
Note 2 - Change in Accounting Method
The Company adopted Statement of Accounting Standards ("SFAS") No. 122,
Accounting for Mortgage Servicing Rights, on July 1, 1996. Mortgage
servicing rights on originated loans are capitalized by allocating the total
cost of the mortgage loans between the mortgage servicing rights and the
loans based on their relative fair values. Capitalized servicing rights are
amortized in proportion to and over the period of estimated servicing revenues.
The amount of mortgage servicing rights capitalized during the three months
ended September 30, 1996 was $12,000.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
AmTrust Capital Corp. (the "Company") was incorporated under the laws of
the State of Delaware for the purpose of becoming the savings and loan
holding company of AmericanTrust Federal Savings Bank (the "Bank") in
connection with the Bank's conversion from a federally chartered mutual
savings bank to a federally chartered stock savings bank, pursuant to its
Plan of Conversion. At September 30, 1996, the Company had no significant
assets except the equity investment in the Bank's stock, cash and a loan to
the Employee Stock Ownership Plan, no material liabilities and the Company
had not conducted any material operations. As a result, the consolidated
condensed financial statements appearing herein and the following discussion
of results of operations relate primarily to the Bank.
AmericanTrust has been, and continues to be, a community-oriented financial
institution offering selected financial services to meet the needs of the
communities it services. The Bank attracts deposits from the general public
and historically has used such deposits, together with other funds, primarily to
originate one- to four-family residential mortgage loans. The Bank also
originates consumer loans, and to a lesser extent, construction loans. Through
its main office, branch office, and limited service office, AmericanTrust serves
communities in Howard and Miami Counties, Indiana.
The Company's results of operations depend primarily upon the level of net
interest income, which is the difference between the interest income earned on
its interest-earning assets such as loans and investments, and the costs of the
Company's interest-bearing liabilities, primarily deposits and borrowings.
Results of operations are also dependent upon the level of the Company's
non-interest income, including fee income and service charges, and affected by
the level of its non-interest expenses, including its general and administrative
expenses. Net interest income depends upon the volume of interest-earning
assets and interest bearing liabilities and the interest rates earned or paid on
them, respectively.
FINANCIAL CONDITION
Total assets increased by $216,000 in the three months ended September 30,
1996 from $71.9 million at June 30, 1996 to $72.1 million at September 30,
1996. Cash and interest-bearing deposits decreased $229,000 due to the use of
funds for lending activities. Investment and mortgage-backed securities
decreased by $124,000 during the three months ended September 30, 1996 due
to principal reductions. Net loans increased by $1.4 million due to increased
loan activity.
<PAGE>
Deposits increased to $47.2 million at September 30, 1996 from $44.6 million
at June 30, 1996. The increase of $2.6 million was due to increased use of
public funds. FHLB advances decreased to $16.9 million at September 30,
1996 from $19.5 million at June 30, 1996 due to repayment of short-term
variable rate advances.
Stockholders' equity decreased $64,000 between June 30, 1996 and September
30, 1996 as a result of a net loss for the quarter of $89,000, due to the
one-time special assessment to recapitalize the Savings Association Insurance
Fund ("SAIF"), and a reduction of net unrealized losses on securities available
for sale, net of tax, of $25,000.
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH
PERIOD ENDED SEPTEMBER 30, 1996 AND 1995
General. The Company had a net loss of $89,000 for the three months ended
September 30, 1996 as compared to net income of $61,000 for the three
months ended September 30, 1995. The decrease of $150,000 is primarily as
result of the one-time FDIC special assessment to recapitalize the SAIF of
$170,000, net of tax. Absent the one-time special assessment, the net income
for the quarter would have been $81,000.
Net Interest Income. Net interest income increased $68,000 to $499,000 for
the three-month period ended September 30, 1996 from $431,000 for the
three-month period ended September 30, 1995. The Company's average
spread increased to 2.54% for the three-month period ended September 30,
1996 from 2.38% for the three-month period ended September 30, 1995. The
ratio of the Company's average interest-earning assets to average
interest-bearing liabilities decreased to 105.43% during the three-month period
ended September 30, 1996 from 108.48% for the three-month period ended
September 30, 1995.
Interest Income. Total interest income increased by $136,000 to $1.3 million
for three-month period ended September 30, 1996 from $1.2 million for the
three-month period ended September 30, 1995 due primarily to an increase in
the average balance of interest-earning assets. Average yields on
interest-earning assets increased slightly to 7.56% for the three-month period
ended September 30, 1996 from 7.52% for the three-month period ended September
30, 1995.
Interest Expense. Interest expense increased $68,000 to $802,000 for the
three months ended September 30, 1996 from $734,000 for the three months
ended September 30, 1996 due to an increase in the average interest-bearing
liabilities to $64.2 million at September 30, 1996 from $62.3 million at June
30, 1996. Average yields on interest-bearing liabilities decreased to 5.02% for
the three-month period ended September 30, 1996 from 5.14% for the three-month
period ended September 30, 1995. The primary reason for the decrease
in the average costs of funds was due to lower yields on FHLB advances of
6.10% for the three-month period ended September 30, 1996, as compared to
7.89% for the three-month period ended September 30, 1995.
<PAGE>
Provision for Losses on Loans. Management's quarterly assessment of
classified assets, provision for loan losses and the portfolio as a whole
indicated that no additional provision for losses on loans for the quarter.
At September 30, 1996 and at June 30, 1996, the allowance for losses on loans
was .95% of total loans.
Bennett Funding Group. The Company has a business relationship with
Bennett Funding Group, Inc. ("BFGI") which filed for Chapter 11 bankruptcy
protection on March 29, 1996. From 1992 to 1995, the Company purchased
commercial lease contracts covering business equipment from BFGI, for which
BFGI acts as servicer. At September 30, 1996, the book value of the
Company's lease contracts totaled $817,000. In addition, the Company had
$674,000 in Short Term Dealer Contracts with Bennett Leasing Corporation
("BLC") which was later included in the bankruptcy proceedings. Newspaper
reports have indicated that BFGI may have utilized fictitious leases in some of
its business activities. The Securities and Exchange Commission has filed a
criminal and civil suit against an officer of BFGI which alleges various
fraudulent actions including the sale of the same leases to two or more buyers.
An allowance for loan losses of $186,000 has been recorded for potential
losses on leases. The leases are currently on non-accrual status. BFGI
continues to service the lease contracts under the leadership of the
court-appointed Trustee. The Company is continuing to evaluate the allegations
against BFGI and BLC and the effect that the bankruptcy file will have on its
leases and its security. Until the evaluation is complete, management is unable
to predict with any certainty the effects of the bankruptcy on the Company.
Other Income. Other income increased $17,000 for the three months ended
September 30, 1996 as compared to the three months ended September 30,
1995. The increase was primarily due an increase in commissions of $48,000
related to U.S. Title. This increase was offset by a decrease of $8,000 in
service charges on deposit accounts as a result of the Company's April, 1996
sale of $5.2 million in deposits as well as a $14,000 decrease on the sale of
investment securities, and an $11,000 decrease on the sale of mortgage loans.
Other Expenses. Other expenses increased $351,000 to $809,000 for the three
months ended September 30, 1996 from $458,000 for the three months ended
September 30, 1995. The increase in the three-month period was primarily a
result of the one-time FDIC special assessment on to recapitalize SAIF. FDIC
deposit insurance increased $318,000 to $325,000 for the three months ended
September 30, 1996 from $7,000 for the three months ended September 30,
1995. The primary reason for the increase was the special assessment of
$295,000. The remaining increase of $23,000 was a result of an error in FDIC
premiums recorded the three-months ended September 30, 1995 which was
corrected in the three-month period ended December 31, 1995. In addition,
compensation expense increased $23,000. The increase can be attributed to
the $35,000 compensation expense related to the Recognition and Retention
Plan offset by a decrease of $12,000 due to a reduction in staff.
Income Tax Expense. Income tax expense decreased from an expense of
$46,000 for the three months ended September 30, 1995 to a tax benefit of
$71,000 due primarily to the pre-tax loss resulting from the FDIC special
assessment.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Bank's most liquid assets are cash and interest-bearing deposits. The
levels of these assets are dependent on the Bank's operating, financing and
investing activities. At September 30, 1996 and June 30, 1996, cash and
interest-bearing deposits totaled $1.5 million and $1.7 million, respectively.
The Bank's primary sources of funds include principal and interest payments on
loans (both scheduled and prepayments), maturities of investment securities
and principal payments from mortgage-backed securities.
While scheduled loan repayments and proceeds from maturing investment
securities and principal payments on mortgage-backed securities are relatively
predictable, deposit flows and early repayments are more influenced by
interest rates, general economic conditions, and competition. The Bank
attempts to price its deposits to meet asset-liability objectives and local
market conditions.
Liquidity management is both a short- and a long-term responsibility of
management. The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) projected purchases
of investment and mortgage-backed securities, (iii) expected deposit flows, (iv)
yields available on interest-bearing deposits, and (v) liquidity of its
asset/liability management program. Excess liquidity is generally invested in
interest-earning overnight deposits and other short-term U.S. agency
obligations. If the Bank requires funds beyond its ability to generate them
internally, it has the ability to borrow funds from the Federal Home Loan Bank
of Indianapolis ("FHLB"). Federal law limits an institutions's borrowings from
the FHLB to 20 times the amount paid for capital stock in the FHLB, subject
to regulatory capital requirements. As a policy matter, however, the FHLB of
Indianapolis typically limits the amount of borrowings from the FHLB to 50%
of adjusted assets (total assets less borrowings). At September 30, 1996, the
Bank had approximately $10.7 million of unused credit available to it under the
above-mentioned borrowing arrangement. At September 30,1 996, the Bank
had borrowings of $16.9 million from the FHLB of Indianapolis.
The Bank is required to maintain minimum levels of liquid assets as defined by
OTS regulations. This requirement, which may be varied at the direction of
the OTS depending upon economic conditions, is based upon a percentage of
deposits and short-term borrowings. The required ratio is currently 5.0%. The
Bank's liquidity ratios have consistently been maintained at levels in excess of
regulatory requirements and at September 30, 1996 and June 30, 1996 were
9.22% and 9.29%, respectively.
At September 30, 1996 and June 30, 1996, the Bank had outstanding
commitments to originate loans of $702,000 and $1.7 million, respectively.
The Bank anticipated that it will have sufficient funds available to meet its
current commitments principally through the use of current liquid assets and
through its borrowing capacity discussed above.
<PAGE>
The OTS's minimum capital standards generally require the maintenance of
regulatory capital sufficient to meet each of three tests, hereinafter described
as the tangible capital requirement, the core capital requirement and the
risk-based capital requirement. The tangible capital requirement provides for
minimum tangible capital (defined as retained earnings less all intangible
assets) equal to 1.5% of adjusted total assets. The core capital requirement
provides for minimum core capital (tangible capital plus certain forms of
supervisory goodwill and other qualifying intangible assets) equal to 3% of
adjusted total assets. The OTS has proposed to increase the core capital
requirement to 4-5%. Management cannot predict what core capital requirement
will be applicable to the Bank under the proposed new rule. The risk-based
capital requirements provide for the maintenance of core capital plus a portion
of unallocated loss allowances equal to 8% of risk-weighted assets. In
computing risk-weighted assets the Bank multiplies the value of each asset on
its balance sheet by a defined risk-weighting factor (e.g. one- to four-family
residential loans carry a risk-weighted factor of 50%).
At September 30, 1996, the Bank's tangible and core capital both totaled $7.1
million, 9.86% of adjusted total assets, which exceeded the minimum tangible
requirement by $6.0 million and the minimum core requirement by $4.9 million.
The Bank's risk-based capital at September 30, 1996 totaled $7.5 million,
which is $4.0 million above the 8% requirement.
EFFECT OF INFLATION AND CHANGING PRICES
The consolidated condensed financial statements and related financial data
presented herein have been prepared in accordance with GAAP which require
the measurement of financial position and operating results in terms of
historical dollars, without considering the change in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Company's operations. Unlike most industrial
companies, virtually all the assets and liabilities of a financial institution
are monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than do general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.
RECENT DEVELOPMENTS
On September 30, 1996, federal legislation was enacted that requires the SAIF
to be recapitalized with a one-time assessment on virtually all SAIF-insured
institutions, such as the Bank, equal to 65.7 basis points on SAIF-insured
deposits maintained by those institutions as of March 31, 1995. This SAIF
assessment, which is to be paid to the FDIC by November 27, 1996, is
approximately $295,000 and has been accrued by the Company at September
30, 1996.
As a result of the SAIF recapitalization, the FDIC has proposed to amend its
regulation concerning the insurance premiums payable by SAIF-insured
institutions. Effective October 1, 1996 through December 31, 1996, the FDIC
has proposed that the SAIF insurance premium for all SAIF-insured
institutions that are required to pay the Financing Corporation (FICO)
<PAGE>
obligation, such as the Bank, be reduced to a range of 18 to 27 basis points
from 23 to 31 basis points per $100 of domestic deposits. The Bank currently
qualifies for the minimum SAIF insurance premium of 23 basis points. The
FDIC has also proposed to further reduce the SAIF insurance premium to a
range of 0 to 27 basis points per $100 of domestic deposits, effective January
1, 1997. Management cannot predict whether or in what form the FDIC's final
regulation may be promulgated.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceeding. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedules
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
AMTRUST CAPITAL CORP.
Registrant
Date: October 18, 1996 /s/ Bruce M. Borst
________________________________
Bruce M. Borst, President, Chief
Executive Officer and Director
(Duly Authorized Officer)
Date: October 18, 1996 /s/ Jami L. Cornish
______________________________
Jami L. Cornish, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
All numbers in thousands except per share data.
</LEGEND>
<S> <C>
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0
0
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