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 December 31, 1997
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: (765) 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 December 31, 1997, there were 479,154 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
December 31, 1997 and June 30, 1997
(Unaudited) .......................................... 3
Consolidated condensed statement of income for
the three and six months ended December 31, 1997
and 1996 (Unaudited) ................................ 4
Consolidated condensed statement of changes in
stockholders' equity for the six months ended
December 31, 1997 and 1996 (Unaudited) ............... 5
Consolidated condensed statement of cash flows for
the six months ended December 31, 1997 and 1996
(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
December June 30,
1997 1997
--------------------------
(UNAUDITED)
ASSETS
CASH AND DUE FROM BANKS $ 1,319,311 $ 1,514,563
INTEREST-BEARING DEPOSITS 941,570 1,093,288
INVESTMENT SECURITIES
HELD TO MATURITY 1,828,790 2,067,249
AVAILABLE FOR SALE 12,352,234 12,148,535
TOTAL INVESTMENT SECURITIES 14,181,024 14,215,784
MORTGAGE LOANS HELD FOR SALE 530,732 1,081,538
LOANS 47,917,268 50,167,394
ALLOWANCE FOR LOAN LOSSES (503,567) (522,743)
NET LOANS 47,413,701 49,644,651
PREMISES AND EQUIPMENT 1,625,115 1,277,976
FEDERAL HOME LOAN BANK OF INDIANAPOLIS STOCK 1,050,000 1,050,000
CASH SURRENDER VALUE-LIFE INSURANCE POLICIES 1,156,308 1,135,038
INTEREST RECEIVABLE 345,181 376,812
DEFERRED INCOME TAX BENEFITS 106,338 204,193
CURRENT INCOME TAX REFUNDABLE 196,299
OTHER ASSETS 437,044 455,320
------------ ------------
TOTAL ASSETS $ 69,106,324 $ 72,245,462
============ ============
LIABILITIES
DEPOSITS $ 46,222,130 $ 53,522,701
ADVANCES FROM FHLB OF INDIANAPOLIS 14,861,738 10,901,738
INTEREST PAYABLE 107,227 85,254
CURRENT TAX PAYABLE 76,917
OTHER LIABILITIES 357,210 272,256
------------ ------------
TOTAL LIABILITIES 61,625,222 64,781,949
------------ ------------
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 4,223,990 4,193,137
RETAINED EARNINGS-SUBSTANTIALLY RESTRICTED 4,321,986 4,249,256
UNEARNED ESOP SHARES --
31,200 AND 34,804 SHARES (259,868) (278,430)
TREASURY STOCK AT COST --
69,710 AND 53,585 SHARES (791,190) (553,086)
NET UNREALIZED LOSS ON SECURITIES AVAILABLE,
NET OF TAX (19,617) (153,165)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 7,481,102 7,463,513
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 69,106,324 $ 72,245,462
============ ============
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 SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
_______________________ _________________________
(UNAUDITED) (UNAUDITED)
INTEREST INCOME
LOANS RECEIVABLE $ 942,280 $ 998,571 $ 1,887,375 $ 2,016,924
SECURITIES, INCLUDING
DIVIDENDS 262,902 268,342 529,075 540,088
INTEREST BEARING DEPOSITS 10,094 8,798 25,824 19,334
----------- ----------- ----------- ------------
1,215,276 1,275,711 2,442,274 2,576,346
----------- ----------- ----------- ------------
INTEREST EXPENSE
DEPOSITS 542,653 558,088 1,139,559 1,088,750
ADVANCES FROM FEDERAL
HOME LOAN BANK 217,194 247,704 381,767 519,096
----------- ----------- ----------- ------------
759,847 805,792 1,521,326 1,607,846
----------- ----------- ----------- ------------
NET INTEREST INCOME 455,429 469,919 920,948 968,500
PROVISION FOR LOSSES ON LOANS 11,304 (17,348) 20,269 (17,348)
----------- ----------- ----------- ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES
ON LOANS 444,125 487,267 900,679 985,848
----------- ----------- ----------- ------------
OTHER INCOME
SERVICE CHARGES ON DEPOSIT
ACCOUNTS 27,283 18,854 54,829 37,811
GAINS ON SALE OF LOANS
HELD FOR SALE 105,172 34,136 155,657 78,327
LOAN FEES AND SERVICE CHARGES 21,280 21,435 37,666 35,815
ANNUITY COMMISSIONS AND
OTHER FEE 31,753 30,079 74,064 79,339
OTHER INCOME 26,532 22,947 44,339 46,474
----------- ----------- ----------- ------------
212,020 127,451 366,555 277,766
----------- ----------- ----------- ------------
OTHER EXPENSES
SALARIES AND EMPLOYEE
BENEFITS 247,369 235,998 483,570 488,312
NET OCCUPANCY EXPENSES 35,349 27,414 69,401 59,890
EQUIPMENT EXPENSES 28,826 26,015 56,340 51,706
DATA PROCESSING FEES 29,249 25,320 58,043 50,880
DEPOSIT INSURANCE EXPENSE 8,432 19,908 16,485 344,841
LEGAL FEES 8,292 21,115 13,250 36,883
CUSTOMER DEPOSIT ACCOUNT
EXPENSES 5,397 15,979 10,868 32,770
ADVERTISING AND PROMOTION 10,075 10,528 19,650 14,429
PRINTING AND OFFICE SUPPLIES 10,661 10,997 20,488 22,190
OTHER EXPENSES 174,161 122,934 314,821 222,937
----------- ----------- ----------- ------------
557,811 516,208 1,062,916 1,324,838
----------- ----------- ----------- ------------
INCOME BEFORE INCOME TAX
EXPENSE (BENEFIT) 98,334 98,510 204,318 (61,224)
INCOME TAX EXPENSE (BENEFIT) 34,495 38,162 79,400 (32,793)
----------- ----------- ----------- ------------
NET INCOME (LOSS) $ 63,839 $ 60,348 $ 124,918 $ (28,431)
=========== =========== =========== ============
NET INCOME (LOSS) PER SHARE:
BASIC $ 0.13 $ 0.12 $ 0.26 $ (0.06)
DILUTED 0.13 0.12 0.25 (0.06)
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
SIX MONTHS ENDED
DECEMBER 31,
1997 1996
____________ ____________
BEGINNING BALANCE $ 7,463,513 $ 7,211,289
STOCK PURCHASE (275,173)
ESOP SHARES EARNED 18,562 18,562
ADDITIONAL PAID IN CAPITAL 30,853 4,641
RECOGNITION AND RETENTION SHARES EARNED 37,069 38,010
NET UNREALIZED LOSSES ON SECURITIES 133,548 132,253
DIVIDENDS ($.10 PER SHARE) (52,188)
NET INCOME 124,918 (28,431)
------------ ------------
ENDING BALANCE $ 7,481,102 $ 7,376,324
============ ============
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
DECEMBER 31,
1997 1996
____________ ___________
OPERATING ACTIVITIES:
(UNAUDITED)
NET INCOME (LOSS) $ 124,918 $ (28,431)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
PROVISION FOR LOAN LOSSES 20,269 (17,348)
PREMIUM AND DISCOUNT AMORTIZATION, NET (365) (522)
DEPRECIATION AND AMORTIZATION 60,563 49,169
DEFERRED INCOME TAX BENEFIT 10,260 43,140
CURRENT INCOME TAX REFUNDABLE 196,299 (102,091)
CURRENT INCOME TAX PAYABLE 76,917
LOANS ORIGINATED FOR SALE (5,310,511) (1,648,190)
PROCEEDS FROM SALES AND PAYDOWNS ON LOANS
HELD FOR SALE 6,016,974 2,605,493
GAINS ON SALES OF LOANS HELD FOR SALE (155,657) (78,327)
ESOP SHARES EARNED 49,413 22,750
RECOGNITION AND RETENTIONS PLAN COMPENSATION
EXPENSE 37,069 38,463
CHANGE IN:
INTEREST RECEIVABLE AND OTHER ASSETS 49,907 41,540
CASH SURRENDER VALUE OF LIFE INSURANCE
POLICIES (21,270) (18,494)
INTEREST PAYABLE AND OTHER LIABILITIES 106,927 (217,573)
------------ -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,261,713 689,579
------------ -----------
INVESTING ACTIVITIES:
NET CHANGE IN INTEREST-BEARING DEPOSITS 151,718 (325,468)
PURCHASES OF SECURITIES AVAILABLE FOR SALE (29,533) (22,259)
PAYMENTS ON SECURITIES HELD TO MATURITY 285,803 342,762
NET CHANGE IN LOANS 2,210,681 (346,137)
PURCHASE OF PREMISES AND EQUIPMENT (407,702) (227,648)
------------ -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 2,210,967 (578,750)
------------ -----------
FINANCING ACTIVITIES:
NET CHANGE IN NOW, SAVINGS AND CERTIFICATES
OF DEPOSIT (7,300,571) 5,216,258
PROCEEDS FROM FHLB ADVANCES 23,550,000 10,566,570
REPAYMENT OF FHLB ADVANCES (19,590,000) (15,403,140)
PURCHASE OF AMTRUST STOCK (275,173)
PAYMENT OF DIVIDENDS (52,188)
------------ -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (3,667,932) 379,688
------------ -----------
NET CHANGE IN CASH (195,252) 490,517
CASH, BEGINNING OF YEAR 1,514,563 1,128,289
------------ -----------
CASH, END OF YEAR $ 1,319,311 $ 1,618,806
============ ===========
ADDITIONAL CASH FLOW AND SUPPLEMENTARY INFORMATION
INTEREST PAID 1,499,352 1,590,340
INCOME TAX PAID (152,412) 168,350
SEE NOTES TO CONSOLIDATED 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.
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 December 31, 1997 and
results of operations for the three and six months ending December 31, 1997
and 1996. The results of operations for the three- and six-month periods
ended December 31, 1997 are not necessarily indicative of the results of
operations which may be expected for the fiscal year ended June 30, 1998.
Note 2 - Earnings Per Share
For the Three Months Ended December 31,
1997 1996
Weighted Per Weighted Per
Average Share Average Share
Income Shares Amount Income Shares Amount
Basic Net Income Per Share:
Net Income Available to
Common Stockholders $ 63,839 482,169 $ 0.13 $ 60,348 493,489 $0.12
====== =====
Effect of Dilutive Stock
Options and Grants 0 10,791 0 0
--------- ------- --------- -------
$ 63,839 492,960 $ 0.13 $ 60,348 493,489 $0.12
========= ======= ====== ========= ======= =====
For the Six Months Ended December 31,
1997 1996
Weighted Per Weighted Per
Average Share Average Share
Income Shares Amount Income Shares Amount
Basic Net Income Per Share:
Net Income Available to
Common Stockholders $ 124,918 486,932 $ 0.26 $ (28,431) 490,952 $(0.06)
====== =======
Effect of Dilutive Stock
Options and Grants 0 9,422 0 0
--------- ------- --------- -------
$ 124,918 496,354 $ 0.25 $ (28,431) 490,952 $(0.06)
========= ======= ====== ========= ======= ======
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
AmTrust Capital Corp. 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 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. Additionally,
at December 31, 1997, the Company had no significant assets except the equity
investment in the Bank's stock, cash and 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 and branch office, AmericanTrust serves communities in
Howard and Miami Counties, Indiana. The Bank anticipates a March opening
for the second branch office in Kokomo, 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 decreased by $3.1 million in the six months ended December 31,
1997 from $72.2 million at June 30, 1997 to $69.1 million at December 31,
1997. Cash and interest-bearing deposits decreased $347,000 million due to
the use of funds for lending activities. Total loans decreased by $2.8 million
due to principal reductions and loan sales.
Deposits decreased to $46.2 million at December 31, 1997 from $53.5 million
at June 30, 1997. The decrease of $7.3 million was due to a decrease in the
use of public funds. FHLB advances increased to $14.9 million at December
31, 1997 from $10.9 million at June 30, 1997 also due to decreased use of
public funds.
Stockholders' equity increased $18,000 between June 30, 1997 and December
31, 1997. The increase was a result of several items. Net income for the six
months of $125,000, net unrealized losses on securities available for sale
decreased by $133,000, net of tax, and treasury stock was increased by
$275,000. As a result of the allocation of ESOP shares, paid-in-capital
increased by $31,000 and unearned ESOP shares were reduced by $19,000.
An increase of $37,000 was a result of stock issued under the Recognition and
Retention Plan. Finally, dividends of $52,000 were paid during the six months
ended December 31, 1997.
COMPARISON OF OPERATING RESULTS FOR THE THREE- AND SIX-MONTH PERIODS ENDED
DECEMBER 31, 1997 AND 1996
General. The Company had net income of $64,000 and $125,000 for the
three- and six-month periods ended December 31, 1997 as compared to net
income of $60,000 and a net loss of $28,000 for the three- and six-month
periods ended December 31, 1996. The increase of $153,000 in the six-month
periods is primarily as result of the one-time FDIC special assessment to
recapitalize the SAIF of $170,000, net of tax, during the three months ended
September 30, 1996.
Net Interest Income. Net interest income decreased $14,000 and $48,000 for
the three and six months ended December 31, 1997 as compared to the three
and six months ended December 31, 1996. The decrease in net interest income
is due to the decrease in average interest-earning assets of $2.6 million from
$67.8 million for the six months ended December 31, 1996 to $65.2 million for
the six months ended December 31, 1997 and a decrease in interest bearing
liabilities of $2.5 million from $64.8 million to $62.3 million during the same
period. The Company's average spread for the three months ended December
31, 1997 increased to 2.61% as compared to 2.48% for the three months
ended December 31, 1997. The spreads for the six months ended December
31, 1997 and 1996 were 2.51% and 2.50%. The ratio of the Company's
average interest-earning assets to average interest-bearing liabilities
increased slightly to 104.79% during the six-month period ended December 31,
1997 from 104.73% for the six-month period ended December 31, 1996.
Interest Income. Total interest income decreased by $61,000 and $134,000 for
the three and six months ended December 31, 1997 from the three and six
months ended December 31, 1996 as a result of the decrease in average
interest-bearing assets and a slight decrease in average yields for the six
month period. Average yields on interest-earning assets increased in the three
months ended December 31, 1997 from 7.46% to 7.53% and decreased slightly for
the six months ended December 31, 1997 from 7.51% to 7.47%.
Interest Expense. Interest expense decreased $46,000 and $87,000 in the three
and six months ended December 31, 1997 from the three and six months ended
December 31, 1996 due to a decrease in interest bearing liabilities and a
decrease in average rates on interest-bearing liabilities. Average rates on
interest-bearing liabilities decreased to 4.93% and 4.92% for the three- and
six-month periods ended December 31, 1997 from 4.99% and 5.00% for the three-
and six-month periods ended December 31, 1996.
Provision for Losses on Loans. The provision for losses on loans was $11,000
and $20,000 for the three and six months ended December 31, 1997 as a result
of management's quarterly assessment of classified assets, provision for loan
losses and the portfolio as a whole. At December 31, 1997 and at June 30,
1997, the allowance for losses on loans was 1.04% and 1.02% of total loans,
respectively.
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 December 31, 1997, 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.
Reserves of $67,000 have been recorded for probable losses. In addition,
reserves of $149,000 have been allocated to the leases for other potential
losses. The Company is continuing to evaluate the allegations against BFGI
and BLC and the effect that the bankruptcy filing will have on 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 $85,000 and $89,000 for the three-
and six-month periods ended December 31, 1997 compared to the three- and
six-months ended December 31, 1996. Increases of $71,000 and $78,000 in
gains on sales of loans for the three and six months accounted for most of the
increase.
Other Expenses. Other expenses increased $42,000 and decreased $262,000 for
the three and six months ended December 31, 1997. Increases in the
three-month period include salaries of $11,000, occupancy expenses of
$8,000 and other expenses of $51,000. These increases were partially offset
by decreases in deposit insurance expense of $12,000, legal fees of $13,000.
The decrease in the six-month period was primarily a result of the one-time
FDIC special assessment of $295,000 on to recapitalize SAIF during the prior
six months ended December 31, 1996.
Income Tax Expense. Income tax expense increased from a tax benefit of
$33,000 to a tax expense of $79,000 for the six months ended December 31,
1997 compared to the six months ended December 31, 1996 as a result of the
increase in pre-tax income.
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 December 31, 1997 and June 30, 1997, cash and
interest-bearing deposits totaled $2.3 million and $2.6 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 institution'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 December 31, 1997 the
Bank had approximately $12.3 million of unused credit available to it under
the above-mentioned borrowing arrangement. At December 31, 1997, the Bank
had borrowings of $14.9 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 December 31, 1997 and June 30, 1997 were
9.40% and 11.30%, respectively.
At December 31, 1997 and June 30, 1997, the Bank had outstanding
commitments to originate loans of $67,000 and $947,000, 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.
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 December 31, 1997, the Bank's tangible and core capital both totaled $6.9
million, 10.0% of adjusted total assets, which exceeded the minimum tangible
requirement by $5.9 million and the minimum core requirement by $4.9 million.
The Bank's risk-based capital at December 31, 1997 totaled $7.3 million, or
17.0% of risk-weighted assets, which is $3.9 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.
<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) A current report on Form 8-K was filed on October 28, 1997 to
report the issuance of a press release announcing the payment of a cash
dividend on November 7, 1997.
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: February 2, 1998 \s\Bruce M. Borst
________________________________
Bruce M. Borst, President, Chief
Executive Officer and Director
(Duly Authorized Officer)
Date: February 2, 1998 \s\Jami L. Cornish
______________________________
Jami L. Cornish, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
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<LEGEND>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
All numbers in thousands except per share data.
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
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0
0
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