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 March 31, 1998
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 March 31, 1998, there were 480,956 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
March 31, 1998 and June 30, 1997
(Unaudited) .......................................
Consolidated condensed statement of income for
the three and nine months ended March 31, 1998
and 1997 (Unaudited) .............................
Consolidated condensed statement of changes in
stockholders' equity for the nine months ended
March 31, 1998 and 1997 (Unaudited)................
Consolidated condensed statement of cash flows for
the nine months ended March 31, 1998 and 1997
(Unaudited) .......................................
Notes to unaudited consolidated condensed financial
statements ........................................
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...............
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ....................................
Item 2. Changes in Securities ................................
Item 3. Defaults Upon Senior Securities ......................
Item 4. Submission of Matters to a Vote of Security Holders ..
Item 5. Other Information ....................................
Item 6. Exhibits and Reports on Form 8-K .....................
Signatures .......................................
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED BALANCE SHEET
March 31, June 30,
1998 1997
--------------------------
(UNAUDITED)
ASSETS
CASH AND DUE FROM BANKS $ 1,430,858 $ 1,514,563
INTEREST-BEARING DEPOSITS 1,307,313 1,093,288
INVESTMENT SECURITIES
HELD TO MATURITY 1,240,149 2,067,249
AVAILABLE FOR SALE 9,370,911 12,148,535
TOTAL INVESTMENT SECURITIES 10,611,060 14,215,784
MORTGAGE LOANS HELD FOR SALE 1,017,310 1,081,538
LOANS 46,357,354 50,167,394
ALLOWANCE FOR LOAN LOSSES (526,493) (522,743)
NET LOANS 45,830,861 49,644,651
PREMISES AND EQUIPMENT 1,657,590 1,277,976
FEDERAL HOME LOAN BANK OF INDIANAPOLIS STOCK 1,050,000 1,050,000
CASH SURRENDER VALUE-LIFE INSURANCE POLICIES 1,169,409 1,135,038
INTEREST RECEIVABLE 390,260 376,812
DEFERRED INCOME TAX BENEFITS 98,243 204,193
CURRENT INCOME TAX REFUNDABLE 196,299
OTHER ASSETS 706,903 455,320
------------ ------------
TOTAL ASSETS $ 65,269,807 $ 72,245,462
============ ============
LIABILITIES
DEPOSITS $ 48,296,938 $ 53,522,701
ADVANCES FROM FHLB OF INDIANAPOLIS 8,411,738 10,901,738
INTEREST PAYABLE 175,768 85,254
CURRENT TAX PAYABLE 105,933
OTHER LIABILITIES 763,149 272,256
------------ ------------
TOTAL LIABILITIES 57,753,526 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 4,236,829 4,193,137
RETAINED EARNINGS-SUBSTANTIALLY RESTRICTED 4,322,703 4,249,256
UNEARNED ESOP SHARES -- 29,398 AND 34,804 SHARES (250,587) (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 (7,275) (153,165)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 7,516,281 7,463,513
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 65,269,807 $ 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 NINE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997 1998 1997
______________________ _____________________
(UNAUDITED) (UNAUDITED)
INTEREST INCOME
LOANS RECEIVABLE $ 891,375 $ 968,362 $2,778,751 $2,985,286
SECURITIES, INCLUDING DIVIDENDS 219,929 267,776 749,004 807,864
INTEREST BEARING DEPOSITS 19,062 22,270 44,886 41,604
---------- ---------- ---------- ----------
1,130,366 1,258,408 3,572,641 3,834,754
---------- ---------- ---------- ----------
INTEREST EXPENSE
DEPOSITS 513,599 582,147 1,653,158 1,670,897
ADVANCES FROM FEDERAL HOME
LOAN BANK 182,700 188,218 564,467 707,314
---------- ---------- ---------- ----------
696,299 770,365 2,217,625 2,378,211
---------- ---------- ---------- ----------
NET INTEREST INCOME 434,067 488,043 1,355,016 1,456,543
PROVISION FOR LOSSES ON LOANS 66,015 86,284 (17,348)
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOSSES ON LOANS 368,052 488,043 1,268,732 1,473,891
---------- ---------- ---------- ----------
OTHER INCOME
SERVICE CHARGES ON DEPOSIT ACCTS 21,947 17,725 76,777 55,536
GAINS ON SALE OF
LOANS HELD FOR SALE 54,172 33,119 209,829 111,446
LOAN FEES AND SERVICE CHARGES 30,159 21,662 67,825 57,477
ANNUITY COMMISSIONS AND OTHER FEES 55,505 25,886 129,569 105,225
OTHER INCOME 24,305 18,027 68,644 64,501
---------- ---------- ---------- ----------
186,088 116,419 552,644 394,185
---------- ---------- ---------- ----------
OTHER EXPENSES
SALARIES AND EMPLOYEE BENEFITS 255,548 239,736 739,118 728,048
NET OCCUPANCY EXPENSES 37,679 37,993 107,079 97,884
EQUIPMENT EXPENSES 28,211 28,221 84,551 79,927
DATA PROCESSING FEES 28,249 28,998 86,292 79,878
DEPOSIT INSURANCE EXPENSE 7,604 7,624 24,089 352,465
LEGAL FEES 2,759 7,566 16,009 44,448
CUSTOMER DEPOSIT ACCOUNT EXPENSES 4,447 15,100 15,315 47,870
ADVERTISING AND PROMOTION 9,737 14,874 29,388 29,304
PRINTING AND OFFICE SUPPLIES 16,372 16,168 36,859 38,358
OTHER EXPENSES 105,957 93,697 420,781 316,634
----------- ---------- ---------- ----------
496,563 489,977 1,559,481 1,814,816
----------- ---------- ---------- ----------
INCOME BEFORE INCOME TAX EXPENSE 57,577 114,485 261,895 53,260
INCOME TAX EXPENSE 31,342 38,616 110,742 5,823
----------- ---------- ---------- ----------
NET INCOME $ 26,235 $ 75,869 $ 151,153 $ 47,437
=========== ========== ========== ==========
NET INCOME PER SHARE:
BASIC $ 0.05 $ 0.15 $ 0.31 $ 0.10
DILUTED 0.05 0.15 0.31 0.10
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
NINE MONTHS ENDED
MARCH 31,
1998 1997
_____________ _____________
(UNAUDITED)
BEGINNING BALANCE $ 7,463,513 $ 7,211,289
STOCK PURCHASE (275,173) (56,250)
ESOP SHARES EARNED 27,843 18,562
ADDITIONAL PAID IN CAPITAL 43,692 4,641
RECOGNITION AND RETENTION SHARES EARNED 37,069 38,010
NET UNREALIZED LOSSES ON SECURITIES 145,890 (15,106)
DIVIDENDS ($.15 PER SHARE) (77,706) (26,574)
NET INCOME 151,153 47,437
------------- -------------
ENDING BALANCE $ 7,516,281 $ 7,222,009
============= =============
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<PAGE>
AMTRUST CAPITAL CORP. AND SUBSIDIARY
AMERICANTRUST FEDERAL SAVINGS BANK
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED
MARCH 31,
1998 1997
____________ ___________
OPERATING ACTIVITIES:
(UNAUDITED)
NET INCOME $ 151,153 $ 47,437
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
PROVISION FOR LOAN LOSSES 86,284 (17,348)
PREMIUM AND DISCOUNT AMORTIZATION, NET (93) (392)
DEPRECIATION AND AMORTIZATION 94,439 78,972
DEFERRED INCOME TAX BENEFIT 10,260 43,140
CURRENT INCOME TAX REFUNDABLE 196,299 (115,476)
CURRENT INCOME TAX PAYABLE 105,933
LOANS ORIGINATED FOR SALE (8,938,374) (2,776,596)
PROCEEDS FROM SALES AND PAYDOWNS ON LOANS HELD
FOR SALE 9,212,431 3,896,712
GAINS ON SALES OF LOANS HELD FOR SALE (209,829) (111,446)
ESOP SHARES EARNED 71,535 23,203
RECOGNITION AND RETENTIONS PLAN COMPENSATION
EXPENSE 37,069 38,010
CHANGE IN:
INTEREST RECEIVABLE AND OTHER ASSETS (265,031) (163,777)
CASH SURRENDER VALUE OF LIFE INSURANCE POLICIES (34,371) (26,663)
INTEREST PAYABLE AND OTHER LIABILITIES 581,407 (55,460)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,099,112 860,316
----------- -----------
INVESTING ACTIVITIES:
NET CHANGE IN INTEREST-BEARING DEPOSITS (214,025) 348,886
PURCHASES OF SECURITIES AVAILABLE FOR SALE (42,742) (36,498)
PAYMENTS ON SECURITIES AVAILABLE FOR SALE 63,013
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE 3,500,000
PAYMENTS ON SECURITIES HELD TO MATURITY 326,126 464,461
NET CHANGE IN LOANS 3,727,506 (97,536)
PURCHASE OF PREMISES AND EQUIPMENT (474,053) (238,971)
------------ -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 6,885,825 440,342
------------ -----------
FINANCING ACTIVITIES:
NET CHANGE IN NOW, SAVINGS AND CERTIFICATES OF
DEPOSIT (5,225,763) 6,520,155
PROCEEDS FROM FHLB ADVANCES 26,800,000 13,066,570
REPAYMENT OF FHLB ADVANCES (29,290,000) (20,403,140)
PURCHASE OF AMTRUST STOCK (275,173) (56,250)
PAYMENT OF DIVIDENDS (77,706) (26,574)
----------- -----------
NET CASH USED BY FINANCING ACTIVITIES (8,068,642) (899,239)
----------- ------------
NET CHANGE IN CASH (83,705) 401,419
CASH, BEGINNING OF YEAR 1,514,563 1,128,289
------------ -----------
CASH, END OF YEAR $ 1,430,858 $ 1,529,708
============ ===========
ADDITIONAL CASH FLOW AND SUPPLEMENTARY INFORMATION
INTEREST PAID 2,127,111 2,312,191
INCOME TAX PAID (140,062) 227,161
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 March 31, 1998 and
results of operations for the three and nine months ending March 31, 1998 and
1997. The results of operations for the three- and nine-month periods ended
March 31, 1998 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 March 31,
1998 1997
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 $ 26,235 479,174 $ 0.05 $ 75,869 491,577 $ 0.15
====== ======
Effect of Dilutive Stock
Options and Grants 0 10,785 0 0
--------- ------- -------- -------
$ 26,235 489,959 $ 0.05 $ 75,869 491,577 $ 0.15
========= ======= ====== ======== ======= ======
For the Nine Months Ended March 31,
1998 1997
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 $ 151,153 484,384 $ 0.31 $ 47,437 491,157 $ 0.10
====== ======
Effect of Dilutive Stock
Options and Grants 0 9,870 0 0
--------- ------- -------- -------
$ 151,153 494,254 $ 0.31 $ 47,437 491,157 $ 0.10
========= ======= ====== ======== ======= ======
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 March 31, 1998, 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 two branch offices, 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 decreased by $6.9 million in the nine months ended March 31,
1998 from $72.2 million at June 30, 1997 to $65.3 million at March 31, 1998.
Total investments decreased $3.6 million due to a call in February of a FNMA
Medium Term Note of $3.0 million, a maturity of a Federal Home Loan Bank
Bond of $500,000 and principal reductions. Total loans decreased by $3.9
million due to loan sales, principal reductions and a decrease in consumer loan
originations.
Deposits decreased to $48.3 million at March 31, 1998 from $53.5 million at
June 30, 1997. The decrease of $5.2 million was due to a decrease in the use
of public funds. FHLB advances decreased to $8.4 million at March 31, 1998
from $10.9 million at June 30, 1997 due to payments using cash from matured
and called securities.
Stockholders' equity increased $53,000 between June 30, 1997 and March 31,
1998. The net increase for the nine months ended March 31, 1998 of
$151,000 resulted from net unrealized losses on securities available for sale
decreasing by $146,000, net of tax, and purchase of treasury stock of $275,000.
As a result of earned ESOP shares, paid-in-capital increased by $44,000 and
unearned ESOP shares were reduced by $28,000. An increase of $37,000 was a
result of stock earned under the Recognition and Retention Plan. Finally,
dividends of $78,000 were paid during the nine months ended March 31, 1998.
COMPARISON OF OPERATING RESULTS FOR THE THREE- AND
NINE-MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
General. The Company had net income of $26,000 and $151,000 for the
three- and nine-month periods ended March 31, 1998 as compared to net
income of $76,000 and $47,000 for the three- and nine-month periods ended
March 31, 1997. The increase of $104,000 in the nine-month period 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 $54,000 and $102,000 for
the three and nine months ended March 31, 1998 as compared to the three and
nine months ended March 31, 1997. The decrease in net interest income is
due to the decrease in average interest-earning assets of $3.2 million from
$67.2 million for the nine months ended March 31,1997 to $64.0 million for
the nine months ended March 31, 1998 and a decrease in interest bearing
liabilities of $3.3 million from $64.3 million to $61.0 million during the same
period. The Company's average spread for the three months ended March 31,
1998 decreased to 2.58% as compared to 2.69% for the three months ended
March 31, 1997. The spreads for the nine months ended March 31, 1998 and
1997 were 2.56% and 2.57%. The ratio of the Company's average interest-earning
assets to average interest-bearing liabilities increased slightly to
104.81% during the nine-month period ended March 31, 1998 from 104.59%
for the nine-month period ended March 31, 1997.
Interest Income. Total interest income decreased by $128,000 and $262,000
for the three and nine months ended March 31, 1998 from the three and nine
months ended March 31, 1997 as a result of the decrease in average interest-
bearing assets and a decrease in average yields. Average yields on interest-
earning assets decreased in the three months ended March 31, 1998 from
7.58% to 7.35% and decreased for the nine months ended March 31, 1998
from 7.53% to 7.43%. The decrease in yields is a result of lower mortgage
rates and the runoff of the higher yielding consumer loans.
Interest Expense. Interest expense decreased $74,000 and $161,000 in the
three and nine months ended March 31, 1998 from the three and nine months
ended March 31, 1997 due to a decrease in interest bearing liabilities and a
decrease in average yields on interest-bearing liabilities. Average yields on
interest-bearing liabilities decreased to 4.77% and 4.87% for the three- and
nine-month periods ended March 31, 1998 from 4.89% and 4.97% for the
three- and nine-month periods ended March 31, 1997.
Provision for Losses on Loans. The provision for losses on loans was $66,000
and $86,000 for the three and nine months ended March 31, 1998 as a result of
management's quarterly assessment of classified assets, provision for loan
losses and the portfolio as a whole. Additional reserves of $66,000 were
recorded in the three months ended March 31, 1998 to allow for increased
delinquencies and repossessions in the consumer portfolio. At March 31,
1998 and at June 30, 1997, the allowance for losses on loans was 1.11% 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 March 31, 1998, 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 $70,000 and $159,000 for the three-
and nine-month periods ended March 31, 1998 compared to the three- and
nine-months ended March 31, 1997. Increases for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997
included gains on the sale of loans of $21,000, increased commissions and
other fees of $30,000 and other increases of $19,000. Increases for the nine
months ended March 31, 1998 as compared to the nine months ended March
31, 1997 included gains on the sale of loans of $99,000, increased
commissions and other fees of $24,000 and other increases of $36,000.
Increases in gains on the sale of loans were attributed to increased mortgage
loan originations. Increases in commissions and other fees were a result of
increased title insurance premiums generated by the Bank's title subsidiary.
Other Expenses. Other expenses increased $7,000 and decreased $255,000 for
the three and nine months ended March 31, 1998. The decrease in the nine-
month period was primarily a result of the one-time FDIC special assessment
of $295,000 on to recapitalize SAIF during the prior nine months ended
March 31, 1997.
Income Tax Expense. Income tax expense decreased $7,000 for the three
months ended March 31, 1998 compared to the three month ended March 31,
1997. Income tax expense increased from $6,000 to $111,000 for the nine
months ended March 31, 1998 compared to the nine months ended March 31,
1997 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 March 31, 1998 and June 30, 1997, cash and interest-
bearing deposits totaled $2.7 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
March 31, 1998, the Bank had approximately $20.0 million of unused credit
available to it under the above-mentioned borrowing arrangement. At March
31, 1998, the Bank had borrowings of $8.4 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 March 31, 1998 and June 30, 1997
were 11.45% and 11.30%, respectively.
At March 31, 1998 and June 30, 1997, the Bank had outstanding
commitments to originate loans of $286,000 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 March 31, 1998, the Bank's tangible and core capital both totaled $7.0
million, 10.7% of adjusted total assets, which exceeded the minimum tangible
requirement by $6.0 million and the minimum core requirement by $4.0
million. The Bank's risk-based capital at March 31, 1998 totaled $7.0 million,
or 17.7% of risk-weighted assets, 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.
IMPACT OF THE YEAR 2000
The Company has conducted a comprehensive review of its computer systems to
identify applications that could be affected by the "Year 2000" issue, and has
developed an implementation plan to address the issue. The Company's data
processing is primarily outsourced with third party vendors, consequently
the Company is very dependent on those vendors to conduct its business. The
Company has already contacted each vendor to request time tables for year
2000 compliance and expected costs, if any, to be passed along to the Company.
To date, the Company has been informed that its primary service providers
anticipate that all programming efforts will be completed by December 31, 1998,
allowing the Company adequate time for testing. Certain other vendors have not
yet responded, however, the Company will pursue other options if it appears that
these vendors will be unable to comply. Management does not expect these costs
to have a significant impact on its financial position or results of operations
however, there can be no assurance that the vendors systems will be 2000
compliant, consequently the Company could incur incremental costs to convert
to another vendor.
<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 January 23, 1998 to
report the issuance of a press release announcing the payment of a cash
dividend on February 6, 1998.
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: May 13, 1998 \s\ Bruce M. Borst
________________________________
Bruce M. Borst, President, Chief
Executive Officer and Director
(Duly Authorized Officer)
Date: May 13, 1998 \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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 1431
<INT-BEARING-DEPOSITS> 1307
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9371
<INVESTMENTS-CARRYING> 1240
<INVESTMENTS-MARKET> 1225
<LOANS> 45831
<ALLOWANCE> 526
<TOTAL-ASSETS> 65270
<DEPOSITS> 48297
<SHORT-TERM> 6732
<LIABILITIES-OTHER> 1045
<LONG-TERM> 1680
0
0
<COMMON> 6
<OTHER-SE> 7510
<TOTAL-LIABILITIES-AND-EQUITY> 65270
<INTEREST-LOAN> 891
<INTEREST-INVEST> 220
<INTEREST-OTHER> 19
<INTEREST-TOTAL> 1130
<INTEREST-DEPOSIT> 514
<INTEREST-EXPENSE> 760
<INTEREST-INCOME-NET> 434
<LOAN-LOSSES> 66
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 497
<INCOME-PRETAX> 58
<INCOME-PRE-EXTRAORDINARY> 58
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
<YIELD-ACTUAL> 7.35
<LOANS-NON> 443
<LOANS-PAST> 0
<LOANS-TROUBLED> 639
<LOANS-PROBLEM> 2907
<ALLOWANCE-OPEN> 504
<CHARGE-OFFS> 44
<RECOVERIES> 66
<ALLOWANCE-CLOSE> 526
<ALLOWANCE-DOMESTIC> 358
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 168
</TABLE>
