SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
For the transition period from to
--------- ---------
Commission File No. 0-28934
Empire Federal Bancorp, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 81-0512374
- --------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 South Main Street, Livingston, Montana 59047
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(Address of principal executive offices)
(406) 222-1981
----------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class: Common Stock, par value $.01 per share
Outstanding at April 30, 2000: 1,805,170
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
EMPIRE FEDERAL BANCORP, INC.
INDEX TO FORM 10-QSB
Page
PART I FINANCIAL INFORMATION ----
---------------------
Item 1. Condensed Financial Statements
Consolidated Balance Sheets at March 31, 2000
(unaudited) and December 31, 1999 (unaudited).......... 1
Consolidated Statements of Income for the Three Months
Ended March 31, 2000 and 1999 (unaudited).............. 2
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2000 and 1999 (unaudited)....... 3
Notes to Unaudited Interim Consolidated Financial
Statements............................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8
PART II OTHER INFORMATION
-----------------
Item 1. Legal Proceedings......................................... 12
Item 2. Changes in Securities..................................... 12
Item 3. Defaults upon Senior Securities........................... 12
Item 4. Submission of Matters to a Vote of Security Holders....... 12
tem 5. Other Information......................................... 12
Item 6. Exhibits and Reports on Form 8-K.......................... 12
SIGNATURES.......................................................... 13
Part I, Item 1 - Financial Statements
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EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 (unaudited)
March 31, December 31,
Assets 2000 1999
------ ------------- -------------
Cash and due from banks $ 1,606,346 $ 1,688,206
Interest-bearing deposits 659,165 683,913
------------- -------------
Cash and cash equivalents 2,265,511 2,372,119
Investment and mortgage-backed
securities available-for-sale 35,885,058 41,090,151
Mortgage-backed securities held-to-maturity
(estimated market value of $5,468,604 at
March 31, 2000 and $6,367,598 at
December 31, 1999) 6,105,373 6,406,467
Loans receivable, net 64,996,419 59,569,783
Stock in Federal Home Loan Bank of Seattle,
at cost 1,487,100 1,463,500
Accrued interest receivable 427,187 451,386
Premises and equipment, net 3,418,536 2,860,330
Prepaid expenses and other assets 243,216 313,032
------------- -------------
Total assets $ 114,828,400 $ 114,526,768
============= =============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Demand deposits $ 791,382 $ 864,132
NOW accounts 9,873,776 10,512,251
Money market 7,629,219 6,825,711
Regular savings 12,269,296 13,915,404
Certificate of deposit 41,074,590 39,235,600
------------- -------------
Total Deposits $ 71,638,263 $ 71,353,098
Advances from Federal Home Loan Bank and
other borrowed funds 11,000,000 8,800,000
Note payable 577,127 591,847
Advances from borrowers for taxes and
insurance 388,033 229,437
Accrued expenses and other liabilities 829,716 797,169
------------- -------------
Total liabilities 84,433,139 81,771,551
Stockholders' equity:
Preferred stock, par value $.01 per share,
250,000 shares authorized, none issued
and outstanding
Common stock, par value $.01 per share,
4,000,000 shares authorized, 2,592,100
issued 25,921 25,921
Additional paid-in capital 25,263,725 25,260,408
Unearned ESOP and MRDP compensation (2,180,490) (2,264,623)
MRDP shares acquired (302,011) (302,011)
Retained earnings, substantially restricted 17,976,485 17,842,091
Accumulated other comprehensive income, net 381,299 632,893
Treasury shares acquired, at cost, 786,930
and 590,830 shares at March 31, 2000 and
December 31, 1999 (10,769,668) (8,439,462)
------------- -------------
Total stockholders' equity 30,395,261 32,755,217
------------- -------------
Total liabilities and stockholders' equity $ 114,828,400 $ 114,526,768
============= =============
See accompanying notes to unaudited interim consolidated financial statements.
1
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
--------------------------
2000 1999
---- ----
Interest income:
Loans receivable $ 1,288,559 $ 994,301
Mortgage-backed securities 699,739 721,943
Investment securities 46,849 37,583
Other 35,979 66,270
----------- -----------
Total interest income 2,071,126 1,820,097
----------- -----------
Interest expense:
Deposits 778,011 682,955
Note payable and other 152,933 65,192
----------- -----------
Total interest expense 930,944 748,147
----------- -----------
Net interest income 1,140,182 1,071,950
Provision for loan losses 15,000 --
----------- -----------
Net interest income after provision
for loan losses 1,125,182 1,071,950
Non-interest income:
Insurance commission income 122,727 160,140
Customer service charges 90,058 73,491
Gain on sale of investments, net 49,314 --
Other 8,858 9,059
----------- -----------
Total non-interest income 270,957 242,690
Non-interest expense:
Compensation and benefits 530,709 439,745
Occupancy and equipment 112,030 88,459
Deposit insurance premiums 11,550 25,256
Other 195,085 220,572
----------- -----------
Total non-interest expense 849,374 774,032
----------- -----------
Income before income taxes 546,765 540,608
Income taxes 212,000 213,265
----------- -----------
Net income $ 334,765 $ 327,343
=========== ===========
Basic earnings per share $ 0.19 $ 0.17
=========== ===========
Diluted earnings per share $ 0.19 $ 0.17
=========== ===========
See accompanying notes to unaudited interim consolidated financial statements.
2
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended
March 31,
--------------------------
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 334,765 $ 327,343
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 15,000 --
Depreciation 57,573 51,541
ESOP shares committed to be released 39,813 47,005
MRDP shares vested 47,637 43,092
Gain on sale of investments and
mortgage-backed securities (49,315) --
Stock Dividends reinvested in Federal
Home Loan Bank (23,600) (26,000)
Decrease (increase) in accrued
interest receivable 24,199 (22,112)
Decrease in prepaid expenses and
other assets 69,816 87,833
Increase in accrued expenses and
other liabilities 193,402 107,286
----------- -----------
Net cash provided by operating
activities 709,290 615,988
----------- -----------
Cash flows from investing activities:
Net change in loans receivable (5,441,636) (1,193,854)
Proceeds from sale of mortgage-backed
securities available-for-sale 1,737,870 --
Principal payments on mortgage-backed
securities held-to maturity 301,094 1,251,550
Proceeds from sales of securities
available-for-sale 1,593,817 --
Principal payments on mortgage-backed
securities available-for-sale 1,510,272 3,351,899
Purchases of mortgage-backed securities
available-for-sale -- (3,484,686)
Purchases of premises and equipment (615,779) (42,649)
----------- -----------
Net cash used in investing
activities (914,362) (117,740)
Cash flows from financing activities:
Net change in deposits 285,165 (5,018)
Repayment of note payable (14,720) (13,632)
Net change in advances from borrowers
for taxes and insurance 158,596 147,428
Dividends paid (200,371) (202,885)
Proceeds from advances from FHLB 2,200,000 --
Purchase of treasury stock (2,330,206) (3,128,643)
Net cash provided by (used in) ----------- -----------
financing activities 98,464 (3,202,750)
----------- -----------
Net decrease in cash and cash equivalents (106,608) (2,704,502)
Cash and cash equivalents, beginning of period 2,372,119 5,153,797
----------- -----------
Cash and cash equivalents, end of period $ 2,265,511 $ 2,449,295
=========== ===========
Cash paid during the period for:
Interest $ 1,107,589 $ 730,853
Income taxes 15,000 10,000
=========== ===========
See accompanying notes to unaudited interim consolidated financial statements.
3
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Consolidated Financial Statements
March 31, 2000
Note 1 Basis of Presentation
---------------------
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for audited financial statements. They should be read in conjunction with the
audited consolidated financial statements filed as part of the Annual Report
on Form 10-KSB for the year ended December 31, 1999.
The accompanying consolidated financial statements include the accounts of
Empire Federal Bancorp, Inc. (the Holding Company) and its wholly-owned
subsidiary, Empire Bank (Empire or the Bank) (formerly Empire Federal Savings
Bank) and Dime Service Corporation (Dime), a wholly-owned subsidiary of
Empire. The Holding Company, Empire and Dime are herein referred to
collectively as "the Company." All significant intercompany balances and
transactions have been eliminated in consolidation.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentations have been included. The
results of operations for the three months ended March 31, 2000, and 1999 are
not necessarily indicative of the results which may be expected for an entire
year or any other period.
Note 2 Comprehensive Income
--------------------
The Company's only component of comprehensive income is the net unrealized
gains or losses on securities available-for-sale. The following summarizes
total comprehensive income for the noted periods:
Three Months Ended
Mar. 31, 2000 Mar. 31, 1999
------------- -------------
$83,171 $50,167
======= =======
4
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Note 3 Treasury Stock
--------------
On January 25, 2000 the Board of Directors approved a program to repurchase up
to 10% of its outstanding common stock during the year. During the three
months ended March 31, 2000, the Company purchased 196,100 shares in the open
market for $2,330,000 for an average price of $11.88 per share. At March 31,
2000 the Company had repurchased 786,930 shares for a total of $10,770,000 or
an average price of $13.69. Book value per share at March 31, 2000 was
$16.84.
Note 4 Earnings Per Share
------------------
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Additionally, ESOP shares which are unallocated
and not yet committed to be released (unallocated) and unvested MRDP shares
issued are excluded from the weighted-average common shares outstanding
calculation. At March 31, 2000, there were 35,537 allocated shares and 3,456
committed to be released ESOP shares. There were 49,815 vested MRDP shares.
Diluted EPS reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or resulted in the
issuance of common stock that would share in the earnings of the entity. At
March 31, 2000, except for a nominal number of shares, outstanding stock
options and unvested MRDP shares were anti-dilutive to EPS. Dilutive
potential common shares are added to the weighted-average shares used to
compute basic EPS. The following information provides a reconciliation of the
numerators and denominators of the basic and fully diluted EPS computation:
For the three months ended March 31
---------------------------------------------------------------------------------
2000 1999
-------------------------------------- ------------------------------------
Net Income Shares Per-Share Net Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
Basic EPS
Net income available to
common stockholders $334,765 1,720,640 $0.19 $327,343 1,878,637 $0.17
======== ===== ======== =====
Effect of Dilutive
Securities
Stock Options -
granted 16 --
Unvested MRDP shares -- --
--------- ---------
Diluted EPS
Income available to
common stockholders
plus assumed
conversion $334,765 1,720,656 $0.19 $327,343 1,878,637 $0.17
======== ========= ===== ======== ========= =====
5
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Note 5 Cash Dividend Declared
----------------------
On April 27, 2000, the Board of Directors declared a quarterly cash dividend
of $.11 per common share to stockholders of record on May 12, 2000, payable on
May 26, 2000.
Note 6 Capital Compliance
------------------
The following table presents Empire's compliance with its regulatory capital
requirements of March 31, 2000 (dollars in thousands):
Percentage
Amount of Assets
------ ---------
GAAP capital(1) $ 27,801 24.21%
======== =====
Tangible capital $ 26,990 23.74%
Tangible capital requirement 1,706 1.50%
-------- -----
Excess $ 25,284 22.24%
======== =====
Core capital $ 26,990 23.74%
Core capital requirement 3,411 3.00%
-------- -----
Excess $ 23,579 20.74%
======== =====
Total risk-based capital(2) $ 28,080 50.11%
Total risk-based capital
requirement(2) 4,483 8.00%
-------- -----
Excess $ 23,597 42.11%
======== =====
(1) Empire's GAAP capital includes unrealized gains on
certain available-for-sale securities of $381,000 and
$430,000 of investments in Dime, which are excluded for
purposes of calculating both tangible and core capital.
(2) Based on risk-weighted assets of $56,040,000.
Note 7 Operating Segment Information
-----------------------------
As of December 31, 1998, the Company adopted SFAS No. 131, "Financial
Reporting or Segments of a Business Enterprise." This statement requires that
a public business enterprise report financial and descriptive information
about its reportable operating segments. According to the statement,
operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.
The Company evaluates segment performance internally based on its two primary
lines of business, commercial banking and insurance, and thus the operating
segments are so defined. The operating segment defined as "other" includes
the Holding Company and eliminations of transactions between segments.
The accounting policies of the individual operating segments are the same as
those of the Company. Transactions between operating segments are primarily
conducted at fair value, resulting in profits that are eliminated for
reporting consolidated results of operating.
6
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
The following is a summary of selected operating segment information for the
three months ended March 31, 2000 and 1999.
2000: Empire Dime Other Consolidated
------ ---- ----- ------------
Net interest
income $ 1,077,305 3,530 59,347 1,140,182
Non-interest
income 157,702 128,873 (15,618) 270,957
------------ --------- --------- -----------
Total income 1,235,007 132,403 43,729 1,411,139
Provision for
loan losses 15,000 -- -- 15,000
Other non-interest
expense 619,675 140,437 89,262 849,374
------------ --------- --------- -----------
Income before
income taxes 600,332 (8,034) (45,533) 546,765
Income Taxes 230,800 -- (18,800) 212,000
------------ --------- --------- -----------
Net Income $ 369,532 (8,034) (26,733) 334,765
============ ========= ========= ===========
Assets $114,926,588 493,092 (591,280) 114,828,400
Net loans 64,996,419 -- -- 64,996,419
Deposits 71,960,121 -- (321,858) 71,638,263
Stockholders'
equity 27,801,049 429,826 2,164,386 30,395,261
============ ========= ========= ===========
1999:
Net interest
income $ 977,353 2,188 92,409 1,071,950
Non-interest
income 135,483 164,378 (57,171) 242,690
------------ --------- --------- -----------
Total income 1,112,836 166,566 35,238 1,314,640
Provision for
loan losses -- -- -- --
Other non-interest
expense 541,234 135,730 97,068 774,032
------------ --------- --------- -----------
Income before
income taxes 571,602 30,836 (61,830) 540,608
Income taxes 220,500 (335) (6,900) 213,265
------------ --------- --------- -----------
Net income $ 351,102 31,171 (54,930) 327,343
============ ========= ========= ===========
Assets $106,044,530 527,940 (503,608) 106,068,862
Net loans 50,693,010 -- -- 50,693,010
Deposits 66,671,688 -- (264,109) 66,407,579
Stockholders'
equity 30,023,975 448,019 2,637,866 33,109,860
============ ========= ========= ===========
7
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Part I, Item 2. - Management's Discussion and Analysis of Financial
- ---------------------------------------------------------------------
Condition and Results of Operations
-----------------------------------
General
Management's discussion and analysis of financial condition and results of
operations is intended to assist in understanding the financial condition and
results of operations of the Company.
Operating Strategy
The Bank is a community oriented financial institution which has traditionally
offered a variety of savings products to its retail customers while
concentrating its lending activities on the origination of loans secured by
one-to-four family residential dwellings. The Bank considers Gallatin, Park
and Sweet Grass counties in south-central Montana as its primary market area.
During 1999, the Bank received regulatory approval to open a de novo branch in
Billings, Montana, and management opened the new branch in April 2000.
Lending activities also have included the origination of multi-family,
commercial, business, commercial real estate and home equity loans. The
Bank's primary business has been that of a traditional financial institution,
originating loans in its primary market area for its portfolio. In addition,
the Bank has maintained a significant portion of its assets in investment and
mortgage-backed securities. Similar to its lending activities, the Bank's
investment portfolio has been weighted toward U.S. Government agency mortgage-
backed securities secured by one-to-four family residential properties. The
portfolio also includes U. S. Government agency securities. The Bank plans to
continue to fund its assets primarily with deposits, although FHLB advances
will be used as a supplemental source of funds.
The Bank's profitability depends primarily on its net interest income, which
is the difference between the income it receives on its loan and investment
portfolio and its cost of funds, which consists of interest paid on deposits
and FHLB advances. Net interest income is also affected by the relative
amounts of interest-earning assets and interest-bearing liabilities. When
interest-earning assets equal or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. The Bank's
profitability is also affected by the level of other income and expenses.
Other income consists of service charges on checking and NOW accounts and
other fees, insurance commissions and net gains or losses on the sale of
investments. Other expenses include compensation and employee benefits,
occupancy expenses, deposit insurance premiums, equipment and data servicing
expenses, professional fees and other operating costs. The Bank's results of
operations are also significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government
legislation and policies concerning monetary and fiscal affairs, housing and
financial institutions and the attendant actions of the regulatory
authorities.
The Bank's strategy is to operate as a conservative, well-capitalized,
profitable institution dedicated to offering a full line of community banking
services and to providing quality service to all customers. The Bank
believes that it has successfully implemented its strategy by (i) maintaining
strong capital levels, (ii) maintaining effective control over operating
expenses to attempt to achieve profitability under differing interest rate
scenarios, (iii) emphasizing local loan originations, and (iv) emphasizing
high-quality customer service with a competitive fee structure.
8
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
As evidenced by the new branch in Billings and an increase in commercial and
business loans, the Bank's strategy is changing from its historical role as a
mortgage lender to a growth-oriented expansion strategy by pursuing internal
and external growth opportunities, when appropriate. This new strategy may
subject the Company to a greater degree of risk. Risks associated with this
new business strategy include increased risk of losses on loans, provision to
loan losses which exceed historical levels, difficulties in integrating or
managing new branches or acquired institutions and problems related to the
management of growth. There can be no assurance that the Company will be
successful in implementing this new business strategy or in managing growth.
Year 2000 Issues
The Bank places significant reliance on computers to process information
necessary to conduct its business. During the past few years industry and
regulatory agencies advised the business community that some computers may not
be able to interpret certain information related to the year 2000. The Bank
successfully completed the year-end closings and all computer systems were
totally operable following January 1, 2000, and management did not identify
any errors or experience any computer malfunctions. The major financial
impact related to the Year 2000 issue was the replacement of teller hardware
and software. The cost of conversion and retraining amounted to $225,000. The
Bank has not been informed of any such problem experienced by its vendors or
its customers.
While there were no disruptions of any services provided to our customers,
management will continue to monitor all data processing applications into the
Year 2000. Management does not believe at this time that any potential
problems will materially impact the ability of the Bank to continue its
operation, however, no assurance can be given that this will be the case.
Financial Condition
Consolidated assets increased by approximately $300,000, or .26%, from $114.5
million at December 31, 1999 to $114.8 million at March 31, 2000.
Investments and mortgage-backed securities available-for-sale decreased $5.2
million, or 12.7% from $41.1 million at December 31, 1999 to $35.9 million at
March 31, 2000 as the result of sales amounting to $3,282,000 and maturities
and payments of $1,510,000 and a decline in market value of $412,000. Net
loans increased $5.4 million, or 9.1%, from $59.6 million at December 31, 1999
to $65.0 million at March 31, 2000.
Deposits increased from $71.4 million at December 31, 1999 to $71.6 million at
March 31, 2000.
Premises and equipment increased by $558,000, or 19.5% from $2.9 million at
December 31, 1999 to $3.4 million March 31, 2000 primarily as the result of
the remodeling costs associated with the property in Billings, Montana for the
new branch facility.
Stockholders' equity decreased from $32.8 million at December 31, 1999, to
$30.4 million at March 31, 2000. The change is the result of net income of
$335,000, the release of ESOP shares in the amount of $40,000 and an decrease
of $252,000 related to the market value of securities available-for-sale. In
addition, 2,982 shares of MRDP vested and unearned MRDP compensation was
reduced by $48,000. Stockholders' equity was also decreased by the payments
of $200,000 in dividends. During the three months ended March 31, 2000, the
Company repurchased 196,100 shares of its common stock in the open market for
an average price of $11.88 per share for a total of $2.3 million. There were
786,930 shares held in treasury at March 31, 2000, and 590,830 shares at
December 31, 1999.
9
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Asset Quality
At March 31, 2000, the Bank had no nonaccrual loans. At March 31, 2000, the
Bank had four loans delinquent over 30 days amounting to $35,000 of which one
loan amounting to $9,000 was delinquent over 90 days. The Bank had no real
estate acquired through foreclosure.
Results of Operations
The operating results of the Bank depend primarily on its net interest income.
The Bank's net interest income is determined by its interest rate spread,
which is the difference between the yields earned on its interest-earning
assets and the rates paid on its interest-bearing liabilities and the degree
of mismatch in the maturity and repricing characteristics of its
interest-earning assets and interest-bearing liabilities. The Bank's net
earnings are also affected by the establishment of provisions for loan losses
and the level of its other non-interest income, including insurance commission
income and deposit service charges, as well as its other expenses and income
tax provisions.
Comparison of Results of Operations for the Three Months Ended March 31, 2000
and 1999
Net Income. Net income increased by $7,000 to $335,000 for the three months
ended March 31, 2000 as compared to the same period in 1999. While the net
income is approximately the same for the two comparative periods, several
components of net income changed and are discussed in the following narrative.
Net Interest Income. Net interest income increased $68,000, or 6.4%, from
$1.1 million for the three months ended March 31, 1999 to $1.2 million for the
same period in 2000. The interest rate spread increased from 2.76% for the
three months ended March 31, 1999 to 2.87% for the comparable period in 2000.
Interest Income. Total interest income increased by $251,000, or 13.8% from
$1.8 million for the three months ended March 31, 1999 to $2.1 million for the
same period in 2000. The increase was primarily attributable to an increase
in average interest earning assets of $7.1 million, or 6.8% from $104.4
million for the three months ended March 31, 1999 as compared to the
comparable period in 2000. Average outstanding loans increased $13.2 million
offset by decreases in the average outstanding balances of investments and
mortgage-backed securities of $6.1 million. The yield on interest earning
assets for the three months ended March 31, 2000, was 7.4% as compared to 6.9%
for the comparable period in 1999.
Interest Expense. Total interest expense was $931,000 for the three months
ended March 31, 2000, as compared to $748,000 for the same period in 1999.
Interest on deposits increased by $95,000, or 13.9%, and interest on notes
payable and other debt increased by $88,000, or 134.6%.
Average deposits for the three months ended March 31, 2000 amounted to $71.2
million as compared to $66.3 million for the same period in 1999. In addition
to the increase in average deposits, the cost of deposits increased from 4.1%
for the three months ended March 31, 1999 to 4.4% for the same period in 2000
reflecting a general increase in interest rates in the Bank's markets.
Other interest expense of $153,000 for the three months ended March 31, 2000
includes $140,000 related to borrowings from the FHLB and $13,000 associated
with the purchase of the main office building. Other interest expense for the
comparable period in 1999 included $51,000 related to FHLB borrowing and
$14,000 associated with the purchase of the main office building.
10
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Provision for Loan Losses. The provision for loan losses was $15,000 for
three months ended March 31, 2000 as compared to no provision for the same
period in 1999. At the end of both periods, the level of reserves was deemed
to be adequate by management. Loan loss reserves as a percentage of loans was
.37% at March 31, 2000, and .43% at March 31, 1999. Management's periodic
evaluation of the adequacy of the allowance is based on factors such as the
Bank's past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, estimated
value of any underlying collateral, current and prospective economic
conditions, peer group comparisons, and independent appraisals. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses. Such agencies may
require the Bank to provide additions to the allowance based upon judgments
different from management. Assessment of the adequacy of the allowance for
credit losses involves subjective judgments regarding future events, and thus,
there can be no assurance that additional provisions for credit losses will
not be required in future periods. Although management uses the best
information available, future adjustments to the allowance may be necessary
due to economic, operating, regulatory and other conditions that may be beyond
the Bank's control. Any increase or decrease in the provision for loan losses
has a corresponding negative or positive effect on net income.
Non-Interest Income. Non-interest income increased $28,000 for the three
months ended March 31, 2000, as compared to the same period in 1999 primarily
as the result of a $16,000 increase in customer service charges and other
non-interest income, net gain on the sale of investments of $49,000, offset by
a decrease in commissions from insurance companies of $37,000.
The net gain on sale of investments was the result of the sale of $3.2 million
of mortgage-backed securities and bonds for a loss of $83,000 offset by the
sale of 2,800 shares of FHLMC stock for a gain of $132,000. Most of the
proceeds of these sales were used to fund the repurchase of treasury shares
during the three months ended March 31, 2000.
Insurance commissions received from Dime are the largest component of
non-interest income. Insurance commissions of $123,000 and $160,000 were
received for the three months ended March 31, 2000 and 1999, respectively.
The decrease in commission income resulted primarily from decreases in
premiums and commissions from key companies represented by Dime. Increased
competition and possible future decreases in commissions will continue to
impact Dime's financial results.
Non-Interest Expense. Total non-interest expense increased $75,000 or 9.7%
for the three months ended March 31, 2000, compared to the same period in
1999. Included in this increase is a $91,000 increase in compensation
expense which is primarily related to the additional salaries and benefits for
the employees at the new branch in Billings. Occupancy expense also increased
from $88,000 for the three months ended March 31, 1999 to $112,000 primarily
as the result of additional cost associated with the new branch facility.
Depreciation expense associated with the new branch will increase occupancy
expense beginning in April 2000.
Offsetting these increases are decreases in deposit insurance premiums and
other non-interest expense amounting to $39,000.
Income Taxes. Income taxes were approximately the same for the three months
ended March 31, 2000 and 1999. The effective combined federal and state tax
rate was 38.78% and 39.40% for the three months ended March 31, 2000 and 1999,
respectively.
11
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings
There are no pending material legal proceedings to which the
registrant or its subsidiaries are a party.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Certificate of Incorporation of Empire Federal Bancorp, Inc. (1)
3.2 Bylaws of Empire Federal Bancorp, Inc. (1)
10.1 Employment Agreement with Kenneth P. Cochran
10.2 Employment Agreement with William H. Ruegamer (4)
10.3 Employee Stock Ownership Plan (1)
10.4 Management Recognition and Development Plan (3)
10.5 Stock Option Plan (3)
10.6 Financial Institution's Thrift Plan (401(k))(4)
21 Subsidiaries of the Registrant (5)
27 Financial Data Schedule
- ---------------
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-1, as amended (File No. 333-12653).
(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997.
(3) Incorporated by reference to the Company's Annual Meeting Proxy Statement
dated March 16, 1998.
(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1999.
(b) Report on Form 8-K
A Form 8-K was filed on April 11, 2000.
12
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Empire Federal Bancorp, Inc.
By s/s William H. Ruegamer May 12, 2000
------------------------------------ ------------
William H. Ruegamer Date
President & Chief Executive Officer
(Principal Executive Officer)
By s/s Linda M. Alkire May 12, 2000
------------------------------------ ------------
Linda M. Alkire Date
Treasurer & Chief Financial Officer
13
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Exhibit
EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated the 29th day of October 1999, by and between
EMPIRE FEDERAL SAVINGS BANK, 123 South Main Street, P.O. Box 1099,
Livingston, MT 59047 (the "Savings Bank"); and KENNETH P. COCHRAN, 1817 Forest
Park Drive, Billings, MT 59102 (the "Executive").
WHEREAS, the Savings Bank wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Savings Bank
on a full-time basis for said period;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. TERMS AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve
as Senior Vice President and Branch President of the Savings Bank.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall commence on January 1, 2000 (or
such earlier or later date as may be decided by the parties) (the "effective
date"), and shall continue for a period of thirty-six (36) full calendar
months thereafter. The Board of Directors of the Savings Bank (the "Board")
and the Executive may extend this agreement for an additional term, at their
pleasure.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder, including activities and services related to the organization,
operation and management the Savings Bank; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time
to time, Executive may serve or continue to serve, on the board of directors
of, and hold any other offices or positions in, companies or organizations,
which, in such Board's judgment, will not present any conflict of interest
with the Savings Bank, or materially affect the performance of Executive's
duties pursuant to this Agreement.
16
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2 herein.
The Savings Bank shall pay Executive as compensation a salary of $105,000.00
per year ("Base Salary"). Such Base Salary shall be payable in accordance
with the customary payroll practices of the Savings Bank. In addition to the
Base Salary provided in Section 3(a), the Savings Bank shall provide Executive
at no cost to Executive with all such other benefits as are provided uniformly
to permanent full-time employees of the Savings Bank.
(b) The Savings Bank will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those provided to
other senior executives to the Savings Bank. Without limiting the generality
of the foregoing provisions of this Subsection (b), Executive will be entitled
to participate in or receive benefits under any employee benefits plans
including, but not limited to, pension plans, medical coverage, or any other
employee benefit plan or arrangement made available by the Savings Bank in the
future to its senior executives and key management employees, subject to, and
on a basis consistent with, the terms, conditions and overall administration
of such plans and arrangements. Nothing paid to Executive under any such plan
or arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement, except as provided under Section
5(e).
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Savings Bank shall provide Executive with a Savings Bank owned
late-model vehicle and shall pay or reimburse Executive for all insurance,
taxes, fuel, maintenance, and any other related expenses of said vehicle and
for all reasonable travel and other obligations under this Agreement and may
provide such additional compensation in such form and in such amounts as the
Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Savings Bank of Executive's full-time employment hereunder
for any reason other than a Change in Control, as defined in Section 5(a)
hereof; disability, as defined in Section 6(a) hereof; death; retirement, as
defined in Section 7 hereof; or Termination for Cause, as defined in Section 8
hereof; (ii) Executive's resignation from the Savings Bank's employ, upon (A)
unless consented to by Executive, a material change in Executive's function,
duties, or responsibilities, which change would cause Executive's position to
become one of lesser responsibility, importance, or scope from the position
and attributes thereof described in Sections 1 and 2, above, (B) a relocation
of Executive's principal place of employment by
17
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
more than 35 miles from its location at the effective date of this Agreement,
or a material reduction in the benefits and perquisites to Executive from
those being provided as of the effective date of this Agreement, or (C) the
liquidation or dissolution of the Savings Bank. Upon the occurrence of any
event described in clauses (A), (B), or (C), above, Executive shall have the
right to elect to terminate his employment under this Agreement by resignation
upon not less than sixty (60) days prior written notice given within a
reasonable period of time not to exceed four (4) calendar months after the
event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, the Savings Bank
shall pay Executive, or, in the event of his subsequent death, his beneficiary
or beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to the payments due to Executive for
the remaining term of the Agreement, provided, however, that if the Savings
Bank is not in compliance with its minimum capital requirements or if such
payments would cause the Savings Bank's capital to be reduced below its
minimum capital requirements, such payments shall be deferred until such time
as the Savings Bank is in capital compliance. All payments made pursuant to
this Section 4(b) shall be paid in substantially equal monthly installments
over the remaining term of this Agreement following Executive's termination;
provided, however, that if the remaining term of the Agreement is less than
one (1) year (determined as of Executive's Date of Termination), such payments
and benefits shall be paid to executive in a lump sum within thirty (30) days
of the Date of Termination.
(c) Upon the occurrence of an Event of Termination, the Savings Bank
will cause to be continued medical coverage substantially identical to the
coverage maintained by the Savings Bank for Executive prior to his
termination. Such overage shall cease upon the expiration of the remaining
term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall
have occurred a Change in Control of the Savings Bank. For purposes of this
Agreement, a "Change in Control" of the Savings Bank shall be deemed to occur
if and when (a) an offer other than Empire Federal Bancorp, Inc. purchases
shares of the common stock of Empire Federal Bancorp, Inc. or the Savings Bank
pursuant to a tender or exchange offer for such shares, (b) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934) is or becomes the beneficial owner, directly or indirectly, of
securities of the Savings Bank representing 25% or more of the combined voting
power of Empire Federal Bancorp, Inc.'s then outstanding securities, (c) the
membership of the board of directors of Empire Federal Bancorp, Inc. or the
Savings Bank changes as a result of a contested election, such that
individuals who were directors at the beginning of any twenty-four (24) month
period (whether commencing before or after the date of adoption of this
18
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of Empire Federal Bancorp, Inc. or the Savings
Bank approve a merger, consolidation, sale or disposition of all or
substantially all of Empire Federal Bancorp, Inc.'s or the Savings Bank's
assets, or a plan of partial or complete liquidation.
(b) If any events described in Section 5(a) hereof constituting a Change
in Control have occurred or the Board of the Savings Bank has reasonably
determined that a Change in Control has occurred, Executive shall be entitled
to the benefits provided in paragraphs (c), (d) and (e) of this Section 5 upon
his subsequent involuntary termination following the effective date of a
Change in Control (or voluntary termination following the effective date of a
Change in Control following any demotion, loss of title, office or significant
authority, reduction in his annual compensation or benefits (other than a
reduction affecting the Savings Bank's personnel generally), or relocation of
his principal place of employment by more than thirty-five (35) miles from its
location immediately prior to the Change in Control), unless such termination
is because of his death, retirement as provided in Section 7, termination for
Cause, or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by Executive's
termination of Employment, the Savings Bank shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or liquidated damages, or both, a
sum equal to 2.99 times Executive's "base amount," within the meaning of
Section 280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended.
Such payment shall be made in a lump sum paid within ten (10) days of
Executive's Date of Termination.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of Employment, the Savings Bank will cause to be continued medical
coverage substantially identical to the coverage maintained by the Savings
Bank for Executive prior to his severance. Such coverage and payments shall
cease upon the expiration of thirty-six (36) months.
(e) Upon the occurrence of a Change in Control, Executive shall be
entitled to receive benefits due him under, or contributed by the Savings Bank
on his behalf, or pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability or other employee benefit plan maintained by
the Savings Bank on Executive's behalf to the extent that such benefits are
not otherwise paid to Executive upon a Change in Control.
(f) Notwithstanding the preceding paragraphs of this Section 5, in the
event that the aggregate payments or benefits to be made or afforded to
Executive under this Section would be deemed to include an "excess parachute
payment" under Section 280G of the Code, then, at the election of Executive,
(i) such payments or benefits shall be payable or provided to Executive over the
minimum period necessary to reduce the present value of such payments or
benefits to an amount which is one dollar ($1.00) less than three (3) times
Executive's "base amount" under Section 280G(b)(3) of the Code or (ii) Executive
shall receive the amount payable under Section 5(c) as the sole benefit
payable under this Section 5.
19
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
6. TERMINATION FOR DISABILITY.
(a) If during the term of this Agreement, the Executive becomes so
disabled or incapacitated that he is unable to perform the duties of Senior
Vice President and Branch President, the Savings Bank shall pay to him
Sixty-five percent (65%) of the fixed salary specified above herein during the
term of such disability or incapacity, but not beyond the terms of this
agreement. In addition, the Savings Bank will cause to be continued medical
coverage substantially identical to the coverage maintained by the Savings
Bank prior to his disability, but not beyond the term of this Agreement.
(b) The disability pay shall be reduced by the amount, if any, paid to
Executive under any plan of the Savings Bank providing disability benefits to
Executive.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.
Termination by the Savings Bank of Executive based on "Retirement" shall
mean retirement at or after attaining age sixty-five (65) or in accordance
with any retirement arrangement established by Executive's consent with
respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Savings
Bank and other plans to which Executive is a party. Upon the death of
Executive during the term of this Agreement, the Savings Bank shall pay to
Executive's estate the compensation due to Executive through the last day of
the calendar month in which his death occurred.
8. TERMINATION FOR CAUSE.
(a) Employer may terminate Executive's employment hereunder upon Ten
(10) days prior written notice, if due to Executive's personal dishonesty,
misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule or regulation (other than minor traffic violations
or similar offenses) or final cease-and-desist order, material breach of any
provision of this Agreement, or any other similar cause, including failure to
perform duties in accordance with the instructions of the Savings Bank or its
Board of Directors.
(b) If Executive's employment is terminated pursuant to this paragraph,
employer shall pay to Executive the compensation payable to Executive for the
month in which such termination occurs, prorated to the day of termination,
including accrued vacation, holiday, and other benefits described herein.
After such payment is made, employer shall have no further financial
obligation to Executive pursuant to this Agreement. Regardless of the
effective date of termination of Executive's employment hereunder, employer
may require Executive to quit employer's premises at any time following
delivery of written notice of termination hereunder.
20
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
(c) Any stock options granted to Executive under any stock option plan
or any unvested awards granted under any other stock benefit plan of the
Savings Bank, Empire Federal Bancorp, Inc., or any subsidiary or affiliate
thereof, shall become null and void effective upon Executive's receipt of
Notice of Termination for Cause, pursuant to Section 9 hereof, and shall not
be exercisable by Executive at any time subsequent to such Termination for
Cause.
9. REQUIRED PROVISIONS.
(a) The Savings Bank may terminate Executive's employment at any time,
but any termination by the Savings Bank, other than Termination for Cause,
shall not prejudice Executive's right to compensation or other benefits under
this Agreement. Executive shall not have the right to receive compensation or
other benefits for any period after Termination for Cause as defined in
Section 8 herein.
(b) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Savings Bank's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the Company's and the Savings Bank's
obligations under the Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Savings Bank may, in its discretion, (i) pay Executive all or
part of the compensation withheld while their contract obligations were
suspended and (ii) reinstate (in whole or in part) any of their obligations
that were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Savings Bank's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the Savings Bank under the Agreement shall terminate as of
the effective date of the order, but vested rights of the contracting parties
shall not be affected.
(d) If the Savings Bank is in default (as defined in Section 3(x)(1) of
the FDIA), all obligations under this Agreement shall terminate as of the date
of default, but this paragraph shall not affect any vested rights of the
parties.
(e) All obligations under this Agreement shall be terminated (except to
the extent determined that continuation of the Agreement is necessary for the
continued operation of the Savings Bank); (i) by the Director of the Office of
Thrift Supervision (the "Director") or his designee at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation enters into
an agreement to provide assistance to or on behalf of the Savings Bank under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director,
or his designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Savings
Bank or when the Savings Bank is determined by the Director to be in an unsafe
or unsound condition.
21
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Any rights of the parties that have already vested, however, shall not be
affected by such action.
(f) Any payments made to Executive pursuant to this Agreement or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
10. NOTICE.
Any purported termination by the Savings Bank or by Executive shall be
communicated by Notice of Termination to the other parties hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
11. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrances, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to effect any such action shall be
null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Savings Bank and its successors and assigns.
12. INSURANCE.
Subject to the reasonable insurability of the Executive, the Savings Bank
shall provide Executive $200,000 in term life insurance benefits with an
insurance company satisfactory to the Savings Bank. The Savings Bank shall
pay the annual premiums on such policy so long as the Executive is employed by
the Savings Bank and such premium payment shall be deemed to be additional
compensation to the Executive. The Executive shall have the right to
designate the beneficiary on the insurance policy.
13. STOCK OPTIONS.
Subject to the approval of its Board of Directors, the Savings Bank
agrees to grant to the Executive stock options in the amount of 5000 shares in
Empire Federal Bancorp, Inc., subject to the rules and regulations of the
Savings Bank's Option Plan.
22
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
14. MODIFICATION AND WAIVER.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Montana,
unless otherwise specified herein; provided, however, that in the event of a
conflict between the terms of this Agreement and any applicable federal or
state law or regulation, the provisions of such law or regulation shall
prevail. Venue for any dispute or controversy arising out of or in connection
with this agreement shall be in Park County, Montana.
18. INDEMNIFICATION.
The Savings Bank shall provide Executive (including his heirs, executors
and administrators) with coverage under the Bank's directors' and officers'
liability insurance policy. The Savings Bank shall indemnify Executive in
accordance with the Savings Bank's indemnification policy and federal
regulations presently in effect or as hereinafter may be amended.
19. SUCCESSOR TO THE SAVINGS BANK OR THE COMPANY.
The Savings Bank shall require any successor assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Savings, expressly and
unconditionally to assume and agree to perform the Savings Bank's obligations
under this Agreement, in the same manner and to the same
23
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
extent that the Savings Bank would be required to perform if no such
succession or assignment had taken place.
20. DUPLICATE ORIGINALS.
This Agreement shall be executed in duplicate, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Savings Bank hereto has caused this Agreement to
be executed and its seal to be affixed hereunto by a duly authorized officer
or director, and Executive has signed this Agreement, all on the day of
. -----
- ----------------
"Savings Bank"
EMPIRE FEDERAL SAVINGS BANK
ATTEST:
By s/s William H. Ruegamer
---------------------------
s/s Ann Worthington Its President & CEO
- ---------------------------
(SEAL)
"Executive"
WITNESS:
---------------------------
KENNETH P. COCHRAN
- ---------------------------
CATHY HANSER
24