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, 1998
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
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(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, 1998: 2,592,100
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
PAGE
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
EMPIRE FEDERAL BANCORP, INC.
INDEX TO FORM 10-QSB
Page
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PART I FINANCIAL INFORMATION
---------------------
Item 1. Condensed Financial Statements
Consolidated Balance Sheets at March 31, 1998
and December 31, 1997 (unaudited)........................ 1
Consolidated Statements of Income for the Three
Months Ended March 31, 1998 and 1997 (unaudited)......... 2
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1998 and 1997 (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
Item 5. Other Information........................................... 12
Item 6. Exhibits and Reports on Form 8-K............................ 12
SIGNATURES............................................................ 13
PAGE
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Part I, Item 1 - Financial Statements
- -------------------------------------
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
March 31, December 31,
Assets 1998 1997
------ ----------- ------------
(unaudited) (unaudited)
Cash and due from banks $ 1,217,408 1,078,823
Interest-bearing deposits 1,458,797 1,825,208
Investment and mortgage-backed securities
available-for-sale 41,048,499 36,495,581
Investment and mortgage-backed securities
held-to-maturity (estimated market value
of $16,610,015 at March 31, 1998 and
$20,802,559 at December 31, 1997) 16,422,664 20,556,479
Loans receivable, net 46,436,493 45,713,508
Stock in Federal Home Loan Bank of Seattle,
at cost 1,285,100 1,261,100
Accrued interest receivable 379,246 427,496
Premises and equipment, net 1,999,003 2,051,238
Prepaid expenses and other assets 342,903 391,470
------------ -----------
Total assets $110,590,113 109,800,903
============ ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Passbook Accounts $ 14,065,474 13,572,343
NOW Accounts 14,655,335 14,838,604
Certificates of Deposit 38,487,302 38,766,470
Total Deposits 67,208,111 66,859,092
------------ -----------
Note payable 685,801 698,136
Advances from borrowers for taxes
and insurance 375,243 208,258
Accrued expenses and other liabilities 1,667,699 1,437,029
------------ -----------
Total liabilities 69,936,854 69,202,515
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 25,233,823 25,208,225
Unearned ESOP and MRDP compensation (3,074,701) (2,737,305)
Retained earnings, substantially
restricted 17,038,780 16,815,367
Accumlated other comprehensive income, net 1,429,436 1,286,180
------------ -----------
Total stockholders' equity 40,653,259 40,598,388
------------ -----------
Total liabilities and stockholders'
equity $110,590,113 109,800,903
============ ===========
See accompanying notes to unaudited interim consolidated financial statements.
1
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended March 31, 1998 and 1997
Three Months Ended
March 31,
------------------------------
1998 1997
---- ----
(unaudited) (unaudited)
Interest income:
Loans receivable $ 967,067 $ 920,453
Mortgage-backed securities 773,724 604,006
Investment securities 112,726 86,613
Other 82,131 262,061
---------- ----------
Total interest income 1,935,648 1,873,133
---------- ----------
Interest expense:
Deposits 738,166 740,119
Note payable and other 15,665 63,170
---------- ----------
Total interest expense 753,831 803,289
---------- ----------
Net interest income 1,181,817 1,069,844
Provision for loan losses -- 18,878
---------- ----------
Net interest income after provision
for loan losses 1,181,817 1,050,966
Non-interest income:
Insurance commission income 162,284 176,956
Customer service charges 46,287 41,729
Other 9,664 6,547
---------- ----------
Total non-interest income 218,235 225,232
Non-interest expense:
Compensation and benefits 427,785 389,109
Occupancy and equipment 73,777 79,260
Deposit insurance premiums 27,804 29,533
Other 205,421 168,654
---------- ----------
Total non-interest expense 734,787 666,556
---------- ----------
Income before income taxes 665,265 609,642
Income taxes 261,960 230,273
---------- ----------
Net income $ 403,305 $ 379,369
========== ==========
Basic earnings per share $ 0.17 $ 0.16
========== ==========
Diluted earnings per share $ 0.17 $ 0.16
========== ==========
See accompanying notes to unaudited interim consolidated financial statements.
2
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997
Three Months Ended
March 31,
--------------------------
1998 1997
---- ----
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 403,305 $ 379,369
Adjustments to reconcile net income to net
cash provided (used in) by operating
activities:
Provision for loan losses -- 18,878
Depreciation 39,857 52,683
ESOP shares committed to be released 59,858 59,238
MRDP shares vested 43,094 --
Stock Dividends reinvested in Federal
Home Loan Bank (24,000) (20,800)
Decrease (increase) in accrued interest
receivable 48,250 (77,345)
Decrease in prepaid expenses and other
assets 71,647 73,262
Increase (decrease) in accrued expenses
and other liabilities 139,080 (501,586)
----------- ----------
Net cash provided (used in) by
operating activities 781,091 (16,301)
----------- ----------
Cash flows from investing activities:
Net change in interest-bearing deposits 366,411 23,918,389
Net change in loans receivable (722,985) 1,123,360
Proceeds from matured or called investment
securities held-to-maturity 1,000,200 250,197
Principal payments on mortgage-backed
securities held-to maturity 3,133,615 1,278,947
Purchases of investment securities
available-for-sale (500,000) (6,465,707)
Proceeds from called investment securities
available-for-sale 1,500,000 --
Principal payments on mortgage-backed
securities available-for-sale 2,546,313 435,114
Purchases of mortgage-backed securities
available-for-sale (7,864,385) (10,856,239)
Purchases of premises and equipment (10,702) (43,000)
---------- -----------
Net cash provided (used in) by
investing activities (551,533) 7,394,341
Cash flows from financing activities:
Net change in deposits 349,019 (656,944)
Repayment of note payable (12,335) --
Net change in advances from borrowers for
taxes and insurance 166,985 180,163
Dividends paid (179,892) --
Funding of MRDP trust (414,750) --
---------- -----------
Net cash used in financing
activities (90,973) (7,463,851)
---------- -----------
Net increase (decrease) in cash and cash
equivalents 138,585 (85,811)
Cash and cash equivalents, beginning of period 1,078,823 1,165,164
---------- -----------
Cash and cash equivalents, end of period $1,217,408 1,079,353
========== ==========
See accompanying notes to unaudited interim consolidated financial statements.
3
EMPIRE FEDERAL BANCORP, INC.
and SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements
March 31, 1998 and 1997
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, 1997.
The accompanying consolidated financial statements include the accounts of
Empire Federal Bancorp, Inc. (the Holding Company) and its wholly-owned
subsidiary, Empire Federal Savings Bank (Empire) 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, 1998, and 1997 are
not necessarily indicative of the results which may be expected for an entire
year or any other period.
Note 2 Conversion to Stock Ownership
-----------------------------
The Holding Company was incorporated in September 1996 to acquire and hold all
of the outstanding capital stock of Empire to be issued as a part of Empire's
conversion from a federally-chartered mutual savings and loan association to a
federally-chartered capital stock savings bank. In connection with the
conversion, which was consummated on January 23, 1997, the Company issued and
sold 2,592,100 shares of common stock (par value $.01 per share) at a price of
$10 per share for net offering proceeds of $25,168,277 after conversion and
offering expenses of $752,723. Net cash offering proceeds were $23,094,597
which is net of $2,073,680 in stock issued to the Employee Stock Ownership
Plan (ESOP) as consideration for future charges to compensation expense as
ESOP shares are earned by employees. The Holding Company used $9,501,000 of
the net cash proceeds to purchase the newly issued capital stock of Empire.
Since the offering proceeds and all required regulatory approvals to
consummate the conversion were received prior to December 31, 1996, the
conversion has been accounted for as being effective as of December 31, 1996.
In connection with the conversion, the Company adopted December 31 as its
fiscal year end. Prior to conversion, Empire's fiscal year ended June 30.
4
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Note 3 New Accounting Pronouncements
-----------------------------
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130 "Reporting Comprehensive Income," which establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. This statement requires that all
items required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial information. The Company adopted
the provisions of SFAS No. 130 as of January 1, 1998. The only additional
component of comprehensive income is the Company's net unrealized gains or
losses on securities available-for-sale. The following summarizes accumulated
other comprehensive income for the quarter ended March 31, 1998, and for the
year ended December 31, 1997:
Accumulated Other
Comprehensive Income, Net
---------------------------------
March 31, 1998 Dec. 31, 1997
---------------------------------
Beginning of period $1,286,180 $ 752,458
Change during period 143,256 533,722
---------- ----------
Ending balance $1,429,436 $1,286,180
========== ==========
Note 4 Earnings Per Share
------------------
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." SFAS No. 128 replaces the presentation of primary earnings per share
(EPS) with a presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures. SFAS No. 128 also
requires a reconciliation of the numerator and denominator of the basic and
diluted EPS computation.
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 release (unallocated) and unvested MRDP shares
issued are excluded from the weighted-average common shares outstanding
calculation. At March 31, 1998, there were 13,825 allocated shares and 3,456
committed to be released ESOP shares. There were 2,592 vested MRDP shares.
The weighted-average common shares outstanding for the year ended March 31,
1998, was 2,348,207, which is net of weighted-average unallocated ESOP and
unvested 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, 1998, outstanding stock options and unvested MRDP shares resulted in
dilution of 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:
5
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
For the period ended March 31, 1998
----------------------------------------
Net Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Net income
Basic EPS
Net income available to
common stockholders $403,305 2,348,207 $0.17
======== =====
Effect of Dilutive Securities
Stock Options - granted 8,676
Unvested MRDP shares 3,328
---------
Diluted EPS
Income available to common
stockholders plus assumed
conversion $403,305 2,360,211 $0.17
======== ========= =====
The weighted-average number of common shares outstanding was the same for both
basic and diluted EPS for the three months ended March 31, 1997, given that
there were no potential common shares.
Note 5 Cash Dividend Declared
----------------------
On January 28, 1998, the Board of Directors declared a quarterly cash dividend
of $.075 per common share to stockholders of record on February 12, 1998,
payable on February 27, 1998.
6
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Note 6 Capital Compliance
------------------
The following table presents Empire's compliance with its regulatory capital
requirements of March 31, 1998 (dollars in thousands):
Percentage
Amount of Assets
GAAP capital(1) $ 28,413 25.69%
======== =====
Tangible capital $ 26,591 24.69%
Tangible capital requirement 2,155 1.50%
-------- -----
Excess $ 24,436 23.19%
======== =====
Core capital $ 26,591 24.69%
Core capital requirement 4,309 3.00%
-------- -----
Excess $ 22,282 21.69%
======== =====
Total risk-based capital(2) $ 26,768 69.10%
Total risk-based capital
requirement(2) 3,099 8.00%
-------- -----
Excess $ 23,669 61.10%
======== =====
(1) GAAP capital includes unrealized gains on certain
available-for-sale securities of $1,429,000 and
$393,000 of investments in Dime, which are excluded
for purposes of calculating both tangible and core
capital.
(2) Based on risk-weighted assets of $38,740,000.
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 business of Empire consists principally of attracting deposits from the
general public and using such deposits to originate mortgage loans secured
primarily by one- to four-family residences. Empire also invests in
interest-bearing deposits, investment grade federal agency securities and
mortgage-backed securities. Empire plans to continue to fund its assets
primarily with deposits, although FHLB advances may be used as a supplemental
source of funds.
Empire'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 debt. 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. Empire's
profitability is also affected by the level of other income and expenses.
Other income consists of service charges on NOW accounts and other fees,
insurance commissions and net real estate owned income. Other expenses
include compensation and employee benefits, occupancy expenses, deposit
insurance premiums, equipment and data servicing expenses, professional fees
and other operating costs. Empire'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.
Year 2000 Issues
For nearly two years Empire has been investigating and addressing
potential Year 2000 problems. In the course of this process Empire has
examined its computer systems, phone systems, mailing and fax capabilities,
office environmental systems, and servicer relationships related to daily
business processing, ATM processing, ACH processing, check processing, wire
transfers processing, travelers check processing, and all other relevant
out-based services. The general plan for addressing Year 2000 problems has
been examined and found satisfactory by the OTS, and Empire is currently on
schedule with respect to implementation of that plan. As of January 1998 all
areas of potential impact directly addressable by Empire appear to be Year
2000 compliant, except the teller system as discussed below. Areas to be
addressed by servicers have been represented either fully compliant or on
schedule for full compliance by December 1998. Empire's plan for full Year
2000 compliance, including testing of servicers' provided system, is scheduled
to be complete by the end of 1998.
8
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
The primary negative impact of the potential Year 2000 problem lies in
Empire's present Olivetti-America 8-window teller hardware/software system now
in use in all three offices. This system has known Year 2000 problems as well
as other inadequacies relevant to current needs on the working teller line.
Empire is developing a plan for replacement of the existing teller system with
a PC-based teller system working internally at each office with a Local Area
Network (LAN) and tied together to the central office and our primary servicer
by a Wide Area Network (WAN). This conversion will not only solve the
potential Year 2000 problem in the teller system, but will also position
Empire to take maximum advantage of current technology in banking as it enters
the 21st Century. The estimated cost of conversion and re-training and
implementation of the new PC-based system is approximately $200,000 based on
information currently available, and the estimated timetable for conversion is
that it will be in process or complete by the end of 1998. Most of the
estimated cost will be for the new teller system and will be depreciated over
five years.
Financial Condition
Consolidated assets increased by approximately $789,000, or .7%, from $109.8
million at December 31, 1997 to $110.6 million at March 31, 1998. This
increase was partially attributable to an increase in deposits of $349,000.
The consolidated balance sheet was not materially affected by market
conditions between December 31, 1997 and March 31, 1998. Maturities and
payments of $4.1 million reduced investment and mortgage-backed securities
held-to-maturity from $20.5 million at December 31, 1997, to $16.4 million at
March 31, 1998. Investment and mortgage-backed securities available-for-sale
increased $4.5 million from $36.5 million at December 31, 1997 to $41.0
million at March 31, 1998 primarily as a result of the reinvestment of the
previously noted maturities and payments. Net loans increased $723,000, or
1.6% and consisted primarily of permanent and construction loans of 1-4
dwelling units and multi-family units.
9
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
Deposits increased by $349,000, or .5%, to $67.2 million at March 31, 1998,
from $66.9 million at December 31, 1996.
Stockholders' equity increased from $40.6 million at December 31, 1997, to
$40.7 million at March 31, 1998. The increase is the result of net income of
$403,000, the release of ESOP shares in the amount of $60,000 and an increase
of $143,000 related to the increase in market value of securities
available-for-sale. In addition, during the first quarter of 1998 the
Management Recognition and Development Plan ("MRDP") purchased, through a
trust funded by the Company, 23,700 additional shares of company shares for a
total cost of $415,000. During the first quarter of 1998, 2,592 shares of the
MRDP vested and unearned MRDP compensation was reduced by $43,000.
Shareholders' equity was also decreased by the payments of $180,000 in
dividends.
Asset Quality
At March 31, 1998, and December 31, 1997, Empire did not have any nonaccrual
loans or troubled debt restructuring. At March 31, 1998, Empire had nine
loans delinquent over 30 days amounting to $653,000 of which $13,000 were
delinquent over 90 days. Empire has no real estate acquired through
foreclosure.
Comparison of Results of Operations for the Three Months Ended March 31, 1998
and 1997
Net Income. Net income increased by $24,000 to $403,000 for the three months
ended March 31, 1998, as compared to $379,000 for the same period in 1997.
The increase in net income was due, in part, to an increase in the yield on
average interest earning assets. This increase was somewhat offset by an
increase in non-interest expense.
Interest Income. Total interest income increased by $63,000, or 3.34%, for
the three months ended March 31, 1998 as compared to the same period in 1997.
The increase was primarily attributable to the increase in the average balance
of loans outstanding from $42.3 million for the period ended March 31, 1997,
to $46.6 million for the same period in 1998. This increase in volume was
partially offset by a decrease in the average yield from 8.71% for the three
months ended March 31, 1997 to 8.29% for the same period in 1998.
Interest Expense. Total interest expense was $754,000 for the three months
ended March 31, 1998, as compared to $803,000 for the same period in 1997.
The $49,000, or 6.16%, decrease was the result of a $2,000 decrease in
interest on deposits and a $47,000 decrease in other interest expense.
The decline in deposit interest is caused by an decrease in average
outstanding deposits of $1.6 million from $68.4 million for the period ended
March 31, 1997, to $66.8 million for the same period in 1998. This decrease
was offset by an increase in the average cost of deposits from 4.27% for the
period ended March 31, 1997, to 4.42% for the comparable period in 1998.
Other interest expense of $63,000 for the three months ended March 31, 1997,
related to the interest paid to stock subscribers on the stock issuance date
of January 23, 1997. Interest expense of
10
EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
$16,000 for the comparable period in 1998 is related to the debt associated
with the purchase of the main office building.
Provision for Loan Losses. There was no provision for loan losses during the
three month period ended March 31, 1998 as compared to $19,000 for the
comparable period in 1997. During the three months ended March 31, 1997,
Empire charged off $19,000 of mortgage loans. 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 .43% at March 31, 1998, and .46% at March 31,
1997.
Non-Interest Income. Non-interest income decreased $7,000 for the three
months ended March 31, 1998, as compared to the same period in 1997 primarily
as the result of a $15,000 decrease in commissions and profit sharing
contingencies from insurance companies. This decrease was partially offset by
an increase in customer service charges and other non-interest income of
$8,000.
Insurance commissions received from Dime are the largest component of
non-interest income. Insurance commissions of $162,000 and $177,000 were
received for the three months ended March 31, 1998, and 1997, respectively.
The decrease in commission income resulted primarily from increases in
competition and reduced premiums and commissions from key companies
represented by Dime.
Non-Interest Expense. Total non-interest expense increased $68,000 for the
three months ended March 31, 1998, compared to the three months ended March
31, 1997. This increase was the result of the following factors:
. Compensation and benefits increased $39,000, or 9.94%, from $389,000 for
the three month period ended March 31, 1997 to $428,000 for the
comparable period in 1998. The primary cause of this increase is the
result of the award of vested shares of the MRDP during the first quarter
of 1998. Compensation expense of $43,000 related to the MRDP was
recorded during the period ended March 31, 1998.
. Other non-interest expense increased $37,000, or 21.8%, from the three
months ended March 31, 1997, to the same period in 1998. The increase
includes $60,000 of additional expenses associated with being a public
company. These expenses include franchise taxes of $20,000, registration
fees of $15,000, accounting fees of $10,000 and legal fees of $9,000.
Partially offsetting this increase is a decrease in marketing costs for
the three month period ended March 31, 1998 as compared to the same
period in 1997.
Income Taxes. Income taxes increased $32,000 from the three month period
ended March 31, 1997, as compared to the same period in 1998 as the result of
the increase in income before income taxes. The effective combined federal
and state tax rate was 39.38% and 37.77% for the nine months ended March 31,
1998 and 1997, 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
None.
Item 3. Defaults on 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 Beverly D. Harris (2)
10.2 Employment Agreement with Ernest A. Sandberg (2)
10.3 Employee Stock Ownership Plan (1)
10.4 Management Recognition and Development Plan (3)
10.5 Stock Option Plan (3)
21 Subsidiaries of the Registrant (2)
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.
(b) Report on Form 8-K
No forms 8-K were filed during the quarter ended March 31, 1998.
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 Beverly D. Harris May 14,1998
--------------------------------------- -------------
Beverly D. Harris Date
President & Chief Executive Officer
(Principal Executive Officer)
By s/s Ernest A. Sandberg May 14, 1998
--------------------------------------- -------------
Ernest A. Sandberg Date
Executive Vice President & Secretary
(Principal Financial and Accounting Officer)
13