In an apparent first for a converted mutual thrift, Enterprise Federal Bancorp of Cincinnati has received permission from the Internal Revenue Service to return some of its capital to stockholders tax-free.

The IRS decision, while it applies only to Enterprise, could pave the way for other thrifts to give back excess capital raised when they converted from mutual to stock ownership. Because stock prices have been higher than expected, many newly converted thrifts now have more capital than they need - which can depress return on equity and, over the long run, stock market appeal.

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