TABLE OF CONTENTS
Page
Directors and Officers 2
President's Message to Shareholders 5
Selected Consolidated Financial Data 6
Management's Discussion and Analysis 8
Report of Independent Certified Public Accountants 21
Consolidated Statements of Financial Condition 22
Consolidated Statements of Earnings 23
Consolidated Statements of Comprehensive Income 24
Consolidated Statements of Changes in Shareholders' Equity 25
Consolidated Statements of Cash Flows 26
Notes to Consolidated Financial Statements 28
BUSINESS OF LOGANSPORT FINANCIAL CORP.
Logansport Financial Corp. ("Logansport Financial" or the "Company"), an Indiana
corporation, became a unitary savings and loan holding company upon the
conversion of Logansport Savings Bank, FSB (the "Bank") from a federal mutual
savings bank to a federal stock savings bank in June, 1995. The Company and the
Bank conduct business from a single office in Logansport, Cass County, Indiana.
The Bank is and historically has been among the top real estate mortgage lenders
in Cass County and is the oldest financial institution headquartered in Cass
County. The Bank offers a variety of retail deposit and lending services. The
Company has no business activity other than being the holding company for the
Bank. The Company is the sole shareholder of the Bank.
MISSION STATEMENT
"The Board of Directors, management and staff of Logansport Savings Bank are
dedicated to serving the needs of our customers, providing them with the best
possible service in an efficient, friendly, caring atmosphere. As a vital part
of this community, Logansport Savings Bank seeks to continue partnering with
local business and individuals. The customers, employees, and shareholders are
an integral part of Logansport Savings Bank and are best served if the Bank
remains an independent, locally controlled and operated, profitable financial
institution."
Logansport Financial Corp.
DIRECTORS AND OFFICERS
DIRECTORS
Charles J. Evans (age 55) has served as Senior Vice President of Logansport
Savings Bank, FSB since January 2000. Prior to that he served as Vice President
and Senior Loan Officer of Logansport Savings Bank, FSB since 1980.
Brian J. Morrill (age 43) is the founder and President of Cass County Title
Company, Inc. The firm provides title insurance policies and real estate
searches for lenders, realtors, attorneys, and the general public. Prior to
founding Cass County Title Company, Morrill served for ten years as the
Executive Director of the Cass County Family YMCA in Logansport, Indiana.
Morrill has served on several community boards and in 2000 served as Chairman of
the Logansport/Cass County Chamber of Commerce.
Susanne S. Ridlen (age 61) has served as an adjunct faculty member of
Indiana University Kokomo ("IUK") since 1969. Ms. Ridlen also currently serves
as a member of the Board of Directors of the Logansport Art Association and the
Cass County Children's Home in Logansport, Indiana.
William Tincher, Jr. (age 61) has served as Plant Manager for the Modine
Manufacturing Company ("Modine") since 1977. Modine is located in Logansport,
Indiana, and manufactures automotive cooling systems.
David G. Wihebrink (age 53) has served as President of Logansport Financial
Corp. and Logansport Savings Bank since April, 2000. Prior to that he had served
as Vice President and Chief Financial Officer of TM Morris Manufacturing Co.,
Inc. since 1988. Prior to his employment with Morris, Mr. Wihebrink was a member
of the accounting firm Smith, Thompson & Wihebrink (Logansport) for 15 years.
Mr. Wihebrink also currently serves as a member of the Board of Directors of the
Neal Home retirement home in Logansport, Indiana and as a member of The Board of
Directors of the North Central Indiana Workforce Investment Board.
Thomas G. Williams (age 68) served as President of Logansport Savings Bank,
FSB from 1971 until his retirement in April 2000.
LOGANSPORT FINANCIAL CORP. LOGANSPORT SAVINGS BANK, FSB
Officers Officers
DAVID G. WIHEBRINK DAVID G. WIHEBRINK - President
President and Chief
Executive Officer CHARLES J. EVANS - Senior Vice President
CHARLES J. EVANS DOTTYE ROBESON - Chief Financial Officer/
Vice President Secretary/Treasurer
DOTTYE ROBESON ALLEN SCHIEBER - Senior Vice President
Secretary/Treasurer
JEFFREY JONES - Vice President
SHEILA WILDERMUTH - Vice President
MARK DEBARGE - Assistant Vice President
KAY GAPSKI - Assistant Vice President
TO OUR SHAREHOLDERS:
Calendar year 2000 was an exciting year for Logansport Savings Bank and
Logansport Financial Corp., its parent company. In addition to celebrating the
Bank's 75th anniversary during the year 2000, Logansport Savings Bank continued
its growth and commitment of "Leading The Way," increasing assets by over $15
million, a 12.9% increase, and reporting record earnings. Basic earnings per
share increased to $1.16 from $1.03 the previous year, representing a 12.6%
increase.
The year 2000 continued to be a year of enormous change within the banking
industry in general and in particular within community banks. Banks continue to
struggle with their ability to generate core deposits at reasonable rates to
fund their growth and have been forced to aggressively look for other methods,
such as FHLB borrowings. This is born out by the fact that at the close of 1999
banks held only 16% of total financial sector assets, down from 30% in 1990.
While bank profits have grown over the past ten years, the number of banks has
declined by 25%. Many market indices raise concerns regarding the ability of
community banks to continue to thrive.
We at Logansport Savings Bank feel confident that we have established a solid
foundation in the past 75 years that will allow the Bank to continue "Leading
The Way." We expect to continue to achieve consistent earnings growth and above
average growth in assets. We intend to increase our market share by enhancing
our existing products and services, continued development of our commercial and
lease lending capabilities, and expansion of our mortgage and consumer lending
base. We realize that nothing in our business occurs independent of the overall
economy and as we strive to continue our asset growth, we will remain focused on
credit quality. We will continue to provide a combination of careful and
consistent underwriting in order to ensure a low level of problem assets. We are
also confident that as interest rates continue to fluctuate, we will be able to
manage our way through this fundamental banking risk.
We believe we are doing the right things and heading in the right "Direction"
for the ongoing success of our Bank as a community bank. Although the financial
markets have not recognized the accomplishments of community banks in the recent
past, we feel the markets will ultimately recognize their value. The Board,
management team, and employees of Logansport Financial Corp. and Logansport
Savings Bank are dedicated, as a team, to serving our customers, our community,
and our stockholders.
Sincerely,
/s/ David G. Wihebrink
David G. Wihebrink
President
Logansport Financial Corp.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables set forth certain information concerning Logansport
Financial's consolidated financial position, results of operations and other
data at the dates and for the periods indicated.
At December 31,
Statement of Financial Condition Data: 2000 1999 1998 1997 1996
(In thousands)
Total assets $132,612 $117,468 $96,085 $86,115 $77,668
Loans receivable, net 102,418 90,900 73,073 63,635 56,802
Mortgage-backed securities 5,165 5,898 8,129 9,932 6,674
Cash and cash equivalents 9,210 5,146 4,328 2,269 3,759
Investment securities 8,322 8,539 5,033 5,750 7,629
Deposits 79,454 76,011 70,011 60,595 57,396
Borrowings 35,237 24,307 8,375 8,025 3,400
Shareholders' equity - net 17,013 16,146 16,488 16,542 15,427
Year ended December 31,
Summary of Operating Results: 2000 1999 1998 1997 1996
(In thousands, except share data)
Interest income $9,524 $7,599 $6,579 $6,101 $5,653
Interest expense 5,597 4,043 3,476 3,115 2,719
----- ----- ----- ----- -----
Net interest income 3,927 3,556 3,103 2,986 2,934
Provision for losses on loans 332 162 63 26 12
------ ------ ------- ------- -------
Net interest income after provision for
losses on loans 3,595 3,394 3,040 2,960 2,922
Other income 122 175 285 170 82
General, administrative and other expense 1,937 1,667 1,322 1,170 1,584
----- ----- ----- ----- -----
Earnings before income taxes 1,780 1,902 2,003 1,960 1,420
Income taxes 511 678 756 728 507
------ ------ ------ ------ ------
Net earnings $1,269 $1,224 $1,247 $1,232 $ 913
===== ===== ===== ===== ======
Basic earnings per share $1.16 $1.03 $1.00 $.98 $.69
==== ==== ==== === ===
Diluted earnings per share $1.16 $1.02 $.97 $.95 $.69
==== ==== === === ===
Cash dividends per share
Regular $.44 $.44 $.43 $.40 $.40
=== === === === ===
Special N/A N/A N/A N/A $3.00 (1)
=== === === === ====
Footnotes on following page.
Logansport Financial Corp.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (CONTINUED)
At or for the year ended December 31,
Supplemental Data: 2000 1999 1998 1997 1996
Return on assets (2) 1.00% 1.14% 1.37% 1.50% 1.18%
Return on equity (3) 7.76 7.33 7.44 7.69 4.76
Interest rate spread (4) 2.57 2.86 2.70 2.94 2.80
Net yield on interest-earning assets (5) 3.27 3.54 3.61 3.86 3.99
General, administrative and other
expense to average assets 1.53 1.55 1.45 1.42 2.04
Net interest income to general,
administrative and other expense 202.74 213.32 234.72 255.21 185.23
Equity-to-assets (6) 12.83 13.75 17.16 19.21 19.86
Average interest-earning assets to
average interest-bearing liabilities 115.39 117.20 122.72 123.36 132.80
Non-performing assets to total assets .25 .57 .33 .62 .52
Non-performing loans to total loans .32 .72 .42 .67 .71
Loan loss allowance to total loans .73 .47 .38 .38 .41
Loan loss allowance to non-performing
loans 226.19 66.07 90.48 56.84 58.12
Dividend payout ratio 37.93 42.72 43.00 40.82 57.97(7)
Net charge-offs to average loans * * .03 .03 *
* Less than .01%
- ----------------------------
(1) Special one-time cash distribution which qualified as a non-taxable return
of capital pursuant to an IRS Private Letter Ruling.
(2) Net earnings divided by average total assets.
(3) Net earnings divided by average total equity.
(4) Interest rate spread is calculated by subtracting combined weighted-average
interest rate cost from combined weighted-average interest rate earned for
the period indicated.
(5) Net interest income divided by average interest-earning assets.
(6) Total equity divided by total assets.
(7) Excludes special one-time $3.00 per share cash distribution.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company was formed as part of the conversion of the Bank from a federal
mutual savings bank to a federal stock savings bank, which was completed June
13, 1995. The Company has no activity other than being the holding company for
the Bank.
The principal business of savings associations, including the Bank, has
historically consisted of attracting deposits from the general public and making
loans secured by residential and other real estate. The Bank and all other
savings associations are significantly affected by prevailing economic
conditions, as well as government policies and regulations concerning, among
other things, monetary and fiscal affairs, housing and financial institutions.
Deposit flows are influenced by a number of factors, including interest rates
paid on competing investments, account maturities and levels of personal income
and savings. In addition, deposit growth is affected by how customers perceive
the stability of the financial services industry amid various current events
such as regulatory changes, failures of other financial institutions and
financing of the deposit insurance fund. Lending activities are influenced by
the demand for and supply of housing lenders, the availability and cost of funds
and various other items. Sources of funds for lending activities of the Bank
include deposits, borrowings, payments on loans and income provided from
operations.
The Bank's earnings are primarily dependent upon its net interest income, which
is the difference between interest income on interest-earning assets and
interest expense on interest-bearing liabilities. Interest income is a function
of the balances of loans and investments outstanding during a given period and
the yield earned on such loans and investments. Interest expense is a function
of the amount of deposits and borrowings outstanding during the same period and
interest rates paid on such deposits and borrowings. The Bank's earnings are
also affected by provisions for losses on loans, service charges, operating
expenses and income taxes.
Forward-Looking Statements
In the following pages, management presents an analysis of the Company's
financial condition as of December 31, 2000, and the results of operations for
the year ended December 31, 2000, as compared to prior periods. In addition to
this historical information, the following discussion contains forward-looking
statements that involve risks and uncertainties. Economic circumstances, the
Company's operations and the Company's actual results could differ significantly
from those discussed in the forward-looking statements. Some of the factors that
could cause or contribute to such differences are discussed herein but also
include changes in the economy and interest rates in the nation and in the
Company's general market area.
Without limiting the foregoing, some of the forward-looking statements include
the following:
1. Management's establishment of an allowance for loan losses and its
statements regarding the adequacy of such allowance for loan losses.
2. Management's opinion as to the financial statement effect of recent
accounting pronouncements.
3. Management's opinion as to the effect of changes in interest rates on the
Company's results of operations.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Changes in Financial Condition from December 31, 1999 to December 31, 2000
The Company's total assets were $132.6 million at December 31, 2000, an increase
of $15.1 million, or 12.9%, over the $117.5 million total at December 31, 1999.
The increase in assets was funded through growth in deposits of $3.4 million and
increases in borrowings of $11.0 million. The percentage of interest-earning
assets to total assets was 95.4% and 94.0% at December 31, 2000 and 1999,
respectively.
At December 31, 2000, investment and mortgage-backed securities totaled $13.5
million, compared to $14.4 million at December 31, 1999, a decrease of $950,000,
or 6.6%. The primary investments added to the portfolio were Federal Home Loan
Bank ("FHLB") callable fixed rate notes. At December 31, 2000, the Company held
$538,000 of corporate obligations, which consisted of debt of domestic
corporations rated AA or better by Moody's Investors Service, Inc.
Loans receivable totaled $102.4 million at December 31, 2000, an increase of
$11.5 million, or 12.7%, over December 31, 1999. Most of the increase occurred
in the one- to four-family mortgages and commercial loans. One- to four-family
mortgage loans increased by $4.4 million, or 7.6%, and loans secured by
nonresidential real estate and commercial loans increased by $4.4 million, or
27.6%. The increase in loans was funded primarily by the increase in deposits
and advances.
During 1997 the Company invested $1.5 million in a limited partnership, which
constructs and manages residential real estate apartments for low and moderate
income residents. This investment reflects a 49.5% participation in the
partnership. The affordable housing project generates tax credits for the Bank.
This investment initially resulted in an increase to total assets of $1.5
million with a corresponding increase in notes payable. During 2000 and 1999,
the Bank recorded pretax losses from the housing project of $244,000 and
$121,000, respectively. At December 31, 1998, the project was just beginning to
rent apartments; therefore, there was no material income or loss allocated to
the Bank.
Deposits totaled $79.5 million at December 31, 2000, an increase of $3.4
million, or 4.5%, over December 31, 1999. Non-interest bearing deposits, NOW
accounts, passbook savings and money market savings decreased by $1.9 million,
while certificates of deposit increased by $5.3 million. At December 31, 2000,
borrowings consisted of $34.0 million in FHLB advances compared to $23.0 million
in FHLB advances at December 31, 1999, an increase of $11.0 million, or 47.8%.
The increase in deposits and borrowings was used primarily to fund growth in
loans during the year.
Shareholders' equity totaled $17.0 million at December 31, 2000, an increase of
$867,000, or 5.4%, over December 31, 1999. Equity was increased by the effects
of amortization of the Company's Recognition and Retention Plan, a recovery of
unrealized losses on available for sale securities of $403,000 and net earnings
for the year ended December 31, 2000, of $1.3 million. Equity was decreased by
payment of dividends totaling $477,000 and common stock repurchases totaling
$464,000.
Comparison of Results of Operations for the Years Ended December 31, 2000 and
1999
Net earnings totaled $1.3 million for the year ended December 31, 2000, a
$45,000, or 3.7%, increase over the net earnings reported for 1999. The increase
in net earnings resulted primarily from an increase of $371,000 in net interest
income and a decrease of $167,000 in the provision for income taxes, which were
partially offset by an increase of $170,000 in the provision for losses on
loans, a decrease of $53,000 in other income and an increase of $270,000 in
general, administrative and other expense.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Years Ended December 31, 2000 and
1999 (continued)
Interest Income
The Company's total interest income was $9.5 million for the year ended December
31, 2000, compared to $7.6 million during 1999, an increase of $1.9 million, or
25.3%. The increase in average interest-earning assets from $101.4 million in
1999 to $121.5 million in 2000 helped contribute to the increase. In addition,
increasing loan rates contributed to a 35 basis point increase in the average
yield on interest-earning assets, to 7.88% in 2000 compared to 7.53% in 1999.
Interest Expense
Interest expense increased by $1.6 million, or 38.4%, for the year ended
December 31, 2000, compared to 1999. This increase was the result of an increase
in the average balance of interest-bearing liabilities of $18.8 million, or
21.8%, and an increase in the average cost of these liabilities of 64 basis
points, from 4.67% during 1999 to 5.31% in 2000. Local competition resulted in
pressure to maintain competitive rates on deposits, while use of FHLB advances
also increased the cost of interest-bearing liabilities.
Net Interest Income
Net interest income increased by $371,000, or 10.4%, to approximately $3.9
million in 2000, as compared to $3.6 million in 1999. The net yield on
weighted-average interest-earning assets declined in 2000 to 3.27% from 3.54% in
1999.
Provision for Losses on Loans
The Company's provision for losses on loans for the years ended December 31,
2000 and 1999, was $332,000 and $162,000, respectively. A larger provision was
recorded in 2000 due to the increase in the volume of loans secured by
nonresidential and commercial real estate. Management considered this provision
and the related increase in the allowance for loan losses adequate based on the
degree of delinquencies in the loan portfolio and the Company's loan loss
history. There were no recoveries in 2000 and 1999, while charge-offs totaled
$12,000 and $7,000 during those respective years. The Company provides a general
allowance that reflects an estimate of inherent losses based upon the types and
categories of outstanding loans as well as problem loans. At December 31, 2000
and 1999, the allowance amounted to $760,000 and $440,000, respectively, for a
ratio to total loans of .73% in 2000 and .47% in 1999. Non-performing loans at
these dates were $336,000 and $666,000, respectively. The ratio of allowance for
loan losses to non-performing loans increased from 66.1% at December 31, 1999 to
226.2% at December 31, 2000. Based on management's review of the loan portfolio
during these years, the allowance for loan losses at December 31, 2000 and 1999,
is considered adequate to cover potential losses inherent in the loan portfolio.
Other Income
The Company's other income for the year ended December 31, 2000, excluding the
loss on equity investments, was $366,000, compared to $296,000 in 1999. The
increase was due primarily to a $21,000, or 15.1%, increase in service charges
on deposit accounts and a $66,000, or 42.0%, increase in other operating income.
The $244,000 loss on equity investments recorded in 2000 had an after-tax effect
of approximately $19,000 when considering the tax benefit and the available tax
credits generated by the project.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Years Ended December 31, 2000 and
1999 (continued)
General, Administrative and Other Expense
General, administrative and other expense totaled $1.9 million for the year
ended December 31, 2000, compared to $1.7 million in 1999, an increase of
$270,000, or 16.2%. Employee compensation and benefits increased by $203,000, or
21.9%, due primarily to additional personnel. Data processing fees increased by
$16,000, or 10.9%, due primarily to increased account volume and the additional
commercial loan software maintenance costs. Various other operating expenses
increased by $76,000, or 13.7%, which were partially offset by a $25,000, or
61.0%, decrease in federal deposit insurance premiums. The majority of the
increase was related to additional operating costs associated with increased
account volume, new services, consulting fees and office supplies, all of which
were primarily related to the new building and additional personnel. The
decrease in federal deposit insurance premiums was due to a reduction in premium
rates year to year.
Income Tax Expense
Income tax expense for the years ended December 31, 2000 and 1999, was $511,000
and $678,000, respectively. Pretax income decreased by $122,000, or 6.4%, in
2000 compared to 1999, and approximately $142,000 of tax credits were available
in 2000, which resulted in a corresponding decrease in income tax expense. The
effective tax rates were 28.7% and 35.6% for the years ended December 31, 2000
and 1999, respectively.
Comparison of Results of Operations for the Years Ended December 31, 1999 and
1998
Net earnings totaled $1.2 million for the year ended December 31, 1999, a
$23,000, or 1.8%, decrease from the net earnings reported for 1998. The decrease
in net earnings resulted primarily from an increase of $99,000 in the provision
for losses on loans, a decrease of $110,000 in other income and an increase of
$345,000 in general, administrative and other expense, which were partially
offset by an increase of $453,000 in net interest income and a decrease of
$78,000 in the provision for income taxes.
Interest Income
The Company's total interest income was $7.6 million for the year ended December
31, 1999, compared to $6.6 million during 1998, an increase of $1.0 million, or
15.5%. The increase in average interest-earning assets from $86.7 million in
1998 to $101.4 million in 1999 helped contribute to the increase. However,
falling loan rates contributed to a 9 basis point decrease in the average yield
on interest-earning assets, to 7.53% in 1999 compared to 7.62% in 1998.
Interest Expense
Interest expense increased by $567,000, or 16.3%, for the year ended December
31, 1999, compared to 1998. This increase was the result of an increase in the
average balance of interest-bearing liabilities of $15.8 million, which was
partially offset by a decrease in the average cost of these liabilities by 25
basis points, from 4.92% during 1998 to 4.67% in 1999. Local competition
resulted in pressure to maintain competitive rates on deposits, while use of
FHLB advances lowered the cost of interest-bearing liabilities.
Net Interest Income
Net interest income increased by $453,000, or 14.6%, to approximately $3.6
million in 1999, as compared to $3.1 million in 1998. The net yield on
weighted-average interest-earning assets declined in 1999 to 3.54% from 3.61% in
1998.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Results of Operations for the Years Ended December 31, 1999 and
1998 (continued)
Provision for Losses on Loans
The Company's provision for losses on loans for the years ended December 31,
1999 and 1998, was $162,000 and $63,000, respectively. A larger provision was
recorded in 1999 due to the increase in the volume of loans secured by
nonresidential and commercial real estate. Management considered this provision
and the related increase in the allowance for loan losses adequate based on the
degree of delinquencies in the loan portfolio and the Company's loan loss
history. There were no recoveries in 1999 and 1998, while charge-offs totaled
$7,000 and $23,000 in 1999 and 1998, respectively. The Company provides a
general allowance that reflects an estimate of inherent losses based upon the
types and categories of outstanding loans as well as problem loans. At December
31, 1999 and 1998, the allowance was $440,000 and $285,000, respectively, for a
ratio to total loans of .47% in 1999 and .38% in 1998. Non-performing loans at
these dates were $666,000 and $315,000, respectively. The ratio of allowance for
loan losses to non-performing loans decreased from 90.5% at December 31, 1998 to
66.1% at December 31, 1999.
Other Income
The Company's other income for the year ended December 31, 1999, without the
loss on equity investments, was $296,000, compared to $285,000 in 1998. The
$121,000 loss on equity investments recorded in 1999 had an after-tax effect of
approximately $40,000, when considering the tax benefit and the available tax
credits generated by the project.
General, Administrative and Other Expense
General, administrative and other expense totaled $1.7 million in 1999, compared
to $1.3 million in 1998, an increase of $345,000, or 26.1%. Employee
compensation and benefits increased by $182,000, or 24.5%, due primarily to
additional personnel. Data processing fees increased by $37,000, or 33.6%, due
primarily to increased account volume and the additional commercial loan
software maintenance costs. Other operating expenses increased by $50,000, or
14.7%. The majority of the increase was related to additional operating costs
associated with increased account volume, new services, consulting fees and
office supplies, all of which were primarily related to the new building and
additional personnel.
Income Tax Expense
Income tax expense for the years ended December 31, 1999 and 1998, was $678,000
and $756,000, respectively. Pretax income decreased only slightly in 1999
compared to 1998, but approximately $40,000 of tax credits were available in
1999. This resulted in a corresponding decrease in income tax expense. The
effective tax rates were 35.6% and 37.7% for the years ended December 31, 1999
and 1998, respectively.
13
AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
The following table presents for the periods indicated the month-end average
balances of each category of the Company's interest-earning assets and
interest-bearing liabilities, and the average yields earned and interest rates
paid on such balances. Such yields and costs are determined by dividing income
or expense by the average balance of assets or liabilities, respectively, for
the periods presented.
Year ended December 31,
2000 1999 1998
Average Interest Average Interest Average Interest
outstanding earned/ Yield/ outstanding earned/ Yield/ outstanding earned/ Yield/
balance paid rate balance paid rate balance paid rate
(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits $ 5,656 $ 301 5.32% $ 4,571 $ 205 4.48% $ 4,699 $ 232 4.93%
Mortgage- and other asset-
backed securities (1) 5,697 383 6.72 7,032 421 5.99 9,327 522 5.60
Other investment securities (1) 10,283 721 7.01 6,820 453 6.64 4,337 277 6.39
Loans receivable (2) 98,320 8,041 8.18 82,091 6,484 7.90 67,793 5,535 8.16
Stock in FHLB of Indianapolis 1,571 130 8.27 864 69 8.00 549 44 8.01
-------- ------- -------- ------ -------- --------
Total interest-earning assets 121,527 9,576 7.88 101,378 7,632 7.53 86,705 6,610 7.62
Non-interest-earning assets 5,442 6,446 4,562
-------- -------- --------
Total assets $126,969 $107,824 $ 91,267
======== ======== ========
Interest-bearing liabilities:
Savings accounts $ 3,417 103 3.01 $ 3,260 98 3.01 $ 3,258 98 3.01
NOW and money market accounts 23,814 886 3.72 25,735 930 3.61 23,185 930 4.01
Certificates of deposit 50,507 2,918 5.78 43,059 2,291 5.32 37,581 2,069 5.51
Borrowings 27,577 1,690 6.13 14,446 724 5.01 6,628 379 5.72
-------- ------- -------- ------ -------- --------
Total interest-bearing
liabilities 105,315 5,597 5.31 86,500 4,043 4.67 70,652 3,476 4.92
------- ----- ------ ---- -------- -------
Other liabilities 5,304 4,629 3,862
-------- -------- --------
Total liabilities 110,619 91,129 74,514
Shareholders' equity 16,350 16,695 16,753
-------- -------- --------
Total liabilities and
shareholders' equity $126,969 $107,824 $ 91,267
======== ======== ========
Net interest-earning assets $ 16,212 $ 14,878 $ 16,053
======== ======== ========
Net interest income $ 3,979 $3,589 $ 3,134
======= ====== ========
Interest rate spread (3) 2.57% 2.86% 2.70%
======= ======= =======
Net yield on weighted-average
interest-earning assets (4) 3.27% 3.54% 3.61%
======= ======= =======
Average interest-earning assets
to average interest-bearing liabilities 115.39% 117.20% 122.72%
======= ======= =======
Adjustment of interest on tax-exempt
securities to a tax-equivalent basis $ 52 $ 33 $ 31
======= ====== ========
- ---------------------------
(1) Includes securities available for sale at amortized cost prior to SFAS No.
115 adjustments.
(2) Comprised of total loans less undisbursed loans in process.
(3) Interest rate spread is calculated by subtracting weighted-average interest
rate cost from weighted-average interest rate yield for the period
indicated.
(4) The net yield on weighted-average interest-earning assets is calculated by
dividing net interest income by weighted-average interest-earning assets
for the period indicated.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Rate/Volume Table
The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected the Company's interest income and expense during the periods
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) changes in
volume (change in volume multiplied by prior year rate), (ii) changes in rate
(change in rate multiplied by prior year volume) and (iii) total changes in rate
and volume. The combined effects of changes in both volume and rate, which
cannot be separately identified, have been allocated proportionately to the
change due to volume and the change due to rate.
Year ended December 31,
2000 vs. 1999 1999 vs. 1998
Increase Increase
(decrease) (decrease)
due to due to
Volume Rate Total Volume Rate Total
(In thousands)
Interest-earning assets:
Interest-earning deposits $ 54 $ 41 $ 95 $ (6) $ (21) $ (27)
Mortgage-backed securities (86) 49 (37) (135) 34 (101)
Investment securities 242 26 268 165 11 176
Loans receivable 1,320 237 1,557 1,131 (182) 949
Stock in FHLB of Indianapolis 58 3 61 25 - 25
------- ----- ------- ------- ---- -------
Total interest-earning assets 1,588 356 1,944 1,180 (158) 1,022
Interest-bearing liabilities:
Savings accounts 5 - 5 - - -
NOW and money market accounts (71) 27 (44) 97 (97) -
Certificates of deposit 419 208 627 292 (70) 222
Borrowings 776 190 966 397 (52) 345
------ --- ------ ----- ----- ---
Total interest-bearing liabilities 1,129 425 1,554 786 (219) 567
----- --- ----- ----- ---- ---
Change in net interest income
(fully taxable equivalent basis) 459 (69) 390 394 61 455
Tax equivalent adjustment (18) (1) (19) (2) - (2)
------- ----- ------- ------- ---- -------
Change in net interest income $ 441 $ (70) $ 371 $ 392 $ 61 $ 453
====== ==== ====== ====== ===== =====
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Rate/Volume Table (continued)
The Company's results of operations have been determined primarily by net
interest income and, to a lesser extent, fee income, miscellaneous income and
general and administrative expenses. Net interest income is determined by the
interest rate spread between the yields earned on interest-earning assets and
the rates paid on interest-bearing liabilities and by the relative amounts of
interest-earning assets and interest-bearing liabilities.
The following table sets forth the weighted-average effective interest rate
earned by the Company on its loan and investment portfolio, the weighted-average
effective costs of the Company's deposits and borrowings, the interest rate
spread of the Company, and the net yield on weighted-average interest-earning
assets for the periods and as of the date shown. Average balances are based on
month-end average balances.
At December 31, Year Ended December 31,
2000 2000 1999 1998
Weighted-average interest rate earned on:
Interest-earning deposits 5.91% 5.32% 4.48% 4.93%
Mortgage-backed securities 7.06 6.72 5.99 5.60
Investment securities 6.74 7.01 6.64 6.39
Loans receivable 8.39 8.18 7.90 8.16
Stock in FHLB of Indianapolis 8.31 8.27 8.00 8.01
Total interest-earning assets 8.06 7.88 7.53 7.62
Weighted-average interest rate cost of:
Savings accounts 3.49 3.01 3.01 3.01
NOW and money market accounts 3.62 3.72 3.61 4.01
Certificates of deposit 6.17 5.78 5.32 5.51
Borrowings 6.11 6.13 5.01 5.72
Total interest-bearing liabilities 5.56 5.31 4.67 4.92
Interest rate spread (1) 2.50 2.57 2.86 2.70
Net yield on weighted average
interest-earning assets (2) N/A 3.27 3.54 3.61
(1) Interest rate spread is calculated by subtracting weighted-average
interest rate cost from weighted-average interest rate earned for the
period indicated. Interest rate spread figures must be considered in
light of the relationship between the amounts of interest-earning assets
and interest-bearing liabilities. Since the Company's interest-earning
assets exceeded its interest-bearing liabilities for each of the three
years shown above, a positive interest rate spread resulted in net
interest income.
(2) The net yield on weighted-average interest-earning assets is calculated
by dividing net interest income by weighted-average interest-earning
assets for the period indicated. No net yield percentage is presented at
December 31, 2000, because the computation of net yield is applicable
only over a period rather than at a specific date.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Asset/Liability Management
The Bank, like other savings associations, is subject to interest rate risk to
the degree that its interest-bearing liabilities, primarily deposits with short-
and medium-term maturities, mature or reprice at different rates than its
interest-earning assets. Management of the Bank believes it is critical to
manage the relationship between interest rates and the effect on the Bank's net
portfolio value ("NPV"). Generally, NPV is the discounted present value of the
difference between incoming cash flows on interest-earning and other assets and
outgoing cash flows on interest-bearing liabilities. Management of the Bank's
assets and liabilities is done within the context of the marketplace, regulatory
limitations and within limits established by the Board of Directors on the
amount of change in NPV which is acceptable given certain interest rate changes.
The Office of Thrift Supervision ("OTS") issued a regulation, effective January
1, 1994, which uses a net market value methodology to measure the interest rate
risk exposure of thrift institutions. Under OTS regulations, an institution's
"normal" level of interest rate risk in the event of an assumed change in
interest rates is a decrease in the institution's NPV in an amount not exceeding
2% of the present value of its assets. Thrift institutions with over $300
million in assets or less than a 12% risk-based capital ratio are required to
file OTS Schedule CMR. Data from Schedule CMR is used by the OTS to calculate
changes in NPV (and the related "normal" level of interest rate risk) based upon
certain interest rate changes (discussed below). Institutions which do not meet
either of the filing requirements are not required to file OTS Schedule CMR, but
may do so voluntarily. The Bank does not currently meet either of these
requirements, but it does voluntarily file Schedule CMR. Presented below, as of
September 30, 2000 (the latest available date) and December 31, 1999 is an
analysis performed by the OTS of the Bank's interest rate risk as measured by
changes in NPV for instantaneous and sustained parallel shifts in the yield
curve, in 100 basis point increments, up and down 300 basis points and in
accordance with OTS regulations. As illustrated in the table, the Bank's NPV is
more sensitive to rising rates than declining rates. This occurs principally
because, as rates rise, the market value of the Bank's investments,
adjustable-rate mortgage loans (many of which have maximum per year adjustments
of 1%), fixed-rate loans and mortgage-backed securities declines due to the rate
increases. The value of the Bank's deposits and borrowings change in
approximately the same proportion in rising or falling rate scenarios.
September 30, 2000
Change in
interest rate Net Portfolio Value NPV as % of PV of Assets
(Basis Points) $ Amount $ Change % Change NPV Ratio Change
(In thousands)
+300 $10,832 $(6,679) (38)% 8.92% (461bp)
+200 13,281 (4,230) (24) 10.68 (285 bp)
+100 15,549 (1,962) (11) 12.24 (129 bp)
- 17,511 - - 13.53 -
-100 18,915 1,404 8 14.41 88 bp
-200 19,781 2,270 13 14.92 139 bp
-300 20,856 3,345 19 15.55 202 bp
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Asset and Liability Management (continued)
December 31, 1999
Change in
interest rate Net Portfolio Value NPV as % of PV of Assets
(Basis Points) $ Amount $ Change % Change NPV Ratio Change
(In thousands)
+300 $11,061 $(5,372) (33)% 10.08% (391 bp)
+200 13,080 (3,353) (20) 11.63 (236 bp)
+100 14,924 (1,509) (9) 12.96 (103 bp)
- 16,433 - - 13.99 -
-100 17,344 911 6 14.54 55 bp
-200 17,694 1,261 8 14.67 68 bp
-300 18,067 1,634 10 14.82 83 bp
As with any method of measuring interest rate risk, certain shortcomings are
inherent in the method of analysis presented in the foregoing table. For
example, although certain assets and liabilities may have similar maturities or
periods of repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable-rate loans, have features which
restrict changes in interest rates on a short-term basis and over the life of
the assets. Further, in the event of a change in interest rates, expected rates
of prepayment on loans and early withdrawal from certificates could likely
deviate significantly from those assumed in calculating the table.
Liquidity and Capital Resources
The Company's primary sources of funds are deposits, proceeds from principal and
interest payments of loans, and proceeds from maturing securities. While
maturities and scheduled amortization of loans are a predictable source of
funds, deposit flows and mortgage prepayments are generally influenced by
general interest rates, economic conditions and competition.
The primary investing activity of the Company is the origination of mortgage
loans and the purchase of investment securities. During the years ended December
31, 2000, 1999 and 1998, the Company originated mortgage loans and commercial
loans in the amounts of $43.2 million, $36.6 million and $16.3 million,
respectively. The Company originated consumer loans of $8.5 million, $7.8
million and $10.5 million, respectively. The Company purchased loans in the
amount of $981,000 in 1999 and $350,000 in 1998. No loans were purchased in
2000. Loan repayments, excluding commercial paper, totaled $39.8 million, $27.4
million and $17.6 million for 2000, 1999 and 1998, respectively.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
During the years ended December 31, 2000, 1999 and 1998, the Company purchased
investment securities in the amounts of $4.1 million, $4.9 million and $6.1
million, respectively. Sales or maturities of such securities held by the
Company and payments on mortgage-backed or other asset-backed securities were
$5.6 million, $2.8 million and $8.6 million for 2000, 1999 and 1998,
respectively.
Deposits grew by $3.4 million from December 31, 1999 to December 31, 2000, and
by $6.0 million from December 31, 1998 to December 31, 1999.
Cash and cash equivalents increased by $4.1 from December 31, 1999 to December
31, 2000, and by $818,000 from December 31, 1998 to December 31, 1999.
The Company had outstanding loan commitments, including undisbursed loans in
process and standby letters of credit, totaling $12.8 million and $11.5 million,
at December 31, 2000 and 1999, respectively. The Company anticipates that it
will have sufficient funds available to meet its current loan commitments.
Certificates of deposit that are scheduled to mature in one year or less from
December 31, 2000 and 1999 totaled $39.4 million and $19.8 million,
respectively. Based upon historical deposit flow data, the Company's competitive
pricing in its market and management's experience, management believes that a
significant portion of such deposits will remain with the Company.
Liquidity management is both a daily and long-term function of the Company's
management strategy. In the event that the Company should require funds beyond
its ability to generate them internally, additional funds are available through
the use of FHLB advances, and also may be available through sales of securities,
although no sales of securities are planned. At December 31, 2000 and 1999, the
Company had outstanding FHLB advances of $34.0 million and $23.0 million,
respectively.
For each calendar month, the Bank is required to maintain an average daily
balance of liquid assets (cash, certain time deposits, bankers' acceptances,
specified United States Government, state or federal agency obligations, shares
of certain mutual funds and certain corporate debt securities and commercial
paper) equal to an amount not less than a specified percentage of its net
withdrawable deposit accounts plus short-term borrowings. This liquidity
requirement may be changed from time to time by the OTS to any amount within the
range of 4% to 10% depending upon economic conditions and the savings flows of
member institutions. The current OTS required level of liquid assets that must
be held by a savings association is equal to 4% of the association's net
withdrawable accounts plus short-term borrowings based upon the average daily
balance of such liquid assets for each quarter of the association's fiscal year.
The OTS may impose monetary penalties upon savings associations that fail to
comply with those liquidity requirements. As of December 31, 2000, the Bank had
liquid assets of $17.9 million, and a regulatory liquidity ratio of 22.2%.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
Pursuant to OTS capital regulations, savings associations must currently meet a
1.5% tangible capital requirement, a 4.0% leverage ratio (or core capital)
requirement, and a total risk-based capital to risk-weighted assets ratio of
8.0%. At December 31, 2000, the Bank's tangible capital ratio was 12.5%, its
leverage ratio 12.5%, and its risk-based capital to risk-weighted assets ratio
20.7%. Therefore, at December 31, 2000, the Bank's capital significantly
exceeded all of the capital requirements currently in effect. The following
table provides the minimum regulatory capital requirements and the Bank's
capital ratios as of December 31, 2000.
OTS Requirement The Bank's Capital Level
% of % of Amount
Assets Amount Assets (1) Amount of excess
(Dollars in thousands)
Tangible capital 1.5% $1,988 12.5% $16,587 $14,599
Core capital (2) 4.0 5,300 12.5 16,587 11,287
Risk-based capital 8.0 6,692 20.7 17,347(3) 10,655
(1) Tangible and core capital levels are shown as a percentage of total assets;
risk-based capital levels are shown as a percentage of risk-weighted
assets.
(2) During 1999, the OTS adopted a core capital requirement for savings
associations comparable to that recently adopted by the Comptroller of the
Currency for national banks. The new regulation requires at least 3% of
total adjusted assets for savings associations that received the highest
supervisory rating for safety and soundness, and 4% for all other savings
associations.
(3) The Bank's risk-based capital includes $760,000 of general valuation
allowances.
As of December 31, 2000, management is not aware of any current recommendations
by regulatory authorities which, if they were to be implemented, would have, or
are reasonably likely to have, a material adverse effect on the Bank's
liquidity, capital resources or results of operations.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires entities to
recognize all derivatives in their financial statements as either assets or
liabilities measured at fair value. SFAS No. 133 also specifies new methods of
accounting for hedging transactions, prescribes the items and transactions that
may be hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.
The definition of a derivative financial instrument is complex, but in general,
it is an instrument with one or more underlyings, such as an interest rate or
foreign exchange rate, that is applied to a notional amount, such as an amount
of currency, to determine the settlement amount(s). It generally requires no
significant initial investment and can be settled net or by delivery of an asset
that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to transfer
held-to-maturity debt securities to the available-for-sale or trading category
without calling into question their intent to hold other debt securities to
maturity in the future. Management adopted SFAS No. 133 effective January 1,
2001, as required, without material impact on the Company's financial position
or results of operations.
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which revises
the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but carries
over most of the provisions of SFAS No. 125 without reconsideration. SFAS No.
140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The Statement is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. SFAS No. 140 is not expected to have a material effect
on the Company's financial position or results of operations.
The foregoing discussion of the effects of recent accounting pronouncements
contains forward-looking statements that involve risks and uncertainties.
Changes in economic circumstances or interest rates could cause the effects of
the accounting pronouncement to differ from management's foregoing assessment.
Report of Independent Certified Public Accountants
Board of Directors
Logansport Financial Corp.
We have audited the accompanying consolidated statements of financial condition
of Logansport Financial Corp. as of December 31, 2000 and 1999, and the related
consolidated statements of earnings, shareholders' equity, comprehensive income
and cash flows for each of the years in the three year period ended December 31,
2000. These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Logansport
Financial Corp. as of December 31, 2000 and 1999, and the consolidated results
of its operations, comprehensive income and cash flows for each of the years in
the three year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.
\s\Grant Thornton LLP
Cincinnati, Ohio
February 16, 2001
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
(In thousands, except share data)
ASSETS 2000 1999
Cash and due from banks $ 576 $ 1,336
Interest-bearing deposits in other financial institutions 8,634 3,810
--------- ---------
Cash and cash equivalents 9,210 5,146
Investment securities designated as available for sale - at market 8,322 8,539
Mortgage-backed securities designated as available for sale - at market 5,165 5,898
Loans receivable - net 102,418 90,900
Office premises and equipment - at depreciated cost 1,843 1,902
Federal Home Loan Bank stock - at cost 1,973 1,273
Investment in real estate partnership 1,284 1,485
Accrued interest receivable on loans 548 416
Accrued interest receivable on mortgage-backed securities 41 47
Accrued interest receivable on investments and interest-bearing deposits 107 115
Prepaid expenses and other assets 64 45
Cash surrender value of life insurance 1,234 1,184
Deferred income tax asset 403 472
Prepaid income taxes - 46
--------- -----------
Total assets $132,612 $117,468
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 79,454 $ 76,011
Advances from the Federal Home Loan Bank 34,000 23,000
Notes payable 1,237 1,307
Accrued interest and other liabilities 906 1,004
Accrued income taxes 2 -
------------ ---------
Total liabilities 115,599 101,322
Commitments - -
Shareholders' equity
Preferred stock - no par value, 2,000,000 shares authorized; none issued - -
Common stock - no par value, 5,000,000 shares authorized; 1,083,510
and 1,130,510 shares at aggregate value issued and outstanding at
December 31, 2000 and 1999, respectively 5,515 5,979
Retained earnings - restricted 11,526 10,734
Less shares acquired by stock benefit plan (103) (239)
Accumulated comprehensive income (loss), unrealized gains (losses)
on securities designated as available for sale, net of related tax effects 75 (328)
----------- ---------
Total shareholders' equity 17,013 16,146
-------- --------
Total liabilities and shareholders' equity $132,612 $117,468
======= =======
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF EARNINGS
For the year ended December 31,
(In thousands, except share data)
2000 1999 1998
Interest income
Loans $8,041 $6,484 $5,538
Investment securities 667 420 243
Mortgage-backed securities 383 421 522
Interest-bearing deposits and other 433 274 276
------ ------ ------
Total interest income 9,524 7,599 6,579
Interest expense
Deposits 3,907 3,319 3,097
Borrowings 1,690 724 379
----- ------ ------
Total interest expense 5,597 4,043 3,476
----- ----- -----
Net interest income 3,927 3,556 3,103
Provision for losses on loans 332 162 63
------ ------ -------
Net interest income after provision for losses on loans 3,595 3,394 3,040
Other income
Service charges on deposit accounts 160 139 106
Gain (loss) on sale of investment and mortgage-backed securities (17) - 4
Gain on sale of real estate acquired through foreclosure - - 6
Loss on investment in real estate partnership (244) (121) -
Other operating 223 157 169
------ ------ ------
Total other income 122 175 285
General, administrative and other expense
Employee compensation and benefits 1,129 926 744
Occupancy and equipment 196 163 90
Federal deposit insurance premiums 16 41 38
Data processing 163 147 110
Other operating 433 390 340
------ ------ ------
Total general, administrative and other expense 1,937 1,667 1,322
----- ----- -----
Earnings before income taxes 1,780 1,902 2,003
Income taxes
Current 649 706 789
Deferred (138) (28) (33)
------ ------- -------
Total income taxes 511 678 756
------ ------ ------
NET EARNINGS $1,269 $1,224 $1,247
===== ===== =====
EARNINGS PER SHARE
Basic $1.16 $1.03 $1.00
==== ==== ====
Diluted $1.16 $1.02 $.97
==== ==== ===
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the year ended December 31,
(In thousands)
2000 1999 1998
Net earnings $1,269 $1,224 $1,247
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on securities
during the period, net of tax (benefit) of $202, $(249)
and $50 for the years ended December 31, 2000, 1999
and 1998, respectively 392 (483) 98
Reclassification adjustment for realized (gains) losses
included in earnings, net of tax (benefit) of $(6) and $1
for the years ended December 31, 2000 and 1998, respectively 11 - (3)
------- ----- --------
Comprehensive income $1,672 $ 741 $1,342
===== ====== =====
Accumulated comprehensive income (loss) $ 75 $ (328) $ 155
======= ====== ======
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 2000, 1999 and 1998
(In thousands, except share data)
Unrealized
Shares gains (losses)
acquired on securities
by stock designated as
Common Retained benefit available
stock earnings plan for sale Total
Balance at January 1, 1998 $7,566 $9,316 $(400) $ 60 $16,542
Net earnings for the year ended December 31, 1998 - 1,247 - - 1,247
Purchase of shares for stock benefit plan - - (93) - (93)
Purchase of shares (945) - - - (945)
Issuance of shares under stock option plan 9 - - - 9
Unrealized gains on securities designated
as available for sale, net of related tax effects - - - 95 95
Amortization expense of stock benefit plan 40 - 125 - 165
Cash dividends of $.43 per share - (532) - - (532)
----- -------- --- --- --------
Balance at December 31, 1998 6,670 10,031 (368) 155 16,488
Net earnings for the year ended December 31, 1999 - 1,224 - - 1,224
Purchase of shares (696) - - - (696)
Issuance of shares under stock option plan 5 - - - 5
Unrealized losses on securities designated
as available for sale, net of related tax effects - - - (483) (483)
Amortization expense of stock benefit plan - - 129 - 129
Cash dividends of $.44 per share - (521) - - (521)
----- -------- --- --- ---------
Balance at December 31, 1999 5,979 10,734 (239) (328) 16,146
Net earnings for the year ended December 31, 2000 - 1,269 - - 1,269
Purchase of shares (464) - - - (464)
Unrealized gains on securities designated
as available for sale, net of related tax effects - - - 403 403
Amortization expense of stock benefit plan - - 136 - 136
Cash dividends of $.44 per share - (477) - - (477)
----- -------- --- --- --------
Balance at December 31, 2000 $5,515 $11,526 $(103) $ 75 $17,013
===== ====== ==== ==== ======
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31,
(In thousands)
2000 1999 1998
Cash flows from operating activities:
Net earnings for the year $ 1,269 $ 1,224 $ 1,247
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 110 81 39
Amortization of premiums on investments and mortgage-backed securities 26 95 200
Amortization expense of stock benefit plan 136 129 165
(Gain) loss on sale of investment and mortgage-backed securities 17 - (4)
Provision for losses on loans 332 162 63
Gain on sale of real estate acquired through foreclosure - - (6)
Loss on investment in real estate partnership 244 121 -
Increase (decrease) in cash, due to changes in:
Accrued interest receivable on loans (132) (79) (38)
Accrued interest receivable on mortgage-backed securities 6 19 17
Accrued interest receivable on investments 8 (53) 59
Prepaid expenses and other assets (19) (9) (3)
Accrued interest and other liabilities (98) (207) 350
Federal income taxes
Current 48 (17) (121)
Deferred (138) (28) (33)
-------- --------- ---------
Net cash provided by operating activities 1,809 1,438 1,935
Cash flows provided by (used in) investing activities:
Decrease in certificates of deposit in other financial institutions - - 100
Proceeds from sale of investment securities designated as available for sale 3,965 - 806
Purchase of investment securities designated as available for sale (4,082) (4,925) (3,057)
Maturities of investment securities designated as available for sale 800 875 3,104
Proceeds from sale of mortgage-backed securities designated as
available for sale - - 1,174
Purchase of mortgage-backed securities designated as available for sale - - (3,039)
Principal repayments on mortgage-backed securities designated as
available for sale 834 1,948 3,472
Purchase of loans - (981) (350)
Loan disbursements (51,693) (44,410) (26,775)
Principal repayments on loans 39,843 27,402 17,585
Investment in real estate partnership (113) (108) (176)
Purchases of and additions to office premises and equipment (51) (455) (1,102)
Purchase of Federal Home Loan Bank stock (700) (705) (74)
Proceeds from sale of real estate acquired through foreclosure - - 151
Increase in cash surrender value of life insurance policy (50) (49) (50)
--------- --------- ---------
Net cash used in investing activities (11,247) (21,408) (8,231)
------ ------ -------
Net cash used in operating and investing activities
(subtotal carried forward) (9,438) (19,970) (6,296)
------- ------ -------
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the year ended December 31,
(In thousands)
2000 1999 1998
Net cash used in operating and investing activities
(subtotal brought forward) $ (9,438) $(19,970) $(6,296)
Cash provided by (used in) financing activities:
Net increase in deposit accounts 3,443 6,000 9,416
Proceeds from Federal Home Loan Bank advances 33,000 31,000 8,000
Repayment of Federal Home Loan Bank advances (22,000) (15,000) (7,500)
Proceeds from the exercise of stock options - 5 9
Purchase of shares for stock benefit plan - - (93)
Dividends on common stock (477) (521) (532)
Purchase of shares (464) (696) (945)
-------- --------- -------
Net cash provided by financing activities 13,502 20,788 8,355
------ ------- ------
Net increase in cash and cash equivalents 4,064 818 2,059
Cash and cash equivalents at beginning of year 5,146 4,328 2,269
------- -------- ------
Cash and cash equivalents at end of year $ 9,210 $ 5,146 $ 4,328
======= ======== ======
Supplemental disclosure of cash flow information: Cash paid during the year for:
Income taxes $ 629 $ 724 $ 689
======== ========= =======
Interest on deposits and borrowings $ 5,449 $ 4,054 $ 3,465
======= ======== ======
Supplemental disclosure of noncash investing and financing activities:
Foreclosed mortgage loans transferred to real estate acquired
through foreclosure $ - $ - $ 40
======= ======== ========
Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects $ 403 $ (483) $ 95
======== ========= ========
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES
Logansport Financial Corp. (the "Corporation") is a savings and loan holding
company whose activities are primarily limited to holding the common stock
of Logansport Savings Bank, FSB (the "Savings Bank"). The Savings Bank
conducts a general banking business in north-central Indiana which consists
of attracting deposits from the general public and applying those funds to
the origination of loans for residential, consumer and nonresidential
purposes. The Savings Bank's profitability is significantly dependent on its
net interest income, which is the difference between interest income
generated from interest-earning assets (i.e. loans and investments) and the
interest expense paid on interest-bearing liabilities (i.e. customer
deposits and borrowed funds). Net interest income is affected by the
relative amount of interest-earning assets and interest-bearing liabilities
and the interest received or paid on these balances. The level of interest
rates paid or received by the Savings Bank can be significantly influenced
by a number of environmental factors, such as governmental monetary policy,
that are outside of management's control.
The financial information presented herein has been prepared in accordance
with accounting principles generally accepted in the United States of
America ("U.S. GAAP") and general accounting practices within the financial
services industry. In preparing consolidated financial statements in
accordance with U.S. GAAP, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and revenues and expenses during the
reporting period. Actual results could differ from such estimates.
The following is a summary of the Corporation's significant accounting
policies which have been consistently applied in the preparation of the
accompanying consolidated financial statements.
1. Principles of Consolidation
The consolidated financial statements include the accounts of the
Corporation and its subsidiary, the Savings Bank. All significant
intercompany balances and transactions have been eliminated.
2. Investment and Mortgage-backed Securities
The Corporation accounts for investments and mortgage-backed securities in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities". SFAS No.
115 requires that investments be categorized as held-to-maturity, trading,
or available for sale. Securities classified as held to maturity are carried
at cost only if the Corporation has the positive intent and ability to hold
these securities to maturity. Trading securities and securities available
for sale are carried at fair value with resulting unrealized gains or losses
recorded to operations or shareholders' equity, respectively. At December
31, 2000, the Corporation's shareholders' equity accounts reflected a net
unrealized gain on available for sale securities of $75,000. At December 31,
1999, the Corporation's shareholders' equity accounts reflected a net
unrealized loss on available for sale securities of $328,000.
Realized gains and losses on sales of securities are recognized using the
specific identification method.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
3. Loans Receivable
Loans receivable are stated at the principal amount outstanding, adjusted
for the allowance for loan losses. Interest is accrued as earned, unless the
collectibility of the loan is in doubt. Uncollectible interest on loans that
are contractually past due is charged off, or an allowance is established
based on management's periodic evaluation. The allowance is established by a
charge to interest income equal to all interest previously accrued, and
income is subsequently recognized only to the extent that cash payments are
received until, in management's judgment, the borrower's ability to make
periodic interest and principal payments has returned to normal, in which
case the loan is returned to accrual status. If the ultimate collectibility
of the loan is in doubt, in whole or in part, all payments received on
nonaccrual loans are applied to reduce principal until such doubt is
eliminated.
4. Loan Origination Fees
The Savings Bank accounts for loan origination fees in accordance with SFAS
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases". Pursuant
to the provisions of SFAS No. 91, origination fees received from loans, net
of certain direct origination costs, are deferred and amortized to interest
income using the interest method, giving effect to actual loan prepayments.
Additionally, SFAS No. 91 generally limits the definition of loan
origination costs to the direct costs attributable to originating a loan,
i.e. principally actual personnel costs. Fees received for loan commitments
that are expected to be drawn upon, based on the Savings Bank's experience
with similar commitments, are deferred and amortized over the life of the
loan using the level-yield method. Fees for other loan commitments are
deferred and amortized over the loan commitment period on a straight-line
basis.
5. Allowance for Loan Losses
It is the Savings Bank's policy to provide valuation allowances for
estimated losses on loans based on past loss experience, trends in the level
of delinquent and problem loans, adverse situations that may affect the
borrower's ability to repay, the estimated value of any underlying
collateral and current and anticipated economic conditions in the primary
lending area. When the collection of a loan becomes doubtful, or otherwise
troubled, the Savings Bank records a loan loss provision equal to the
difference between the fair value of the property securing the loan and the
loan's carrying value. Major loans and major lending areas are reviewed
periodically to determine potential problems at an early date. The allowance
for loan losses is increased by charges to earnings and decreased by
charge-offs (net of recoveries).
The Savings Bank accounts for impaired loans in accordance with SFAS No.
114, "Accounting by Creditors for Impairment of a Loan". SFAS No. 114
requires that impaired loans be measured based upon the present value of
expected future cash flows discounted at the loan's effective interest rate
or, as an alternative, at the loan's observable market price or fair value
of the collateral. The Savings Bank's current procedures for evaluating
impaired loans result in carrying such loans at the lower of cost or fair
value.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
5. Allowance for Loan Losses (continued)
A loan is defined under SFAS No. 114 as impaired when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. In applying the provisions of SFAS No. 114, the Savings Bank
considers its investment in one- to four-family residential loans and
consumer installment loans to be homogeneous and therefore excluded from
separate identification for evaluation of impairment. With respect to the
Savings Bank's investment in nonresidential and multi-family residential
real estate loans, and its evaluation of impairment thereof, such loans are
generally collateral dependent and, as a result, are carried as a practical
expedient at the lower of cost or fair value.
Collateral dependent loans which are more than ninety days delinquent are
considered to constitute more than a minimum delay in repayment and are
evaluated for impairment under SFAS No. 114 at that time.
At December 31, 2000, the Savings Bank had seven loans totaling
approximately $1.4 million that were impaired as defined under SFAS No. 114.
At December 31, 1999, the Savings Bank had two loans totaling approximately
$485,000 that were impaired as defined under SFAS No. 114.
6. Real Estate Acquired Through Foreclosure
Real estate acquired through foreclosure is carried at the lower of the
loan's unpaid principal balance (cost) or fair value less estimated selling
expenses at the date of acquisition. Real estate loss provisions are
recorded if the properties' fair value subsequently declines below the value
determined at the recording date. In determining the lower of cost or fair
value at acquisition, costs relating to development and improvement of
property are capitalized. Costs relating to holding real estate acquired
through foreclosure, net of rental income, are charged against earnings as
incurred.
7. Office Premises and Equipment
Office premises and equipment are carried at cost and include expenditures
which extend the useful lives of existing assets. Maintenance, repairs and
minor renewals are expensed as incurred. For financial reporting,
depreciation and amortization are provided on the straight-line and
accelerated methods over the useful lives of the assets, estimated to be
thirty to forty years for buildings, five to twenty years for building
improvements, five to fifteen years for furniture and equipment and five
years for automobiles. An accelerated method is used for tax reporting
purposes.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
8. Investment in Real Estate Partnership
During 1997, the Corporation invested $1.5 million in a real estate
partnership for the purpose of constructing and managing residential real
estate apartments for low and moderate income residents. The investment
reflects a 49.5% participation in the partnership and is accounted for by
the Savings Bank using the equity method. The Savings Bank realized
after-tax losses from the investment of approximately $140,000 and $70,000
during the years ended December 31, 2000 and 1999, respectively, as well as
federal income tax credits of approximately $142,000 and $40,000 in 2000 and
1999, respectively. This affordable housing project is expected to generate
tax credits for the Savings Bank in future years.
9. Income Taxes
The Corporation accounts for income taxes pursuant to SFAS No. 109,
"Accounting for Income Taxes". In accordance with SFAS No. 109, a deferred
tax liability or deferred tax asset is computed by applying the current
statutory tax rates to net taxable or deductible temporary differences
between the tax basis of an asset or liability and its reported amount in
the consolidated financial statements that will result in net taxable or
deductible amounts in future periods. Deferred tax assets are recorded only
to the extent that the amount of net deductible temporary differences or
carryforward attributes may be utilized against current period earnings,
carried back against prior years' earnings, offset against taxable temporary
differences reversing in future periods, or utilized to the extent of
management's estimate of future taxable income. A valuation allowance is
provided for deferred tax assets to the extent that the value of net
deductible temporary differences and carryforward attributes exceeds
management's estimates of taxes payable on future taxable income. Deferred
tax liabilities are provided on the total amount of net temporary
differences taxable in the future.
Deferral of income taxes results primarily from the different methods of
accounting for certain retirement plans, general loan loss allowances and
percentage of earnings bad debt deductions. Additional temporary differences
result from depreciation computed using accelerated methods for tax
purposes.
10. Benefit Plans
Employees of the Savings Bank are covered by the Pentegra Group, previously
the Financial Institutions Retirement Fund (the "Fund"), which is a defined
benefit pension plan to which contributions are made for the benefit of the
employees. Contributions are determined to cover the normal cost of pension
benefits, the one-year cost of the pre-retirement death and disability
benefits and the amortization of any unfunded accrued liabilities.
The Fund has advised the Savings Bank that the pension plan meets the
criteria of a multi-employer pension plan as defined in SFAS No. 87,
"Employers' Accounting for Pensions". In accordance with SFAS No. 87, net
pension cost is recognized for any required contribution for the period. A
liability is recognized for any contributions due and unpaid. Due to a
continuation of the Fund's overfunded status, no contributions were made to
the pension plan during the years ended December 31, 2000, 1999 and 1998.
The provision for pension expense was computed by the Fund's actuaries
utilizing the projected unit credit cost method and assuming a 7.5% return
on Fund assets.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
10. Benefit Plans (continued)
The Savings Bank has purchased life insurance policies on certain officers
and directors. The insurance policies had an approximate cash surrender
value of $1.2 million at both December 31, 2000 and 1999. The Savings Bank
has approved compensation arrangements that provide retirement benefits to
certain officers and deferral of fees for directors covered by the policies.
The benefit arrangement for one individual requires that the individual
provide consulting services to the Savings Bank during the five-year period
following retirement. The benefits to be paid, excluding amounts
attributable to consulting, are being accrued from the date of approval of
the arrangements to the date that full eligibility is attained. Expense
related to the above described plans totaled $112,000, $81,000 and $85,000
for the years ended December 31, 2000, 1999 and 1998, respectively.
The Savings Bank adopted the Logansport Savings Bank, FSB Employee Stock
Ownership Plan and Trust Agreement ("ESOP") in 1995, for eligible employees
of the Savings Bank. The ESOP will be funded by discretionary employer
contributions made in cash, which will be invested in shares of the
Corporation's common stock. No contributions were made to the ESOP during
the years ended December 31, 2000, 1999 or 1998.
In April 1996, the Corporation's shareholders approved the Logansport
Savings Bank, FSB Recognition and Retention Plan and Trust ("RRP"), which
provided for the acquisition of up to 52,900 shares of the Corporation's
common stock for awards to management. Shares awarded to management under
the RRP generally vest at a rate of 20% at the end of each full twelve
months of service with the Savings Bank after the date of the award. During
1996, the Savings Bank contributed $615,000 to the RRP for the purchase of
46,675 shares of the Corporation's common stock awarded to management and
recorded the amount as unearned compensation. During 1998, the Savings Bank
contributed $93,000 for the purchase of the 6,225 remaining allowable
shares. Amortization expense under the RRP totaled $136,000, $129,000 and
$125,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
In April 1999, the Corporation implemented a contributory 401(k) plan
covering all employees who have attained the age of 21 and have completed
one year of service. Contributions to the plan are voluntary and are subject
to matching by the employer. The Savings Bank's expense related to the plan
totaled approximately $14,000 and $11,000 for the years ended December 31,
2000 and 1999, respectively.
11. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average shares
outstanding during the year. Weighted-average common shares outstanding
totaled 1,090,800, 1,194,070 and 1,243,972 for the years ended December 31,
2000, 1999 and 1998, respectively. Diluted earnings per share is computed
taking into consideration common shares outstanding and dilutive potential
common shares to be issued under the Corporation's stock option plan.
Weighted-average common shares deemed outstanding for purposes of computing
diluted earnings per share totaled 1,090,800, 1,203,324 and 1,287,851 for
the years ended December 31, 2000, 1999 and 1998, respectively. Incremental
shares related to the assumed exercise of stock options
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
11. Earnings Per Share (continued)
included in the calculation of diluted earnings per share totaled 9,254 and
43,879 for the years ended December 31, 1999 and 1998, respectively. Options
to purchase 125,915, 116,661 and 82,536 shares of common stock with a
respective weighted-average exercise price of $10.59, $10.60 and $10.63,
were outstanding at December 31, 2000, 1999 and 1998, respectively, but were
excluded from the computation of diluted earnings per share because their
exercise prices were greater than the average market price of the common
shares.
12. Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents includes
cash and due from banks and interest-bearing deposits in other financial
institutions with original maturities of less than 90 days.
13. Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value of financial instruments, both assets and
liabilities, whether or not recognized in the consolidated statement of
financial condition, for which it is practicable to estimate that value. For
financial instruments where quoted market prices are not available, fair
values are based on estimates using present value and other valuation
methods.
The methods used are greatly affected by the assumptions applied, including
the discount rate and estimates of future cash flows. Therefore, the fair
values presented may not represent amounts that could be realized in an
exchange for certain financial instruments.
The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments at December
31, 2000 and 1999:
Cash and cash equivalents: The carrying amounts presented in
the consolidated statements of financial condition for cash
and cash equivalents are deemed to approximate fair value.
Investment and mortgage-backed securities: For investment and
mortgage-backed securities, fair value is deemed to equal the
quoted market price.
Loans receivable: The loan portfolio has been segregated into
categories with similar characteristics, such as one- to
four-family residential, multi-family residential,
nonresidential real estate and consumer. These loan categories
were further delineated into fixed-rate and adjustable-rate
loans. The fair values for the resultant loan categories were
computed via discounted cash flow analysis, using current
interest rates offered for loans with similar terms to
borrowers of similar credit quality.
Federal Home Loan Bank stock: The carrying amount presented in
the consolidated statements of financial condition is deemed
to approximate fair value.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
13. Fair Value of Financial Instruments (continued)
Deposits: The fair value of NOW accounts, passbook and club
accounts, and money market deposits is deemed to approximate
the amount payable on demand at December 31, 2000 and 1999.
Fair values for fixed-rate certificates of deposit have been
estimated using a discounted cash flow calculation using the
interest rates currently offered for deposits of similar
remaining maturities.
Federal Home Loan Bank advances: The fair value of Federal
Home Loan Bank advances has been estimated using discounted
cash flow analysis, based on the interest rates currently
offered for advances of similar remaining maturities.
Notes Payable: The fair value of notes payable is deemed to
approximate the carrying value.
Commitments to extend credit: For fixed-rate and
adjustable-rate loan commitments, the fair value estimate
considers the difference between current levels of interest
rates and committed rates. At December 31, 2000 and 1999, the
difference between the fair value and notional amount of loan
commitments was not material.
Based on the foregoing methods and assumptions, the carrying value and fair
value of the Corporation's financial instruments are as follows at December
31:
2000 1999
Carrying Fair Carrying Fair
value value value value
(In thousands)
Financial assets
Cash and cash equivalents $ 9,210 $ 9,210 $ 5,146 $ 5,146
Investment securities 8,322 8,322 8,539 8,539
Mortgage-backed securities 5,165 5,165 5,898 5,898
Loans receivable 102,418 102,674 90,900 89,169
Federal Home Loan Bank stock 1,973 1,973 1,273 1,273
--------- --------- --------- ---------
$127,088 $127,344 $111,756 $110,025
======= ======= ======= =======
Financial liabilities
Deposits $ 79,454 $ 79,547 $ 76,011 $ 76,047
Advances from the Federal Home Loan Bank 34,000 33,943 23,000 22,870
Notes payable 1,237 1,237 1,307 1,307
--------- --------- --------- ---------
$114,691 $114,727 $100,318 $100,224
======= ======= ======= =======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
14. Advertising
Advertising costs are expensed when incurred. The Corporation's advertising
expense totaled $41,000, $37,000 and $36,000 for the years ended December
31, 2000, 1999 and 1998, respectively.
15. Reclassifications
Certain prior year amounts have been reclassified to conform to the 2000
consolidated financial statement presentation.
NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair value of investment securities designated as available for
sale at December 31, 2000 and 1999, are as follows:
2000
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
U.S. Government agency obligations $4,746 $ 1 $122 $4,625
State and municipal obligations 2,800 99 - 2,899
FHLMC stock 4 255 - 259
Corporate debt obligations 560 - 21 539
------ --- ---- ------
Total investment securities $8,110 $355 $143 $8,322
===== === === =====
1999
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
U.S. Government agency obligations $6,295 $- $394 $5,901
State and municipal obligations 1,931 20 12 1,939
FHLMC stock 4 172 - 176
Corporate debt obligations 560 - 37 523
------ --- ---- ------
Total investment securities $8,790 $192 $443 $8,539
===== === === =====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)
The amortized cost and estimated fair value of investment securities by term
to maturity at December 31, 2000, are shown below.
Estimated
Amortized fair
cost value
(In thousands)
Due in one year or less $ 125 $ 125
Due after one year through three years 550 547
Due after three years through five years 1,114 1,147
Due after five years through ten years 3,829 3,763
Due after ten years 2,488 2,481
----- -----
8,106 8,063
FHLMC stock 4 259
-------- ------
$8,110 $8,322
===== =====
Proceeds from sales and calls of investment securities available for sale
during the year ended December 31, 2000, totaled $4.8 million, resulting in
gross realized gains of $17,000 and gross realized losses of $34,000.
Proceeds from maturities and calls of investment securities available for
sale during the year ended December 31, 1999, totaled $875,000, resulting in
no realized gains or losses.
Proceeds from sales and calls of investment securities available for sale
during the year ended December 31, 1998, totaled $3.9 million, resulting in
gross realized gains of $96,000 and gross realized losses of $92,000.
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair values of mortgage-backed securities at December 31, 2000 and
1999 are presented below.
2000
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
Federal Home Loan Mortgage
Corporation participation certificates $ 766 $- $ 6 $ 760
Government National Mortgage
Association participation certificates 2,134 - 61 2,073
Federal National Mortgage
Association participation certificates 915 - 19 896
Federal Housing Authority participation
certificates 851 5 6 850
Small Business Administration
participation certificates 598 - 12 586
------ ----- ---- ------
Total mortgage-backed securities $5,264 $ 5 $104 $5,165
===== ===== === =====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)
1999
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
Federal Home Loan Mortgage
Corporation participation certificates $ 822 $- $ 52 $ 770
Government National Mortgage
Association participation certificates 2,602 - 125 2,477
Federal National Mortgage
Association participation certificates 1,144 - 29 1,115
Federal Housing Authority participation
certificates 863 - 25 838
Small Business Administration
participation certificates 714 - 16 698
------ -- ---- ------
Total mortgage-backed securities $6,145 $- $247 $5,898
===== == === =====
The amortized cost and estimated fair value of mortgage-backed securities at
December 31, 2000 and 1999, by contractual terms to maturity, are shown below.
Expected maturities will differ from contractual maturities because borrowers
may generally prepay obligations without prepayment penalties.
2000 1999
Estimated Estimated
Amortized fair Amortized fair
cost value cost value
(In thousands)
Due within one year $ 691 $ 677 $ 863 $ 834
Due after one year to three years 1,082 1,062 1,174 1,132
Due after three years to five years 721 707 781 751
Due after five years to ten years 1,159 1,133 1,291 1,236
Due after ten years 1,611 1,586 2,036 1,945
----- ----- ----- -----
Total mortgage-backed securities $5,264 $5,165 $6,145 $5,898
===== ===== ===== =====
Proceeds from sales of mortgage-backed securities during the year ended December
31, 1998, totaled $1.2 million, resulting in gross realized gains of $3,000 and
gross realized losses of $3,000.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE C - LOANS RECEIVABLE
The composition of the loan portfolio at December 31 is as follows:
2000 1999
(In thousands)
Residential real estate
One- to four-family residential $ 62,277 $57,889
Multi-family residential 2,050 2,111
Construction 2,814 2,575
Nonresidential real estate and land 13,230 11,825
Commercial 7,088 4,102
Commercial leases 2,228 1,609
Consumer and other 14,575 12,914
-------- ------
104,262 93,025
Less:
Undisbursed portion of loans in process 1,084 1,685
Allowance for loan losses 760 440
---------- -------
$102,418 $90,900
======= ======
The Savings Bank's lending efforts have historically focused on one- to
four-family residential and multi-family residential real estate loans,
which comprised approximately $66.1 million, or 64%, of the total loan
portfolio at December 31, 2000, and $61.2 million, or 67%, of the total
portfolio at December 31, 1999. Generally, such loans have been underwritten
on the basis of no more than an 80% loan-to-value ratio, which has
historically provided the Savings Bank with adequate collateral coverage in
the event of default. Nevertheless, the Savings Bank, as with any lending
institution, is subject to the risk that real estate values could
deteriorate in its primary lending area of north-central Indiana, thereby
impairing collateral values. However, management is of the belief that real
estate values in the Savings Bank's primary lending area are presently
stable.
In the normal course of business, the Savings Bank has made loans to its
directors, officers and their related business interests. In the opinion of
management, such loans are consistent with sound lending practices and are
within applicable regulatory lending limitations. Loans to officers and
directors totaled approximately $1.0 million at both December 31, 2000 and
1999.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE D - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses for the year ended December 31
is as follows:
2000 1999 1998
(In thousands)
Beginning balance $440 $285 $245
Provision for losses on loans 332 162 63
Charge-offs of loans - net (12) (7) (23)
---- ----- ----
Ending balance $760 $440 $285
=== === ===
At December 31, 2000, the Savings Bank's allowance for loan losses was
comprised entirely of a general loan loss allowance, which is includible as
a component of regulatory risk-based capital.
At December 31, 2000, 1999 and 1998, the Savings Bank had loans of $336,000,
$666,000 and $315,000, respectively, which had been placed on nonaccrual
status due to concerns as to borrowers' ability to pay. Interest income that
would have been recognized had nonaccrual loans performed pursuant to
contractual terms totaled approximately $12,000, $36,000 and $26,000 for the
years ended December 31, 2000, 1999 and 1998, respectively.
NOTE E - OFFICE PREMISES AND EQUIPMENT
Office premises and equipment is comprised of the following at December 31:
2000 1999
(In thousands)
Land $ 203 $ 203
Buildings and improvements 1,742 1,742
Furniture and equipment 473 510
------ ------
2,418 2,455
Less accumulated depreciation and amortization (575) (553)
------ ------
$1,843 $1,902
======= =======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE F - DEPOSITS
Deposits consist of the following major classifications at December 31:
Deposit type and weighted-average
interest rate 2000 1999
(In thousands)
NOW accounts
December 31, 2000 - 2.63% $ 6,080
December 31, 1999 - 2.29% $ 5,677
Passbook and club accounts
December 31, 2000 - 3.57% 3,478
December 31, 1999 - 3.02% 2,869
Money market deposit accounts
December 31, 2000 - 4.29% 15,823
December 31, 1999 - 4.35% 19,287
Non-interest bearing accounts 3,277 2,681
------- -------
Total demand, transaction and passbook deposits 28,658 30,514
Certificates of deposit
Original maturities of:
Less than 12 months
December 31, 2000 - 6.84% 8,607
December 31, 1999 - 5.41% 3,760
12 months to 18 months
December 31, 2000 - 6.40% 21,093
December 31, 1999 - 5.42% 13,301
24 months to 30 months
December 31, 2000 - 5.56% 12,680
December 31, 1999 - 5.38% 19,912
More than 30 months
December 31, 2000 - 5.72% 3,226
December 31, 1999 - 5.71% 3,395
Individual retirement accounts
December 31, 2000 - 5.90% 5,190
December 31, 1999 - 5.44% 5,129
----------- -------
Total certificates of deposit 50,796 45,497
------ ------
Total deposits $79,454 $76,011
====== ======
At December 31, 2000 and 1999, the Savings Bank had certificate of deposit
accounts with balances greater than $100,000 totaling $6.1 million and $4.1
million, respectively.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE F - DEPOSITS (continued)
Interest expense on deposits for the year ended December 31 is summarized as
follows:
2000 1999 1998
(In thousands)
Passbook and money market deposit accounts $ 856 $ 903 $ 923
NOW accounts 133 125 105
Certificates of deposit 2,918 2,291 2,069
----- ----- -----
$3,907 $3,319 $3,097
===== ===== =====
Maturities of outstanding certificates of deposit at December 31 are
summarized as follows:
2000 1999
(In thousands)
Less than one year $39,335 $19,777
One year to three years 10,411 22,304
Over three years 1,050 3,416
------- -------
$50,796 $45,497
====== ======
NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK
Advances from the Federal Home Loan Bank, collateralized at December 31,
2000 by a blanket pledge of residential mortgage loans totaling $59.9
million, and the Savings Bank's investment in certain U.S. Government agency
securities and mortgage-backed securities totaling $9.8 million, are
summarized as follows:
Maturing year December 31,
Interest rate ending December 31, 2000 1999
(Dollars in thousands)
4.87% - 6.22% 2000 $ - $12,000
6.46% - 6.71% 2001 10,000 -
5.94% 2004 3,000 8,000
5.55% - 6.75% 2005 4,000 -
4.53% 2009 - 3,000
5.60% - 5.99% 2010 17,000 -
------ -------
$34,000 $23,000
====== ======
Weighted-average interest rate 6.11% 5.70%
==== ====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE H - NOTES PAYABLE
At December 31, 2000 and 1999, notes payable consists of borrowings secured
by the Savings Bank's investment in a real estate partnership which will
mature in 2009. The interest rate on the variable rate borrowing was 3.61%
and 3.76% at December 31, 2000 and 1999, respectively.
NOTE I - INCOME TAXES
The provision for income taxes differs from that computed at the statutory
corporate tax rate for the year ended December 31 as follows:
2000 1999 1998
(In thousands)
Federal income taxes computed at the statutory rate $605 $647 $681
Increase (decrease) in taxes resulting from:
Tax exempt interest (37) (22) (23)
Increase in cash surrender value of life insurance (17) (17) (17)
Real estate partnership tax credits (142) (40) -
State income tax provision 103 111 116
Other (1) (1) (1)
----- ----- -----
Income tax provision per consolidated
financial statements $511 $678 $756
=== === ===
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE I - INCOME TAXES (continued)
The composition of the Corporation's net deferred tax asset at December 31
is as follows:
Taxes (payable) refundable on temporary 2000 1999
differences at statutory rate: (In thousands)
Deferred tax assets:
Other than temporary declines in investment securities $ 23 $ 23
Retirement expense 216 183
General loan loss allowance 323 187
Stock benefit plan expense 57 53
Unrealized losses on securities designated as
available for sale - 170
Other 14 17
---- ----
Total deferred tax assets 633 633
Deferred tax liabilities:
State income taxes (35) (27)
Percentage of earnings bad debt deduction (37) (49)
Unrealized gains on securities designated as available for sale (38) -
Loss on investment in real estate partnership (95) (41)
Book versus tax depreciation (25) (19)
Other - (25)
-- -----
Total deferred tax liabilities (230) (161)
--- ---
Net deferred tax asset $403 $472
=== ===
The Savings Bank was allowed a special bad debt deduction based on a
percentage of earnings, generally limited to 8% of otherwise taxable income,
or the amount of qualifying and nonqualifying loans outstanding and subject
to certain limitations based on aggregate loans and savings account balances
at the end of the year. This percentage of earnings bad debt deduction had
accumulated to approximately $1.7 million as of December 31, 2000. If the
amounts that qualified as deductions for federal income taxes are later used
for purposes other than bad debt losses, including distributions in
liquidation, such distributions will be subject to federal income taxes at
the then current corporate income tax rate. The amount of unrecognized
deferred tax liability relating to the cumulative bad debt deduction is
approximately $500,000 at December 31, 2000.
The Savings Bank is required to recapture as taxable income approximately
$220,000, representing its post-1987 percentage of earnings bad debt
deductions. The Savings Bank has provided deferred taxes for this amount and
is permitted by such legislation to recapture such income over a six year
period, which commenced in 1998.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE J - COMMITMENTS
The Savings Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers, including commitments to extend credit. Such commitments involve,
to varying degrees, elements of credit and interest-rate risk in excess of
the amount recognized in the consolidated statement of financial condition.
The contract or notional amounts of the commitments reflect the extent of
the Savings Bank's involvement in such financial instruments.
The Savings Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
is represented by the contractual notional amount of those instruments. The
Savings Bank uses the same credit policies in making commitments and
conditional obligations as those utilized for on-balance-sheet instruments.
At December 31, 2000, the Savings Bank had outstanding commitments of
approximately $135,000 to originate residential one-to-four family loans.
The Savings Bank also had outstanding commitments of approximately $1.9
million to originate non-residential real estate loans and approximately
$330,000 to originate other commercial loans at December 31, 2000.
Additionally, the Savings Bank had unused lines of credit under home equity
loans and commercial loans of approximately $652,000 and $6.0 million at
December 31, 2000, respectively. Finally, the Savings Bank had a commitment
under a standby letter of credit totaling $2.7 million at December 31, 2000.
Standby letters of credit are conditional commitments issued by the Savings
Bank to guarantee the performance of a customer to a third party. In the
opinion of management, all loan commitments equaled or exceeded prevalent
market interest rates as of December 31, 2000, and will be funded from
normal cash flow from operations.
NOTE K - REGULATORY CAPITAL
The Savings Bank is subject to minimum capital requirements promulgated by
the Office of Thrift Supervision ("OTS"). Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional
discretionary - actions by regulators that, if undertaken, could have a
direct material effect on the Corporation's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Savings Bank must meet specific capital guidelines
that involve quantitative measures of the Savings Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Savings Bank's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Such 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 shareholders' equity 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) generally equal to 4.0% of
adjusted total assets, except for those associations with the highest
examination rating and acceptable levels of risk.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE K - REGULATORY CAPITAL (continued)
The risk-based capital requirement currently provides for the maintenance of
core capital plus general loan loss allowances equal to 8.0% of
risk-weighted assets. In computing risk-weighted assets, the Savings Bank
multiplies the value of each asset on its statement of financial condition
by a defined risk-weighting factor, e.g., one- to four-family residential
loans carry a risk-weighted factor of 50%.
During the calendar year, the Savings Bank was notified by its regulator
that it was categorized as "well-capitalized" under the regulatory framework
for prompt corrective action. To be categorized as "well-capitalized", the
Savings Bank must maintain minimum capital ratios as set forth in the
following table.
As of December 31, 2000 and 1999, management believes that the Savings Bank
met all capital adequacy requirements to which it was subject.
2000: To be "well-
capitalized" under
For capital prompt corrective
Actual adequacy purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Tangible capital $16,587 12.5% =>$1,988 =>1.5% =>$6,625 => 5.0%
Core capital $16,587 12.5% =>$5,300 =>4.0% =>$7,950 => 6.0%
Risk-based capital $17,347 20.7% =>$6,692 =>8.0% =>$8,365 =>10.0%
1999: To be "well-
capitalized" under
For capital prompt corrective
Actual adequacy purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Tangible capital $15,152 12.9% =>$1,761 =>1.5% =>$5,869 => 5.0%
Core capital $15,152 12.9% =>$4,695 =>4.0% =>$7,042 => 6.0%
Risk-based capital $15,592 21.7% =>$5,747 =>8.0% =>$7,184 =>10.0%
The Savings Bank's management believes that, under the current regulatory
capital regulations, the Savings Bank will continue to meet its minimum
capital requirements in the foreseeable future. However, events beyond the
control of the Savings Bank, such as increased interest rates or a downturn
in the economy in the primary market area, could adversely affect future
earnings and, consequently, the ability to meet future minimum regulatory
capital requirements.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE K - REGULATORY CAPITAL (continued)
The Savings Bank is subject to regulations imposed by the OTS regarding the
amount of capital distributions payable to the Corporation. Generally, the
Savings Bank's payment of dividends is limited, without prior OTS approval,
to net earnings for the current calendar year plus the two preceding
calendar years, less capital distributions paid over the comparable time
period. Insured institutions are required to file an application with the
OTS for capital distributions in excess of this limitation. During October
1999, the Savings Bank received OTS approval to make up to $2.0 million in
capital distributions to the Corporation. Of this amount, dividend payments
of $700,000 and $1.0 million were paid in 2000 and 1999, respectively. At
December 31, 2000, $300,000 was available to be paid in future years.
NOTE L - STOCK OPTION PLANS
During 1996, the Board of Directors adopted a Stock Option Plan that
provided for the issuance of 132,250 authorized, but unissued shares of
common stock at the fair value at the date of grant. During 1999, the Board
of Directors adopted a second Stock Option Plan that provided for the
issuance of 115,000 authorized, but unissued shares of common stock at the
fair value at the date of grant.
The Corporation accounts for its stock option plans in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation," which contains a fair
value-based method for valuing stock-based compensation that entities may
use, which measures compensation cost at the grant date based on the fair
value of the award. Compensation is then recognized over the service period,
which is usually the vesting period. Alternatively, SFAS No. 123 permits
entities to continue to account for stock options and similar equity
instruments under Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities that continue to
account for stock options using APB Opinion No. 25 are required to make pro
forma disclosures of net earnings and earnings per share, as if the fair
value-based method of accounting defined in SFAS No. 123 had been applied.
The Corporation applies APB Opinion No. 25 and related Interpretations in
accounting for its stock option plans. Accordingly, no compensation cost has
been recognized for the plans. Had compensation cost for the Corporation's
stock option plans been determined based on the fair value at the grant
dates for awards under the plans consistent with the accounting method
utilized in SFAS No. 123, there would have been no material effect on the
Corporation's net earnings and earnings per share.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE L - STOCK OPTION PLANS (continued)
A summary of the status of the Corporation's stock option plans as of
December 31, 2000, 1999 and 1998, and changes during the years ending on
those dates is presented below:
2000 1999 1998
Weighted- Weighted- Weighted-
average average average
exercise exercise exercise
Shares price Shares price Shares price
Outstanding at beginning of year 125,915 $10.59 126,415 $10.59 124,795 $10.53
Granted - - - - 2,500 13.75
Exercised - - (500) 10.53 (880) 10.53
Forfeited - - - - - -
--------- ------ --------- ------- -------- ------
Outstanding at end of year 125,915 $10.59 125,915 $10.59 126,415 $10.59
======= ===== ======= ===== ======= =====
Options exercisable at year-end 98,547 $10.56 72,179 $10.55 46,311 $10.53
====== ===== ====== ===== ====== =====
Weighted-average fair value of
options granted during the year N/A N/A $2.77
=== === ====
The following information applies to options outstanding at December 31,
2000:
Number outstanding 125,915
Range of exercise prices $10.53 - $13.75
Weighted-average exercise price $10.59
Weighted-average remaining contractual life 5.33 years
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE M - CONDENSED FINANCIAL STATEMENTS OF LOGANSPORT FINANCIAL CORP.
The following condensed financial statements summarize the financial
position of Logansport Financial Corp. as of December 31, 2000 and 1999, and
the results of its operations and cash flows for the years ended December
31, 2000, 1999 and 1998.
Logansport Financial Corp.
STATEMENTS OF FINANCIAL CONDITION
December 31,
(In thousands)
ASSETS 2000 1999
Cash and cash equivalents $ 103 $ 374
Investment in subsidiary 16,662 14,824
Dividend receivable from subsidiary 300 1,001
Prepaid expenses and other 69 75
--------- ---------
Total assets $17,134 $16,274
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities $ 121 $ 128
Shareholders' equity
Common stock 5,515 5,979
Retained earnings 11,526 10,734
Shares acquired by stock benefit plan (103) (239)
Unrealized gains (losses) on securities designated
as available for sale, net 75 (328)
--------- --------
Total shareholders' equity 17,013 16,146
------ ------
Total liabilities and shareholders' equity $17,134 $16,274
====== ======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE M - CONDENSED FINANCIAL STATEMENTS OF LOGANSPORT FINANCIAL CORP.
(continued)
Logansport Financial Corp.
STATEMENTS OF EARNINGS
Year ended December 31,
(In thousands)
2000 1999 1998
Revenue
Interest income $ 6 $ 12 $ 13
Equity in earnings of subsidiary 1,300 1,260 1,279
----- ----- -----
Total revenue 1,306 1,272 1,292
General and administrative expenses 57 72 66
------- ------- -------
Earnings before income tax credits 1,249 1,200 1,226
Income tax credits (20) (24) (21)
------- ------ -------
NET EARNINGS $1,269 $1,224 $1,247
===== ===== =====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE M - CONDENSED FINANCIAL STATEMENTS OF LOGANSPORT FINANCIAL CORP.
(continued)
Logansport Financial Corp.
STATEMENTS OF CASH FLOWS
Year ended December 31,
(In thousands)
2000 1999 1998
Cash flows provided by (used in) operating activities:
Net earnings for the year $1,269 $1,224 $1,247
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Excess distributions from (undistributed earnings of)
consolidated subsidiary (598) 239 221
Increase (decrease) in cash due to changes in:
Accrued expenses and other liabilities (70) ( 6) 40
Other 69 (23) (48)
------- ------- -------
Net cash provided by operating activities 670 1,434 1,460
Cash flows provided by (used in) financing activities:
Proceeds from exercise of stock options - 5 9
Dividends on common stock (477) (521) (532)
Purchase of shares (464) (696) (945)
------ ------ ------
Net cash used in financing activities (941) (1,212) (1,468)
------ ----- -----
Net increase (decrease) in cash and cash equivalents (271) 222 (8)
Cash and cash equivalents at beginning of year 374 152 160
------ ------ ------
Cash and cash equivalents at end of year $ 103 $ 374 $ 152
====== ====== ======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000, 1999 and 1998
NOTE N - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table summarizes the Corporation's quarterly results for the
years ended December 31, 2000 and 1999. Certain amounts, as previously
reported, have been reclassified to conform to the 2000 presentation.
Three Months Ended
March 31, June 30, September 30, December 31,
2000: (In thousands, except per share data)
Total interest income $2,209 $2,343 $2,453 $2,519
Total interest expense 1,243 1,368 1,430 1,556
----- ----- ----- -----
Net interest income 966 975 1,023 963
Provision for losses on loans 71 70 71 120
Other income (loss) 50 49 (8) 31
General, administrative and other expense 487 495 490 465
------ ------ ------ ------
Earnings before income taxes 458 459 454 409
Income taxes 151 136 124 100
------ ------ ------ ------
Net earnings $ 307 $ 323 $ 330 $ 309
====== ====== ====== ======
Earnings per share:
Basic $.28 $.29 $.30 $.29
=== === === ===
Diluted $.28 $.29 $.30 $.29
=== === === ===
Three Months Ended
March 31, June 30, September 30, December 31,
1999: (In thousands, except per share data)
Total interest income $1,730 $1,821 $1,945 $2,103
Total interest expense 875 950 1,060 1,158
------ ------ ----- -----
Net interest income 855 871 885 945
Provision for losses on loans 41 40 41 40
Other income 66 12 44 53
General, administrative and other expense 426 420 397 424
------ ------ ------ ------
Earnings before income taxes 454 423 491 534
Income taxes 172 152 173 181
------ ------ ------ ------
Net earnings $ 282 $ 271 $ 318 $ 353
====== ====== ====== ======
Earnings per share:
Basic $.24 $.22 $.27 $.30
=== === === ===
Diluted $.23 $.22 $.27 $.30
=== === === ===
MARKET PRICE OF LOGANSPORT FINANCIAL'S
COMMON SHARES AND RELATED SECURITY HOLDER MATTERS
The common stock of the Company is traded on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") Small Cap Market, under
the symbol "LOGN." As of February 8, 2001, there were 800 shareholders of record
of the Company's common stock. The table below presents the high and low trade
prices for the common shares of the Company, together with dividends declared
per share, for each quarter of the years ended December 31, 2000 and 1999. Such
price information was obtained from Nasdaq.
Per Share
Year Ending December 31, High Low dividends
2000
Quarter ending March 31, 2000 $10.313 $9.063 $0.11
Quarter ending June 30, 2000 9.875 7.625 0.11
Quarter ending September 30, 2000 11.875 9.813 0.11
Quarter ending December 31, 2000 11.813 10.875 0.11
1999
Quarter ending March 31, 1999 $14.000 $12.000 $0.11
Quarter ending June 30, 1999 12.500 11.130 0.11
Quarter ending September 30, 1999 11.560 9.630 0.11
Quarter ending December 31, 1999 10.500 9.030 0.11
TRANSFER AGENT AND REGISTRAR. The Fifth Third Bank of Cincinnati, Ohio ("Fifth
Third") is the Company's stock transfer agent and registrar. Fifth Third
maintains the Company's shareholder records. Shareholders requiring a change of
name, address or ownership of stock, as well as information about shareholder
records, lost or stolen certificates, dividend checks, or dividend direct
deposit should contact:
Fifth Third Bank
Corporate Trust Operations
Mail Drop 10AT66
38 Fountain Square
Cincinnati, Ohio 45263
(800) 837-2755 or 513-579-5320
GENERAL COUNSEL. INDEPENDENT AUDITORS.
Barnes & Thornburg Grant Thornton LLP
11 South Meridian Street 625 Eden Park Drive, Suite 900
Indianapolis, Indiana 46204 Cincinnati, Ohio 45202
SHAREHOLDER & GENERAL INQUIRIES. The Company is required to file an Annual
Report on Form 10-K for its year ended December 31, 2000 with the Securities and
Exchange Commission. Copies of this annual report may be obtained without charge
upon written request to:
Dottye Robeson, Secretary/Treasurer
Logansport Financial Corp.
723 East Broadway, Box 569
Logansport, Indiana 46947
(219) 722-3855 extension 313
OFFICE LOCATION.
723 East Broadway
Logansport, Indiana 46947
(219) 722-3855
Fax - (219) 722-3857
Email - dottyer@logansportsavings.com