EXHIBIT 13
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TABLE OF CONTENTS
Page
Directors and Officers 2
President's Message to Shareholders 3
Selected Consolidated Financial Data 4
Management's Discussion and Analysis 6
Report of Independent Certified Public Accountants 19
Consolidated Statements of Financial Condition 20
Consolidated Statements of Earnings 21
Consolidated Statements of Comprehensive Income 22
Consolidated Statements of Changes in Shareholders' Equity 23
Consolidated Statements of Cash Flows 24
Notes to Consolidated Financial Statements 26
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 44) 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, Ph.D. (age 61) is a faculty member and Director of the
Project Success Program for under-prepared students at Indiana University
Kokomo. Dr. Ridlen has taught at IUK since 1969. She also serves on the Lilly
Scholarship Committee for the Cass County Community Foundation.
William Tincher, Jr. (age 62) 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 54) 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; as a member of the Board of
Directors of the North Central Indiana Workforce Investment Board and as a
member of the Board of Directors of the Logansport/Cass County Chamber of
Commerce.
Thomas G. Williams (age 68) served as President of Logansport Savings Bank,
FSB from 1971 until his retirement in April 2000.
Dr. Todd S. Weinstein (age 40) is a member of the surgical staff at
Logansport Memorial Hospital and has been a member of Logansport Surgical
Associates since 1991. He serves on the Board of Trustees of Logansport Memorial
Hospital and the Board of Directors of the Cass County Family YMCA.
James P. Bauer (age 56) is the Vice President of Finance and Treasurer of
Material Processing, Inc., a holding company for Small Parts, Inc. and ABC
Metals. He serves on the Board of Directors of the Logansport Economic
Development Foundation, Inc. and the United Way of Cass County, Inc.
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:
On behalf of our employees and Board of Directors, I take great pleasure in
presenting to you the 2001 Annual Report to Shareholders for Logansport
Financial Corp.
By any measure, 2001 was an exceptional year. The financial services industry,
along with our country as a whole, was confronted with challenges and changes to
our businesses and personal lives that were unprecedented. During 2001 the stock
market tested and confirmed the value of our Bank. Although we were faced with
these challenges and changes, we never lost focus on our commitment to deliver
the maximum value to our shareholders, build careers for our employees and serve
our customers - that mission remained constant in 2001.
Logansport Financial Corp. has a simple plan for its success that consists of
three goals:
o Maximize the return to our shareholders
o Enhance our products and provide the very best service to our
customers
o Develop our talents to provide greater opportunities for our employees
We intend to use the talents and abilities of our employees to create a positive
impact in our community and our current and future markets. The Bank and its
employees are committed to community banking and continuing our focus on
customer service.
Since becoming a public company in 1995, Logansport Financial Corp. has
maintained a steady record of earnings growth and dividend payments. In the year
2001, we were again able to achieve record earnings with a 10.2% increase over
the year 2000. Earnings per diluted share were $1.27, representing a 9.5%
increase over 2000. During 2001, a 10% stock repurchase was announced and
approximately 60% of the repurchase was completed by the end of the year. By
January 31, 2002, the remaining portion of the repurchase had been completed.
The results of our performance are detailed in the report pages that follow this
letter. We are committed to consistently improving our financial performance
even in the face of the many challenges that we know await us in the future. We
remain confident we are doing the right things and that our motto of "Leading
The Way" speaks of our commitment to our shareholders, community and our
employees.
We want to thank our valued shareholders, customers and employees for their
support, confidence, loyalty and commitment as we pursue our mission of
providing community banking.
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: 2001 2000 1999 1998 1997
(In thousands)
Total assets $138,065 $132,612 $117,468 $96,085 $86,115
Loans receivable, net 111,696 102,418 90,900 73,073 63,635
Mortgage-backed securities 4,419 5,165 5,898 8,129 9,932
Cash and cash equivalents 8,816 9,210 5,146 4,328 2,269
Investment securities 5,788 8,322 8,539 5,033 5,750
Deposits 83,900 79,454 76,011 70,011 60,595
Borrowings 35,915 35,237 24,307 8,375 8,025
Shareholders' equity - net 17,402 17,013 16,146 16,488 16,542
Year ended December 31,
Summary of Operating Results: 2001 2000 1999 1998 1997
(In thousands, except share data)
Interest income $9,831 $9,524 $7,599 $6,579 $6,101
Interest expense 5,696 5,597 4,043 3,476 3,115
----- ----- ----- ----- -----
Net interest income 4,135 3,927 3,556 3,103 2,986
Provision for losses on loans 392 332 162 63 26
------ ------ ------ ------- -------
Net interest income after provision for
losses on loans 3,743 3,595 3,394 3,040 2,960
Other income 222 122 175 285 170
General, administrative and other expense 2,046 1,937 1,667 1,322 1,170
----- ----- ----- ----- -----
Earnings before income taxes 1,919 1,780 1,902 2,003 1,960
Income taxes 521 511 678 756 728
------ ------ ------ ------ ------
Net earnings $1,398 $1,269 $1,224 $1,247 $1,232
===== ===== ===== ===== =====
Basic earnings per share $1.29 $1.16 $1.03 $1.00 $.98
==== ==== ==== ==== ===
Diluted earnings per share $1.27 $1.16 $1.02 $.97 $.95
==== ==== ==== === ===
Cash dividends per share $.48 $.44 $.44 $.43 $.40
=== === === === ===
Footnotes on following page.
Logansport Financial Corp.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (CONTINUED)
At or for the year ended December 31,
Supplemental Data: 2001 2000 1999 1998 1997
Return on assets (1) 1.03% 1.00% 1.14% 1.37% 1.50%
Return on equity (2) 7.82 7.76 7.33 7.44 7.69
Interest rate spread (3) 2.55 2.57 2.86 2.70 2.94
Net yield on interest-earning assets (4) 3.23 3.27 3.54 3.61 3.86
General, administrative and other
expense to average assets 1.50 1.53 1.55 1.45 1.42
Net interest income to general,
administrative and other expense 202.10 202.74 213.32 234.72 255.21
Equity-to-assets (5) 12.60 12.83 13.75 17.16 19.21
Average interest-earning assets to
average interest-bearing liabilities 115.21 115.39 117.20 122.72 123.36
Non-performing assets to total assets 1.41 .25 .57 .33 .62
Non-performing loans to total loans 1.72 .32 .72 .42 .67
Loan loss allowance to total loans 1.00 .73 .47 .38 .38
Loan loss allowance to non-performing
loans 58.11 226.19 66.07 90.48 56.84
Dividend payout ratio 37.21 37.93 42.72 43.00 40.82
Net charge-offs to average loans .02 * * .03 .03
* Less than .01%
- ----------------------------------
(1) Net earnings divided by average total assets.
(2) Net earnings divided by average total equity.
(3) Interest rate spread is calculated by subtracting combined weighted-average
interest rate cost from combined weighted-average interest rate earned for
the period indicated.
(4) Net interest income divided by average interest-earning assets.
(5) Total equity divided by total assets.
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, 2001, and the results of operations for
the year ended December 31, 2001, 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, 2000 to December 31, 2001
The Company's total assets were $138.1 million at December 31, 2001, an increase
of $5.5 million, or 4.1%, over the $132.6 million total at December 31, 2000.
The increase in assets was funded primarily through growth in deposits of $4.4
million and an increase in borrowings of $750,000. The percentage of
interest-earning assets to total assets was 95.3% and 95.4% at December 31, 2001
and 2000, respectively.
At December 31, 2001, investment and mortgage-backed securities totaled $10.2
million, compared to $13.5 million at December 31, 2000, a decrease of $3.3
million, or 24.3%. The decrease was due to maturities and principal repayments
totaling $5.1 million, which were partially offset by purchases of $1.6 million.
The primary investments added to the portfolio were Federal Home Loan Bank
("FHLB") and FNMA fixed rate notes and mortgage-backed securities. At December
31, 2001, the Company held $731,000 of corporate obligations, which consisted of
debt of domestic corporations rated AA or better by Moody's Investors Service,
Inc.
Loans receivable totaled $111.7 million at December 31, 2001, an increase of
$9.3 million, or 9.1%, over December 31, 2000. The increase in loans receivable
was due primarily to loan disbursements totaling $61.1 million, which were
partially offset by principal repayments of $51.4 million. Loan origination
volume during 2001 exceeded that of 2000 by $9.4 million, or 18.2%. The increase
occurred in loans secured by nonresidential real estate, commercial loans and
loans secured by one- to four-family residential real estate. Loans secured by
nonresidential real estate and commercial loans and leases increased by $9.4
million, or 41.6%, and one- to four-family mortgage loans increased by $1.6
million, or 2.5%. The increase in loans was funded primarily by the increase in
deposits and advances and the use of excess cash.
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 the three years
ended December 31, 2001, the Bank recorded pretax losses from the housing
project of totaling $572,000, while realizing cumulative tax credits of
$364,000.
Deposits totaled $83.9 million at December 31, 2001, an increase of $4.4
million, or 5.6%, over December 31, 2000. Non-interest bearing deposits, NOW
accounts, passbook savings and money market savings increased by $3.6 million,
or 12.6%, while certificates of deposit increased by $847,000. At December 31,
2001, borrowings consisted of $34.8 million in FHLB advances compared to $34.0
million in FHLB advances at December 31, 2000, an increase of $750,000, or 2.2%.
The increase in deposits and borrowings was used primarily to fund growth in
loans during the year.
Shareholders' equity totaled $17.4 million at December 31, 2001, an increase of
$389,000, or 2.3%, over December 31, 2000. The increase was due primarily to net
earnings for the year ended December 31, 2001, of $1.4 million, an increase in
unrealized gains on available for sale securities of $180,000 and proceeds from
the exercise of stock options of $163,000, which were partially offset by
dividends totaling $516,000 and common stock repurchases totaling $921,000.
Comparison of Results of Operations for the Years Ended December 31, 2001 and
2000
Net earnings totaled $1.4 million for the year ended December 31, 2001, a
$129,000, or 10.2%, increase over the net earnings reported for 2000. The
increase in net earnings resulted primarily from an increase of $208,000 in net
interest income and an increase of $100,000 in other income, which were
partially offset by an increase of $60,000 in the provision for losses on loans,
an increase of $109,000 in general, administrative and other expense and an
increase in the provision for income taxes of $10,000.
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, 2001 and
2000 (continued)
Interest Income
The Company's total interest income was $9.8 million for the year ended December
31, 2001, compared to $9.5 million during 2000, an increase of $307,000, or
3.2%. The $8.3 million, or 6.8%, increase in average interest-earning assets,
from $121.5 million in 2000 to $129.8 million in 2001, was offset by a 27 basis
point decrease in the average yield on interest-earning assets, to 7.61% in 2001
compared to 7.88% in 2000. Interest income on loans increased by $680,000, or
8.5%, due primarily to a $10.8 million, or 10.9%, increase in the average
balance of loans outstanding, which was partially offset by an 18 basis point
decrease in the average yield year to year, to 8.00% in 2001. Interest income on
investment and mortgage-backed securities and other interest-bearing deposits
decreased by $373,000, or 25.2%, due primarily to a $2.5 million, or 10.7%,
decrease in the average balance outstanding and a 96 basis point decline in the
average yield, to 5.66% in 2001.
Interest Expense
Interest expense totaled $5.7 million for the year ended December 31, 2001, an
increase of $99,000, or 1.8%, compared to 2000. This increase was the result of
an increase in the average balance of interest-bearing liabilities of $7.4
million, or 7.0%, offset by a decrease in the average cost of these liabilities
of 25 basis points, from 5.31% in 2000 to 5.06% in 2001. Interest expense on
deposits decreased by $230,000, or 5.9%, due primarily to a 34 basis point
decline in the average cost of deposits, to 4.69% in 2001, which was partially
offset by a $683,000, or .9%, increase in the average balance of deposits
outstanding year to year. Interest expense on borrowings increased by $329,000,
or 19.5%, due primarily to a $6.7 million, or 24.2%, increase in the average
balance outstanding, which was partially offset by a 23 basis point decrease in
the average cost of borrowings year to year. The decreases in the level of
yields on interest-earning assets and the cost of interest-bearing liabilities
were due primarily to the overall decrease in interest rates in the economy
during 2001.
Net Interest Income
Net interest income increased by $208,000, or 5.3%, to $4.1 million in 2001,
compared to $3.9 million in 2000. The interest rate spread was 2.55% in 2001
compared to 2.57% in 2000, and the net yield on weighted-average
interest-earning assets declined to 3.23% in 2001 from 3.27% in 2000.
Provision for Losses on Loans
The Company maintains a general allowance for loan losses that reflects an
estimate of inherent losses based upon the types and categories of outstanding
loans, as well as problem loans and current economic conditions in the Company's
market area. The Company's provision for losses on loans was $392,000 and
$332,000, for the years ended December 31, 2001 and 2000, respectively. The
current period provision was predicated primarily upon the increase in the
volume of loans secured by nonresidential and commercial real estate and the
increase in nonperforming loans year to year. At December 31, 2001 and 2000, the
allowance amounted to $1.1 million and $760,000, respectively, for a ratio to
total loans of 1.00% in 2001 and .73% in 2000. Non-performing loans at December
31, 2001 and 2000 were $1.9 million and $336,000, respectively. The ratio of the
allowance for loan losses to non-performing loans decreased from 226.2% at
December 31, 2000 to 58.1% at December 31, 2001. Based on management's review of
the loan portfolio during these years, the allowance for loan losses at December
31, 2001 is considered adequate to cover potential losses inherent in the loan
portfolio. However, there can be no assurance that additions to the allowance
will not be necessary in future periods, which could adversely affect the
Company's results of operations.
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, 2001 and
2000 (continued)
Other Income
The Company's other income for the year ended December 31, 2001, excluding the
loss on equity investments, was $429,000, compared to $366,000 in 2000. The
increase was due primarily to a $78,000, or 48.8%, increase in service charges
on deposit accounts. The $207,000 loss on equity investments recorded in 2001
had a positive after-tax effect of approximately $45,000 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 $2.0 million for the year
ended December 31, 2001, compared to $1.9 million in 2000, an increase of
$109,000, or 5.6%. Employee compensation and benefits decreased by $14,000, or
1.2%, due primarily to a $96,000 reduction in expense related to the stock-based
RRP plan, which expired in April 2001. This decrease was partially offset by
normal merit increases and an increase in officer and employee bonus expenses
year to year. Occupancy and equipment expense increased by $34,000, or 17.3%,
mainly because of an increase in property taxes and an increase in depreciation
of new equipment required for the new building. Data processing fees increased
by $20,000, or 12.3%, due primarily to increased account volume and additional
commercial loan software maintenance costs. Various other operating expenses
increased by $70,000, or 16.2%. 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.
Income Tax Expense
Income tax expense totaled $521,000 and $511,000 for the years ended December
31, 2001 and 2000, respectively. Pretax income increased by $139,000, or 7.8%,
in 2001 compared to 2000, while approximately $182,000 of tax credits were
available in 2001, compared to $142,000 in tax credits recorded in 2000. The
effective tax rates were 27.1% and 28.7% for the years ended December 31, 2001
and 2000, respectively.
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.
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.
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 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 $3.9 million in 2000,
compared to $3.6 million in 1999. The interest rate spread was 2.57% for 2000,
compared to 2.86% for 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 maintains a general allowance for loan losses that reflects an
estimate of inherent losses based upon the types and categories of outstanding
loans as well as problem loans and economic conditions in the Company's market
area. The Company's provision for losses on loans was $332,000 and $162,000 for
the years ended December 31, 2000 and 1999 respectively. A larger provision was
recorded in 2000 due to the increase in the volume of loans secured by
nonresidential and commercial real estate. 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 was 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, an
increase of $70,000, or 23.6%. 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 loss effect of approximately $19,000 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 $1.9 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 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.
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)
Income Tax Expense
Income tax expense totaled $511,000 and $678,000 for the years ended December
31, 2000 and 1999, respectively, a decrease of $167,000, or 24.6%. 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.
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,
2001 2000 1999
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 $ 7,271 $ 261 3.59% $ 5,656 $ 301 5.32% $ 4,571 $ 205 4.48%
Mortgage- and other asset-
backed securities(1) 4,791 297 6.20 5,697 383 6.72 7,032 421 5.99
Other investment securities(1) 6,694 457 6.83 10,283 721 7.01 6,820 453 6.64
Loans receivable(2) 109,075 8,721 8.00 98,320 8,041 8.18 82,091 6,484 7.90
Stock in FHLB of Indianapolis 1,973 147 7.45 1,571 130 8.27 864 69 7.99
--------- ------ --------- ------ --------- -------
Total interest-earning assets 129,804 9,883 7.61 121,527 9,576 7.88 101,378 7,632 7.53
Non-interest-earning assets 6,306 5,442 6,446
--------- --------- --------
Total assets $136,110 $126,969 $107,824
======= ======= =======
Interest-bearing liabilities:
Savings accounts $ 3,993 100 2.50 $ 3,417 103 3.01 $ 3,260 98 3.01
NOW and money market accounts 23,023 718 3.12 23,814 886 3.72 25,735 930 3.61
Certificates of deposit 51,405 2,859 5.56 50,507 2,918 5.78 43,059 2,291 5.32
Borrowings 34,245 2,019 5.90 27,577 1,690 6.13 14,446 724 5.01
-------- ----- -------- ----- ------ ------
Total interest-bearing
liabilities 112,666 5,696 5.06 105,315 5,597 5.31 86,500 4,043 4.67
----- ------ ----- ------ ----- ------
Other liabilities 5,562 5,304 4,629
--------- --------- --------
Total liabilities 118,228 110,619 91,129
Shareholders' equity 17,882 16,350 16,695
-------- -------- -------
Total liabilities and
shareholders' equity $136,110 $126,969 $107,824
======= ======= =======
Net interest-earning assets $ 17,138 $ 16,212 $ 14,878
======== ======== ========
Net interest income $4,187 $3,979 $3,589
===== ===== ======
Interest rate spread (3) 2.55% 2.57% 2.86%
====== ====== ====
Net yield on weighted-average
interest-earning assets (4) 3.23% 3.27% 3.54%
====== ====== ====
Average interest-earning assets
to average interest-bearing liabilities 115.21% 115.39% 117.20%
====== ====== ======
Adjustment of interest on tax-exempt
securities to a tax-equivalent basis $ 52 $ 52 $ 33
======= ======= =====
- ---------------------------
(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,
2001 vs. 2000 2000 vs. 1999
Increase Increase
(decrease) (decrease)
due to due to
Volume Rate Total Volume Rate Total
(In thousands)
Interest-earning assets:
Interest-earning deposits $ 298 $ (338) $ (40) $ 54 $ 42 $ 96
Mortgage-backed securities (52) (34) (86) (86) 48 (38)
Investment securities (260) (4) (264) 242 26 268
Loans receivable 864 (184) 680 1,320 237 1,557
Stock in FHLB of Indianapolis 28 (11) 17 58 3 61
------- ------- ---- ------- ----- -------
Total interest-earning assets 878 (571) 307 1,588 356 1,944
Interest-bearing liabilities:
Savings accounts 831 (834) (3) 5 - 5
NOW and money market accounts (31) (137) (168) (71) 27 (44)
Certificates of deposit 54 (113) (59) 419 208 627
Borrowings 390 (61) 329 776 190 966
------ ------- --- ------ --- ------
Total interest-bearing liabilities 1,244 (1,145) 99 1,129 425 1,554
----- ----- ---- ----- --- -----
Change in net interest income
(fully taxable equivalent basis) (367) 575 208 459 (69) 390
Tax equivalent adjustment - - - (18) (1) (19)
----- ----- ---- ------- ----- -------
Change in net interest income $ (367) $ 575 $208 $ 441 $ (70) $ 371
====== ====== === ====== ==== ======
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,
2001 2001 2000 1999
Weighted-average interest rate earned on:
Interest-earning deposits 1.35% 3.59% 5.32% 4.48%
Mortgage-backed securities 5.92 6.20 6.72 5.99
Investment securities 6.60 6.83 7.01 6.64
Loans receivable 7.59 8.00 8.18 7.90
Stock in FHLB of Indianapolis 6.80 7.45 8.27 7.99
Total interest-earning assets 7.12 7.61 7.88 7.53
Weighted-average interest rate cost of:
Savings accounts 2.43 2.50 3.01 3.01
NOW and money market accounts 2.15 3.12 3.72 3.61
Certificates of deposit 4.91 5.56 5.78 5.32
Borrowings 5.39 5.90 6.13 5.01
Total interest-bearing liabilities 4.37 5.06 5.31 4.67
Interest rate spread (1) 2.75 2.55 2.57 2.86
Net yield on weighted-average
interest-earning assets (2) N/A 3.23 3.27 3.54
- ------------------------------
(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, 2001, 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, 2001 (the latest available date) and December 31, 2000 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 decline 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, 2001
Change in
interest rate Net Portfolio Value NPV as % of PV of Assets
(Basis Points) $ Amount $ Change % Change NPV Ratio Change
(In thousands)
+300 $13,376 $(4,215) (24)% 10.00% (241 bp)
+200 15,087 (2,504) (14) 11.05 (136 bp)
+100 16,546 (1,045) (6) 11.89 (52 bp)
- 17,591 - - 12.41 -
-100 17,774 183 1 12.36 (5 bp)
-200 17,504 (87) - 12.02 (39 bp)
-300 - - - - -
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Asset and Liability Management (continued)
December 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 $12,013 $(5,986) (33)% 9.49% (395 bp)
+200 14,618 (3,381) (19) 11.27 (217 bp)
+100 16,476 (1,523) (8) 12.49 (95 bp)
- 17,999 - - 13.44 -
-100 19,081 1,082 6 14.09 65 bp
-200 20,210 2,211 12 14.75 131 bp
-300 21,696 3,697 21 15.61 217 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 and borrowings, proceeds
from principal and interest payments on loans, and proceeds from maturing
securities. While maturities and scheduled amortization of loans are a
relatively 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, 2001, 2000 and 1999, the Company originated mortgage loans and commercial
loans in the amounts of $54.3 million, $43.2 million and $36.6 million,
respectively. The Company originated consumer loans of $6.8 million, $8.5
million and $7.8 million, in 2001, 2000 and 1999, respectively. The Company
purchased loans in the amount of $499,000 in 2001 and $981,000 in 1999. No loans
were purchased in 2000. Loan repayments totaled $51.4 million, $39.8 million and
$27.4 million for 2001, 2000 and 1999, respectively.
During the years ended December 31, 2001, 2000 and 1999, the Company purchased
investment securities in the amounts of $1.6 million, $4.1 million and $4.9
million, respectively. Sales or maturities of such securities held by the
Company and payments on mortgage-backed or other asset-backed securities totaled
$5.1 million, $5.6 million and $2.8 million for 2001, 2000 and 1999,
respectively.
Deposits grew by $4.4 million from December 31, 2000 to December 31, 2001, and
by $3.4 million from December 31, 1999 to December 31, 2000.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
Cash and cash equivalents decreased by $394,000 from December 31, 2000 to
December 31, 2001, and increased by $4.1 million from December 31, 1999 to
December 31, 2000.
The Company had outstanding loan commitments, including undisbursed loans in
process and standby letters of credit, totaling $13.9 million and $12.8 million,
at December 31, 2001 and 2000, 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, 2001 and 2000 totaled $31.6 million and $39.3 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, 2001 and 2000, the
Company had outstanding FHLB advances of $34.8 million and $34.0 million,
respectively.
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, 2001, the Bank's tangible capital and leverage ratios were
both 11.7%, and its risk-based capital to risk-weighted assets ratio was 16.9%.
Therefore, at December 31, 2001, 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, 2001.
OTS Requirement The Bank's Capital Level
% of % of Amount
Assets Amount Assets (1) Amount of excess
(Dollars in thousands)
Tangible capital 1.5% $2,066 11.7% $16,109 $14,043
Core capital (2) 4.0 5,508 11.7 16,109 10,601
Risk-based capital 8.0 8,166 16.9 17,241 (3) 9,075
- ----------------------------
(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 $1.1 million of general valuation
allowances.
Logansport Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
As of December 31, 2001, 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.
Effects of Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141 "Business Combinations,"
which requires that all business combinations initiated after June 30, 2001 be
accounted for using the purchase method. The pooling-of-interests method of
accounting is prohibited except for combinations initiated before June 30, 2001.
The remaining provisions of SFAS No. 141 relating to business combinations
accounted for by the purchase method, including identification of intangible
assets, accounting for negative goodwill, financial statement presentation and
disclosure, are effective for combinations completed after June 30, 2001.
Management adopted SFAS No. 141 effective July 1, 2001, as required, without
material effect on the Company's financial position or results of operations.
In June 2001, the FASB issued SFAS No. 142 "Goodwill and Intangible Assets,"
which prescribes accounting for all purchased goodwill and intangible assets.
Pursuant to SFAS No. 142, acquired goodwill is not amortized, but is tested for
impairment at the reporting unit level annually and whenever an impairment
indicator arises.
SFAS No. 142 is effective for fiscal years beginning after December 15, 2001,
and is not expected to have a material effect on the Company's financial
position or results of operations.
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, 2001 and 2000, 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,
2001. 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, 2001 and 2000, 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, 2001, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Grant Thornton LLP
Cincinnati, Ohio
February 19, 2002
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
(In thousands, except share data)
ASSETS 2001 2000
Cash and due from banks $ 1,081 $ 576
Interest-bearing deposits in other financial institutions 7,735 8,634
--------- ---------
Cash and cash equivalents 8,816 9,210
Investment securities designated as available for sale - at market 5,788 8,322
Mortgage-backed securities designated as available for sale - at market 4,419 5,165
Loans receivable - net 111,696 102,418
Office premises and equipment - at depreciated cost 1,803 1,843
Real estate acquired through foreclosure 65 -
Federal Home Loan Bank stock - at cost 1,973 1,973
Investment in real estate partnership 1,109 1,284
Accrued interest receivable on loans 445 548
Accrued interest receivable on mortgage-backed securities 28 41
Accrued interest receivable on investments and interest-bearing deposits 92 107
Prepaid expenses and other assets 88 64
Cash surrender value of life insurance 1,291 1,234
Deferred income tax asset 452 403
---------- ----------
Total assets $138,065 $132,612
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 83,900 $ 79,454
Advances from the Federal Home Loan Bank 34,750 34,000
Notes payable 1,165 1,237
Accrued interest and other liabilities 819 906
Accrued income taxes 29 2
----------- ------------
Total liabilities 120,663 115,599
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; 1,034,545
and 1,083,510 shares at aggregate value issued and outstanding at
December 31, 2001 and 2000, respectively 4,802 5,515
Retained earnings - restricted 12,408 11,526
Less shares acquired by stock benefit plan (63) (103)
Accumulated comprehensive income, unrealized gains on securities
designated as available for sale, net of related tax effects 255 75
---------- -----------
Total shareholders' equity 17,402 17,013
-------- --------
Total liabilities and shareholders' equity $138,065 $132,612
======= =======
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)
2001 2000 1999
Interest income
Loans $8,721 $8,041 $6,484
Investment securities 405 667 420
Mortgage-backed securities 297 383 421
Interest-bearing deposits and other 408 433 274
------ ------ ------
Total interest income 9,831 9,524 7,599
Interest expense
Deposits 3,677 3,907 3,319
Borrowings 2,019 1,690 724
----- ----- ------
Total interest expense 5,696 5,597 4,043
----- ----- -----
Net interest income 4,135 3,927 3,556
Provision for losses on loans 392 332 162
------ ------ ------
Net interest income after provision for losses on loans 3,743 3,595 3,394
Other income
Service charges on deposit accounts 238 160 139
Loss on sale of investment and mortgage-backed securities - (17) -
Loss on investment in real estate partnership (207) (244) (121)
Other operating 191 223 157
------ ------ ------
Total other income 222 122 175
General, administrative and other expense
Employee compensation and benefits 1,115 1,129 926
Occupancy and equipment 230 196 163
Federal deposit insurance premiums 15 16 41
Data processing 183 163 147
Other operating 503 433 390
------ ------ ------
Total general, administrative and other expense 2,046 1,937 1,667
----- ----- -----
Earnings before income taxes 1,919 1,780 1,902
Income taxes
Current 662 649 706
Deferred (141) (138) (28)
------ ------ -------
Total income taxes 521 511 678
------ ------ ------
NET EARNINGS $1,398 $1,269 $1,224
===== ===== =====
EARNINGS PER SHARE
Basic $1.29 $1.16 $1.03
==== ==== ====
Diluted $1.27 $1.16 $1.02
==== ==== ====
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)
2001 2000 1999
Net earnings $1,398 $1,269 $1,224
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on securities
during the period, net of taxes (benefits) of $93, $202
and $(249) for the years ended December 31, 2001, 2000
and 1999, respectively 180 392 (483)
Reclassification adjustment for realized losses
included in earnings, net of tax benefit of $6
for the year ended December 31, 2000 - 11 -
----- ------- -----
Comprehensive income $1,578 $1,672 $ 741
===== ===== ======
Accumulated comprehensive income (loss) $ 255 $ 75 $ (328)
====== ======= ======
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 2001, 2000 and 1999
(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, 1999 $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
Net earnings for the year ended
December 31, 2001 - 1,398 - - 1,398
Purchase of shares (921) - - - (921)
Issuance of shares under stock option plan 163 - - - 163
Unrealized gains on securities designated
as available for sale, net of related tax effects - - - 180 180
Amortization expense of stock benefit plan 45 - 40 - 85
Cash dividends of $.48 per share - (516) - - (516)
----- -------- --- --- ------
Balance at December 31, 2001 $4,802 $12,408 $ (63) $255 $17,402
===== ====== ===== === ======
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)
2001 2000 1999
Cash flows from operating activities:
Net earnings for the year $ 1,398 $ 1,269 $ 1,224
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 99 110 81
Amortization of premiums on investments and mortgage-backed securities 31 26 95
Amortization expense of stock benefit plan 85 136 129
Loss on sale of investment and mortgage-backed securities - 17 -
Provision for losses on loans 392 332 162
Loss on investment in real estate partnership 207 244 121
Increase (decrease) in cash, due to changes in:
Accrued interest receivable on loans 103 (132) (79)
Accrued interest receivable on mortgage-backed securities 13 6 19
Accrued interest receivable on investments 15 8 (53)
Prepaid expenses and other assets (24) (19) (9)
Accrued interest and other liabilities (87) (98) (207)
Federal income taxes
Current 27 48 (17)
Deferred (141) (138) (28)
-------- -------- ---------
Net cash provided by operating activities 2,118 1,809 1,438
Cash flows provided by (used in) investing activities:
Proceeds from sale of investment securities designated as available for sale - 3,965 -
Purchase of investment securities designated as available for sale (1,053) (4,082) (4,925)
Maturities of investment securities designated as available for sale 3,775 800 875
Purchase of mortgage-backed securities designated as available for sale (514) - -
Principal repayments on mortgage-backed securities designated as
available for sale 1,313 834 1,948
Purchase of loans (499) - (981)
Sales of loan participations 416 - -
Loan disbursements (61,082) (51,693) (44,410)
Principal repayments on loans 51,430 39,843 27,402
Investment in real estate partnership (104) (113) (108)
Purchases of and additions to office premises and equipment (59) (51) (455)
Purchase of Federal Home Loan Bank stock - (700) (705)
Increase in cash surrender value of life insurance policy (57) (50) (49)
--------- --------- ---------
Net cash used in investing activities (6,434) (11,247) (21,408)
------- ------ ------
Net cash used in operating and investing activities
(subtotal carried forward) (4,316) (9,438) (19,970)
------- ------- ------
Logansport Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the year ended December 31,
(In thousands)
2001 2000 1999
Net cash used in operating and investing activities
(subtotal brought forward) $ (4,316) $ (9,438) $ (19,970)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 4,446 3,443 6,000
Proceeds from Federal Home Loan Bank advances 12,750 33,000 31,000
Repayment of Federal Home Loan Bank advances (12,000) (22,000) (15,000)
Proceeds from the exercise of stock options 163 - 5
Dividends on common stock (516) (477) (521)
Purchase of shares (921) (464) (696)
-------- -------- ---------
Net cash provided by financing activities 3,922 13,502 20,788
------- ------ -------
Net increase (decrease) in cash and cash equivalents (394) 4,064 818
Cash and cash equivalents at beginning of year 9,210 5,146 4,328
------- ------- --------
Cash and cash equivalents at end of year $ 8,816 $ 9,210 $ 5,146
======= ======= ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 590 $ 629 $ 724
======= ======= ========
Interest on deposits and borrowings $ 5,719 $ 5,449 $ 4,054
======= ======= ========
Supplemental disclosure of noncash investing and financing activities:
Transfers from loans to real estate acquired
through foreclosure $ 65 $ - $ -
======= ======= ========
Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects $ 180 $ 403 $ (483)
======= ======= ========
The accompanying notes are an integral part of these statements.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001, 2000 and 1999
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, 2001 and 2000, the Corporation had designated
all investment and mortgage-backed securities as available for sale.
Realized gains and losses on sales of securities are recognized using the
specific identification method.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
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 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, 2001, 2000 and 1999
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.
The Savings Bank's impaired loan information is as follows at December 31:
2001 2000
(In thousands)
Impaired loans with related allowance $1,460 $1,379
Impaired loans with no related allowance - -
---- -----
Total impaired loans $1,460 $1,379
===== =====
2001 2000 1999
(In thousands)
Allowance on impaired loans
Beginning balance $ 228 $ 48 $ -
Provision 113 180 48
----- --- ----
Ending balance $ 341 $ 228 $ 48
===== === ====
Average balance of impaired loans $1,419 $ 632 $ 488
Interest income recognized on impaired loans $ 37 $ 59 $ 71
The allowance for impaired loans is included in the Savings Bank's overall
allowance for credit losses. The provision necessary to increase this
allowance is included in the Savings Bank's overall provision for losses on
loans.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
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.
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 $119,000, $140,000
and $70,000 during the years ended December 31, 2001, 2000 and 1999,
respectively, as well as federal income tax credits of approximately
$182,000, $142,000 and $40,000 in 2001, 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.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
9. Income Taxes (continued)
Deferral of income taxes results primarily from the different methods of
accounting for certain benefit plans, the real estate partnership
investment, 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 participate in a defined benefit pension plan
(the "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 Plan sponsor 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 Plan's overfunded status, no contributions were made to
the pension plan during the years ended December 31, 2001, 2000 and 1999.
The provision for pension expense was computed by the Plan's actuaries
utilizing the projected unit credit cost method and assuming a 7.5% return
on Plan assets.
The Savings Bank has purchased life insurance policies on certain officers
and directors. The insurance policies had an approximate cash surrender
value of $1.3 million and $1.2 million at December 31, 2001 and 2000,
respectively. 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 $63,000, $108,000 and $81,000 for the years ended December 31,
2001, 2000 and 1999, 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, 2001, 2000 or 1999.
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
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
10. Benefit Plans (continued)
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 $40,000, $136,000 and $129,000 for the years ended
December 31, 2001, 2000 and 1999, respectively.
In April 1999, the Savings Bank 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 Savings Bank. The Savings Bank's expense related
to the plan totaled approximately $19,000, $14,000 and $11,000 for the
years ended December 31, 2001, 2000 and 1999, respectively.
11. Earnings Per Share
Basic earnings per share is computed based upon 1,084,377, 1,090,800 and
1,194,070 weighted-average shares outstanding for the years ended December
31, 2001, 2000 and 1999, 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 1,104,323, 1,090,800 and
1,203,324 for the years ended December 31, 2001, 2000 and 1999,
respectively. Incremental shares related to the assumed exercise of stock
options included in the calculation of diluted earnings per share totaled
19,946 and 9,254 for the years ended December 31, 2001 and 1999,
respectively. There were no incremental shares related to the assumed
exercise of stock options included in the calculation of diluted earnings
per share for the year ended December 31, 2000. Options to purchase 2,500,
125,915 and 2,500 shares of common stock with a respective weighted-average
exercise price of $13.75, $10.59 and $13.75, were outstanding at December
31, 2001, 2000 and 1999, 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.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
13. Fair Value of Financial Instruments (continued)
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, 2001 and 2000:
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.
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, 2001 and 2000. 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, 2001 and 2000, the difference between the
fair value and notional amount of loan commitments was not
material.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
13. Fair Value of Financial Instruments (continued)
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:
2001 2000
Carrying Fair Carrying Fair
value value value value
(In thousands)
Financial assets
Cash and cash equivalents $ 8,816 $ 8,816 $ 9,210 $ 9,210
Investment securities 5,788 5,788 8,322 8,322
Mortgage-backed securities 4,419 4,419 5,165 5,165
Loans receivable 111,696 112,990 102,418 102,674
Federal Home Loan Bank stock 1,973 1,973 1,973 1,973
--------- ----------- --------- ---------
$132,692 $133,986 $127,088 $127,344
======= ======= ======= =======
Financial liabilities
Deposits $ 83,900 $ 85,098 $ 79,454 $ 79,547
Advances from the Federal Home Loan Bank 34,750 34,777 34,000 33,943
Notes payable 1,165 1,165 1,237 1,237
--------- --------- --------- ---------
$119,815 $121,040 $114,691 $114,727
======= ======= ======= =======
14. Advertising
Advertising costs are expensed when incurred. The Corporation's advertising
expense totaled $56,000, $41,000 and $37,000 for the years ended December
31, 2001, 2000 and 1999, respectively.
15. Reclassifications
Certain prior year amounts have been reclassified to conform to the 2001
consolidated financial statement presentation.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
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, 2001 and 2000, are as follows:
2001
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
U.S. Government agency obligations $1,900 $ 13 $ 5 $1,908
State and municipal obligations 2,789 113 1 2,901
FHLMC stock 4 244 - 248
Corporate debt obligations 710 22 1 731
------ ---- ----- ------
Total investment securities $5,403 $392 $ 7 $5,788
===== === ===== =====
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
===== === === =====
The amortized cost and estimated fair value of investment securities by
term to maturity at December 31 are shown below.
2001 2000
Estimated Estimated
Amortized fair Amortized fair
cost value cost value
(In thousands)
Due in one year or less $ 25 $ 25 $ 125 $ 125
Due after one year through three years 1,004 1,035 550 547
Due after three years through five years 937 959 1,114 1,147
Due after five years through ten years 2,379 2,436 3,829 3,763
Due after ten years 1,054 1,085 2,488 2,481
----- ----- ----- -----
5,399 5,540 8,106 8,063
FHLMC stock 4 248 4 259
----- ----- ----- -----
$5,403 $5,788 $8,110 $8,322
===== ===== ===== =====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)
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.
The amortized cost, gross unrealized gains, gross unrealized losses and
estimated fair values of mortgage-backed securities at December 31, 2001
and 2000 are presented below.
2001
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands)
Federal Home Loan Mortgage
Corporation participation certificates $ 675 $ 7 $- $ 682
Government National Mortgage
Association participation certificates 1,489 3 13 1,479
Federal National Mortgage
Association participation certificates 1,210 14 1 1,223
Federal Housing Authority participation
certificates 653 - 2 651
Small Business Administration
participation certificates 391 - 7 384
------ --- ----- ------
Total mortgage-backed securities $4,418 $ 24 $ 23 $4,419
===== ==== ==== =====
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, 2001, 2000 and 1999
NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)
The amortized cost and estimated fair value of mortgage-backed securities
at December 31, 2001 and 2000, by contractual terms to maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may generally prepay obligations without prepayment penalties.
2001 2000
Estimated Estimated
Amortized fair Amortized fair
cost value cost value
(In thousands)
Due within one year $ 805 $ 805 $ 691 $ 677
Due after one year to three years 989 991 1,082 1,062
Due after three years to five years 531 531 721 707
Due after five years to ten years 786 785 1,159 1,133
Due after ten years 1,307 1,307 1,611 1,586
----- ----- ----- -----
Total mortgage-backed securities $4,418 $4,419 $5,264 $5,165
===== ===== ===== =====
NOTE C - LOANS RECEIVABLE
The composition of the loan portfolio at December 31 is as follows:
2001 2000
(In thousands)
Residential real estate
One- to four-family residential $63,863 $ 62,277
Multi-family residential 1,816 2,050
Construction 2,278 2,814
Nonresidential real estate and land 18,435 13,230
Commercial 9,586 7,088
Commercial leases 3,914 2,228
Consumer and other 13,635 14,575
-------- --------
113,527 104,262
Less:
Undisbursed portion of loans in process 699 1,084
Allowance for loan losses 1,132 760
-------- ----------
$111,696 $102,418
======= =======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE C - LOANS RECEIVABLE (continued)
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 $67.3 million, or 60%, of the total loan
portfolio at December 31, 2001, and $66.1 million, or 64%, of the total
loan portfolio at December 31, 2000. Approximately 66% of these 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. The remaining 34% of these loans have
been underwritten with original loan-to-value ratios of greater than 80%.
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 $1.1 million and $1.0 million at December
31, 2001 and 2000, respectively.
NOTE D - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses for the year ended December
31 is as follows:
2001 2000 1999
(In thousands)
Beginning balance $ 760 $440 $285
Provision for losses on loans 392 332 162
Charge-offs of loans - net (20) (12) (7)
------- ---- -----
Ending balance $1,132 $760 $440
===== === ===
At December 31, 2001, 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, 2001, 2000
and 1999, the Savings Bank had loans of $1.9 million, $336,000 and
$666,000, respectively, which had been placed on nonaccrual status due to
concerns as to borrowers' ability to pay. At December 31, 2001, nonaccrual
loans include certain loans that had been identified as impaired under SFAS
No. 114. Interest income that would have been recognized had nonaccrual
loans performed pursuant to contractual terms totaled approximately
$41,000, $12,000 and $36,000 for the years ended December 31, 2001, 2000
and 1999, respectively.
NOTE E - OFFICE PREMISES AND EQUIPMENT
Office premises and equipment is comprised of the following at December 31:
2001 2000
(In thousands)
Land $ 203 $ 203
Buildings and improvements 1,766 1,742
Furniture and equipment 435 473
------ ------
2,404 2,418
Less accumulated depreciation and amortization (601) (575)
------ ------
$1,803 $1,843
====== ======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE F - DEPOSITS
Deposits consist of the following major classifications at December 31:
Deposit type and weighted-average
interest rate 2001 2000
(In thousands)
NOW accounts
December 31, 2001 - 1.58% $ 7,019
December 31, 2000 - 2.63% $ 6,080
Passbook and club accounts
December 31, 2001 - 2.47% 4,136
December 31, 2000 - 3.57% 3,478
Money market deposit accounts
December 31, 2001 - 2.48% 17,759
December 31, 2000 - 4.29% 15,823
Non-interest bearing accounts 3,343 3,277
------- -------
Total demand, transaction and passbook deposits 32,257 28,658
Certificates of deposit
Original maturities of:
Less than 12 months
December 31, 2001 - 3.08% 4,633
December 31, 2000 - 6.84% 8,607
12 months to 18 months
December 31, 2001 - 4.80% 20,955
December 31, 2000 - 6.40% 21,093
24 months to 30 months
December 31, 2001 - 5.32% 16,654
December 31, 2000 - 5.56% 12,680
More than 30 months
December 31, 2001 - 5.63% 3,370
December 31, 2000 - 5.72% 3,226
Individual retirement accounts
December 31, 2001 - 5.16% 6,031
December 31, 2000 - 5.90% 5,190
------- -------
Total certificates of deposit 51,643 50,796
------ ------
Total deposits $83,900 $79,454
====== ======
At December 31, 2001 and 2000, the Savings Bank had certificate of deposit
accounts with balances greater than $100,000 totaling $6.5 million and $6.1
million, respectively.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE F - DEPOSITS (continued)
Interest expense on deposits for the year ended December 31 is summarized
as follows:
2001 2000 1999
(In thousands)
Passbook and money market deposit accounts $ 655 $ 856 $ 903
NOW accounts 104 133 125
Certificates of deposit 2,918 2,918 2,291
----- ----- -----
$3,677 $3,907 $3,319
===== ===== =====
Maturities of outstanding certificates of deposit at December 31 are
summarized as follows:
2001 2000
(In thousands)
Less than one year $31,551 $39,335
One year to three years 19,026 10,411
Over three years 1,066 1,050
------- -------
$51,643 $50,796
====== ======
NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK
Advances from the Federal Home Loan Bank, collateralized at December 31,
2001 by a blanket pledge of residential mortgage loans totaling $58.2
million are summarized as follows:
Maturing year December 31,
Interest rate ending December 31, 2001 2000
(Dollars in thousands)
6.46% - 6.71% 2001 $ - $10,000
2.76% - 4.06% 2002 6,000 -
5.94% 2004 3,000 3,000
5.10% - 6.75% 2005 4,200 4,000
5.04% - 5.30% 2006 1,500 -
5.31% - 5.72% 2007 1,050 -
5.60% - 5.99% 2010 17,000 17,000
4.75% 2011 2,000 -
------- -------
$34,750 $34,000
====== ======
Weighted-average interest rate 5.39% 6.11%
==== ====
Advances totaling approximately $26.0 million are subject to interest rate
increases at the discretion of the FHLB beginning in 2002. Such advances
can be repaid by the Savings Bank upon the enactment of such interest rate
adjustment.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE H - NOTES PAYABLE
At December 31, 2001 and 2000, notes payable consisted 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
1.92% and 3.61% at December 31, 2001 and 2000, 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:
2001 2000 1999
(In thousands)
Federal income taxes computed at the statutory rate $652 $605 $647
Increase (decrease) in taxes resulting from:
Tax exempt interest (42) (37) (22)
Increase in cash surrender value of life insurance (19) (17) (17)
Real estate partnership tax credits (182) (142) (40)
State income tax provision 113 103 111
Other (1) (1) (1)
----- ----- -----
Income tax provision per consolidated
financial statements $521 $511 $678
=== === ===
The composition of the Corporation's net deferred tax asset at December 31
is as follows:
Taxes (payable) refundable on temporary 2001 2000
differences at statutory rate: (In thousands)
Deferred tax assets:
Other than temporary declines in investment securities $ 23 $ 23
Retirement expense 231 216
General loan loss allowance 481 323
Stock benefit plan expense 69 57
Other 33 14
---- ----
Total deferred tax assets 837 633
Deferred tax liabilities:
State income taxes (56) (35)
Percentage of earnings bad debt deduction (24) (37)
Unrealized gains on securities designated as available for sale (131) (38)
Loss on investment in real estate partnership (136) (95)
Book versus tax depreciation (38) (25)
---- ----
Total deferred tax liabilities (385) (230)
--- ---
Net deferred tax asset $452 $403
=== ===
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE I - INCOME TAXES (continued)
Prior to 1997, 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, 2001. 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,
2001.
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.
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, 2001, the Savings Bank had outstanding commitments of
approximately $762,000 to originate residential one- to four-family loans.
The Savings Bank also had outstanding commitments of approximately $1.0
million to originate non-residential real estate loans and approximately
$300,000 to originate other commercial loans at December 31, 2001.
Additionally, the Savings Bank had unused lines of credit under home equity
loans and commercial loans of approximately $977,000 and $7.5 million,
respectively, at December 31, 2001. Finally, the Savings Bank had
commitments under standby letters of credit totaling $2.7 million at
December 31, 2001. 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, 2001, and will
be funded from normal cash flow from operations.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
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. 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 OTS notified the Savings Bank 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, 2001 and 2000, management believes that the Savings Bank
met all capital adequacy requirements to which it was subject.
2001: 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 $16,109 11.7% =>$2,066 =>1.5% =>$ 6,885 => 5.0%
Core capital $16,109 11.7% =>$5,508 =>4.0% =>$ 8,262 => 6.0%
Risk-based capital $17,241 16.9% =>$8,166 =>8.0% =>$10,207 =>10.0%
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE K - REGULATORY CAPITAL (continued)
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%
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.
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 $300,000, $700,000 and $1.0 million were paid in 2001, 2000 and 1999,
respectively. During 2001, the Savings Bank received an additional OTS
approval to make up to $2.0 million in capital distributions to the
Corporation. Of this amount, dividend payments of $1,050,000 were paid in
2001. At December 31, 2001, $950,000 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.
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE L - STOCK OPTION PLANS (continued)
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.
A summary of the status of the Corporation's stock option plans as of
December 31, 2001, 2000 and 1999, and changes during the years ending on
those dates is presented below:
2001 2000 1999
Weighted- Weighted- Weighted-
average average average
exercise exercise exercise
Shares price Shares price Shares price
Outstanding at beginning of year 125,915 $10.59 125,915 $10.59 126,415 $10.59
Granted - - - - - -
Exercised (15,463) 10.53 - - (500) 10.53
Forfeited (3,656) 10.53 - - - -
--------- ----- ------- ------ ------- -----
Outstanding at end of year 106,796 $10.61 125,915 $10.59 125,915 $10.59
======= ===== ======= ===== ======= =====
Options exercisable at year-end 105,796 $10.58 98,547 $10.56 72,179 $10.55
======= ===== ====== ===== ====== =====
The following information applies to options outstanding at December 31,
2001:
Number outstanding 106,796
Range of exercise prices $10.53 - $13.75
Weighted-average exercise price $10.61
Weighted-average remaining contractual life 4.3 years
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
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, 2001 and 2000,
and the results of its operations and cash flows for the years ended
December 31, 2001, 2000 and 1999.
Logansport Financial Corp.
STATEMENTS OF FINANCIAL CONDITION
December 31,
(In thousands)
ASSETS 2001 2000
Cash and cash equivalents $ 121 $ 103
Investment in subsidiary 16,363 16,662
Dividend receivable from subsidiary 950 300
Prepaid expenses and other 94 69
--------- ---------
Total assets $17,528 $17,134
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities $ 126 $ 121
Shareholders' equity
Common stock 4,802 5,515
Retained earnings 12,408 11,526
Shares acquired by stock benefit plan (63) (103)
Unrealized gains on securities designated as available for sale, net 255 75
------- ---------
Total shareholders' equity 17,402 17,013
------ ------
Total liabilities and shareholders' equity $17,528 $17,134
====== ======
Logansport Financial Corp.
STATEMENTS OF EARNINGS
Year ended December 31,
(In thousands)
2001 2000 1999
Revenue
Interest income $ 14 $ 6 $ 12
Equity in earnings of subsidiary 1,436 1,300 1,260
----- ----- -----
Total revenue 1,450 1,306 1,272
General and administrative expenses 77 57 72
------- ------- -------
Earnings before income tax credits 1,373 1,249 1,200
Income tax credits (25) (20) (24)
------- ------- ------
NET EARNINGS $1,398 $1,269 $1,224
===== ===== =====
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE M - CONDENSED FINANCIAL STATEMENTS OF LOGANSPORT FINANCIAL CORP.
(continued)
Logansport Financial Corp.
STATEMENTS OF CASH FLOWS
Year ended December 31,
(In thousands)
2001 2000 1999
Cash flows provided by (used in) operating activities:
Net earnings for the year $1,398 $1,269 $1,224
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Excess distributions from (undistributed earnings of)
consolidated subsidiary (86) (598) 239
Increase (decrease) in cash due to changes in:
Accrued expenses and other liabilities 5 (70) ( 6)
Other (25) 69 (23)
------- ------- -------
Net cash provided by operating activities 1,292 670 1,434
Cash flows provided by (used in) financing activities:
Proceeds from exercise of stock options 163 - 5
Dividends on common stock (516) (477) (521)
Purchase of shares (921) (464) (696)
------ ------ ------
Net cash used in financing activities (1,274) (941) (1,212)
----- ------ -----
Net increase (decrease) in cash and cash equivalents 18 (271) 222
Cash and cash equivalents at beginning of year 103 374 152
------ ------ ------
Cash and cash equivalents at end of year $ 121 $ 103 $ 374
====== ====== ======
Logansport Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2001, 2000 and 1999
NOTE N - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table summarizes the Corporation's quarterly results for the
years ended December 31, 2001 and 2000. Certain amounts, as previously
reported, may have been reclassified to conform to the 2001 presentation.
Three Months Ended
March 31, June 30, September 30, December 31,
2001: (In thousands, except per share data)
Total interest income $2,501 $2,498 $2,462 $2,370
Total interest expense 1,529 1,470 1,376 1,321
----- ----- ----- -----
Net interest income 972 1,028 1,086 1,049
Provision for losses on loans 86 85 86 135
Other income 52 45 47 78
General, administrative and other expense 535 513 476 522
------ ------ ------ ------
Earnings before income taxes 403 475 571 470
Income taxes 102 129 167 123
------ ------ ------ ------
Net earnings $ 301 $ 346 $ 404 $ 347
====== ====== ====== ======
Earnings per share:
Basic $.28 $.32 $.37 $.32
=== === === ===
Diluted $.27 $.32 $.36 $.32
=== === === ===
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
=== === === ===
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, 2002, there were 775 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, 2001 and 2000. Such
price information was obtained from Nasdaq.
Per Share
Year Ending December 31, High Low dividends
2001
Quarter ending March 31, 2001 $12.25 $11.25 $0.12
Quarter ending June 30, 2001 13.34 11.44 0.12
Quarter ending September 30, 2001 14.05 12.77 0.12
Quarter ending December 31, 2001 15.25 13.00 0.12
2000
Quarter ending March 31, 2000 $10.31 $9.06 $0.11
Quarter ending June 30, 2000 9.88 7.63 0.11
Quarter ending September 30, 2000 11.88 9.81 0.11
Quarter ending December 31, 2000 11.81 10.88 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, 2001 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
(574) 722-3855 extension 313
OFFICE LOCATION.
723 East Broadway
Logansport, Indiana 46947
(574) 722-3855
Fax - (574) 722-3857
Email - dottyer@logansportsavings.com