SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________
TO _____________________.
Commission file number: 0-25910
LOGANSPORT FINANCIAL CORP.
(Exact name of registrant specified in its charter)
Indiana 35-1945736
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
723 East Broadway
P.O. Box 569
Logansport, Indiana 46947
(Address of principal executive offices
including Zip Code)
(219) 722-3855
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of the Registrant's common stock, without par value, as of
August 1, 1997 was 1,260,620
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.
Logansport Financial Corp.
Form 10-Q
Index
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Condensed Statement of Financial
Condition as of June 30, 1997 and December 31,
1996 (Unaudited)
Consolidated Condensed Statement of Income for the
three and six months ended June 30, 1997 and 1996
(Unaudited)
Consolidated Condensed Statement of Changes in
Shareholders' Equity for the six months ended June 30,
1997 and 1996 (Unaudited)
Consolidated Condensed Statement of Cash Flows for the
six months ended June 30, 1997 and 1996 (Unaudited)
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports of Form 8-K 14
SIGNATURES
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LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Financial Condition
(Unaudited)
June 30, December 31,
1997 1996
-------------- ---------------
Assets
Cash $ 1,450,283 $ 997,552
Short-term interest bearing deposits 2,905,651 2,761,126
---------- ----------
Total cash and cash equivalents 4,355,934 3,758,678
Interest bearing deposits 100,000 100,000
Securities available for sale 14,920,694 14,303,105
Loans 59,717,570 57,038,066
Allowance for loan losses (227,628) (235,970)
----------- ----------
Net loans 59,489,942 56,802,096
Real estate owned 8,000
Premises and equipment 462,441 476,325
Federal Home Loan Bank stock, at cost 494,000 386,500
Cash value of life insurance 1,058,242 1,040,242
Other assets 2,262,331 801,547
------------- --------
Total assets $ 83,151,584 $ 77,668,493
=========== ===========
Liabilities
Deposits $ 60,399,596 $ 57,396,200
Borrowings 4,500,000 3,400,000
Dividends payable 126,040 125,638
Other liabilities 2,166,286 1,319,767
------------- -------------
Total liabilities 67,191,922 62,241,605
----------- -----------
Shareholders' Equity
Common stock 7,560,456 7,518,062
Retained earnings-substantially restricted 8,911,202 8,587,979
Unearned compensation (460,925) (522,382)
Net unrealized gain (loss) on securities
available for sale, net of tax (51,071) (156,771)
---------- ---------------
Total shareholders' equity 15,959,662 15,426,888
----------- -----------
Total liabilities and shareholders' equity $ 83,151,584 $ 77,668,493
=========== ===========
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LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Income
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
Interest Income
Loans $1,235,099 $1,076,749 $2,432,517 $2,108,294
Investment securities
Taxable 208,911 252,752 402,318 488,499
Tax-exempt 29,525 31,680 60,231 62,534
Other interest and dividend income 53,370 42,130 106,686 82,687
------ ------ ------- ------
Total interest income 1,526,905 1,403,311 3,001,752 2,742,014
--------- --------- --------- ---------
Interest Expense
Deposits 707,487 638,729 1,391,834 1,265,661
Borrowings 53,757 14,985 97,951 28,799
------ ------ ------ ------
Total interest expense 761,244 653,714 1,489,785 1,294,460
------- ------- --------- ---------
Net Interest Income 765,661 749,597 1,511,967 1,447,554
Provision for losses on loans 5,000 3,000 8,000 6,000
----- ----- ----- -----
Net Interest Income After Provision for
Losses on Loans 760,661 746,597 1,503,967 1,441,554
------- ------- --------- ---------
Other Income
Service charges on deposit accounts 19,046 15,748 37,527 29,086
Net realized gains (losses) on
sales of securities (3,364) (31,527) 7,876
Recoveries on previously written-
off securities 9,709 17,291 13,083 17,291
Other income 12,655 11,463 25,571 22,710
------ ------ ------ ------
Total other income 41,410 41,138 44,654 76,963
------ ------ ------ ------
Other Expenses
Salaries and employee benefits 180,937 164,813 352,629 305,557
Net occupancy expenses 8,968 8,722 20,298 20,070
Equipment expenses 7,656 9,311 17,988 20,385
Deposit insurance expense 9,230 29,877 18,195 59,598
Computer processing fees 22,457 20,439 45,342 44,014
Other expenses 90,780 101,566 181,690 182,340
------ ------- ------- -------
Total other expenses 320,028 334,728 636,142 631,964
------- ------- ------- -------
Income Before Income Tax 482,043 453,007 912,479 886,553
Income tax expense 179,114 170,314 337,578 329,971
------- ------- ------- -------
Net Income $302,929 $282,693 $574,901 $556,582
======== ======== ======== ========
Earnings per share $.24 $.21 $.46 $.42
==== ==== ==== ====
Weighted average shares outstanding 1,258,767 1,322,500 1,257,577 1,322,500
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LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Shareholders' Equity
(Unaudited)
Six Months Ended
June 30,
-----------------------------
1997 1996
----------- -----------
Beginning balance $ 15,426,888 $ 20,454,270
Net proceeds from exercise of stock options 42,394
Contribution for unearned compensation (614,567)
Amortization of unearned compensation 61,457 30,728
Dividends (251,678) (264,500)
Net change in unrealized gain (loss)
on securities available for sale 105,700 (341,446)
Net income 574,901 556,582
----------- -----------
Ending balance $ 15,959,662 $ 19,821,067
=========== ===========
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LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1997 1996
----------- -------------
Operating Activities
Net income $ 574,901 $ 556,582
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 8,000 6,000
Securities (gains) losses 31,527 (7,876)
Gain on sale of foreclosed real estate (1,136)
Securities amortization, net 42,623 14,260
Amortization of unearned compensation 61,457 30,728
Depreciation 19,463 18,417
Change in
Other assets (23,113) 399,510
Other liabilities 23,816 (129,684)
----------- -------------
Net cash provided by operating activities 737,538 887,937
----------- -------------
Investing Activities
Purchase of securities available for sale (3,293,858) (6,842,172)
Proceeds from available for sale maturities 400,000 750,000
Proceeds from sales of securities 1,067,562 3,964,115
Payments on mortgage and asset-backed
securities 607,288 1,926,203
Purchase of Federal Home Loan Bank Stock (107,500) (38,300)
Net changes in loans (2,702,544) (3,011,088)
Investment in real estate owned (166)
Purchase of premises and equipment (5,579) (64,184)
----------- -------------
Net cash used by investing activities (4,034,797) (3,315,426)
----------- -------------
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LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
-----------------------------
1997 1996
----------- ----------
Financing Activities
Net change in
Noninterest-bearing, interest-bearing
demand and savings deposits 643,853 1,309,278
Certificates of deposit 2,359,543 1,001,697
Short-term borrowings (1,400,000)
Payment of Federal Home Loan Bank advances (6,000,000)
Proceeds from Federal Home Loan Bank advances 8,500,000 1,000,000
Contribution for unearned compensation (614,567)
Proceeds from exercise of stock options 42,394
Dividends (251,275) (264,500)
----------- ----------
Net cash provided by financing
activities 3,894,515 2,431,908
----------- ----------
Net Change in Cash and Cash Equivalents 597,256 4,419
Cash and Cash Equivalents, Beginning of Period 3,758,678 3,242,579
----------- ----------
Cash and Cash Equivalents, End of Period $ 4,355,934 $ 3,246,998
========== ==========
Additional Cash Flow and Supplementary
Information
Interest paid $1,495,777 $1,306,248
Income tax paid 355,105 393,000
Dividends payable 126,040 132,250
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of Logansport Financial Corp. (the "Company") and its subsidiary,
Logansport Savings Bank, FSB, (the "Bank").
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the financial statements reflect all adjustments necessary to
present fairly the Company's financial position as of June 30, 1997, results of
operations for the three and six month periods ended June 30, 1997 and 1996 and
cash flows for the six month periods ended June 30, 1997 and 1996.
NOTE B: Plan of Conversion
Effective June 13, 1995, the Bank completed its conversion from a federally
chartered mutual savings bank to a federally chartered stock savings bank (the
"Conversion"), and became a wholly-owned subsidiary of the Company. In the
Conversion, the Company sold 1,322,500 shares of Common Stock, with no par value
("Common Stock"), for $10.00 per share and used all proceeds except $3,982,500
to acquire complete ownership of the Bank. Net proceeds of the Company's stock
issuance, after costs, were $12,670,006.
At a meeting of the Company's shareholders on April 9, 1996, the Board of
Directors submitted for shareholder approval a stock option plan (the "Stock
Option Plan"), and at that time made certain awards pursuant to the Stock Option
Plan. The plan was approved by the Company's shareholders. Common Stock in an
aggregate amount of 10.0% of the shares issued in the Conversion (132,250
shares) were reserved for issuance upon the exercise of options granted under
the Stock Option Plan. Options were granted under the Stock Option Plan for
108,691 shares of common stock and will have an exercise price per share equal
to $12.50, the fair market value of the shares on the date of grant. Pursuant to
the terms of the Option Plan and in order to ensure equivalent economic
consequence to the option holders following the special cash distribution paid
by the Company on December 10, 1996, the number of options granted was adjusted
to 129,340 at a per share option price of $10.53. The Company accounts for
stock-based compensation as prescribed in Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, with appropriate proforma
disclosures made in the notes to its annual audited financial statements.
-8-
Additionally, at a meeting of the Company's shareholders held on April 9, 1996,
the Board of Directors submitted for shareholder approval a Management
Recognition and Retention Plan and Trust (the "RRP"). The RRP was approved by
the shareholders. The Bank will contribute funds to the RRP to enable it to
acquire an aggregate amount of Common Stock equal to up to 4.0% of the shares
issued in the Conversion (52,900 shares), either directly from the Company or in
the open market. Shares awarded under the RRP will vest at a rate of 20% at the
end of each full twelve months of service with the Bank after the date of grant.
As of April 9, 1996, the number of shares awarded under the RRP was 46,675. All
of these shares were acquired in the open market for an average price of $13.17.
NOTE C: Cash Dividends and Earnings Per Share
A cash dividend of $.10 per common share was declared on June 10,1997, payable
on July 10, 1997, to stockholders of record as of June 24, 1997. Earnings per
share was computed based upon the weighted average common shares outstanding
during the period subsequent to the Bank's conversion to a stock savings bank on
June 13, 1995.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Financial Condition
Total assets were $83.2 million at June 30,1997 compared to $77.7 million at
December 31, 1996, an increase of $5.5 million or 7.1%. Funds were obtained
primarily from a growth in deposits of $3.0 million and an increase in Federal
Home Loan Bank advances, and were invested in securities, loans and a $1.5
million equity investment in a limited partnership which will construct and
manage residential real estate apartments for low and moderate income residents.
The investment reflects a 49.5% participation in the partnership. This
affordable housing project is expected to generate significant tax credits for
the Bank in future years. The investment resulted in an increase to total assets
of $1.5 million with a corresponding increase in other liabilities; however, no
capital contributions were required at inception. Capital contributions are due
over the course of the next twelve years and will be used to repay principal and
interest of tax exempt bonds and equity bridge loans used to finance
construction of the development. Securities increased slightly from $14.3
million at December 31, 1996 to $14.9 million at June 30,1997. Net loans
increased $2.7 million, or 4.7%, from $56.8 million at December 31, 1996 to
$59.5 million at June 30, 1997. Loan demand was stronger during the second
quarter and pay-offs slowed resulting in the increase.
Deposits were $60.4 million at June 30,1997 compared to $57.4 million at
December 31, 1996, or an increase of $3.0 million in the first two quarters of
1997. During the quarter ended March 31, 1997, the Company's note to another
bank was repaid with the proceeds of a Bank dividend to the Company. The Bank
currently has a $1.5 million putable advance due in two years from the Federal
Home Loan Bank. The rate is guaranteed for one year at which time the Federal
Home Loan Bank may convert the advance to a periodic adjustable advance. If this
is done the Bank has the option to prepay the advance without a fee. The Bank
also has $3.0 million in short-term adjustable rate advances.
Shareholders' equity was $16.0 million at June 30, 1997 and $15.4 million at
December 31, 1996. The payment of dividends, a decrease in the unrealized loss
on securities available for sale, the amortization of unearned compensation, the
exercise of stock options, and net income combined to result in an increase of
$532,774 for the six months ended June 30, 1997.
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Results of Operations
Comparison of the Three Months Ended June 30, 1997 and June 30, 1996
Net income for the Company for the three months ended June 30,1997 was $302,929
compared with $282,693 for the three months ended June 30, 1996. This is an
increase of $20,236 or 7.2%. Net interest income increased $16,064 while total
other expenses decreased $14,700 and taxes increased $8,800. The major
contributor to the increase in interest income was the growth in the loan
portfolio during the past calendar year. Loans were $52.9 million at June 30,
1996 compared to $59.7 million at June 30, 1997. However, a corresponding
increase in deposits from $54.8 million at June 30, 1996 to $60.4 million at
June 30, 1997 resulted in little change in overall net interest income.
The provision for loan losses was $5,000 for the three months ended June 30,
1997 and $3,000 for the quarter ended June 30, 1996. Net loan chargeoffs were
$16,300 for the three months ended June 30, 1997. No loan chargeoffs were
recorded for the 1996 period. Non-performing loans increased to $500,000, or
0.84% of loans at June 30, 1997 from $406,000, or 0.71% of loans at December 31,
1996. Loan loss reserves amounted to $227,628, or 0.38% of total loans at June
30, 1997 compared to $235,970, or 0.41% at December 31, 1996.
Other income increased by $272. During the quarter, a recovery of $9,709 was
recorded on a security that had been written-off previously compared to
recoveries of $17,291 for the 1996 quarter. Service charges on deposit accounts
increased by $3,298 or 20.9% from June 30, 1997 over June 30, 1996. Securities
losses of $3,364 were recorded for the three months ended June 30, 1996.
Total other expenses decreased $14,700 or 4.4 % in the three months ending June
30, 1997 compared to June 30, 1996. Salaries and employee benefits increase
$16,124 or 9.8 %. Approximately $5,000 is the result of the FICA expense related
to the Bank's RRP plan adopted April 9, 1996. The balance is the result of
additional accruals for the 1997 year-end bonus plan. Deposit insurance expense
decreased $20,647 or 69.1% from $29,877 for the quarter ended June 30, 1996 to
$9,230 for the quarter ending June 30, 1997. This reduction is due to the
recapitalization of the Savings Association Insurance Fund and the resulting
decline in the assessment. The decrease in other expenses of $10,786 is an
offset to the increase reflected in the first quarter of 1997 and is the result
of the timing of payments which were made for legal expenses, accounting fees
and the printing of the annual report.
The Company's effective tax rate for the three months ended June 30, 1997 was
37.2% compared to 37.6% for the three months ended June 30,1996.
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Comparison of the Six Months Ended June 30,1997 and June 30, 1996
Net income for the Company for the six months ended June 30, 1997 was $574,901
compared with $556,582 for the six months ended June 30, 1996. This is an
increase of $18,319 or 3.3%. Interest income increased $259,738 as a result of
the increase in the loan portfolio and a favorable interest rate environment.
Interest expense increased only $195,325 resulting in an improvement in net
interest income of $64,413 or 4.4% when comparing the six months ended June 30,
1997 to the six months ended June 30, 1996.
The provision for loan losses was $8,000 for the six months ended June 30, 1997
and $6,000 for the six months ended June 30, 1996. There were no properties
taken into real estate owned in the period ended June 30, 1996 and no loans were
written off. Two properties were taken into real estate owned for the six months
ended June 30, 1997 and one was written down as discussed in the previous
section.
Other income decreased by $32,309 or 42.0% primarily because of the $31,527 loss
on the sale of available for sale securities. Service charges on deposit
accounts increased $8,441 or 29.0%. This increase is a result of an increase in
the volume of transaction accounts. There was a nonrecurring recovery on
securities previously written off of $13,083 for the six months ended June 30,
1997 and $17,291 for the period ending June 30, 1996.
Total other expenses increased only $4,178 or .66% for the six months ending
June 30, 1997 compared to the six months ended June 30, 1996. Salary and
employee benefits increased $47,072 or 15.4%. This is primarily the result of
the amortization of the expense associated with the RRP Plan. The plan was
effective for three months of the six months period ending June 30, 1996 and
resulted in amortization expense of $30,728 for the six months ended June 30,
1996. The plan, for the six months period ending June 30, 1997, resulted in
amortization expense of $61,457. These increases were offset by the decrease in
deposit insurance expense of $41,403. Deposit insurance expense was $59,598 for
the six months ending June 30, 1996 and $18,195 for the six months ending June
30, 1997. All other expenses were generally consistent for the two periods.
The Company's effective tax rate for the six months ended June 30,1997 was 37.0%
compared to 37.2% for the six months ended June 30, 1996.
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Capital Resources
Pursuant to OTS capital regulations, savings associations must currently meet a
1.5% tangible capital requirement, a 3% leverage ratio (or core capital)
requirement, and total risk-based capital to risk- weighted assets ratio of 8%.
At June 30, 1997, the Bank's tangible capital ratio was 18.9%, its leverage
ratio was 18.9%, and its risk-based capital to risk-weighted assets ratio was
35.2%. Therefore, 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 June 30,
1997.
Capital Standard Required Bank's Excess
- ---------------- -------- ------ ------
Tangible (1.5%) $1,242,000 $15,679,000 $14,437,000
Core (3.0%) 2,483,000 15,679,000 13,196,000
Risk-based (8.0%) 3,614,000 15,907,000 12,293,000
Liquidity
The standard measure of liquidity for savings associations is the ratio of cash
and eligible investments to a certain percentage of net withdrawable savings
account and borrowings due within one year. The minimum required ratio is
currently set by the Office of Thrift Supervision at 5%, of which 1% must be
comprised of short-term investments. At June 30, 1997 the Company's ratio was
10.12%, of which 7.08% was comprised of short-term investments.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Bank nor the Company were, during the three-month period ended June
30, 1997, involved in any legal proceeding of a material nature. From time to
time, the Bank is a party to legal proceedings wherein it enforces its security
interests in connection with its mortgage and other loans.
Item 4. Submission of Matters to a Vote of Security Holders
On April 8, 1997, the Company held its 1996 annual meeting of shareholders. A
total of 948,828 shares, or 75.52% of the Company's shares outstanding, were
represented at the meeting either in person or by proxy.
Two directors were nominated by the Company's Board of Directors to serve new
three year terms or until their successors are duly chosen and qualified. This
was the only item of business at the meeting. These nominees, and the voting
results for each are listed below.
Broker
For Withheld Abstain Non-Votes
------- -------- ------- ---------
Norbert E. Adrian (three year term) 946,803 2,025 0 0
William Tincher, Jr. (three year term) 948,328 500 0 0
The continuing directors and the remaining amount of their terms are listed
below.
Donald G. Pollitt (one year term) David G. Wihebrink (two year term)
Susanne S. Ridlen (one year term) Thomas G. Williams (two year term)
Charles J. Evans (two year term)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are attached to this report on Form
10-Q:
3(1) The Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit 3(1) to the
Registration Statement on Form S-1(Registration No.
33-89788)
3(2) The Code of By-Laws of the Registrant
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the fiscal
quarter ended June 30,1997.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on behalf of the
undersigned thereto duly authorized.
Logansport Financial Corp.
Date: August 12, 1997 By: /s/ Thomas G. Williams
--------------------------------------
Thomas G. Williams, President
and Chief Executive Officer
Date: August 12, 1997 By: /s/ Dottye Robeson
--------------------------------------
Dottye Robeson, Secretary and
Treasurer
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