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EXHIBIT 99.1 PRESS RELEASE
July 08, 2003
PRESS RELEASE
Lawrence Financial Holdings, Inc. Announces
Basic Earnings Per Share of $0.21 for Second Quarter 2003
LAWRENCE FINANCIAL HOLDINGS, INC. - Ironton, Ohio (OTCBB:LWFH) reported basic
earnings per share of $0.21 and diluted earnings per share of $0.20 for the
second quarter ended June 30, 2003 compared to basic earnings per share of $0.31
and diluted earnings per share of $0.29 for the second quarter of 2002. In the
first six months of 2003 the Company reported basic earnings per share of $0.41
and diluted earnings per share of $0.40 compared to basic earnings per share of
$0.57 and diluted earnings per share of $0.55 per share for the same period in
2002. Net income for the second quarter of 2003 was $125,000, a decrease of
$2,000, or 2%, when compared to the first quarter of 2003. During the first six
months of 2003 net income for the Company was $251,000, a decrease $141,000, or
36%, when compared to the first six months of 2002. Mr. Jack Blair, President
and CEO of Lawrence Financial Holdings, Inc. remarked:
"It has been a little over two and one-half years since our
conversion from 'mutual' to 'stock'. During this time we have
implemented several significant strategic changes. The pending
conversion to a new data processor will certainly be one of the most
important events to-date. Beginning at the date of conversion, July 11,
2003, our customers will realize several significant benefits from the
improved financial products and services being offered through our
banking subsidiary, Lawrence Federal Savings Bank. The Company will
benefit from greatly improved management and communication systems and
reduced data processing costs (approximately $10,000 per month in
savings). The deconversion costs incurred by the Company in the first
six months of 2003 have exceeded $70,000 and we will continue to incur
additional costs through July and August. From the beginning of this
process we had anticipated that deconversion costs would total
approximately $80,000 and it appears that this estimate will be close
to the actual costs. The expected payback period of eight months,
combined with improved services, products, management systems and
reduced data processing costs truly creates a unique opportunity for
the Company to enhance customer service and shareholder value.
In previous earnings releases I have used the `remarks'
section to discuss our non-performing assets ("NPA's") and I believe it
is important to again highlight the current status of these accounts.
To better position the Company for increased charge-off activity we
have expensed $495,000 of provision in the half of 2003 compared to
$330,000 expensed during the same period in 2002.
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During the first six months of 2003, the Company has
experienced net charge-offs to the allowance for loan losses ("ALL") of
approximately $482,000, of which $272,000 occurred in the second
quarter. At June 30, 2003, the Company had a ratio of ALL to gross
loans of 1.22% compared to 1.24% at the end of the prior quarter and
1.01% on the same date in 2002.
We believe that current levels of charge-off activity will
likely continue through the third quarter of 2003 and may extend
through the last half of this year. The Company will continue to
closely monitor the adequacy of our ALL in a manner consistent with
generally accepted account principals ("GAAP") and regulatory
guidelines. The Company is encouraged by trends showing reduced NPA's
over the last two quarters and we believe that these trends will
eventually result in reduced charge-off activity and lower provision
expense most likely beginning in the first quarter of 2004."
Asset quality improved in the second quarter of 2003. Non-performing assets
totaled $1.5 million at June 30, 2003, or 1.12% of assets. Of this amount:
$672,000 were loans 90 days or more past due and still accruing ("Accr")
interest; $771,000 were loans in a non-accrual ("N-Acr") status; and the
remaining balance of $75,000 were other real estate properties owned ("OREO").
The following table provides a summary of non-performing asset balances for the
current quarter and the prior four quarters:
NPA NPA Accr Accr N-Accr N-Accr OREO OREO
Quarter $(a) % $(a) % $(a) % $(a) %
Ended Assets Assets Assets Assets
---------------- ----------- ------------ ---------- ----------- --------- ----------- ----------- ----------
06/30/03 $1,518 1.12% $672 0.50% $771 0.57% $75 0.06%
03/31/03 1,823 1.34% 1,056 0.78% 656 0.48% 111 0.08%
12/31/02 2,118 1.58% 1,436 1.07% 531 0.41% 151 0.10%
09/30/02 1,650 1.21% 980 0.72% 593 0.43% 77 0.06%
06/30/02 1,610 1.20% 820 0.61% 759 0.57% 31 0.02%
(a) All dollar values are shown in thousands.
Lawrence Financial reported earnings for the second quarter and the six
months ended June 30, 2003, of $125,000 and $251,000, respectively, compared to
$200,000 and $392,000, respectively, for the same periods in 2002. Net interest
income was $1.3 million for the three months ended June 30, 2003, and $2.6
million for the first six months of 2003 reflecting a decrease of $21,000 when
compared to the same quarter in 2002 and an increase of $49,000 over the first
six months in 2002. Net interest margin for the second quarter of 2003 averaged
4.05% compared to 4.17% for the same period in 2002. Through the first six
months of 2003 net interest margin averaged 4.08% compared to 4.06% for the same
period in 2002. For the six months ended June 30, 2003, the average yield on
earning assets was 6.16%, a decrease of 116 basis points when compared to the
same period in 2002. The reduction in the yield on earning assets was more than
offset by a reduction in the average cost of funding for earning assets which
was 2.08% for the six
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month ended June 30, 2003, a decrease of 118 basis points when compared to the
same period in 2002. This reduction in cost was generated by changes in both the
mix of, and the rate paid for, interest bearing deposits. The Company had no
borrowed funds during the quarter.
Non-interest income increased $164,000, or 48%, for the six-month
period as compared to the same period ended June 30, 2002. The Company
recognized $300,000 in non-interest income in the first quarter of 2003 and
$203,000 in the second quarter of 2003 compared to $166,000 and $173,000,
respectively, for the same periods in 2002. In the first six months of 2003, the
Company recognized $185,000 in gains from the sale of securities and a loss of
($17,000) from the sale of assets.
Non-interest expense increased $268,000, or 14%, for the six months
ended June 30, 2003, as compared to the same period in 2002. The Company
experienced a $117,000, or 14%, increase in salaries, wages and benefits paid
during the first six months of 2003 compared to the same period in 2002, which
reflects the addition of employees in the loan collection, loan review, internal
audit and operations departments within the Company's banking subsidiary. The
Company increased 2003 salaries and wages by an average of 3% and the cost of
employee health benefits has increased by 26% over 2002 costs. In addition to
increased salaries, wages and benefits: fees related to data processing services
have increased by $91,000, or 34%, with $71,000 of the increase directly related
to costs incurred in preparation for the July, 2003 deconversion from our
current data processor; legal fees paid have increased $21,000, or 21%, most of
which is a result of actions taken in the collection of delinquent loans; and
miscellaneous expenses related to the repossession of indirect loans increased
$27,000, or 46%, compared to expenses recorded for this activity in the first
six months of 2002.
Provision for loan losses was $495,000, an increase of $165,000, or
50%, for the six month period ending June 30, 2003 when compared to the same
period in 2002. At June 30, 2003, the Company's allowance for loan losses as a
percentage of gross loans outstanding increased by 21 basis points, from 1.01%
to 1.22%, when compared to totals at June 30, 2002. Management considers the
Company to be adequately reserved and will assess the need for additional
reserves on at least a quarterly basis.
Stockholders' equity at June 30, 2003, was $13.9 million, or 10.3% of
total assets. This balance is a decrease of $901,000, or 6%, when compared to
stockholder's equity at December 31, 2002. The decrease reflects treasury stock
purchases totaling $1.0 million, offset in part by net income for the period. At
June 30, 2003 book value per share was $21.36 compared to $20.97 at December 31,
2002.
Lawrence Financial Holdings, Inc. is the holding company for Lawrence
Federal Savings Bank, a federally chartered savings bank headquartered in
Ironton, Ohio. Lawrence Federal operates a total of five full-service banking
offices with locations in Ironton, Chesapeake, South Point, Rome and
Wheelersburg in southeastern Ohio.
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This release contains "forward-looking statements" which may describe
future plans and strategies, including our expectations of future financial
results. Management's ability to predict results or the effect of future plans
or strategies is inherently uncertain. Factors that could affect our actual
results include market interest rate trends, the general regional and national
economic climate, our ability to control costs and expenses, actions by our
competitors and federal and state regulation. As we have no control over these
factors, they should be considered in evaluating any forward-looking statements
and undue reliance should not be placed on such statements.
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LAWRENCE FINANCIAL HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(UNAUDITED)
IN THOUSANDS, EXCEPT FOR PER-SHARE AMOUNTS
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
Operating Data:
Total interest income $ 1,891 $ 2,239 $ 3,869 $ 4,514
Total interest expense 628 955 1,309 2,003
-------- -------- -------- --------
Net interest income 1,263 1,284 2,560 2,511
Provision for loan losses 195 180 495 330
-------- -------- -------- --------
Net interest income after
provision for loan losses $ 1,068 $ 1,104 $ 2,065 $ 2,181
Non-interest income 203 173 503 339
Non-interest expense 1,103 1,001 2,230 1,962
-------- -------- -------- --------
Income before income taxes $ 168 $ 276 $ 338 $ 558
Income taxes 43 76 87 166
-------- -------- -------- --------
Net income $ 125 $ 200 $ 251 $ 392
======== ======== ======== ========
Per Common Share Data:
Basic:
Net Income $ 0.21 $ 0.31 $ 0.41 $ 0.57
Avg Shares Outstanding 601,941 653,005 617,446 683,557
Diluted:
Net Income $ 0.20 $ 0.29 $ 0.40 $ 0.55
Avg Shares Outstanding 613,354 677,755 632,784 707,917
Cash Dividends Per Common
Share Declared: $ 0.07 $ 0.07 $ 0.14 $ 0.14
Return on Average Equity: 3.58% 5.49% 3.55% 5.22%
Return on Average Assets: 0.37% 0.60% 0.37% 0.59%
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LAWRENCE FINANCIAL HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - CONTINUED
(UNAUDITED)
IN THOUSANDS
Selected Financial Condition Data As Of:
Current Year - 2003 Prior Year - 2002
Jun 30 Mar 31 Dec 31 Jun 30
------------- ------------ ----------- ---------
Total assets $ 135,313 $ 136,081 $ 134,389 $ 136,164
Cash and cash equivalents 11,250 14,992 16,141 13,407
Investment securities 26,256 18,599 14,192 11,497
Gross loans receivable 92,423 96,571 97,568 105,266
Allowance for loan losses 1,124 1,201 1,111 1,058
Loans receivable, net 91,299 95,370 96,457 104,208
Deposits 120,644 121,139 118,926 117,029
Federal Home Loan Bank advances -- -- -- 2,000
Stockholders' equity 13,888 14,252 14,789 14,517
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FOR MORE INFORMATION PLEASE CONTACT:
Lawrence Financial Holdings, Inc.
Jack Blair or RobRoy Walters, 740/532-0263
Fax: 740/532-1885