PRESS RELEASE
Lawrence Financial Holdings, Inc. Announces Fourth Quarter 2004 Results
Tuesday, January 25, 9:57 am ET
Ironton, Ohio--(BUSINESS WIRE)--Jan. 25, 2005--Lawrence Financial
Holdings, Inc. (OTCBB:LWFH) today reported a loss of ($1.24) per share, basic
and diluted, for the fourth quarter ended December 31, 2004 compared to basic
earnings per share of $0.22 and diluted earnings per share of $0.21 for the
fourth quarter of 2003. For the twelve months ending December 31, 2004 the
Company is reporting basic and diluted losses per share of ($5.66) compared to
$0.78 and $0.76 per share (basic and diluted) for the same period in 2003. The
net loss for the fourth quarter of 2004 was ($760,000), a decrease of $893,000
when compared to fourth quarter of 2003. During the fiscal year 2004 the net
loss was ($3,444,000), a decrease of $3,921,000 when compared to the fiscal year
2003.
The loss for 2004 reflected $4.4 million in third quarter 2004
write-downs related to the loss from the sale of indirect mobile home ("IDMH")
loan portfolio; $0.8 million in charges related to the termination of employment
agreements; $0.2 million in charges related to the termination of retirement
agreements with the Board of Directors; and $0.2 million in other merger related
expenses. The $1.2 million in termination charges and other merger related
expenses were incurred by the Company in the fourth quarter of 2004. Through
fiscal year 2004 the Company has incurred write-downs and charges totaling $5.6
million in pre-tax dollars related to the October 12, 2004 Agreement and Plan of
Merger between Lawrence Financial and Oak Hill Financial, Inc., Jackson, Ohio
(Nasdaq NMS:OAKF).
Lawrence Financial is reporting losses of ($1.24) per share, basic and
diluted, for the fourth quarter ended December 31, 2004 compared to basic
earnings per share of $0.22 and diluted earnings per share of $0.21 for the
fourth quarter of 2003. For the twelve months ending December 31, 2004 the
Company is reporting basic and diluted losses per share of ($5.66) compared to
$0.78 and $0.76 per share (basic and diluted) for the same period in 2003. The
net loss for the fourth quarter of 2004 was ($760,000), a decrease of $893,000
when compared to fourth quarter of 2003. During the fiscal year 2004 the net
loss was ($3,444,000), a decrease of $3,921,000 when compared to the fiscal year
2003.
During the fourth quarter of 2004, the Company experienced net
charge-offs to the allowance for loan losses ("ALL") of approximately $163,000
compared to $349,000 in the third quarter, $186,000 in the second quarter and
$200,000 in the first quarter of 2004. At December 31, 2004, the Company had a
ratio of ALL to gross loans of 0.94% compared to 1.24% at the end of 2003 and
1.10% at September 30, 2004. The Company expensed $50,000 in provision for loan
losses during the fourth quarter of 2004 and $590,000 during fiscal year 2004.
Asset quality within our homogenous loan portfolios improved in the
fourth quarter of 2004. Non-performing assets totaled $1.5 million at December
31, 2004, or 1.30% of total assets. Of this amount: $750,000 million were loans
classified as substandard or 90 days or more past due and still accruing
("Accr") interest; $579,000 were loans in a non-accrual ("N-Acr") status; and
the remaining balance of $215,000 is other real estate property owned ("OREO").
2
The following table provides a summary of non-performing asset balances
for the current quarter and the prior four quarters:
------------------------------------------------------------------------------------------------------
NPA Accr N-Accr OREO
Quarter NPA % Accr % N-Accr % OREO %
Ended $(a) Assets $(a) Assets $(a) Assets $(a) Assets
------------------------------------------------------------------------------------------------------
12/31/04 $1,544 1.30% $ 750 0.63% $579 0.49% $215 0.18%
09/30/04 1,788 1.50% 989 0.83% 754 0.63% 45 0.04%
06/30/04 2,210 1.77% 1,765 1.41% 370 0.30% 75 0.06%
03/31/04 2,326 1.86% 1,860 1.49% 391 0.31% 75 0.06%
12/31/03 2,066 1.63% 1,492 1.18% 340 0.27% 234 0.19%
(a) All dollar values are shown in thousands.
At December 31, 2004 our NPA total included a commercial real estate
loan with a balance of $554,000. The Company has a first priority lien on the
real estate which secures this loan and we have the personal guarantees of the
borrowers. In January, 2005 the borrower made a $73,000 reduction to the
outstanding principal of this loan and paid the loan current through March,
2005. The Company considers this loan to be "Substandard" and continues to
maintain a specific reserve based on a history of delinquency with this credit.
In addition to this one loan there are four other loans, which total $362,000,
where the Company holds first priority liens on the real estate. The Company has
no cause to anticipate a loss resulting from the sale of these four properties.
Lawrence Financial reported a loss for the fourth quarter and the
twelve months ended December 31, 2004, of ($760,000) and ($3,444,000),
respectively, compared to net income of $133,000 and $477,000, respectively, for
the same periods in 2003. Net interest income was $1.0 million for the three
months ended December 31, 2004, and $4.4 million for fiscal year 2004 reflecting
decrease of $204,000 when compared to the fourth quarter of 2003 and a decrease
of $578,000 when compared to fiscal year 2003. Net interest margin for the
fourth quarter of 2004 averaged 3.43% compared to 4.03% for the same period in
2003. Through the twelve months ending December 31, 2004 net interest margin
averaged 3.83% compared to 4.06% for the same period in 2003. For the year ended
December 31, 2004, the average yield on earning assets was 5.45%, a decrease of
52 basis points when compared to the same period in 2003. The reduction in the
yield on earning assets was partially offset by a reduction in the average cost
of funding for earning assets which was 1.62% for the twelve months ended
December 31, 2004, a decrease of 29 basis points when compared to the same
period in 2003. 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 decreased ($4,711,000) for the year ended December
31, 2004 as compared to the same period in 2003. In 2004 the Company recognized
$222,000 in non-interest income in the first quarter, $155,000 in the second
quarter, a loss of ($4,276,000) in the third quarter, and $117,000 on
non-interest income in the fourth quarter of 2004. During fiscal year 2004, the
Company recognized $75,000 in gains from the sale of securities, a loss of
($4,435,000) from the charge related to the Company's sale of the indirect
mobile home loan portfolio and a loss of ($17,000) from the sale of other
assets.
3
Non-interest expense increased $872,000, or 20%, for the year ended
December 31, 2004, as compared to the same period in 2003. The Company
experienced an $8,000 decrease in salaries, wages and benefits paid during
fiscal year 2004 compared to the same period in 2003, which reflects : increased
salaries and wages of $38,000 due to the creation of the operation and proof
areas within the Company's banking subsidiary and medical insurance costs
decreased by $15,000, or 10%. During the twelve months ended December 31, 2004
data processing expenses decreased $249,000, or 40%, when compared to the same
period in 2003, with $78,000 of the decrease directly related to costs incurred
in 2003 as the Company prepared for the July, 2003 conversion to a new data
processing provider. In the fourth quarter the Company incurred $1.2 million in
termination charges and other merger expenses related to the October 12, 2004
Agreement and Plan of Merger between Lawrence Financial and Oak Hill Financial.
Within the $1.2 million total: $813,000 were charges taken by the Company
involving the termination of existing employment agreements with executive
officers; $175,000 were charges taken by the Company related to the termination
of existing retirement agreements with independent members of the Board of
Directors; and $199,000 were charges to-date for legal and investment banker
services related to the pending merger.
Provision for loan losses was $590,000, a decrease of $325,000, or 36%,
for the twelve month period ending December 31, 2004 when compared to the same
period in 2003. At December 31, 2004, the Company's allowance for loan losses as
a percentage of gross loans outstanding decreased by 30 basis points, from 1.24%
to 0.94%, when compared to totals at December 31, 2003. Management considers the
Company to be adequately reserved and will assess the need for additional
provision on a monthly basis.
Stockholders' equity at December 31, 2004, was $10.5 million, or 9.0%
of total assets. This balance is a decrease of ($3,491,000) when compared to
stockholder's equity at December 31, 2003. The change in stockholder's equity
reflects: a ($2,822,000) decrease to current earnings from the charge related to
the Company's sale of the indirect mobile home loan portfolio; a ($652,000)
decrease to current earnings involving the termination of existing employment
agreements with executive officers; a ($131,000) decrease to current earnings
from charges to-date for legal and investment banker services related to the
pending merger; and a ($116,000) decrease to current retained earnings related
to the termination of existing retirement agreements with independent members of
the Board of Directors, all of which were offset in part by net income for the
period. At December 31, 2004 book value per share was $16.20 compared to $21.55
at December 31, 2003.
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.
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.
4
LAWRENCE FINANCIAL HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(UNAUDITED)
IN THOUSANDS, EXCEPT FOR PER-SHARE AMOUNTS
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
--------- --------- ---------- --------
Operating Data:
Total interest income $ 1,421 $ 1,665 $ 6,214 $ 7,322
Total interest expense 456 496 1,830 2,360
-------- -------- --------- --------
Net interest income 965 1,169 4,384 4,962
Provision for loan losses 50 225 590 915
-------- -------- --------- --------
Net interest income after
provision for loan losses 915 944 3,794 4,047
Non-interest income 145 192 577 738
Gain or (loss) on sale (28) (4) (4,360) 190
Non-interest expense 2,206 976 5,298 4,366
-------- -------- --------- --------
Income (loss) before taxes (1,174) 156 (5,287) 609
Income taxes (benefit) (414) 23 (1,843) 132
Net income (loss) $ (760) $ 133 $ (3,444) $ 477
======== ======== ======== ========
Per Common Share Data:
Basic:
Net Income (loss) $ (1.24) $ 0.22 $ (5.66) $ 0.78
Avg Shares Outstanding 612,636 601,774 608,576 608,873
Diluted:
Net Income (loss) $ (1.24) $ 0.21 $ (5.66) $ 0.76
Avg Shares Outstanding 612,636 625,099 608,576 627,790
Cash Dividends Per Common
Share Declared: $ 0.07 $ 0.07 $ 0.28 $ 0.28
Return on Average Equity: (28.64)% 4.17% (26.28)% 4.06%
Return on Average Assets: (2.53)% 0.45% (2.78)% 0.45%
5
LAWRENCE FINANCIAL HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - CONTINUED
(UNAUDITED)
IN THOUSANDS OF DOLLARS
Selected Financial Condition Data As Of:
Current Year - 2004 Prior Year - 2003
Dec 31 Sep 30 Dec 31
-------------- -------------- -----------
Total assets $ 119,160 $ 120,304 $ 125,462
Cash and cash equivalents 13,375 6,029 10,643
Loans held for sale -- 7,360 --
Investment securities 22,824 24,773 26,886
Gross loans receivable 74,800 74,529 81,897
Allowance for loan losses 707 819 1,014
Loans receivable, net 74,093 73,710 80,883
Deposits 107,947 108,200 110,996
Federal Home Loan Bank advances -- -- --
Stockholders' equity 10,534 11,292 14,025
- ---------------------------------
Contact:
Lawrence Financial Holdings, Inc., Ironton
Jack Blair or RobRoy Walters, (740) 532-0263
Fax: (740) 532-1885