UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Commission file number: 0-31847
Lawrence Financial Holdings, Inc.
---------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 31-1724442
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
311 South Fifth Street, Ironton, Ohio 45638
-------------------------------------------
(Address of principal executive offices)
(740) 532-0263
--------------
(Issuer's telephone number, including area code)
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class: Outstanding at July 31, 2002
Common Stock, $.01 par value 705,110 Common Shares
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
Lawrence Financial Holdings, Inc.
FORM 10-QSB
Quarter Ended June 30, 2002
Part I - Financial Information
Page
----
ITEM 1 - Financial Statements
Consolidated Balance Sheets ................................. 3
Consolidated Statements of Income ........................... 4
Consolidated Statements of Comprehensive Income ............. 5
Consolidated Statements of Changes in
Shareholders' Equity ....................................... 6
Consolidated Statements of Cash Flows ....................... 7
Notes to the Consolidated Financial Statements .............. 8
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations ............... 11
Part II - Other Information
Other Information ................................................ 21
Signatures ....................................................... 22
Exhibits ......................................................... 23
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and December 31, 2001
(Unaudited)
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June 30, December 31,
2002 2001
-------- ------------
ASSETS
Cash and due from banks $ 11,558,961 $ 11,984,642
Money market fund 38,056 213,124
------------ ------------
Total cash and cash equivalents 11,597,017 12,197,766
Securities available for sale, at fair value 11,496,506 11,045,872
Loans receivable, net 104,207,880 105,017,604
Federal Home Loan Bank stock 600,500 587,000
Premises and equipment, net 3,344,298 3,315,192
Accrued interest receivable 733,784 797,483
Cash surrender value of life insurance 2,053,979 1,975,177
Other assets 320,328 340,858
------------ ------------
$134,354,292 $135,276,952
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits $ 2,207,750 $ 1,465,129
Interest-bearing deposits 114,821,149 115,330,755
------------ ------------
Total deposits 117,028,899 116,795,884
Federal Home Loan Bank borrowings 2,000,000 2,000,000
Other liabilities 808,601 702,770
------------ ------------
Total liabilities 119,837,500 119,498,654
Shareholders' Equity
Common stock; par value $0.01 per share; shares
authorized: 4,000,000; shares issued: 799,110 7,991 7,991
Additional paid-in capital 7,446,941 7,426,239
Retained earnings 9,367,720 9,076,779
Treasury stock, at cost (94,000 shares) (1,683,600) --
Unearned ESOP shares (465,580) (496,660)
Unearned restricted stock awards (269,059) (269,059)
Accumulated other comprehensive income,
net of tax of $57,892 at 2002 and $17,004 at 2001 112,379 33,008
------------ ------------
Total shareholders' equity 14,516,792 15,778,298
------------ ------------
Total liabilities and shareholders' equity $134,354,292 $135,276,952
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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3
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended and Six Months June 30, 2002 and 2001
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income
Loans, including fees $2,048,371 $2,260,667 $4,126,248 $4,484,825
Taxable securities 161,004 116,978 326,440 222,513
Overnight deposit 29,612 54,351 61,150 94,406
---------- ---------- ---------- ----------
2,238,987 2,431,996 4,513,838 4,801,744
---------- ---------- ---------- ----------
Interest expense
Deposits 925,081 1,342,646 1,944,221 2,684,490
Federal Home Loan Bank borrowings 29,469 29,469 58,614 63,412
---------- ---------- ---------- ----------
954,550 1,372,115 2,002,835 2,747,902
---------- ---------- ---------- ----------
Net interest income 1,284,437 1,059,881 2,511,003 2,053,842
Provision for loan losses 180,000 60,000 330,000 108,000
---------- ---------- ---------- ----------
Net interest income
after provision for loan losses 1,104,437 999,881 2,181,003 1,945,842
Noninterest income
Net securities losses 13,103 -- 8,214 --
Service charges 109,504 107,563 217,092 201,272
Other 50,668 47,545 113,590 86,498
---------- ---------- ---------- ----------
173,275 155,108 338,896 287,770
---------- ---------- ---------- ----------
Noninterest expense
Salaries and benefits 431,019 378,031 866,822 745,706
Deposit insurance premiums 28,891 15,920 57,640 31,720
Occupancy and equipment 82,953 82,166 167,245 165,983
Data processing 131,720 118,871 265,883 238,143
Franchise tax 32,250 24,000 65,250 50,250
Advertising expense 23,868 19,587 55,192 42,385
Other 270,382 189,396 483,684 370,847
---------- ---------- ---------- ----------
1,001,083 827,971 1,961,716 1,645,034
---------- ---------- ---------- ----------
Income before income tax 276,629 327,018 558,183 588,578
Provision for income tax 76,894 107,144 166,093 188,652
---------- ---------- ---------- ----------
Net income $ 199,735 $ 219,874 $ 392,090 $ 399,926
========== ========== ========== ==========
Basic earnings per common share $ 0.31 $ 0.30 $ 0.57 $ 0.55
========== ========== ========== ==========
Diluted earnings per common share $ 0.29 $ 0.30 $ 0.55 $ 0.55
========== ========== ========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
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4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended and Six Months June 30, 2002 and 2001
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
Net income $199,735 $219,874 $392,090 $399,926
Other comprehensive income:
Unrealized gains (losses)
arising during period 299,476 808 128,473 134,100
Reclassification adjustment for gains
included in net income (13,103) -- (8,214) --
-------- -------- -------- --------
286,373 808 120,259 134,100
Income tax effect (97,367) (275) (40,888) (45,594)
-------- -------- -------- --------
Other comprehensive income, net of tax 189,006 533 79,371 88,506
-------- -------- -------- --------
Comprehensive income $388,741 $220,407 $471,461 $488,432
======== ======== ======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Year Ended December 31, 2001 and the Six Months Ended June 30, 2002
(Unaudited)
- --------------------------------------------------------------------------------
Unearned Accumulated
Additional Unearned Restricted Other
Common Paid-In Retained Treasury ESOP Stock Comprehensive
Stock Capital Earnings Stock Shares Awards Income Total
------ ---------- -------- -------- -------- ---------- ------------- -----
Balance - January 1, 2001 $7,696 $6,994,305 $8,555,006 $ -- $(558,660) $ -- $(58,402) $14,939,945
Net income -- -- 576,081 -- -- -- -- 576,081
Net unrealized appreciation on
securities available for sale,
net of tax of $47,089 -- -- -- -- -- -- 91,410 91,410
Cash dividend - $0.07 per share -- -- (54,308) -- -- -- -- (54,308)
Stock-based compensation 295 431,934 -- -- 62,000 (269,059) -- 225,170
------ ---------- ---------- ----------- --------- --------- -------- -----------
Balance, December 31, 2001 7,991 7,426,239 9,076,779 -- (496,660) (269,059) 33,008 15,778,298
Net income -- -- 392,090 -- -- -- -- 392,090
Net unrealized depreciation on
securities available for sale,
net of tax of $40,888 -- -- -- -- -- -- 79,371 79,371
Treasury Stock - 94,000 shares -- -- -- (1,683,600) -- -- -- (1,683,600)
Cash dividend - $0.14 per share -- -- (101,149) -- -- -- -- (101,149)
Stock-based compensation -- 20,702 -- -- 31,080 -- -- 51,782
------ ---------- ---------- ----------- --------- --------- -------- -----------
Balance, June 30, 2002 $7,991 $7,446,941 $9,367,720 $(1,683,600) $(465,580) $(269,059) $112,379 $14,516,792
====== ========== ========== =========== ========= ========= ======== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
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6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2002 and 2001
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
--------------------------
2002 2001
---- ----
Cash flows from operating activities
Net income $ 392,090 $ 399,926
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 89,503 88,881
Provision for loan losses 330,000 108,000
Stock dividend on Federal Home Loan Bank stock (13,500) (19,900)
Net premium amortization (discount accretion) (10,291) 7,970
Net securities (gains) losses (8,214) --
ESOP expense 51,782 40,300
Restricted stock award expense 37,654 --
Change in other assets and liabilities 69,809 (105,663)
----------- -----------
Net cash from operating activities 938,833 519,514
----------- -----------
Cash flows from investing activities
Purchase of:
Securities available for sale (7,458,857) (3,750,000)
Premises and equipment (118,715) (38,659)
Proceeds from:
Sale of securities available for sale 7,110,000 --
Calls, maturities and principal repayments of securities
available for sale -- 3,250,000
Net change in loans 479,724 (2,532,541)
----------- -----------
Net cash from investing activities 12,152 (3,071,200)
----------- -----------
Cash flows from financing activities
Net change in:
Deposits 233,015 8,405,680
Federal Home Loan Bank short-term borrowings -- (3,000,000)
Cash dividend paid (101,149) --
Purchase of treasury stock (1,683,600) --
----------- -----------
Net cash from financing activities (1,551,734) 5,405,680
----------- -----------
Net change in cash and cash equivalents (600,749) 2,853,994
Cash and cash equivalents at beginning of the year 12,197,766 4,885,079
----------- -----------
Cash and cash equivalents at end of the period $11,597,017 $ 7,739,073
=========== ===========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 2,008,161 $ 2,773,900
Income taxes 486,500 195,000
The accompanying notes are an integral part of these
consolidated financial statements.
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7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
Lawrence Financial Holdings, Inc. and its wholly-owned subsidiary, Lawrence
Federal Savings Bank (the "Bank") and the Bank's wholly-owned subsidiary,
Lawrence Financial Services Corporation (together, the "Company"). Intercompany
transactions and balances are eliminated in consolidation.
Nature of Operations: The Company provides financial services through its
offices in Lawrence and Scioto Counties. Its primary deposit products are
checking, savings, and term certificate accounts, and its primary lending
products are real estate mortgage and installment loans. Substantially all loans
are secured by specific items of collateral including consumer assets and real
estate. Lawrence Financial Services Corporation holds real property for
investment purposes. Management considers the Company to operate in one segment,
banking.
Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding during the period.
Diluted earnings per common share includes the dilutive effect of additional
potential common shares issuable. ESOP shares are considered to be outstanding
for this calculation unless they are unearned. The weighted average number of
common shares outstanding for basic and diluted earnings per share computations
were as follows:
Six Month Period Three Month Period
Ended June 30, Ended June 30
---------------- ------------------
2002 2001 2002 2001
---- ---- ---- ----
Weighted average shares outstanding 730,915 775,827 699,017 775,827
Effect of unallocated stock options 47,358 53,526 46,012 54,309
------- ------- ------- -------
Net weighted average shares outstanding - Basic 683,557 722,301 653,005 721,518
Effect of stock options 6,903 -- 7,876 --
Effect of non-vested stock awards 17,457 -- 16,874 --
------- ------- ------- -------
Net Effect of stock options and non-vested
stock awards 24,360 -- 24,750 --
Weighted average shares outstanding - Diluted 707,917 722,301 677,755 721,518
======= ======= ======= =======
Management's Opinion: In the opinion of management, the accounting and reporting
policies followed by Lawrence Financial Holdings, Inc. conform to accounting
principles generally accepted in the United States of America (US GAAP) and to
general practices within the financial services industry. The preparation of
finacial statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclousrure of contingent assets and liabiltities at the date
of the financial statements. Actual results could differ from those estimates.
The allowance for credit losses is particularly subject to change.
These interim financial statements are prepared without audit and reflect all
adjustments of a normal recurring nature which, in the opinion of management,
are necessary to present fairly the consolidated financial position of Lawrence
Financial Holdings, Inc. at June 30, 2002, and its results of operations and
cash flows for the periods presented. Certain amounts in prior financial
statements have been reclassified to conform to the current presentation. The
accompanying consolidated financial statements do not contain all financial
disclosures required by US GAAP. Lawrence Financial Holdings, Inc.'s Annual
Report for the year ended December 31, 2001, contains consolidated financial
statements and related notes which should be read in conjunction with the
accompanying consolidated financial statements.
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8
NOTE 2 - REGULATORY CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital requirements administered
by federal regulatory agencies. Failure to meet minimum capital requirements can
initiate certain mandatory actions that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and regulatory framework for prompt-corrective action, the Bank must
meet specific capital guidelines involving quantitative measures of the Bank's
assets, liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and classifications
are also subject to qualitative judgments by regulators about the Bank's
components, risk weightings and other factors. At June 30, 2002 and December 31,
2001, management believes the Bank complied with all regulatory capital
requirements. Based on the Bank's computed regulatory capital ratios, the Bank
was considered well capitalized under Section 38 of the Federal Deposit
Insurance Act as of its last regulatory exam. Management is unaware of any
events or circumstances that would change the Bank's classification since that
time.
The Bank's actual capital levels and minimum required levels were as
follows:
Minimum
Required to be
Minimum Required Well Capitalized Under
for Capital Prompt Corrective
Actual Adequacy Purposes Action Regulations
------ ----------------- ----------------------
(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
June 30,2002:
- ------------
Total capital (to risk-
weighted assets) $14,633 15.03% $7,789 8.0% $9,736 10.0%
Tier 1 (core) capital (to
risk-weighted assets) $13,498 13.86% $3,896 4.0% $5,843 6.0%
Tier 1 (core) capital (to
adjusted total assets) $13,498 9.94% $5,476 4.0% $6,845 5.0%
December 31,2001:
- ----------------
Total capital (to risk-
weighted assets) $14,467 14.58% $7,936 8.0% $9,921 10.0%
Tier 1 (core) capital (to
risk-weighted assets) $13,212 13.32% $3,968 4.0% $5,952 6.0%
Tier 1 (core) capital (to
adjusted total assets) $13,212 9.82% $5,381 4.0% $6,726 5.0%
Regulations of the Office of Thrift Supervision (OTS) limit the amount of
capital distributions that may be made by the Bank without prior approval of the
OTS. The regulatory restriction provides that the Bank may make a capital
distribution without notifying the OTS or applying to the OTS for approval
provided that (1) the total amount of all capital at the institution (including
the proposed capital distribution) for the applicable calendar year does not
exceed the institution's net income for that year to date plus the institution's
retained net income for the preceding two years; (2) the institution will be
well capitalized following the proposed capital distributions; and, (3) certain
other conditions are met.
In addition to the restriction described above, the Bank may not make any
capital distributions if the effect thereof would reduce the Bank's capital
level below the aggregate balance required for the liquidation account
established in connection with the Bank's mutual-to-stock conversion.
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9
NOTE 3 - ALLOWANCE FOR LOAN LOSSES AND NON-PERFORMING LOANS
Activity in the allowance for loan losses is as follows:
Six Months Ended June 30,
2002 2001
------------ -----------
(Dollars in Thousands)
Beginning Balance ......................................... $1,232 $775
Provision for Loan Losses ................................. 330 108
Charge Offs ............................................... (519) (52)
Recoveries ................................................ 15 8
------ ----
Ending Balance ............................................ $1,058 $839
====== ====
The following table shows the components of non-performing assets at:
06/30/02 12/31/01
-------------- -------------
(Dollars in Thousands)
Non-Accrual Loans ......................................... $760 $160
Loans 90 days or more past due
and still accruing interest .............................. 820 1,110
------ ------
Total Non-Performing Loans .............................. 1,580 1,270
------ ------
Other Real Estate Owned ................................... 30 --
Total Non-Performing Assets ............................... $1,610 $1,270
====== ======
Non-performing loans to total loans ....................... 1.50% 1.20%
Non-Performing assets to total loans plus
other real estate owned ................................ 1.53% 1.20%
Allowance for credit losses to total
non-performing loans ................................... 66.98% 97.01%
Loans 90 days or more past due and
not on non-accrual to total loans ...................... .78% 1.04%
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10
ITEM 2
Management's Discussion and Analysis of Financial Condition
And Results of Operations
Selected Financial Data
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
Significant Ratios:
Net income to
Average total assets 0.60% 0.67% 0.59% 0.63%
Average stockholders' equity 5.49 5.73 5.22 5.26
Net Interest Margin 4.16 3.50 4.05 3.46
Average net loans to average deposits 90.05 96.92 90.33 97.95
Average stockholders' equity to
average total assets 10.99 11.77 11.37 11.99
Capital ratios
Tier I capital 9.94 10.34 9.94 10.34
Risk-based capital 15.03 15.19 15.03 15.19
- -----------------------------------------------------------------------------------------
Per Share Data:
Earnings per weighted average share
Basic $ 0.31 0.30 $ 0.57 0.55
Diluted 0.29 0.30 0.55 0.55
Weighted average shares outstanding
Basic 653,005 722,301 683,557 721,518
Diluted 677,755 722,301 710,796 721,518
Total shares outstanding 705,110 775,827 705,110 775,827
Cash dividends per share $ 0.07 -- $ 0.14 --
Book value per share at end of period $ 20.59 19.94 $ 20.59 19.94
Market price at end of period
Source: NASDAQ.com $ 16.15 12.90 $ 16.15 12.90
Introduction
This report contains certain "forward-looking statements" within the
meaning of the federal securities laws. These statements are not historical
facts, rather they are statements based on Lawrence Financial Holdings, Inc.'s
("Lawrence Financial") current expectations regarding its business strategies,
intended results and future performance. Forward-looking statements are preceded
by terms such as "expects," "believes," "anticipates," "intends" and similar
expressions.
Management's ability to predict results or the effect of future plans or
strategies is inherently uncertain. Factors which could affect actual results
include interest rate trends, the general economic climate in the market area in
which Lawrence Financial operates, as well as nationwide, Lawrence Financial's
ability to control costs and expenses, competitive products and pricing, loan
delinquency rates and changes in federal and state legislation and regulation.
These factors should be considered in evaluating the forward-looking statements
and undue reliance should not be placed on such statements. Lawrence Financial
assumes no obligation to update any forward-looking statements.
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11
Operating Strategy
Lawrence Financial, through its wholly owned subsidiary Lawrence Federal
Savings Bank (the "Bank" or "Lawrence Federal"), operates as a
community-oriented financial institution focused on meeting the financial
service needs of consumers in its market area. To accomplish this objective,
Lawrence Federal offers a variety of mortgage and consumer loans and retail
deposit products. Lawrence Federal has extended its lending activities outside
of its market area through programs for originating mobile home and automobile
loans through a network of dealers. These indirect lending programs help
Lawrence Federal originate a larger amount of consumer loans, which typically
have shorter terms and higher yields than mortgage loans, than Lawrence Federal
would otherwise be able to originate. In addition, the origination of shorter
term consumer loans will help Lawrence Federal in managing its interest rate
risk. However, these indirect lending programs represent a higher risk of credit
loss than real estate loans, since the collateral securing these loans may
decline in value quickly.
As we have discussed in prior disclosures, the Company has experienced an
increase in delinquent loans and non-performing assets. Much of the increase has
been related to growing delinquency within the indirect mobile home loan
portfolio. In response to this trend the Company has halted the origination of
new mobile home loans, internalized the majority of the collection process
involving indirect mobile homes and increased the monthly provision for loan
losses. We are also developing multiple outlets for the re-sale of repossessed
units.
We continued to observe deterioration in portions of the loan portfolio, we
expensed $150,000 of provision in the first quarter of 2002, and $180,000 was
expensed in the second quarter of 2002. For the first six months of 2002 we have
expensed total provision for loan losses of $330,000 compared to $108,000 taken
in the first six months of 2001.
During the same six month period of 2002, the Company has experienced net
charge-offs of approximately $414,000, of which $290,000 occurred in the second
quarter. To date, we have made progress in clearing out several of the more
difficult delinquent loans. At June 30, 2002, the Company had a ratio of ALLL to
gross loans of 1.01% compared to 1.19% at the end of the prior quarter and 0.77%
on the same date in 2001.
The Company will continue to closely monitor the adequacy of our ALLL in a
manner consistent with generally accepted account principles ("GAAP") and
regulatory guidelines. We are confident that the investments we made last year
to acquire and develop collection expertise and to improve the Company's
management systems will result in mitigating the negative impact to long-term
shareholder value. The Company's Board of Directors and management team has
been, and will continue to be, focused on reducing the risk of loss related to
our loan portfolio.
On the positive side of the ledger, the Company continues to experience
increased net interest income in 2002. We have improved net interest income by
$457,000, or 22% during the first six months of 2002, when compared to the same
period in 2001. Earnings per share is up over last quarter and last year and
non-interest income is up by $51,000, or 18%, over the same period. Despite the
additional provision for loan loss expense we are realizing steady improvement
in several of the Company's key financial measurements.
General
Lawrence Federal's results of operations depend primarily on net interest
income, which is the difference between the interest income earned on Lawrence
Federal's interest-earning assets, such as loans and securities, and the
interest expense on its interest-bearing liabilities, such as deposits and
borrowings. Lawrence Federal also generates noninterest income primarily from
loan fees and deposit service charges. Lawrence Federal's noninterest expenses
primarily consist of employee compensation and benefits, occupancy expense, data
processing costs, and other operating expenses. Lawrence Federal's results of
operations are also affected by general economic and competitive conditions,
notably changes in market interest rates, government policies and regulations.
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12
Comparison of Financial Condition at June 30, 2002 and December 31, 2001
During the first six months of 2002, total assets decreased $923,000, or
0.7%, to $134.4 million at June 30, 2002 when compared to December 31, 2001. At
June 30, 2002, net loans receivable had decreased $810,000, or 0.8%, when
compared to December 31, 2001. Direct and indirect consumer loans decreased $2.1
million, or 7%, real estate loans decreased by $1.5 million, or 3%, indirect
mobile home loans decreased $0.5 million, or 2%, commercial loans increased by
$3.2 million, or 298%. The allowance for loan losses at June 30, 2002 was $1.1
million. The growth in the commercial loan portfolio was due primarily to the
origination of several commercial loan participations with other, local
commercial banks. In general, the decline in the direct consumer loan portfolios
reflects a combination of reduced loan demand and very aggressive competition
from other in-market and out-of-market lenders. The Bank has maintained
competitve and consistent pricing and underwriting criteria during this period
of heightened competition. The decline in indirect loan balances is the result
of an ongoing strategic objective to gradually reduce the outstanding amounts in
both the indirect mobile home and indirect consumer loan portfolios. Lawrence
Federal's long term investments, held in the form of securities, increased by
$0.5 million, or 4%, when comparing June 30, 2002 balances to December 31, 2001.
During the first six months of 2002, Lawrence Financial's available cash and
cash equivalents decreased to $11.6 million, a decrease of $601,000, or 5%.
Compared to December 31, 2001, total deposits increased $233,000, or .2%,
to $117 million and the volume of Federal Home Loan Bank advances was unchanged
at $2 million at June 30, 2002.
Equity decreased $1.3 million, or 8%, to $14.5 million at June 30, 2002
when compared to December 31, 2001. During the period ended June 30, 2002,
treasury stock purchased totaled $1,683,600, retained earnings increased
$392,000 as a result of net income for the period, the net unrealized
appreciation on securities available-for-sale grew from an unrealized gain of
$33,000 to an unrealized gain of $112,000 and $101,149 of cash dividends were
paid to shareholders.
Comparison of Operating Results for the Three Month and Six Month Periods Ending
June 30, 2002 and 2001
General. For the three months ended June 30, Lawrence Financial's net
income decreased 9% to $200,000 for 2002 from $220,000 for 2001. For the six
month period ended June 30, Lawrence Financial's net income decreased 2% to
$392,000 for 2002 from $400,000 for 2001. Return on average assets was 0.60% and
0.59% for the second quarter and first six months of 2002, respectively,
compared to 0.67% and 0.63% for the same two periods in 2001. Return on average
equity was 5.49% and 5.22% for the second quarter and first six months of 2002,
respectively, compared to 5.73% and 5.26% for the same two periods in 2001. Net
interest income increased $225,000, or 21%, during the second quarter and
$457,000, or 22%, for the six month period ending June 30. Noninterest income
increased $18,000, or 12%, during the second quarter and $51,000, or 18%, for
the six month period ending June 30. Offseting the increase in net interest was
a $120,000 or 200% increase in the provision for loan losses for the quarter
ended June 30, and a $220,000 or 204% increase in the provision for loan losses
for the six months ended June 30. Offsetting the increase in net interest and
noninterest income was a $173,000, or 21%, increase in noninterest expense for
the quarter ended June 30 and a $317,000, or 19%, increase in noninterest
expense for the six months ended June 30. There are several causes for the
increase in non-interest expense. The Company has expensed $90,000 year to date
for the Employee Stock Ownership Program (ESOP) and for the restricted stock
awards compared to $40,000 during the same period in 2001. The Company has also
experienced: increases in salaries and wages paid; the addition of an employee
in the loan collection department; increased costs of employee benefits;
increased data processing fees; increased costs related to the collection of
delinquent mobile home loans; and other non-interest expenses which are related
to the growth of the Company's customer base.
Interest Income. Interest income decreased $193,000, or 8%, for the quarter
compared to the same quarter in 2001 and decreased $288,000, or 6%, for the
first six months of 2002 compared to the first six months of 2001. Interest
income on loans decreased $212,000, or 9%, and decreased $359,000, or 8%, for
the quarter and six months ended June 30 respectively. These decreases were
primarily a result of a decline in the balance of the loan portfolio and as a
result of a decrease in the yield on the portfolio. Interest income on long-term
investments increased $44,000, or 38%, for the
- --------------------------------------------------------------------------------
13
quarter and increased $104,000, or 47%, for the six months ended June 30
primarily as a result of a larger average balance being carried by the Company
during 2002. The average yield on interest-earning assets declined to 7.26% for
the quarter and 7.32% for the six months ended June 30, 2002, from 8.05% and
8.13% for the same two periods in 2001, as short term, liquid deposits became a
higher percentage of interest-earning assets and the yield on overnight
investments declined.
Interest Expense. Interest expense decreased $418,000, or 31%, for the
quarter compared to the same quarter in 2001 and decreased $745,000, or 27%, for
the first six months of 2002 compared to the first six months in 2001. The
decrease in interest expense for the quarter and six months ending June 30,
2002, was a direct result of a decline in the rates paid on deposits. Interest
paid on Federal Home Loan Bank advances was $29,000 for the quarter and $59,000
through the first six months of 2002 compared to $29,000 and $63,000 for the
same periods in 2001. The average cost of interest-bearing liabilities was 3.28%
for the quarter and 3.46% in the first six months of 2002 compared to 4.85% and
4.97% for the same periods in 2001, primarily as a result of lower market rates
on certificates of deposits and a change in the mix of deposits with a higher
percentage of deposit dollars being made up from lower cost funding sources.
Provision for Loan Losses. Activity in the allowance for loan losses (the
"Allowance") consists of increases due to monthly provisions for loan losses and
decreases for monthly charge offs, net of recoveries. Management analyzes the
adequacy of the allowance balance quarterly by determining its estimate of
probable losses in the loan portfolio and comparing that estimate to the
allowance's balance. Management calculates its estimate of probable losses
primarily by applying expected loss percentages to classified loans and
homogeneous loan categories. The impact of these events are described in more
detail below as part of the discussion comparing the first and second quarters
of 2002, to the fourth quarter 2001 and to the second quarter 2001 provisions
for loan losses.
The provision for loan losses was $180,000 for the second quarter of 2002
which represents an increase of $120,000, or 200%, over the $60,000 of provision
recorded for the same period in 2001. The provision for loan losses was $330,000
for the six months ended June 30, 2002 compared to $108,000 for the same period
in 2001. Through the six month periods ended June 30, provision increased
$222,000, or 206% when comparing 2002 to 2001. The increase in provision was
driven, in part, by a shift in the loan portfolio's mix toward more consumer
loan balances which, historically, contain more risk of loss to the Bank than
loans secured by mortgages. In addition to the change in the mix of the loan
portfolio, the Bank has experienced a trend, particularly over the last nine
months, showing a deterioration in asset quality evidenced by an increase in
total non-performing assets.
Non-performing assets totaled $1.61 million at June 30, 2002, or 1.20% of
assets. Of the $1.61 million in non-performing assets, $820,000 were loans which
are 90 days or more past due and still accruing interest and $762,000 were loans
in a non-accrual status. Non-performing indirect mobile home loans made up
$392,000 of the loans that were 90 days or more past due and still accruing
interest and $463,000 of the loans that are carried in a non-accrual status. At
March 31, 2002, non-performing assets totaled $1.65 million or 1.25% of assets.
Of the $1.65 million $623,000 were loans which are 90 days or more past due and
still accruing interest and $1,031,000 were loans in a non-accrual status. At
March 31, 2002, non-performing indirect mobile home loans made up $228,000 of
the loans that were 90 days or more past due and still accruing interest and
$658,000 of the loans that are carried in a non-accrual status. To facilitate
long-term improvement to the quality of the Bank's loan portfolios, the banks
loan review and collection processes have been enhanced by: the addition of an
experienced collection officer in October, 2001; the reorganization of the
collection area of the Bank in the first quarter of 2002; and the addition of a
Loan Review Officer in the second quarter of 2002. In addition to these
improvements the Bank has hired an experienced Certified Public Accountant to
implement a full time internal audit department within the Company. The
individual charged with this responsibility started with the Bank late in the
second quarter of 2002. Management believes that these changes have already
served to improve the quality of the information used to analyze the credit risk
contained on the balance sheet and the adequacy of the Bank's allowance for loan
losses. The bank also believes that these recent investments in personnel will
better position the Company for future growth.
In addition to the non-performing assets detailed above, the Bank has
approximately $560,000 of delinquent, outstanding commercial real estate loans
to a group of local borrowers. At June 30, 2001, these loans were included in
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14
the Bank's non-performing assets. At that time, the outstanding balance of the
loans totaled $627,000 and they were in a non-accrual status. Subsequent to June
30, 2001, the loans were brought current and remained current through May 2002.
At June 30, 2002, the loans were 29 days delinquent and, by policy, do not
contain the characteristics of a non-performing asset. Management has contacted
the borrowers on several occasions and is actively engaged in standard
collection procedures. The loans are collateralized by all real estate, fixtures
and inventory related to the operation of the business and the Bank has the
personal guarantees of each owner. Management has not placed the loans in a
non-accrual status at this time nor has the Bank established a specific loss
reserve; however both actions will be taken, as prescribed by Bank policy,
should circumstances warrant.
Allowance for loan losses totaled $1.1 million at June 30, 2002, an
increase of $220,000, or 26%, compared to the same date in 2001. At June 30,
2002, Lawrence Federal's allowance for loan losses represented 1.01% of total
gross loans and 67% of nonperforming loans. Although management believes that it
uses the best information available to establish the allowance for loan losses,
future adjustments to the allowance for loan losses may be necessary and results
of operations could be adversely affected. Furthermore, while Lawrence Federal
believes it has established its existing allowance for loan losses in conformity
with generally accepted accounting principles, there can be no assurance that
regulators, in reviewing Lawrence Federal's loan portfolio, will not request
Lawrence Federal to increase its future provisions for loan losses. In addition,
because future events affecting borrowers and collateral cannot be predicted
with certainty, there can be no assurance that the existing allowance for loan
losses is adequate or that increases will not be necessary should the quality of
any loans deteriorate as a result of the factors discussed above. Any material
increase in the allowance for loan losses may adversely affect Lawrence
Federal's financial condition and results of operations.
Management continues to monitor closely the risk characteristics of the
loan portfolio, local economic conditions and, as stated earlier, will consider
these factors when evaluating the appropriate amount of provision and allowance
for loan losses. Management believes the company to be adequately reserved at
June 30, 2002.
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15
Noninterest Income. The following table shows the components of noninterest
income and the dollar and percentage change from the three months ended June 30,
2002 to the same period in 2001 and the six months ending June 30, 2002 to the
same period in 2001.
Quarters Ended Dollar Percentage
06/30/02 06/30/01 Change Change
------------ ----------- ------------ ---------------
(Dollars in Thousands)
Net securities gains (losses) ............................. $13 -- $13 (N/A)
Service charges ........................................... 109 $108 1 1%
Other ..................................................... 51 47 4 9%
---- ---- ---
Total ............................................... $173 $155 $18 12%
==== ==== ===
Net securities gains recognized for the quarter ended June 30, 2002
were not duplicated in the same period of 2001.
Six Months Ended Dollar Percentage
06/30/02 06/30/01 Change Change
------------ ----------- ------------ ---------------
(Dollars in Thousands)
Net securities gains (losses) ............................. $8 -- $8 (N/A)
Service charges ........................................... 217 $201 16 8%
Other ..................................................... 114 87 27 31%
---- ---- ---
Total ............................................... $339 $288 $51 18%
==== ==== ===
Net securities gains recognized in the first six months of 2002 were not
duplicated in the same period of 2001. Service charges increased during the
period as a result of growth in the number of deposit accounts.
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16
Non-Interest Expense. The following tables show the components of noninterest
expense and the dollar and percentage change from the three months ended June
30, 2002 to the same period in 2001 and the six months ending June 30, 2002 to
the same period in 2001.
Quarters Ended Dollar Percentage
06/30/02 06/30/01 Change Change
-------------- ---------------- ----------------- ----------------
(Dollars in Thousands)
Salaries and benefits $431 $378 $53 14%
Deposit insurance premiums 29 16 13 81%
Occupancy and equipment 83 82 1 1%
Data processing 132 119 13 11%
Franchise tax 32 24 8 33%
Advertising expense 24 20 4 20%
Other 270 189 81 43%
------ ---- ----
Total $1,001 $828 $173 21%
====== ==== ====
Non-interest expense increased $173,000, or 21%, for quarter ended June 30,
2002, as compared to the same period in 2001. The increase in salaries and
benefits for the quarter ended June 30, 2002 compared to the same period in 2001
reflects the following increases: an increase of $34,000 in salary and wage
expense; an increase of $4,000 in expense for the Employee Stock Ownership
Program (ESOP) and for restricted stock awards; an increase of $6,000 in health
insurance premiums; as well as other changes to components of the "Salaries and
benefits" line item. The Company has also experienced increases in: data
processing; printing and supplies; and other non-interest expenses which are
related to the growth of the Company's customer base and the daily operation of
the Company.
Six Months Ended Dollar Percentage
06/30/02 06/30/01 Change Change
-------------- ---------------- ----------------- ----------------
(Dollars in Thousands)
Salaries and benefits $867 $746 $121 16%
Deposit insurance premiums 58 32 26 82%
Occupancy and equipment 167 166 1 1%
Data processing 266 238 28 12%
Franchise tax 65 50 15 30%
Advertising expense 55 42 13 30%
Other 484 371 113 30%
------ ------ ----
Total $1,962 $1,645 $317 19%
====== ====== ====
Non-interest expense increased $317,000, or 19%, for the six months ended
June 30, 2002, as compared to the same period in 2001. The increase in salaries
and benefits for the six months ended June 30, 2002 compared to the same period
in 2001 reflects the following increases: an increase of $58,000 in salary and
wage expense; an increase of $12,000 in expense for the Employee Stock Ownership
Program (ESOP) and for restricted stock awards; an increase of $12,000 in health
insurance premiums; as well as other changes to components of the "Salaries and
benefits" line item. The Company has also experienced increases in: data
processing; printing and supplies; and other non-interest expenses which are
related to the growth of the Company's customer base and the daily operation of
the Company.
Income Tax Expense. The provision for income tax was $76,900 for the three
months ended June 30, 2002, compared to $107,100 in the same period for 2001 and
$166,100 for the six months ended June 30, 2002, compared to $188,700 in the
same period for 2001. The provision decreased as a result of lower taxable
income. The effective tax rate for the quarter ended June 30, 2002 was 27.8%
compared with 32.8% for the same period in 2001 and for the six months ended
June 30, 2002 was 29.8% compared with 32.1% for the same period in 2001.
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17
Average Balances, Interest and Average Yields/Cost
The following table presents certain information regarding average balances
of assets and liabilities, as well as the total dollar amounts of interest
income from average interest-earning assets and interest expense on average
interest-bearing liabilities and the resulting average yields and costs. The
yields and costs for the periods indicated are derived by dividing income or
expense by the average balances of assets or liabilities, respectively, for the
periods presented. Average balances were derived from daily balances.
----------------------------------------------------------------------------
Six months ended June 30,
----------------------------------------------------------------------------
2002 2001
---------------------------------- ----------------------------------
(Dollars in Thousands) Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ---------- --------- --------- ---------- ----------
Interest-earning assets:
Loans (1) .................... 103,565 4,126 8.00% 107,242 4,485 8.40%
Securities (2) ............... 11,953 327 5.52% 7,072 223 6.36%
Short term investments ....... 8,337 61 1.48% 4,207 94 4.51%
------- ----- ------- -----
Total interest-earning assets.. 123,855 4,514 7.35% 118,521 4,802 8.13%
Non-interest-earning assets ..... 9,316 9,442
------- -------
Total assets ........... 133,171 127,963
======= =======
Interest-bearing liabilities:
Deposits:
Passbook accounts ......... 26,340 294 2.25% 19,899 286 2.89%
Money market accounts ..... 981 14 2.87% 821 12 2.92%
NOW accounts .............. 15,236 103 1.33% 12,861 143 2.24%
Certificates of deposit ... 72,100 1,533 4.28% 75,767 2,244 5.97%
------- ----- ------- -----
Total deposits ......... 114,657 1,944 3.42% 109,348 2,685 4.95%
FHLB advances ................ 2,000 59 5.91% 2,129 63 6.01%
------- ----- ------- -----
Total interest-bearing
liabilities .......... 116,657 2,003 3.46% 111,477 2,748 4.97%
----- -----
Non-interest-bearing liabilities. 1,375 1,145
------- -------
Total liabilities ...... 118,032 112,622
Total retained earnings ......... 15,139 15,341
------- -------
Total liabilities and
retained earnings .... 133,171 127,963
======= =======
Net interest-earning assets .. 7,198 7,044
===== =====
Net interest income/interest
rate spread (3) ............. 2,511 3.86% 2,054 3.16%
===== ===== =====
Net interest margin (4) ...... 4.05% 3.46%
====
Ratio of interest-earning assets
to interest-bearing
liabilities ................ 106.17% 106.32%
======
- -----------------------------------
(1) Balances are net of deferred loan origination costs, allowance for loan
losses, undisbursed proceeds of construction loans in process, and include
non-accrual loans.
(2) Includes investment securities available-for-sale, stock in the Federal
Home Loan Bank of Cincinnati and mutual funds.
(3) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
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18
Management of Interest Rate Risk and Market Risk Analysis
Qualitative Aspects of Market Risk. Lawrence Federal's most significant
form of market risk is interest rate risk. The principal objectives of Lawrence
Federal's interest rate risk management are to evaluate the interest rate risk
inherent in certain balance sheet accounts, determine the level of risk
appropriate given Lawrence Federal's business strategy, operating environment,
capital, liquidity requirements and performance objectives, and manage the risk
consistent with the Board of Director's approved guidelines. Lawrence Federal
has an Asset/Liability Committee (ALCO), responsible for reviewing its
asset/liability policies and interest rate risk position, which meets monthly
and reports trends and interest rate risk position to the Board of Directors
quarterly. The ALCO is actively involved in reviewing the mix, volume and
pricing strategies associated with managing the Bank's balance sheet and
interest rate risk. During the first six months of 2002 management has utilized
several internal reports to better analyze the current financial position of the
Bank, and the Company, and to identify historic trends in both entities.
However, management is aware that the movement of interest rates is an
uncertainty which could have a negative impact on the earnings of Lawrence
Federal.
At this time, Lawrence Federal is liability sensitive which makes the Bank
subject to increased interest expense during periods of rising interest rates.
Lawrence Federal has placed an emphasis on adjustable-rate loans and the
origination of fixed-rate mortgage loans through a third party which, over the
long-term, will serve to make the balance sheet less liability sensitive.
Lawrence Federal currently does not participate in hedging programs, interest
rate swaps or other activities involving the use of derivative financial
instruments.
Quantitative Aspects of Market Risk. When evaluating interest rate risk
Lawrence Federal utilizes an interest sensitivity analysis prepared by the
Office of Thrift Supervision (the "OTS"), which is supplemented by an internally
generated, monthly "Rate-Volume-Variance Report". The following table, which is
based on information provided to Lawrence Federal by the Office of Thrift
Supervision, presents the change in Lawrence Federal's net portfolio value at
March 31, 2002, that would occur upon an immediate change in interest rates
based on OTS assumptions, but without giving effect to any steps that management
might take to counteract that change.
NPV as % of Portfolio
Change in Net Portfolio Value Value of Assets
Interest Rates ----------------------------------------- ------------------------
In Basis Points (Dollars in thousands) NPV
(Rate Shock) $ Amount $ Change % Change Ratio Change (1)
- ----------------- ----------- ------------ -------------- --------- -------------
300 13,131 -5,652 -30% 10.15% -358
200 15,192 -3,592 -19% 11.50% -222
100 17,137 -1,646 -9% 12.73% -99
Static 18,783 -- -- 13.73% --
-100 19,980 1,196 6% 14.41% 68
(1) Expressed in basis points.
The preceding table shows that in the event of a sudden and sustained
increase in market interest rates of 200 basis points or more, the net portfolio
value of Lawrence Federal would decrease moderately.
The OTS uses certain assumptions in assessing the interest rate risk of
savings associations. These assumptions relate to interest rates, loan
prepayment rates, deposit decay rates, and the market values of certain assets
under differing interest rate scenarios, among others.
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19
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 to 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 mortgage loans, have
features which restrict changes in interest rates on a short-term basis and over
the life of the asset. Further, if interest rates change, expected rates of
prepayments on loans and early withdrawals from certificates of deposit could
deviate significantly from those assumed in calculating the table.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations
of a short-term nature. Lawrence Federal further defines liquidity as the
ability to respond to the needs of depositors and borrowers as well as
maintaining the flexibility to take advantage of investment opportunities.
Lawrence Federal's primary sources of funds consist of deposit inflows, loan
repayments, maturities and sales of investment securities and borrowings from
the Federal Home Loan Bank. While maturities and scheduled amortization of loans
and securities are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition.
Lawrence Federal's most liquid assets are cash and short-term investments
(securities maturing in one year or less). The levels of these assets are
dependent on Lawrence Federal's operating, financing, lending and investing
activities during any given period. At June 30, 2002, cash and short-term
investments totaled $13.4 million. Securities classified as available-for-sale
totaled $11.5 million at June 30, 2002.
Funding is obtained primarily from activity involving deposit accounts and
Federal Home Loan Bank advances. In the first six months of 2002 Lawrence
Federal experienced a net increase in total deposits of $0.2 million since
December 31, 2001 compared to an increase of $8.4 million for the same period in
2001. In addition, at June 30, 2002, Lawrence Federal had the ability to borrow
a total of approximately $15 million from the Federal Home Loan Bank of
Cincinnati through the use of an existing cash management advance agreement. On
that date, Lawrence Federal had advances outstanding of $2 million. As of
December 31, 2001, Federal Home Loan Bank advances were at $2 million. Deposit
flows are affected by the overall level of interest rates, the interest rates
and products offered by Lawrence Federal and its local competitors and other
factors. Lawrence Federal generally manages the pricing of its deposits to be
competitive and to increase core deposit relationships. Occasionally, Lawrence
Federal offers promotional rates on certain deposit products in order to attract
deposits.
Lawrence Federal is subject to various regulatory capital requirements
administered by the OTS including a risk-based capital measure. The risk-based
capital guidelines include both a definition of capital and a framework for
calculating risk-weighted assets by assigning balance sheet assets and
off-balance sheet items to broad risk categories. At June 30, 2002, Lawrence
Federal exceeded all of its regulatory capital requirements. Lawrence Federal is
considered "well capitalized" under regulatory guidelines. See the table on page
nine (9) of this filing for more detail regarding the Bank's capital position.
Effect of Inflation and Changing Prices
The consolidated financial statements and related financial data presented
in this Form 10-QSB have been prepared following accounting principles generally
accepted in the United States of America, which require the measurement of
financial position and operating results in terms of historical dollars without
considering the change in the relative purchasing power of money over time due
to inflation. The primary impact of inflation is reflected in the increased cost
of Lawrence Federal's operations. Unlike most industrial companies, virtually
all the assets and liabilities of a financial institution are monetary in
nature. As a result, interest rates generally have a more significant impact on
a financial institution's performance than do general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the prices of goods and services.
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20
Lawrence Financial Holdings, Inc.
Form 10-QSB
Quarter ended June 30, 2002
PART II - Other Information
Item 1- Legal Proceedings:
There are no matters required to be reported under this item.
Item 2- Changes in Securities:
There are no matters required to be reported under this item.
Item 3- Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4- Submission of Matters to a Vote of Security Holders:
The Annual Meeting of Stockholders of the Company was held on May 13,
2002. The results of the vote on the matters presented at the meeting
is as follows:
1. The following individuals were elected as directors, each
for a three-year term:
Vote For Vote Withheld
-------- -------------
Charles E. Austin, II 559,881 90,915
------- ------
Phillip O. McMahon 560,981 89,815
------- ------
The terms of Directors Jack L. Blair, Tracey E. Brammer, Herbert J.
Karlet and Robert N. Taylor continued after the meeting.
2. The appointment of Crowe, Chizek and Company LLP as auditors for
the Corporation for the fiscal year ending December 31, 2002 was
ratified by stockholders by the following vote:
For 645,691; Against 3,900; Abstain 1,205
------- ----- -----
Item 5- Other Information:
(a) The Company issued a press release dated May 28, 2002 to announce
the declaration of a cash dividend to shareholders.
(b) The Company issued a press release dated July 11, 2002, to
announce earnings from the second quarter of 2002.
Item 6- Exhibits and Reports on Form 8-K:
(a) Exhibits -
99.1 - Certification pursuant to 18 U.S.C. Section 1350,as
adpoted pursuant to Section 906 of the Sarbanes-Oxley act of 2002
- RobRoy Walters -- Chief Financial Officer
99.2 - Certification pursuant to 18 U.S.C. Section 1350,as
adpoted pursuant to Section 906 of the Sarbanes-Oxley act of 2002
- Jack L. Blair -- Chief Executive Officer
(b) Reports on Form 8-K.
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21
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Lawrence Financial Holdings, Inc.
August 13, 2002 /s/ Jack L. Blair
Date: ___________________________ ________________________________________
Jack L. Blair
President and Chief Executive Officer
August 13, 2002 /s/ RobRoy Walters
Date: ___________________________ ________________________________________
RobRoy Walters
Senior Vice President and
Chief Financial Officer
- --------------------------------------------------------------------------------
22