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, 2004
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)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past ninety days. Yes X No
--- ---
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, 2004
Common Stock, $.01 par value 650,110 Common Shares
Transitional Small Business Disclosure Format (Check One) : Yes [ ] No [ X ]
LAWRENCE FINANCIAL HOLDINGS, INC.
FORM 10-QSB
QUARTER ENDED JUNE 30, 2004
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........................... 12
ITEM 3 - Controls and Procedures............................................. 21
PART II - OTHER INFORMATION
Other Information............................................................ 22
Signatures................................................................... 23
Exhibits..................................................................... 24
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2
CONSOLIDATED BALANCE SHEETS
June 30, 2004 and December 31, 2003
- -----------------------------------------------------------------------------------------------------
(Unaudited)
June 30, December 31,
2004 2003
---- ----
ASSETS
Cash and due from banks $ 7,641,610 $ 10,134,534
Merrill Lynch money market fund 643,036 508,695
------------- -------------
Total cash and cash equivalents 8,284,646 10,643,229
Securities available for sale, at fair value 25,489,987 26,247,238
Loans receivable, net 83,361,870 80,882,658
Federal Home Loan Bank stock 651,800 639,100
Premises and equipment, net 3,345,141 3,474,160
Accrued interest receivable 595,697 566,309
Cash surrender value of life insurance 2,328,663 2,284,990
Other assets 965,968 724,445
------------- -------------
$ 125,023,772 $ 125,462,129
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits $ 7,654,595 $ 7,753,907
Interest-bearing deposits 103,036,296 103,241,721
Total deposits 110,690,891 110,995,628
Other liabilities 617,269 441,249
Total liabilities 111,308,160 111,436,877
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 7,600,234 7,559,313
Retained earnings 9,855,163 9,781,499
Treasury stock, at cost; 149,000 shares (2,728,688) (2,728,688)
Unearned ESOP shares (341,470) (372,510)
Unearned restricted stock awards (134,530) (134,530)
Accumulated other comprehensive income,
net of tax of $(279,773) at 2004 and $(45,242)
in 2003 (543,088) (87,823)
------------- -------------
Total shareholders' equity 13,715,612 14,025,252
------------- -------------
Total liabilities and shareholders' equity $ 125,023,772 $ 125,462,129
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
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3
CONSOLIDATED STATEMENTS OF INCOME
Three Months and Six Months Ended June 30, 2004 and 2003
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ------------------------------
2004 2003 2004 2003
---- ---- ---- ----
INTEREST INCOME
Loans, including fees $ 1,349,099 $ 1,677,334 $ 2,728,182 $ 3,418,418
Taxable securities 190,022 173,513 400,769 365,533
Tax exempt securities 31,655 23,219 38,360 45,555
Overnight deposit 16,010 16,498 33,110 38,982
----------- ----------- ----------- -----------
1,586,786 1,890,564 3,200,421 3,868,488
----------- ----------- ----------- -----------
INTEREST EXPENSE
Deposits 461,912 627,848 919,016 1,308,559
----------- ----------- ----------- -----------
NET INTEREST INCOME 1,124,874 1,262,716 2,281,405 2,559,929
Provision for loan losses 180,000 195,000 360,000 495,000
----------- ----------- ----------- -----------
NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES 944,874 1,067,716 1,921,405 2,064,929
NONINTEREST INCOME
Net securities gains -- 31,488 75,314 184,610
Service charges 119,133 120,089 229,643 226,587
Other 35,983 50,979 71,791 91,296
----------- ----------- ----------- -----------
155,116 202,556 376,748 502,493
----------- ----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and benefits 482,635 495,250 1,026,005 983,800
Deposit insurance premiums 4,187 15,082 8,563 30,354
Occupancy and equipment 111,138 89,729 217,345 181,893
Data processing 95,496 160,775 188,764 357,158
Franchise tax 33,643 34,594 68,293 67,594
Advertising expense 20,619 19,110 42,176 49,752
Professional fees 59,207 77,308 160,655 166,139
Other 171,215 211,190 363,580 392,890
----------- ----------- ----------- -----------
978,140 1,103,038 2,075,381 2,229,580
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAX 121,850 167,233 222,772 337,842
Provision for income tax 30,039 42,725 59,396 86,504
----------- ----------- ----------- -----------
NET INCOME $ 91,811 $ 124,508 $ 163,376 $ 251,338
=========== =========== =========== ===========
Basic earnings per common share $ 0.15 $ 0.21 $ 0.27 $ 0.41
=========== =========== =========== ===========
Diluted earnings per common share $ 0.15 $ 0.20 $ 0.26 $ 0.40
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
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4
CONSOLIDATED STATEMENTS OF INCOME
Three Months and Six Months Ended June 30, 2004 and 2003
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ------------------------------
2004 2003 2004 2003
---- ---- ---- ----
Net income $ 91,810 $ 124,509 $ 163,376 $ 251,338
Other comprehensive income:
Unrealized gains arising during period (813,352) 151,439 (614,482) 65,675
Reclassification adjustment for gains
included in net income -- (31,488) (75,314) (184,610)
----------- ----------- ----------- -----------
(813,352) 119,951 (689,796) (118,935)
Income tax effect 276,540 (40,783) 234,531 40,438
----------- ----------- ----------- -----------
Other comprehensive income (loss),
net of tax (536,812) 79,168 (455,265) (78,497)
----------- ----------- ----------- -----------
Comprehensive income (loss) $ (445,002) $ 203,677 $ (291,889) $ 172,841
=========== =========== =========== ===========
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, 2003 and the Six Months Ended June 30, 2004
(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, 2003 $ 7,991 $ 7,467,042 $9,485,971 $ (1,683,600) $ (434,580) $ (201,794) $ 147,761 $ 14,788,791
Net income -- -- 477,190 -- -- -- -- 477,190
Net unrealized depreciation
on securities available
for sale, net of tax of
$(121,361) -- -- -- -- -- -- (235,584) (235,584)
Treasury Stock acquired -
55,000 shares -- -- -- (1,045,088) -- -- -- (1,045,088)
Cash dividend - $0.28
per share -- -- (181,662) -- -- -- -- (181,662)
Stock-based compensation -- 92,271 -- -- 62,070 67,264 -- 221,605
-------- ------------ ---------- ------------ ---------- ---------- --------- ------------
Balance, December 31, 2003 7,991 7,559,313 9,781,499 (2,728,688) (372,510) (134,530) (87,823) 14,025,252
Net income -- -- 163,376 -- -- -- -- 163,376
Net unrealized depreciation
on securities available
for sale, net of tax of
$234,531 -- -- -- -- -- -- (455,265) (455,265)
Cash dividend - $0.14
per share -- -- (89,712) -- -- -- -- (89,712)
Stock-based compensation -- 40,921 -- -- 31,040 -- -- 71,961
-------- ------------ ---------- ------------ ---------- ---------- --------- ------------
Balance, June 30, 2004 $ 7,991 $ 7,600,234 $9,855,163 $ (2,728,688) $ (341,470) $ (134,530) $(543,088) $ 13,715,612
======== ============ ========== ============ ========== ========== ========= ============
The accompanying notes are an integral part of these consolidated financial statements..
- -----------------------------------------------------------------------------------------------------------------------------------
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2004 and 2003
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30,
--------------------------------
2004 2003
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 163,376 $ 251,338
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 135,331 108,282
Provision for loan losses 360,000 495,000
Stock dividend on Federal Home Loan Bank stock (12,700) (12,100)
Net premium amortization (discount accretion) 78,532 82,530
Net securities gains (75,314) (184,610)
ESOP expense 71,961 63,670
Restricted stock award expense 33,633 52,369
Change in other assets and liabilities 62,332 (113,829)
------------ ------------
Net cash from operating activities 817,151 742,650
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of:
Securities available for sale (10,703,394) (27,873,325)
Premises and equipment (6,311) (186,423)
Proceeds from:
Sale of securities available for sale 4,049,769 15,401,821
Calls, maturities and principal repayments of securities
available for sale 6,717,864 1,641,357
Sale of fixed assets -- 2,800
Net change in loans (2,839,213) 4,619,483
------------ ------------
Net cash from investing activities (2,781,285) (6,394,287)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits (304,737) 1,717,878
Cash dividend paid (89,712) (91,793)
Purchase of treasury stock -- (1,045,088)
------------ ------------
Net cash from financing activities (394,449) 580,997
------------ ------------
Net change in cash and cash equivalents (2,358,583) (5,070,640)
Cash and cash equivalents at beginning of the year 10,643,229 16,320,500
------------ ------------
Cash and cash equivalents at end of the period $ 8,284,646 $ 11,249,860
============ ============
Supplemental disclosures:
Cash paid during the period for:
Interest $ 924,608 $ 1,312,062
Income taxes 132,150 347,413
Non-cash transactions
Transfer of loans to real estate owned -- 43,235
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, 2004
(Unaudited)
- --------------------------------------------------------------------------------
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, Ohio. 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 only holds liquid assets in the
form of cash. The operations from Lawrence Financial Services Corporation are
not considered to be significant. 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
-------------- -------------
2004 2003 2004 2003
---- ---- ---- ----
Weighted average shares outstanding 605,848 617,446 607,206 601,941
Effect of stock options 19,468 13,202 17,533 9,744
Effect of non-vested stock awards 2,044 2,136 1,696 1,668
------- ------- ------- -------
Weighted average shares outstanding - Diluted 627,360 632,784 626,435 613,353
======= ======= ======= =======
STOCK-BASED COMPENSATION: Employee compensation under the stock option plan is
reported if options are granted below market price at grant date. Pro forma
disclosures of compensation cost of stock-based awards have been determined
using the fair value method that considers the time value of the option
considering the volatility of the Company's stock, expected dividend yield, and
the risk-free interest rate over the expected life of the option using a
Black-Scholes valuation model.
The options granted on December 31, 2001 have an exercise price of $14.45 and
expire in December 2011. One-fifth of the options vested on the date of grant;
the remaining options vest over four years. The fair value of options granted in
2001 was estimated using the following assumptions: Risk-free interest rate of
4.49%, expected life of 5 years, expected volatility of stock price of 27% and
expected dividend yield of 1.94%. Based on these assumptions, the estimated fair
value of options granted in 2001 was $3.77 per option.
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8
The following pro forma information presents net income and earnings per common
share had the fair value of the options been used to measure compensation cost
for the stock option plan.
Six Months Ended Three Months Ended
June 30, June 30,
2004 2003 2004 2003
Reported net income $163,376 $251,338 $91,810 $124,509
Pro forma impact (19,450) (19,450) (9,725) (9,725)
-------- -------- ------- --------
Pro forma net income $143,926 $231,888 $82,085 $114,784
======== ======== ======= ========
Reported basic earnings per common share $0.27 $0.41 $0.15 $0.21
Pro forma impact (0.03) (0.03) (0.02) (0.02)
----- ----- ----- -----
Pro forma basic earnings per common share $0.24 $0.38 $0.13 $0.19
===== ===== ===== =====
Reported diluted earnings per common share $0.26 $0.40 $0.15 $0.20
Pro forma impact (0.03) (0.03) (0.02) (0.01)
----- ----- ----- -----
Pro forma diluted earnings per common share $0.23 $0.37 $0.13 $0.19
===== ===== ===== =====
BASIS OF PRESENTATION: 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). The preparation of financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates. The allowance for loan 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, 2004, 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, 2003, contains consolidated financial
statements and related notes which should be read in conjunction with the
accompanying consolidated financial statements.
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, 2004 and
December 31, 2003, management believes the Bank complied with all regulatory
capital requirements. At June 30, 2004, Lawrence Federal exceeded all of its
regulatory capital requirements. Lawrence Federal is considered "well
capitalized" under regulatory guidelines. Management is unaware of any events or
circumstances that would change the Bank's classification since this time.
- --------------------------------------------------------------------------------
9
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 30,2004:
- -------------
Total capital (to risk-
weighted assets) $ 13,670 15.60% $ 7,010 8.0% $ 8,763 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 12,989 14.82 3,506 4.0 5,259 6.0
Tier 1 (core) capital (to
adjusted total assets) 12,989 10.36 5,015 4.0 6,269 5.0
December 31,2003:
- -----------------
Total capital (to risk-
weighted assets) $ 13,521 16.39% $ 6,600 8.0% $ 8,250 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 12,803 15.52 3,300 4.0 4,950 6.0
Tier 1 (core) capital (to
adjusted total assets) 12,803 10.18 5,031 4.0 6,289 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 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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10
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,
2004 2003
--------- ---------
(Dollars in Thousands)
Beginning Balance ...................................... $1,014 $1,111
Provision for Loan Losses .............................. 360 495
Charge Offs ............................................ (394) (505)
Recoveries ............................................. 8 23
------ ------
Ending Balance ......................................... $988 $1,124
====== ======
The following table shows the components of non-performing assets at:
June 30, December 31,
2004 2003
------------ ------------
(Dollars in Thousands)
Non-Accrual Loans ................................. $370 $340
Loans 90 days or more past due
and still accruing interest ..................... 1,765 1,492
------ ------
Total Non-Performing Loans ...................... 2,135 1,832
------ ------
Other Real Estate Owned ........................... 75 234
Total Non-Performing Assets ....................... $2,210 $2,066
====== ======
Non-performing loans to total loans ............... 2.53% 2.24%
Non-Performing assets to total loans plus 2.62% 2.52%
other real estate owned ........................
Allowance for credit losses to total 46.29% 55.37%
non-performing loans ...........................
Loans 90 days or more past due and 2.09% 1.82%
not on non-accrual to total loans ..............
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11
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,
-------------------- --------------------
2004 2003 2004 2003
---- ---- ---- ----
SIGNIFICANT RATIOS:
Net income to
Average total assets 0.29% 0.37% 0.26% 0.37%
Average stockholders' equity 2.65 3.58 2.35 3.55
Net Interest Margin 3.90 4.05 3.99 4.08
Average net loans to average deposits 77.06 78.70 77.48 79.40
Average stockholders' equity to
average total assets 10.98 10.33 11.07 10.51
Capital ratios
Tier I capital 10.36 9.35 10.36 9.35
Risk-based capital 15.60 15.36 15.60 15.36
- ---------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Earnings per weighted average share
Basic $ 0.15 0.21 $ 0.27 0.41
Diluted 0.15 0.20 0.26 0.40
Weighted average shares outstanding
Basic 607,206 601,941 605,848 617,446
Diluted 626,435 613,354 627,360 632,784
Total shares outstanding at end of period 650,110 650,110 650,110 650,110
Cash dividends per share $ 0.07 0.07 $ 0.14 0.14
Book value per share at end of period $ 21.11 21.36 $ 21.11 21.36
Market price at end of period
Source: NASDAQ.com $ 23.00 22.50 $ 23.00 22.50
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.
OPERATING STRATEGY
Lawrence Financial, through its wholly owned subsidiary Lawrence Federal
Savings Bank (the "Bank" or
- --------------------------------------------------------------------------------
12
"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 extends its lending
activities outside of its market area through programs for originating
automobile loans through a network of dealers and other banks. The consumer
loans originated through these indirect lending programs typically have shorter
terms and higher yields than mortgage loans. 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.
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 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.
The Bank expensed $360,000 of provision for loan loss for the first six
months of 2004, compared to $495,000 for the same period of 2003. While the
provision for loan loss has been reduced from the same period in 2003 as a
direct result of the continued efforts in the collection department, management
has determined that the current level is adequate considering the current charge
off experiences.
During the six month period ended June 30, 2004, the Company had net
charge-offs of approximately $387,000, compared to $482,000 for the six month
period ended June 30, 2003. At June 30, 2004, the Company had a ratio of
Allowance for Loan Loss to gross loans of 1.17% compared to 1.22% on the same
date in 2003.
- --------------------------------------------------------------------------------
13
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2004 AND DECEMBER 31, 2003
Total assets decreased $438,000, or .5%, to $125.0 million at June 30,
2004 when compared to the balances at December 31, 2003. At June 30, 2004, net
loans receivable had increased $2.5 million, or 3%, when compared to the
balances at December 31, 2003. Direct and indirect consumer loans increased $5.1
million, or 27%, real estate loans decreased by $2.8 million, or 7%, indirect
mobile home loans decreased $1.3 million, or 9%, and commercial loans increased
$1.5 million, or 16% at June 30, 2004. The allowance for loan losses at June 30,
2004 was $988,000. The growth in the direct and indirect loan portfolio resulted
primarily from the purchase of $5.0 million in auto loans. The growth in the
commercial loan portfolio was due primarily to the origination of one commercial
loan participation with a local commercial bank. Lawrence Federal's long term
investments, held in the form of securities, decreased by $757,000 or 3%, when
comparing June 30, 2004 balances to December 31, 2003. During the first six
months of 2004 Lawrence Financial's available cash and cash equivalents
decreased to $8.3 million, a decrease of $2.4 million, or 22%. This decrease was
primarily due to the increase in loan volume.
Compared to December 31, 2003, deposits decreased $305,000 or 1%, to
$110.7 million at June 30, 2004.
Equity decreased $310,000, or 2%, to $13.7 million at June 30, 2004 when
compared to December 31, 2003. During the period ended June 30, 2004, retained
earnings increased $163,000 as a result of net income for the period and
decreased as a result of the payment of $90,000 in cash dividends to the
shareholders. In addition to these changes, retained earnings decreased $455,000
as a result of the net unrealized depreciation in the investments portfolio.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDING
JUNE 30, 2004 AND 2003
GENERAL. For the three months ended June 30, Lawrence Financial's net
income decreased 26% to $92,000 for 2004 from $125,000 for 2003. For the six
month period ended June 30, Lawrence Financial's net income decreased 35% to
$163,000 for 2004 from $251,000 for 2003. Return on average assets was 0.29% and
0.26% for the second quarter and first six months of 2004, respectively,
compared to 0.37% and 0.37% for the same two periods in 2003. Return on average
equity was 2.65% and 2.35% for the second quarter and first six months of 2004,
respectively, compared to 3.58% and 3.55% for the same two periods in 2003. Net
interest income decreased $138,000, or 11%, during the second quarter and
decreased $279,000, or 11%, for the six month period ending June 30. Noninterest
income decreased $47,000, or 23%, during the second quarter and $126,000, or
25%, for the six month period ending June 30. Offsetting the decrease in net
interest was a $15,000 or 8% decrease in the provision for loan losses for the
quarter ended June 30, and a $135,000 or 27% decrease in the provision for loan
losses for the six months ended June 30. Offsetting the decrease in net interest
and noninterest income was a $125,000, or 11%, decrease in noninterest expense
for the quarter ended June 30 and a $154,000, or 7%, decrease in noninterest
expense for the six months ended June 30. The Company experienced a $42,000 or
4% increase in salaries, wages and benefits during the first six months of 2004
when compared to the same period of 2003. This increase was a result of the
creation of the operation and proof areas within the Company's banking
subsidiary and increased medical insurance costs, as well as other related
costs. The Company has determined that the 2004 salaries and wages will be held
at the 2003 levels to help offset the rising benefit costs. Data processing
costs decreased $168,000, or 47%, when compared to the same period in 2003, with
$75,000 of the decrease directly related to the costs incurred for preparation
of the data processing conversion the Company underwent in July 2003.
INTEREST INCOME. Interest income decreased $304,000, or 16%, for the
quarter compared to the same quarter in 2003 and decreased $668,000, or 17%, for
the first six months of 2004 compared to the first six months of 2003. Interest
income on loans decreased $328,000, or 20%, and decreased $690,000, or 20%, 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 $25,000, or 13%, for the quarter and increased $28,000, or
7%, for the six months ended June 30 primarily as a result of a larger average
balance being carried by the Company during 2004. The average yield on
interest-earning assets declined to 5.50% for the quarter and 5.60% for the six
months ended June 30, 2004, from 6.06% and 6.16% for the same two periods in
2003, as lower yielding long term investments became a higher percentage of
interest earning assets.
- --------------------------------------------------------------------------------
14
INTEREST EXPENSE. Interest expense decreased $166,000, or 26%, for the
quarter compared to the same quarter in 2003 and decreased $390,000, or 30%, for
the first six months of 2004 compared to the first six months in 2003. The
decrease in interest expense for the quarter and six months ending June 30,
2004, was a direct result of a decline in the rates paid on deposits. The
average cost of interest-bearing liabilities was 1.79% for the quarter and 1.79%
in the first six months of 2004 compared to 2.11% and 2.20% for the same periods
in 2003, 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 at least 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 second quarter of
2004, to the fourth quarter 2003 and the second quarter of 2003.
The provision for loan losses was $180,000 for the second quarter of
2004 which represents a decrease of $15,000, or 8%, from the provision of
$195,000 recorded for the same period in 2003. The decrease in provision was
driven, in part, by management's evaluation of historic trends and estimates
regarding charge-offs.
Non-performing assets totaled $2.21 million at June 30, 2004, or 1.77%
of assets. Of the $2.21 million in non-performing assets, $1.77 million were
loans which are 90 days or more past due and still accruing interest and
$370,000 were loans in a non-accrual status. Non-performing indirect mobile home
loans made up $590,000 of the loans that were 90 days or more past due and still
accruing interest and $298,000 of the loans that are carried in a non-accrual
status. At December 31, 2003, non-performing assets totaled $2.07 million or
1.65% of assets. Of the $2.07 million, $1.49 million were loans which are 90
days or more past due and still accruing interest and $340,000 were loans in a
non-accrual status. At December 31, 2003, non-performing indirect mobile home
loans made up $569,000 of the loans that were 90 days or more past due and still
accruing interest and $229,000 of the loans that are carried in a non-accrual
status.
Allowance for loan losses totaled $988,000 at June 30, 2004 and $1.1
million at June 30, 2003. At June 30, 2004, Lawrence Federal's allowance for
loan losses represented 1.16% of total gross loans and 46% 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 allowance to be adequate at June 30,
2004.
- --------------------------------------------------------------------------------
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,
2004 to the same period in 2003 and the six months ending June 30, 2004 to the
same period in 2003.
Quarters Ended
Dollar Percentage
06/30/04 06/30/03 Change Change
------------ ----------- ------------ -------------
(Dollars in Thousands)
Net securities gains (losses) ................... $ -- $ 31 $ (31) N/M
Service charges ................................. 119 $120 (1) (1)%
Other ........................................... 36 51 (15) (29)%
----- ---- -----
Total ........................................ $ 155 $202 $ (47) (23)%
===== ==== =====
There were no securities sold during the second quarter ended June 30,
2004 to create gains or losses. Income earned on the cash surrender value of
life insurance was down $15,000 for the quarter ended June 30, 2004 when
compared to the same period of 2003.
Six Months Ended
Dollar Percentage
06/30/04 06/30/03 Change Change
------------ ----------- ------------ -------------
(Dollars in Thousands)
Net securities gains (losses) ................... $ 75 $185 $(110) (59)%
Service charges ................................. 230 $226 4 2%
Other ........................................... 72 91 (19) (21)%
----- ---- -----
Total ........................................ $377 $502 $(125) (25)%
===== ==== =====
Net securities gains recognized in the first six months of 2003 were not
duplicated in the same period of 2004. There were no sales of securities during
the second quarter of 2004. During the first six months of 2003, management had
determined that there were investments being held that should be sold due to
market conditions. These conditions were no longer present during the same
period in 2004, resulting in fewer sales of securities and the related gains.
The decrease in "Other" was primarily due to the decrease in income earned on
the cash surrender value of bank owned life insurance.
- --------------------------------------------------------------------------------
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, 2004 to the same period in 2003 and the six months ending June 30, 2004 to
the same period in 2003.
Quarters Ended
Dollar Percentage
06/31/04 06/30/03 Change Change
--------- --------- -------- ------------
(Dollars in Thousands)
Salaries and benefits ............ $483 $495 $(12) (2)%
Deposit insurance premiums ....... 4 15 (11) (73)%
Occupancy and equipment .......... 111 90 21 23%
Data processing .................. 95 161 (66) (41)%
Franchise tax .................... 34 35 (1) (3)%
Advertising expense .............. 21 19 2 11%
Professional Fees ................ 59 77 (18) (23)%
Other ............................ 171 211 (40) (19)%
---- ------ -----
Total ...................... $978 $1,103 $(125) (11)%
==== ====== =====
Non-interest expense decreased $125,000, or 11%, for quarter ended June
30, 2004, as compared to the same period in 2003. One of the primary reasons for
this involves the $65,000 decrease in expenses related to the data processing
function of the Bank. This is a result of the successful conversion to a new
data processor which was completed during the third quarter of 2003. In
addition, the company has experienced decreases in: professional fees; including
audit and legal services; printing and supplies; various expenses related to the
collection of delinquent mobile home loans; and other various non-interest
expenses.
Six Months Ended
Dollar Percentage
06/31/04 06/30/03 Change Change
--------- --------- -------- ------------
(Dollars in Thousands)
Salaries and benefits ............ $1,026 $984 $42 4%
Deposit insurance premiums ....... 9 30 (21) (70)%
Occupancy and equipment .......... 217 182 35 19%
Data processing .................. 189 357 (168) (47)%
Franchise tax .................... 68 68 -- --
Advertising expense .............. 42 50 (8) (16)%
Professional Fees ................ 161 166 (5) (3)%
Other ............................ 364 393 (29) (7)%
------ ------ -----
Total ...................... $2,076 $2,230 $(154) (7)%
====== ====== =====
Non-interest expense decreased $154,000, or 6%, for the six months ended
June 30, 2004, as compared to the same period in 2003. The increase in salaries
and benefits for the six months ended June 30, 2004 compared to the same period
in 2003 reflects the addition of employees in the loan collection, loan review,
internal audit and operations departments within the Company's banking
subsidiary. The decrease in data processing is the direct result of the
successful conversion of data processors which was completed during the third
quarter of 2003. The Company has also experienced decreases in: printing and
supplies; advertising expenses; expenses directly related to the collection of
delinquent mobile home loans; and other non-interest expenses.
INCOME TAX EXPENSE. The provision for income tax was $30,000 for the
three months ended June 30, 2004, compared to $43,000 in the same period for
2003 and $59,000 for the six months ended June 30, 2004, compared to $87,000 in
the same period for 2003. The provision decreased as a result of lower taxable
income. The effective tax rate for the quarter ended June 30, 2004 was 24.7%
compared with 25.6% for the same period in 2003 and for the six months ended
June 30, 2004 was 26.7% compared with 25.6% for the same period in 2003.
- --------------------------------------------------------------------------------
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,
--------------------------------------------------------------------------
2004 2003
--------------------------------- ---------------------------------
(DOLLARS IN THOUSANDS) AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
BALANCE YIELD/ BALANCE YIELD/
RATE RATE
--------- ---------- --------- --------- ---------- ---------
Interest-earning assets:
Loans (1) ......................... $ 79,928 $2,728 6.85% $ 95,030 $3,418 7.22%
Securities (2) .................... 25,490 439 3.67% 22,514 411 3.95%
Short term investments ........... 9,441 33 0.07% 9,154 39 0.09%
-------- -- -------- --
Total interest-earning assets ... 114,859 3,200 5.60% 126,698 3,868 6.16%
Non-interest-earning assets ......... 11,680 9,163
-------- --------
Total assets .................... $126,539 $135,861
======== ========
Interest-bearing liabilities:
Deposits:
Savings accounts ................ 27,666 33 0.48% 33,414 81 0.98%
NOW accounts .................... 19,167 55 1.16% 16,998 35 0.83%
Certificates of deposit ......... 55,705 369 2.67% 69,736 565 3.29%
Total deposits-interest
bearing liabilities ......... 103,162 919 1.79% 119,680 1,308 2.20%
Non-interest-bearing liabilities .... 9,372 1,092
----- -----
Total liabilities ............. 112,534 120,772
Total retained earnings ............. 14,005 15,089
------ ------
Total liabilities and
retained earnings ........... $126,539 $135,861
======== ========
Net interest-earning assets ....... $11,697 $7,018
======= =====
Net interest income/interest
rate spread (3) ................. 2,281 3.81% 2,560 3.96%
===== ===== ===== =====
Net interest margin (4) ........... 3.99% 4.08%
Ratio of interest-earning
assets to interest-bearing
liabilities ..................... 111.34% 105.86%
___________________________________
(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.
- --------------------------------------------------------------------------------
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 2004 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, 2004, 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.
NET PORTFOLIO VALUE NPV AS % OF PORTFOLIO
CHANGE IN VALUE OF ASSETS
INTEREST RATES -------------------------------------- ----------------------
IN BASIS POINTS (DOLLARS IN THOUSANDS) NPV
(RATE SHOCK) $ AMOUNT $ CHANGE % CHANGE RATIO CHANGE (1)
- --------------- ---------- ------------ ---------- ------- ------------
300 14,449 (2,700) (16)% 11.59% (168)
200 15,672 (1,478) (9)% 12.39% (88)
100 16,629 (520) (3)% 12.98% (29)
Static 17,150 -- -- 13.26% --
(100) 17,183 33 N/M 13.22% (5)
(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.
- --------------------------------------------------------------------------------
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, 2004, cash and
short-term investments totaled $8.3 million. Securities classified as
available-for-sale totaled $25.5 million at June 30, 2004.
Funding is obtained primarily from activity involving deposit accounts
and Federal Home Loan Bank advances. In the first six months of 2004 Lawrence
Federal experienced a net decrease in total deposits of $305,000 since December
31, 2003 compared to an increase of $1.7 million for the same period in 2003. In
addition, at June 30, 2004, 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,
as well as the same date in 2003, Lawrence Federal had no long term advances
outstanding. 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, 2004, Lawrence
Federal exceeded all of its regulatory capital requirements. Lawrence Federal is
considered "well capitalized" under regulatory guidelines. See the table on page
ten (10) 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.
- --------------------------------------------------------------------------------
20
ITEM 3
CONTROLS AND PROCEDURES
The Company's management, including the Company's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Company's "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"). Based upon their evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
were effective for the purpose of ensuring that the information required to be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission (the "SEC") (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (2) is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
- --------------------------------------------------------------------------------
21
LAWRENCE FINANCIAL HOLDINGS, INC.
FORM 10-QSB
Quarter ended June 30, 2004
PART II - OTHER INFORMATION
Item 1- Legal Proceedings:
There are no matters required to be reported under this item.
Item 2- Changes in Securities:
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
(c) (d)
(a) (b) Total Number of Shares (or Maximum Number (or Approximate
Total Number of Average Price Units) Purchased as Part of Dollar Value) of Shares (or
Shares (or Paid per Share Publicly Announced Plans or Units) that May Yet Be Purchased
Period Units) Purchased (or Unit) Programs Under the Plans or Program
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
Month #1: April 1, 2004
through April 30, 2004 0 N/A N/A 15,000
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
Month #2: May 1, 2004 through
May 31, 2004 0 N/A N/A 15,000
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
Month #3: June 1, 2004
through June 30, 2004 0 N/A N/A 15,000 (1)
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
Total 0 N/A N/A N/A
- ------------------------------- ------------------ ---------------- ------------------------------ ---------------------------------
(1) On October 24, 2003, Lawrence Financial announced a repurchase program under
which it would repurchase up to 15,000 shares of its common stock. The
repurchase program will continue until it is completed or terminated by the
Board of Directors..
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 14,
2004. The results of the vote on matters presented at the meeting is
as follows:
The following individuals were elected as directors, each for a three
year term:
VOTES FOR VOTES WITHHELD
--------- --------------
Jack L. Blair 478,317 66,800
------- ------
Tracey E. Brammer, Jr. 478,317 66,800
------- ------
The appointment of Crowe, Chizek and Company LLC as auditors for the
Corporation for the fiscal year ending December 31, 2004 was ratified
by the stockholders by the following vote:
For 544,767; Against 300; Abstain 50
---------- ---------- ----------
Item 5- Other Information:
There are no matters required to be reported under this item.
- --------------------------------------------------------------------------------
22
Item 6- Exhibits and Reports on Form 8-K:
(a) Exhibits -
31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer
31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer
32.1 - Section 1350 Certification of Chief Executive Officer
32.2 - Section 1350 Certification of Chief Financial Officer
(b) Reports on Form 8-K.
A report on form 8-K was filed on April 16, 2004. Under Item 12,
Lawrence Financial Holdings, Inc. furnished information regarding results of
operations for the quarter ended March 31, 2004.
- --------------------------------------------------------------------------------
23
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.
Date: August 12, 2004 /s/ Jack L. Blair
------------------------------ ----------------------------------------
Jack L. Blair
President and Chief Executive Officer
Date: August 12, 2004 /s/ RobRoy Walters
------------------------------ ----------------------------------------
RobRoy Walters
Executive Vice President and Chief
Financial Officer
- --------------------------------------------------------------------------------
24