<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ----------------------
Commission File Number 0-28162
LENOX BANCORP, INC.
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(Exact name of registrant as specified in its charter)
OHIO 31-1445959
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(State or other jurisdiction of incorporation or (IRS Employer
organization) Identification No.)
5255 Beech Street, St. Bernard, Ohio 45217
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(Address of principal executive offices) (Zip Code)
(513) 242-4690
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes | | No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 425,677 shares of
common stock, without par value per share, were outstanding as of November 10,
1996.
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LENOX BANCORP, INC.
FORM 10-Q
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995.........................................2
Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1996 and 1995.......3
Consolidated Statements of Cash Flows for the Three and
Nine Months Ended September 30, 1996 and 1995.................4
Notes to Consolidated Financial Statements....................5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations.................6
PART II OTHER INFORMATION
Item 1 Legal Proceedings.............................................11
Item 2 Changes in Securities.........................................11
Item 3 Defaults Upon Senior Securities...............................11
Item 4 Submission of Matters to a Vote of Security Holders...........11
Item 5 Other Information.............................................11
Item 6 Exhibits and Reports on Form 8-K..............................11
SIGNATURES
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
LENOX BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------------ -------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks....................................................... $ 1324 $ 1,249
Certificates of deposit....................................................... 160 152
Investment securities - available for sale, at fair value (amortized cost of
$7,284 at September 30, 1996 and amortized cost of $6,022 at
December 31, 1996............................................................. 7,439 6,021
Mortgage-backed securities - available for sale, at fair value (amortized cost
of $877 at September 30, 1996 and amortized cost of $1,083 at
December 31, 1995)............................................................ 875 1,023
Loans receivable, net......................................................... 36,630 33,384
Accrued interest receivable:
Loans...................................................................... 142 124
Mortgage-backed securities................................................. 6 7
Investments and certificates of deposit.................................... 120 104
Property and equipment, net................................................... 263 288
Federal Home Loan Bank Stock-at cost.......................................... 428 407
Prepaid federal income tax.................................................... - 19
Prepaid expenses and other assets............................................. 99 253
------- -------
Total assets............................................................. $47,332 $43,149
======= =======
LIABILITIES AND RETAINED EARNINGS
Liabilities:
Deposits:
Savings, club and other accounts......................................... $ 5,565 $ 5,683
Money market and NOW accounts............................................ 4,893 5,529
Certificate accounts..................................................... 23,643 22,466
------- ------
Total deposits......................................................... 34,101 33,669
Advances from Federal Home Loan Bank.......................................... 5,662 5,327
Capitalized lease obligations................................................. 6 16
Advances by borrowers for taxes and insurance................................. 50 95
Deferred tax liability........................................................ 15 106
Accrued federal income taxes.................................................. 11 --
Accrued expenses and other liabilities........................................ 149 87
SAIF assessment............................................................... 227 --
--------- ---------
Total liabilities........................................................ 40,222 39,301
Stockholders' equity Common Stock, no par value;
2,00,000 shares authorized; 425,677 issued and outstanding.................... 3,850 3,768
Additional paid in capital:
Stockholder's equity - substantially restricted............................... (104) 81
-------- --------
Unrealized gain (loss) on available for sale securities,
net of tax of $53,550 and $37,024 for September 30
and December 31, respectively.............................................. (184,432) 80,511
Total stockholders' equity............................................... 7,110 3,848
------ -------
Total liabilities and stockholders' equity.................................... $47,332 $43,149
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
2
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<TABLE>
<CAPTION>
LENOX SAVINGS BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1996
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------------- -------------------------------
1996 1995 1996 1995
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans................................................ 681 621 1,977 1,810
Mortgage-backed securities........................... 15 19 62 53
Investments and interest bearing deposits............ 140 131 368 327
FHLB stock dividends................................. 8 7 22 20
--- --- ----- -----
Total............................................ 844 777 2,429 2,209
--- --- ----- -----
INTEREST EXPENSE
Deposits............................................. 406 415 1,209 1,240
Borrowed money and capitalized leases................ 81 63 250 108
--- --- ----- -----
Total............................................ 487 477 1,459 1,347
--- --- ----- -----
Net interest income before provision for loan losses. 357 300 970 862
Provision (credit) for loan losses...................... -- (3) -- (6)
--- --- ---- ---
Net interest income after provision for loan losses.. 357 303 970 868
--- --- --- ---
OTHER INCOME
Service fee income................................... 29 24 82 69
Gain on sale of investments.......................... (--) -- 29 --
--- --- --- --
Total............................................ 29 24 110 69
--- --- --- --
GENERAL AND ADMINISTRATIVE EXPENSES
Compensation and employee benefits................... 81 103 291 321
Occupancy and equipment.............................. 42 66 126 143
Federal insurance premiums........................... 247 20 285 60
Franchise taxes...................................... 13 16 39 43
Other expenses....................................... 94 110 227 300
--- --- --- ---
Total............................................ 477 314 968 866
--- --- --- ---
Income before provision for income taxes............. (91) 12 112 70
Provision for income taxes.............................. (38) -- 30 15
--- --- --- --
Net income........................................... (53) 12 82 55
=== == == ==
Earnings per share................................... (.12) N/A N/A N/A
===== === === ===
</TABLE>
See accompanying notes to consolidated financial statements.
3
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<TABLE>
<CAPTION>
LENOX BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SEPTEMBER 30, 1996
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- -----------------------------
1996 1995 1996 1995
------------ ------------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................... (27) 12 82 56
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization................................. 18 19 49 44
Provision (credit) for losses on loans........................ -- (3) -- (6)
Amortization of deferred loan fees............................ (5) (10) (7) (17)
Deferred loan origination fees (costs)........................ 3 10 5 5
FHLB stock dividends.......................................... (8) (7) (22) (19)
Gain on sale of investments and mortgage-backed securities.... -- -- (29) --
Gain on sale of equipment..................................... -- (2) (2)
Effect of change in operating assets and liabilities:
Accrued interest receivable............................... 3 (39) (34) (75)
Prepaid expenses.......................................... 131 (114) 1 (142)
Advances by borrowers for taxes and insurance............. 31 31 (45) (20)
Accrued expenses.......................................... 316 52 288 45
Accrued federal income taxes.............................. (38) -- 11 --
Deferred federal income taxes............................. -- (5) -- 6
------ ----- ------ -------
Net cash provided (used) by operating activities..... 424 (56) 299 (126)
------ ----- ------ -------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions.............................. (12) (65) (13) (72)
Proceeds from sale of equipment............................... -- 4 -- 4
Purchase of mortgage-backed securities - AFS.................. -- -- (653) --
Purchase of mortgage-backed securities - HTM.................. -- (164) -- (164)
Repayment of mortgage-backed securities....................... 52 26 183 50
Proceeds from sale of mortgage-backed securities - AFS........ -- -- 646 --
Purchase of certificates of deposit........................... (3) (--) (8) --
Redemption of certificates of deposits........................ -- (2) -- 76
Loan disbursements............................................ (4,173) (3,339) (9,832) (8,049)
Loan principal repayments..................................... 2,668 2,234 6,552 4,705
Purchase of investments - AFS................................. (2,000) -- (6,150) --
Purchase of investments - HTM................................. -- (1,019) -- (4,727)
Maturity of investments - HTM................................. -- 1,300 -- 2,500
Maturity of investments - AFS................................. 400 -- 2,220 --
Proceeds from sale of investments - AFS....................... 149 -- 2,501 --
------- -------- ------- --------
Net cash used in investing activities..................... (2,919) (1,025) (4,554) (3,667)
------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits........................... (3,597) (1,196) 432 (1,907)
Borrowings from FHLB.......................................... (50) 2,625 600 5,225
Repayment of FHLB advances.................................... (123) (5) (265) (18)
Payments on capitalized lease obligations..................... (3) (10) (9) (29)
Proceeds from issuance of common stock........................ 3,572 -- 3,572 --
------ ------- ------ -------
Net cash provided by financing activities................. (201) 1,414 4,330 3,271
------ ------ ------ ------
Increase (decrease) in cash and cash equivalents................. (2,696) 333 75 (522)
Cash and cash equivalents, beginning of period................... 4,020 1,124 1,249 1,979
------ ------ ------ ------
Cash and cash equivalents at end of period....................... $ 1,324 $ 1,457 $ 1,324 $ 1,457
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE
Cash paid for:
Interest expense.......................................... $487 $477 $1,445 $1,347
Income taxes.............................................. $ -- $ -- $ -- $ 24
</TABLE>
See accompanying notes to consolidated financial statements.
4
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LENOX BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1. PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated financial statements include the accounts of Lenox
Bancorp, Inc. ("Lenox" or the "Company") and its wholly-owned subsidiary Lenox
Savings Bank (the "Bank"). All significant intercompany transactions have been
eliminated in consolidation. The investment in the Bank on Lenox's financial
statements is carried at the parent company's equity in the underlying net
assets.
The consolidated balance sheet as of September 30, 1996 and related
consolidated statements of income, cash flows and changes in stockholder's
equity for the three and nine months ended September 30, 1996 and 1995 are
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included. Such adjustments
consisted of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-Q. The interim statements are unaudited and should be read in conjunction
with the financial statements and notes thereto contained in the Bank's annual
report as presented in Lenox's prospectus dated May 13, 1996.
2. CONVERSION TO CAPITAL STOCK FORM OF OWNERSHIP
---------------------------------------------
The Board of Directors of Lenox Savings Bank, FSB adopted a plan of
conversion, pursuant to which the Bank would convert from an Ohio chartered
mutual savings bank to an Ohio chartered capital stock savings bank, with the
concurrent formation of the holding company, Lenox Bancorp, Inc. On July 14,
1996, the conversion from a mutual form of ownership to a stock form was
finalized. Lenox was capitalized through the initial sale of 425,677 shares of
common stock to eligible account holders, an employee benefit plan of the Bank,
supplemental eligible account holders, other members of the Bank, and the
general public. Lenox then used a portion of the proceeds from the sale to
purchase all of the outstanding shares of the Bank. This transaction was
accounted for in a manner similar to the pooling of interests method.
The Bank may not declare or pay cash dividends on or repurchase any of
its shares of common stock if the effect thereof would cause equity to be
reduced below applicable regulatory capital maintenance requirements or if such
declaration and payment would otherwise violate regulatory requirements.
5
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3. EARNINGS PER SHARE
------------------
The initial public offering was completed July 14, 1996. Net income for
the nine months ended September 30, 1996 was $82,000 and the net loss for the
quarter ended September 30, 1996 was $53,000 or $(.12) per share. Earnings per
share information for the nine month period ended September 30, 1996 and 1995
and the quarter ended September 30, 1995 are not applicable since the Bank's
mutual to stock conversion was not consummated until July 14, 1996.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Comparison of Financial Condition at September 30, 1996 and December 31, 1995.
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ASSETS. Total assets increased by $4.2 million, or 9.7% to $47.3
million at September 30, 1996, from $43.1 million at December 31, 1995. The
increase in total assets was primarily attributable to the Bank's conversion
from the mutual to stock form of ownership and the receipt of conversion
proceeds upon the issuance of common stock by the Company. Net proceeds from the
issuance of Common Stock totalled $3.6 million, and were invested in loans and
investment securities. Loans increased by $3.2 million, or 9.7% to $36.6 million
at September 30, 1996 from $33.4 million at December 31, 1995. Investment
securities increased by $1.2 million or 19.8% to $7.3 million at September 30,
1996 from $6.1 million at December 31, 1995.
LIABILITIES. Total liabilities increased by 900,000, from $39.3 million
at December 31, 1995 to $40.2 million at September 30, 1996 primarily due to
$227,131 accrued for the required SAIF assessment which contributed to the
increase in accrued expenses and other liabilities to $458,455 for the nine
months ended September 30, 1996 from $304,441 at December 31, 1996. Total
liabilities also increased due to an increase in total deposits. Total deposits
at September 30, 1996 were $34.1 million, representing a $432,193, or 1.3%
increase over the December 31, 1995 balance of $33.7 million. Certificate
accounts increased $1.1 million, or 5.2%, while savings, club and other accounts
decreased $25,460, or 0.4% and money market and NOW accounts increased $1.3
million, or 51.6% during the first nine months of 1996. The increase in
certificate accounts was due mainly to favorable rates offered by the Bank. The
increase in money market and NOW accounts was due to the deposit by the Company
of proceeds from the conversion in Lenox Savings Bank. Federal Home Loan Bank
("FHLB") advances increased by $335,292, or 6.3% to $5.7 million at September
30, 1996 from $5.3 million at December 31, 1995.
CAPITAL. Stockholders' equity increased $3.2 million, or 84.8% to $7.1
million at September 30, 1996 from $3.8 million at December 31, 1995. The
increase was due to the Bank's conversion to a stock from of ownership and the
subsequent issuance of common stock which netted the Company $3.6 million. The
increase was also due to a net income of $82,165 earned for the nine months
ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES. The Company's primary sources of funds
are deposits and principal and interest payments on loans. While maturities and
scheduled amortization of
6
<PAGE>8
loans are predictable sources of funds, deposit flows and mortgage prepayments
are strongly influenced by changes in general interest rates, economic
conditions, and competition.
The primary investment activity of the Company for the nine months
ended September 30, 1996 was the origination of mortgage and consumer loans in
the amount of $9.8 million. The most significant source of funds for the nine
months ended September 30, 1996 were the proceeds from the issuance of common
stock of $3.6 million and borrowings from the FHLB of $600,000.
The Bank is required to maintain a minimum level of liquidity (net
cash, short term and marketable assets divided by total deposits and short term
liabilities), as defined by the Federal Deposit Insurance Corporation ("FDIC"),
of at least 15%. The Bank's liquidity at September 30, 1996 was 25.0%. The
Bank's most liquid assets are cash, federal funds sold, and marketable
securities. The levels of the Bank's liquid assets are dependent on the Bank's
operating, financing, lending and investing activities during any given period.
At September 30, 1996, assets qualifying for short term liquidity, including
cash and short term investments, totalled $9.7 million.
At September 30, 1996, the Bank's capital exceeded all of the capital
requirements of the FDIC. The Bank's tier 1 leverage and total capital to
risk-weighted capital ratios were 15.2% and 31.4%, respectively.
RECENT DEVELOPMENTS
- -------------------
On September 30, 1996, the President signed into law the Deposit
Insurance Funds Act of 1996 (the "Funds Act") which, among other things, imposes
a special one-time assessment on SAIF member institutions, including the
Association, to recapitalize the SAIF. As required by the Funds Act, the FDIC
imposed a special assessment of 65.7 basis points on SAIF assessable deposits
held as of March 31, 1995, payable November 27, 1996. The special assessment was
recognized as an expense in the third quarter of 1996 and is tax deductible. The
Association took a charge of $227,000 as a result of the FDIC special
assessment.
The Funds Act also spreads the obligations for payment of the Financing
Corporation ("FICO") bonds across all SAIF and BIF members. Beginning on January
1, 1997, BIF deposits will be assessed for FICO payments at a rate of 20% of the
rate assessed on SAIF deposits. Based on current estimates by the FDIC, BIF
deposits will be assessed a FICO payment of 1.3 basis points, while SAIF
deposits will pay an estimated 6.5 basis points on the FICO bonds. Full pro rata
sharing of the FICO payments between BIF and SAIF members will occur on the
earlier of January 1, 2000 or the date the BIF and SAIF are merged. The Funds
Act specifies that the BIF and SAIF will be merged on January 1, 1999 provided
no savings associations remain as of that time.
As a result of the Funds Act, the FDIC recently proposed to lower SAIF
assessments to 0 to 27 basis points effective January 1, 1997, a range
comparable to that of BIF members. However, SAIF members will continue to make
the higher FICO payments described above.
7
<PAGE>9
Management cannot predict the level of FDIC insurance assessments on an on-going
basis whether the savings association charter will be eliminated or whether the
BIF and SAIF will eventually be merged.
Comparison of Results of Operations for the Three months ended September 30,
- --------------------------------------------------------------------------------
1996 and 1995.
- -------------
GENERAL. Net income for the three months ended September 30, 1996
decreased by $65,000, or 542%, to $(53,000) from $12,000 for the three months
ended September 30, 1995. This decrease was primarily due to the contribution of
$227,000 for the recapitalization of the Savings Association Insurance Fund
(SAIF).
INTEREST INCOME. Interest income for the three months ended September
30, 1996 was $844,000 compared to $777,000 for the three months ended September
30, 1995, an increase of $67,000 or 8.6%. Interest earned on loans increased
$60,000, or 9.7% to $681,000 for the three months ended September 30, 1996 from
$621,000 for the three months ended September 30, 1995 and was the primary
reason for the increase in interest income. The increase in interest earned on
loans was due to an increase in the average balance of loans for the three
months ended September 30, 1996 from the comparable 1995 period. Adding to the
increase in interest income was an increase of $9,000, or 6.9% in interest
earned on investments and interest bearing deposits. This increase was primarily
due to the average balance of investments and interest bearing deposits for the
three months ended September 30, 1996 increasing as compared to the average
balance for the three months ended September 30, 1995.
INTEREST EXPENSE. Interest expense for the three months ended September
30, 1996 was $487,000 compared to $477,000 for the three months ended September
30, 1995, an increase of $10,000 or 2.1%. Interest expense on deposits was
$406,000 for the three months ended September 30, 1996 as compared to $415,000
for the three months ended September 30, 1995. Interest expense on borrowed
money and capitalized leases was $81,000 for the three months ended September
30, 1996 as compared to $63,000 for the three months ended September 30, 1995,
an increase of $18,00 or 28.6%. The increase was due to a larger amount of
outstanding Federal Home Loan Bank advances for the period ended September 30,
1996.
NET INTEREST INCOME. Net interest income increased for the three months
ended September 30, 1996 increased to $357,000 from $303,000 for the three
months ended September 30, 1995. This increase was due to interest income
increasing by $67,000 or 8.6% compared to interest expense for the three months
ended September 30, 1996 increasing $10,000 or 2.0%
GENERAL AND ADMINISTRATIVE EXPENSES. Other expenses increased for the
three months ended September 30, 1996 to $477,000 from $314,000 for the three
months ended September 30, 1995. This increase was primarily due to the Bank's
contribution of $227,000 for the recapitalization of the Savings Association
Insurance Fund (SAIF), implementation of the Bank Employee Stock Ownership Plan
(ESOP) and additional expenses associated with becoming a public company.
8
<PAGE>10
INCOME TAXES. Income taxes for the three months ended September 30,
1996 decreased $38,000 to $(38,000), from $0 for the three months ended
September 30, 1995. This was the result of an decrease in income before taxes of
$103,000 for the three months ended September 30, 1996, compared to the same
period of the prior year.
Comparison of Results of Operations for the Nine months ended September 30, 1996
- --------------------------------------------------------------------------------
and 1995.
- --------
GENERAL. Net income for the nine months ended September 30, 1996
increased by $27,092, or 33.0%, to $82,165 from $55,073 for the nine months
ended September 30, 1995. This increase was due primarily to an increase in net
interest income of $102,044, offset by an increase in taxes of $14,841 and an
increase of $138,506 in general and administrative expenses resulting
exclusively from the Bank's contribution of $227,000 for the recapitalization of
the SAIF.
INTEREST INCOME. Interest income for the nine months ended September
30, 1996 was $2.4 million compared to $2.2 million for the nine months ended
September 30, 1995. Interest earned on loans increased $167,069, or 9.2% to $2.0
million for the nine months ended September 30, 1996 from $1.8 million for the
nine months ended September 30, 1995 and was the primary reason for the increase
in interest income. The increase in loans was primarily due to an increase of
$2.7 million, or 8.3%, in the average balance of conventional mortgage loans for
the nine months ended September 30, 1996 from the comparable 1995 period. Adding
to the increase in interest income, was an increase of $50,300, or 13.4% in
interest earned on investments and interest bearing deposits.
INTEREST EXPENSE. Interest expense for the nine months ended September
30, 1996 was $1.5 million compared to $1.3 million for the same period ended
September 30, 1995, and increase of 112,000 or 8.3%. Interest expense on
deposits decreased $31,000 or 2.5% to $1.2 million for the nine months ended
September 30, 1996 compared to the balance for the nine months ended September
30, 1995, which decrease was primarily due to a larger percentage of the Bank's
deposits being composed of lower costing money market and NOW accounts. Interest
expense on borrowed money and capitalized leases increased $135,000 to $243,000
for the nine months ended September 30, 1996 compared to $108,000 for the nine
months ended September 30, 1995. The increase was primarily due to an increase
in borrowed funds.
NET INTEREST INCOME. Net interest income increased for the nine months
ended September 30, 1996 to $970,000 from $867,000 for the nine months ended
September 30, 1995. This increase was due to interest income increasing by
$219,663, or 9.9% to $2.4 million from $2.2 million for the nine months ended
September 30, 1996 and 1995, respectively. Interest expense increased only 8.2%
to $1.5 million for the nine months ended September 30, 1996 compared to $1.3
million for the same time period in 1995.
PROVISION FOR LOAN LOSSES. There were no provisions recorded during the
period ended September 30, 1996. As of September 30, 1996, nonperforming assets
totalled $65,068 representing a $24,720 decrease from the December 31, 1996
balance of $89,788. At September
9
<PAGE>11
30, 1996, the allowance for loan losses equalled 92.2% of total non-performing
assets, as compared to 66.8% as of December 31, 1995.
For the nine months ended September 30, 1996 and 1995, loans with an
aggregate balance of $1.241 were charged off and loans totalling $1,621 were
recovered. Management believes that the current level of loan loss reserve is
adequate to cover losses inherent in the portfolio as of such date. There can be
no assurance, however, that Lenox will not sustain losses in future periods
which could be substantial in relation to the size of the allowance at September
30, 1996.
OTHER INCOME. Other income increased by $78,397 or 114% to $147,213 for
the nine months ended September 30, 1996 from $68,816 for the nine months ended
September 30, 1995. The increase was primarily due to an increase of $49,891 in
service fee income and a gain on the sale of investments of $29,506 during the
nine months ended September 30, 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. Other expenses increased for the
nine months ended September 30, 1996 to $1.0 million from $866,374 for the nine
months ended September 30, 1995. This increase was the result of the Bank
accruing $227,000 for the recapitalization of the SAIF and the implementation of
the Bank's Employee Stock Ownership Plan ("ESOP") and additional expenses
associated with becoming a public company.
INCOME TAXES. Income taxes for the nine months ended September 30, 1996
increased $14,841 to $29,860, from $15,019 for the nine months ended September
30, 1995. This was the result of an increase in income before taxes of $41,933
for the nine months ended September 30, 1996, compared to the same period of the
prior year. The annualized effective income tax rate for the periods ended
September 30, 1996 and 1995 were 35.4% and 21.4%, respectively.
10
<PAGE>12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are various claims and lawsuits in which the Company is
periodically involved incidental to the Company's business, which in
the aggregate involve amounts which are believed by management to be
immaterial to the financial condition and results of operations of the
Company.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed as part of this report.
Exhibit 3.1 - Certificate of Incorporation of Lenox Bancorp,Inc.*
Exhibit 3.2 - Bylaws of Lenox Bancorp, Inc.*
Exhibit 11 - Computation of Earnings Per Share (filed herewith)
Exhibit 27 - Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
None
- -----------------------
* Incorporated herein by reference into this document from the Exhibits to
Form S-1, Registration Statement, filed on August 28, 1996, as amended,
Registration No. 33-96248.
11
<PAGE>13
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
LENOX BANCORP, INC.
(Registrant)
Date: November 14, 1996 /s/ Virginia M. Porowski
------------------------
Virginia M. Porowski
President and Chief Executive Officer
Date: November 14, 1996 /s/ William T. Bird
-------------------
William T. Bird
Treasurer and Chief Financial Officer
(Principal Accounting Officer)
EXHIBIT 11
<TABLE>
<CAPTION>
LENOX BANCORP, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C>
Net income applicable to common stock $ (53,000)
=========
EARNINGS PER SHARE
Average number of shares of common stock outstanding
LESS: Weighted average unearned ESOP shares 425,677
-------
$ 391,623
=========
Earnings per share $ (.12)
======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001000050
<NAME> LENOX BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 140
<INT-BEARING-DEPOSITS> 159
<FED-FUNDS-SOLD> 1,324
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,159
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 36,690
<ALLOWANCE> 60
<TOTAL-ASSETS> 47,332
<DEPOSITS> 34,101
<SHORT-TERM> 4,049
<LIABILITIES-OTHER> 458
<LONG-TERM> 1,614
0
0
<COMMON> 7,110
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 47,332
<INTEREST-LOAN> 1,977
<INTEREST-INVEST> 452
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,429
<INTEREST-DEPOSIT> 1,209
<INTEREST-EXPENSE> 1,452
<INTEREST-INCOME-NET> 977
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 894
<INCOME-PRETAX> 112
<INCOME-PRE-EXTRAORDINARY> 112
<EXTRAORDINARY> 30
<CHANGES> 0
<NET-INCOME> 82
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 739
<LOANS-NON> 67
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 60
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 60
<ALLOWANCE-DOMESTIC> 60
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
