FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20552
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 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 No. 0-26248
LONDON FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 34-1800830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2 East High Street
London, Ohio 43140
- --------------------- ----------
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (614) 852-0787
Check whether the issuer (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.
Yes _X_ No
As of August 5, 1996, the latest practicable date, 529,000 of the registrant's
common shares, without par value, were issued and outstanding.
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<PAGE>
LONDON FINANCIAL CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition ....... 3
Consolidated Statements of Earnings .................. 4
Consolidated Statements of Cash Flows ................ 5
Notes to Consolidated Financial Statements ........... 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ........................................... 8
PART II - OTHER INFORMATION ........................................... 13
SIGNATURES ............................................................. 14
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<PAGE>
<TABLE>
London Financial Corporation
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
June 30, September 30,
ASSETS 1996 1995
<S> <C> <C>
Cash and due from banks ................................ $ 865 $ 835
Interest-bearing deposits in other
financial institutions .............................. 2,182 2,009
-------- -------
Cash and cash equivalents ........................ 3,047 2,844
Investment securities - at amortized cost,
approximate market value of $1,999 and
$498 at June 30, 1996 and September 30,
1995, respectively .................................. 2,000 500
Mortgage-backed securities - at cost,
approximate market value of $4,065
and $1,978 at June 30, 1996 and
September 30, 1995, respectively .................... 4,143 2,009
Loans receivable - net ................................. 27,130 27,972
Office premises and equipment - at
depreciated cost .................................... 360 372
Stock in Federal Home Loan Bank - at cost .............. 257 244
Accrued interest receivable on loans ................... 145 135
Accrued interest receivable on mortgage-
backed securities ................................... 17 5
Accrued interest receivable on investments
and interest-bearing deposits ........................ 14 --
Prepaid expenses and other assets ...................... 43 33
Prepaid federal income taxes ........................... -- 5
Deferred federal income taxes .......................... 33 33
-------- -------
TOTAL ASSETS ..................................... $ 37,189 $34,152
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits ............................................... $ 28,780 $30,594
Advances from Federal Home Loan Bank ................... 300 300
Other liabilities ...................................... 62 34
Accrued federal income taxes ........................... 102 --
-------- -------
TOTAL LIABILITIES ................................ 29,244 30,928
Shareholders' Equity
Common shares - 5,000,000, no par value,
authorized, 529,000 shares issued and
outstanding ........................................ -- --
Additional paid-in capital ........................... 4,910 --
Shares acquired by Employee Stock Ownership Plan ..... (423) --
Retained earnings - substantially restricted ......... 3,458 3,224
-------- -------
TOTAL SHAREHOLDERS' EQUITY ....................... 7,945 3,224
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....... $ 37,189 $34,152
======== =======
</TABLE>
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<PAGE>
<TABLE>
London Financial Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
Nine months ended Three months ended
June 30, June 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income
Loans ...................................... $1,783 $ 1,533 $588 $519
Mortgage-backed securities ................. 85 72 31 25
Investment securities ...................... 23 19 10 6
Interest-bearing deposits and other ........ 172 90 89 44
------ ------- ---- ----
Total interest income .................. 2,063 1,714 718 594
Interest expense
Deposits ................................... 1,123 982 351 360
Borrowings ................................. 21 21 7 7
------ ------- ---- ----
Net interest expense ................... 1,144 1,003 358 367
------ ------- ---- ----
Net interest income before provision
for losses on loans .................. 919 711 360 227
Provision for losses on loans ................ -- -- -- --
------ ------- ---- ----
Net interest income after provision
for losses on loans .................. 919 711 360 227
Other operating income ....................... 45 51 7 6
General, administrative and other expense
Employee compensation and benefits ......... 309 292 101 92
Occupancy and equipment .................... 53 51 18 18
Federal deposit insurance premiums ......... 63 59 20 24
Franchise taxes ............................ 34 33 11 11
Data processing ............................ 44 42 15 14
Other ...................................... 117 116 50 41
------ ------- ---- ----
Total general, administrative and
other expense ....................... 620 593 215 200
------ ------- ---- ----
Earnings before income taxes ........... 344 169 152 33
Federal income taxes
Current .................................... 110 51 41 14
Deferred ................................... -- (2) -- --
------ ------- ---- ----
Total federal income taxes ............. 110 49 41 14
------ ------- ---- ----
NET EARNINGS ........................... $ 234 $ 120 $111 $ 19
====== ======= ==== ====
EARNINGS PER SHARE ..................... N/A N/A $.23 N/A
====== ======= ==== ====
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</TABLE>
<PAGE>
<TABLE>
London Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended June 30,
(In thousands)
1996 1995
------ ------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net earnings for the period ................................. $ 234 $ 120
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of deferred loan origination fees ............ (76) (42)
Depreciation and amortization ............................. 19 18
Federal Home Loan Bank stock dividends .................... (13) (24)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans .................... (10) (7)
Accrued interest receivable on mortgage-backed securities (12) (6)
Accrued interest receivable on investments and interest-
bearing deposits ...................................... (14) --
Prepaid expenses and other assets ....................... (10) (17)
Other liabilities ....................................... 28 (1)
Federal income taxes
Current ............................................... 107 42
Deferred .............................................. -- (2)
------- -------
Net cash provided by operating activities ............... 253 81
Cash flows provided by (used in) investing activities:
Principal repayments on mortgage-backed securities .......... 162 122
Purchase of mortgage-backed securities ...................... (2,296) --
Purchase of investment securities ........................... (1,500) --
Principal repayments on loans ............................... 5,602 3,543
Loan disbursements .......................................... (4,684) (5,594)
Purchase of office equipment ................................ (7) (9)
------- -------
Net cash provided by (used in) investing activities ..... (2,723) (1,938)
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposit accounts ................. (1,814) 1,303
Proceeds from issuance of common shares ..................... 4,487 --
------- -------
Net cash provided by financing activities ............... 2,673 1,303
------- -------
Net increase (decrease) in cash and cash equivalents .......... 203 (554)
Cash and cash equivalents at beginning of period .............. 2,844 2,556
------- -------
Cash and cash equivalents at end of period .................... $ 3,047 $ 2,002
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Federal income taxes ...................................... $ 20 $ 10
======= =======
Interest on deposits and borrowings ....................... $ 1,144 $ 1,003
======= =======
</TABLE>
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<PAGE>
London Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine month periods ended
June 30, 1996 and 1995
In October 1995, the Board of Directors of The Citizens Loan and Savings
Company ("Citizens") adopted a Plan of Conversion (the "Plan") providing for
the conversion of Citizens to the stock form of organization (the
"Conversion"). In connection with the Conversion, Citizens formed a holding
company, London Financial Corporation, ("LFC"). On March 29, 1996, Citizens
completed the conversion to the stock form of organization, in connection with
which Citizens issued all of its outstanding shares to LFC and LFC issued
529,000 common shares in a subscription offering and a community offering at a
price of $10.00 per share which, after consideration of offering expenses
totaling $380,000, and shares purchased by employee benefit plans totaling
$423,000, resulted in net cash proceeds of $4.5 million. The financial
statements for the periods prior to March 1996 are those of Citizens prior to
the Conversion.
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of consolidated
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of
management, all adjustments (consisting of only normal recurring accruals)
which are necessary for a fair presentation of the consolidated financial
statements have been included. The results of operations for the three and
nine month periods ended June 30, 1996 and 1995, are not necessarily
indicative of the results which may be expected for an entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of LFC
and Citizens. All significant intercompany items have been eliminated.
3. Earnings Per Share
Earnings per share for the three month period ended June 30, 1996 is computed
based upon 486,680 weighted-average shares outstanding, which gives effect to
a reduction for the 42,320 unallocated shares held by the London Financial
Corporation Employee Stock Ownership Plan (the "ESOP") in accordance with
Statement of Position 93-6.
Earnings per share for the nine month period ended June 30, 1996, and the
three and nine month periods ended June 30, 1995 is not applicable as LFC
completed its conversion to the stock form of ownership in March 1996.
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<PAGE>
London Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine month periods ended
June 30, 1996 and 1995
4. Effects of Recent Accounting Pronouncements
In May 1993, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting by
Creditors for Impairment of a Loan". SFAS No. 114, which was amended by SFAS
No. 118 as to certain income recognition and financial statement disclosure
provisions, requires that impaired loans be measured based upon the present
value of expected future cash flows discounted at the loan's effective
interest rate or, as an alternative, at the loan's observable market price or
fair value of the collateral. SFAS No. 114 was effective for years beginning
after December 15, 1994 (fiscal 1996 as to LFC). LFC adopted SFAS No. 114
effective October 1, 1995, without material effect on consolidated financial
condition or results of operations.
In May 1993, the FASB issued SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". SFAS No. 115 requires that investments be
categorized as held-to-maturity, trading, or available for sale. Securities
classified as held-to-maturity are carried at cost only if LFC has the
positive intent and ability to hold these securities to maturity. Trading
securities and securities available for sale are carried at fair value with
resulting unrealized gains or losses recorded to operations or shareholders'
equity, respectively. LFC adopted SFAS No. 115 for the fiscal year beginning
October 1, 1994 by designating all investment and mortgage-backed securities
as held-to-maturity.
In October 1994, the FASB issued SFAS No. 123 entitled "Accounting for
Stock-Based Compensation." SFAS No. 123 establishes a fair value based method
of accounting for stock-based compensation paid to employees. SFAS No. 123
recognizes the fair value of an award of stock or stock options on the grant
date and is required to be adopted before LFC's 1997 fiscal year. Management
does not believe the disclosure provisions of SFAS No. 123 will have a
material adverse effect on the LFC's consolidated financial position or
results of operations.
5. Pending Legislative Changes
The deposit accounts of Citizens and of other savings associations are insured
by the FDIC in the Savings Association Insurance Fund ("SAIF"). The reserves
of the SAIF are currently below the level required by law. The deposit
accounts of commercial banks are insured by the FDIC in the Bank Insurance
Fund ("BIF"), except to the extent such banks have acquired SAIF deposits. The
reserves of the BIF met the level required by law in May 1995. As a result of
the disparity in the respective reserve levels of the funds, deposit insurance
assessments paid by healthy savings associations exceeded those paid by
healthy commercial banks by approximately $.19 per $100 in deposits in 1995,
and in 1996 BIF assessments required of healthy commercial banks are limited
to a $2,000 minimum fee. This premium disparity could have a negative
competitive impact on the Citizens and other institutions with SAIF-insured
deposits.
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<PAGE>
London Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine month periods ended
June 30, 1996 and 1995
5. Pending Legislative Changes (continued)
Congress is considering legislation to recapitalize the SAIF and to eliminate
the significant premium disparity between the BIF and the SAIF. Currently,
that recapitalization plan provides for the payment of a special assessment,
currently estimated at $.69 to $.70 per $100 of SAIF insured deposits held at
March 31, 1995. In addition, the cost of prior thrift failures would be shared
by both the SAIF and the BIF. This would likely increase BIF assessments by
$.02 to $.025 per $100 in deposits. SAIF assessments would initially be set at
the same level as BIF assessments and could never be reduced below the level
for BIF assessments. These projected assessment levels may change.
A component of the recapitalization plan provides for the merger of the SAIF
and BIF on January 1, 1998. However, the SAIF recapitalization legislation
currently provides for an elimination of the federal thrift charter or of the
separate federal regulation of thrifts prior to the merger of the deposit
insurance funds. As a result, Citizens would be regulated as a bank under
Federal laws which would subject it to the more restrictive activity limits
imposed on national banks. LFC, as the holding company of Citizens, would
become a bank holding company, which would subject it to more restrictive
activity limits and to capital requirements similar to those imposed on
Citizens. In a separate recent legislative proposal, tax legislation would
require Citizens to recapture post-1987 additions to its bad debt reserve, and
Citizens would not be able to utilize the percentage of taxable income method
to compute its reserve in the future. Under such legislation Citizens may be
required to recapture, as taxable income, approximately $360,000 of its bad
debt reserve, which represents post-1987 additions to the reserve. Citizens
will be permitted to pay taxes on its recapture of post-1987 bad debt reserves
over six years beginning in 1997.
Citizens had $29.7 million in deposits at March 31, 1995. If the special
assessment is $.71 per $100 in deposits, Citizens will pay an additional
assessment of $211,000. This assessment should be tax deductible, but it will
reduce earnings and capital for the quarter in which it is recorded. It is
expected that quarterly SAIF assessments will be reduced to approximately $.06
to $.065 per $100 in deposits.
No assurances can be given that the SAIF recapitalization plan will be enacted
into law or in what form it may be enacted. In addition, LFC can give no
assurances that the disparity between BIF and SAIF assessments will be
eliminated and cannot predict the impact of being regulated as a bank holding
company until legislation requiring such changes is enacted.
-8-
<PAGE>
London Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
At June 30, 1996, LFC had total assets of $37.2 million, an increase of $3.0
million, or 8.9%, over September 30, 1995. In March 1996, LFC completed the
conversion from mutual to stock form, realizing net proceeds of $4.5 million
from the sale of common shares. The increase in assets was funded primarily
from the offering proceeds, which were partially offset by a net decline in
deposits of approximately $1.8 million, a significant portion of which is
attributable to the use of deposited funds to purchase common shares in LFC's
offering.
Investment securities and mortgage-backed securities increased by $3.6
million, to a total of $6.1 million at June 30, 1996, reflecting the
investment of the proceeds from the sale of common shares. Investment
securities increased $1.5 million as a result of the purchase of U. S.
Government agency securities. Mortgage-backed securities increased $2.1
million, as purchases totaling $2.3 million exceeded principal repayments of
$162,000.
Loans receivable declined $842,000, or 3.0%, as loan disbursements of $4.7
million were exceeded by principal repayments of $5.6 million.
At June 30, 1996, Citizens' allowance for loan losses totaled $187,000, a
$3,000 decline from the level maintained at September 30, 1995. Nonperforming
loans totaled $77,000, or .27% of the total loan portfolio at June 30, 1996,
as compared to nonperforming loans of $45,000, or .15% of the total loan
portfolio at September 30, 1995. At June 30, 1996, Citizens' allowance for
loan losses was comprised solely of a general loan loss allowance which is
includible as a component of regulatory risk-based capital. Although
management of LFC believes that its allowance for loan losses was adequate at
June 30, 1996, based on facts and circumstances available to it, there can be
no assurances that the allowance will be adequate to absorb actual loan losses
during the current period or that additions to such allowance will not be
necessary in future periods, which could adversely affect LFC's results of
operations.
Deposits totaled $28.8 million at June 30, 1996, a decrease of $1.8 million,
or 5.9%, from the $30.6 million of deposits outstanding at September 30, 1995.
Such decrease resulted primarily from deposit withdrawals which were utilized
to purchase common stock in the conversion.
As required by the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 ("FIRREA") and regulations promulgated thereunder by the Office of
Thrift Supervision ("OTS"), Citizens is required to maintain minimum levels of
capital under three separate standards. Citizens is required to maintain
regulatory capital sufficient to meet tangible, core and risk-based capital
ratios of 1.50% and 3.00% of adjusted total assets, and 8.00% of risk-weighted
assets, respectively.
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<PAGE>
London Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition Changes
As of June 30, 1996, Citizens' regulatory capital exceeded all minimum capital
requirements as shown in the following table:
<TABLE>
Regulatory capital
Tangible Core Risk-based
capital Percent capital Percent capital
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Capital under generally
accepted accounting
principles ........... $5,461 $5,461 $ 5,461
Additional capital items
General valuation
allowances ........... -- -- 187
------- ------ --------
Regulatory capital
computed ............. 5,461 15.5 5,461 15.5 5,648 30.6
Capital requirement .... 527 1.5 1,054 3.0 1,474 8.0
------ -------- ------ -------- ------ --------
Regulatory
capital - excess ..... $4,934 14.0 $4,407 12.5 $4,174 22.6
====== ======== ====== ======== ====== ========
</TABLE>
Comparison of Operating Results For the Nine Month Periods Ended June 30,
1996 and 1995
General
Net earnings for the nine month period ended June 30, 1996, totaled $234,000,
an increase of $114,000, or 95.0%, over the comparable 1995 period. The
increase in earnings resulted primarily from a $208,000 increase in net
interest income, which was partially offset by a $27,000 increase in general,
administrative and other expense, and a $61,000 increase in the federal income
tax provision.
Net Interest Income
Interest income on loans for the nine months ended June 30, 1996, increased by
$250,000, or 16.3%, as compared to the nine months ended June 30, 1995. The
increase was primarily due to an increase in yield, coupled with an increase
in the weighted average portfolio balance year-to-year. Interest income on
mortgage-backed securities increased by $13,000, or 18.1%, due primarily to an
increase in the weighted average portfolio balance year-to-year. Interest
income on investment securities and other interest-earning assets increased
$86,000, or 78.9%. The increases in interest income on investment and
mortgage-backed securities reflect the earnings on securities purchased from
net proceeds of LFC's offering of common shares.
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<PAGE>
London Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net Interest Income (continued)
Interest expense on deposits increased by $141,000, or 14.4%, during the nine
months ended June 30, 1996. This increase was the result of an increase in the
cost of deposits, which was partially offset by a decline in the weighted
average balance of deposits outstanding.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $208,000, or 29.3%, during the nine months
ended June 30, 1996, as compared to the nine months ended June 30, 1995.
Provision for Losses on Loans
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management
based on historical experience, the volume and type of lending conducted by
Citizens, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to Citizens'
market area, and other factors related to the collectibility of Citizen's loan
portfolio. As a result of such analysis, management concluded that the
allowance for loan losses was adequate and, as a result, a provision for
losses on loans was not necessary during the nine month periods ended June 30,
1996 and 1995. There can be no assurance that the loan loss allowance of
Citizens will be adequate to absorb losses on known nonperforming assets or
that the allowance will be adequate to cover losses on nonperforming assets in
the future.
Other Income
Other income decreased $6,000, or 11.8%, during the nine months ended June 30,
1996, due to a decline in service charges and other fees year-to-year.
General, Administrative and Other Expense
General, administrative and other expense increased approximately $27,000, or
4.6%, during the nine months ended June 30, 1996, as compared to 1995. This
increase was primarily the result of a $17,000, or 5.8%, increase in employee
compensation and benefits and pro-rata increases in other operating expenses.
The increase in compensation expense resulted primarily from increased costs
of employee stock benefit plans and normal merit salary increases.
Federal Income Taxes
The provision for federal income taxes increased $61,000, or 124.5%, during
the nine months ended June 30, 1996, due primarily to an increase in earnings
before income taxes of $175,000, or 103.6%. LFC's effective tax rates amounted
to 32.0% and 29.0% during the nine months ended June 30, 1996 and 1995,
respectively.
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<PAGE>
London Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended June 30,
1996 and 1995
General
Net earnings for the three month period ended June 30, 1996, totaled $111,000,
an increase of $92,000, or 484.2%, over the comparable 1995 quarter. The
increase in net earnings resulted primarily from a $133,000 increase in net
interest income, which was partially offset by a $15,000 increase in general,
administrative and other expense, and a $27,000 increase in the federal income
tax provision.
Net Interest Income
Interest income on loans for the three months ended June 30, 1996, increased
by $69,000, or 13.3%. Interest income on mortgage-backed securities increased
by $6,000, or 24.0%, due to an increase in yield, coupled with an increase in
the weighted average portfolio balance outstanding year-to-year. Interest
income on investment securities and other interest-earning assets increased by
$49,000, or 98.0%. This increase was primarily the result of an increase in
the weighted average portfolio balance outstanding year-to-year.
Interest expense on deposits declined by $9,000, or 2.5%, during the three
months ended June 30, 1996. This decline was the result of a decrease in the
average balance outstanding year-to-year.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $133,000, or 58.6%, during the three months
ended June 30, 1996, as compared to the three months ended June 30, 1995.
General, Administrative and Other Expense
General, administrative and other expense increased approximately $15,000, or
7.5%, during the three months ended June 30, 1996, compared to the same period
in 1995. This increase was primarily the result of a $9,000, or 9.8%, increase
in employee compensation and benefits and a $9,000, or 22.0 %, increase in
other operating expenses, which were partially offset by a $4,000, or 16.7%,
decrease in federal deposit insurance premiums. The increase in compensation
expense resulted primarily from increased costs related to employee stock
benefit plans. The increase in other operating expense generally reflects
pro-rata increase in operating costs overall, while the decline in federal
deposit insurance premiums resulted primarily from the decline in deposit
balance outstanding year-to-year.
Federal Income Taxes
The provision for federal income taxes increased by $27,000, or 192.9%, during
the three months ended June 30, 1996, due primarily to an increase in earnings
before income taxes of $119,000, or 360.6%. LFC's effective tax rates amounted
to 27.0% and 42.4% during the three months ended June 30, 1996 and 1995,
respectively.
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<PAGE>
London Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
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) Exhibit 27 -- Financial Data Schedule
LFC filed a Form 8-K and a Form 8-K/A on July 11, 1996, and July
26, 1996, respectively, to report a change in the LFC's
independent certified public accounting firm, from KPMG Peat
Marwick LLP to Grant Thornton LLP.
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<PAGE>
SIGNATURES
Pursuant to 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.
Date: August 9, 1996 John J. Bodle
______________________________
President
Date: August 9, 1996 Joyce E. Bauerle
______________________________
Treasurer
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 865
<INT-BEARING-DEPOSITS> 2,182
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 6,143
<INVESTMENTS-MARKET> 6,064
<LOANS> 27,130
<ALLOWANCE> 187
<TOTAL-ASSETS> 37,189
<DEPOSITS> 28,780
<SHORT-TERM> 0
<LIABILITIES-OTHER> 164
<LONG-TERM> 300
0
0
<COMMON> 4,910
<OTHER-SE> 3,035
<TOTAL-LIABILITIES-AND-EQUITY> 37,189
<INTEREST-LOAN> 1,783
<INTEREST-INVEST> 108
<INTEREST-OTHER> 172
<INTEREST-TOTAL> 2,063
<INTEREST-DEPOSIT> 1,123
<INTEREST-EXPENSE> 1,144
<INTEREST-INCOME-NET> 919
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 620
<INCOME-PRETAX> 344
<INCOME-PRE-EXTRAORDINARY> 234
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.02
<LOANS-NON> 77
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 190
<CHARGE-OFFS> 3
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 187
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 187
</TABLE>
