UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1997.
[ ] 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 000-22469
LAFAYETTE BANCORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1605492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
133 North 4th Street, Lafayette, Indiana 47902
(Address of principal executive offices) (Zip Code)
(765) 423-7100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1994 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 ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Class Outstanding at August 11, 1997
Common Stock, without par value 1,965,050 shares
<PAGE>
<PAGE> 2
LAFAYETTE BANCORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets -- June 30, 1997 and December
31, 1996
Consolidated Statements of Income -- Three Months Ended
June 30, 1997 and 1996
Consolidated Statements of Income -- Six Months Ended June
30, 1997 and 1996
Consolidated Statements of Cash Flows -- Six Months Ended
June 30, 1997 and
1996
Notes to Consolidated Financial Statements -- June 30, 1997
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
b) Reports on Form 8-K
SIGNATURES
<PAGE>
<PAGE> 3
ITEM 1.
LAFAYETTE BANCORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and due from banks $ 23,175 $ 21,330
Federal funds sold 2,300 8,050
---------- ----------
Total cash and cash equivalents 25,475 29,380
Securities available-for-sale (at market) 74,444 88,206
Securities held-to-maturity, at cost
(market value $4,590 and $6,147) 4,635 6,156
Loans held for sale 5,562 5,877
Loans 292,006 268,940
Less: Allowance for loan losses (3,194) (3,198)
---------- ----------
Loans, net 288,812 265,742
Federal Home Loan Bank stock (at cost) 1,242 1,116
Premises, furniture and equipment, net 6,166 6,355
Accrued interest receivable and other assets 11,200 11,559
---------- ----------
Total assets $ 417,536 $ 414,391
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits $ 40,710 $ 43,579
Interest-bearing demand and savings deposits 138,517 135,883
Interest-bearing time deposits 168,145 162,088
---------- ----------
Total deposits 347,372 341,550
Short-term borrowings 15,410 24,521
Long-term debt 13,657 9,265
Accrued interest payable and other liabilities 4,693 4,409
---------- ----------
Total liabilities 381,132 379,745
Shareholders' equity
Common stock, no par value: 5,000,000 shares
authorized; 1,975,973 shares issued; and
1,965,050 shares outstanding 1,976 1,976
Additional paid-in capital 19,368 19,368
Retained earnings 15,534 13,705
Unrealized gain (loss) on securities
available-for-sale,net of tax
(($250) and ($204)) (382) (311)
Less: Treasury stock, at cost (10,923 shares) (92) (92)
---------- ----------
Total shareholders' equity 36,404 34,646
---------- ----------
Total liabilities and shareholders' equity $ 417,536 $ 414,391
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 4
LAFAYETTE BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended June 30, 1997 and 1996
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Interest income
Loans $ 6,509 $ 5,462
Taxable securities 1,040 1,049
Tax exempt securities 192 222
Other 124 108
---------- ----------
Total interest income 7,865 6,841
Interest expense
Deposits 3,474 3,072
Short-term borrowings 148 179
Long-term debt 144 127
---------- ----------
Total interest expense 3,766 3,378
---------- ----------
Net interest income 4,099 3,463
Provision for loan losses 90 60
---------- ----------
Net interest income after provision
for loan losses 4,009 3,403
Noninterest income
Income from fiduciary activities 206 196
Service charges on deposit accounts 306 270
Net realized gain on securities 2 23
Net gain on loan sales 150 51
Other service charges and fees 153 94
Other operating income 135 127
----------- -----------
Total noninterest income 952 761
----------- -----------
Noninterest expense
Salaries and employee benefits 1,855 1,496
Occupancy expenses, net 212 190
Equipment expenses 234 263
Other operating expenses 810 737
----------- -----------
Total noninterest expense 3,111 2,686
----------- -----------
Income before income taxes 1,850 1,478
Income taxes 650 504
----------- -----------
Net income $ 1,200 $ 974
=========== ===========
Net income per share $ .61 $ .50
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>5
LAFAYETTE BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the six months ended June 30, 1997 and 1996
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Interest income
Loans $ 12,593 $ 10,731
Taxable securities 2,100 2,180
Tax exempt securities 430 449
Other 293 216
------------ -----------
Total interest income 15,416 13,576
Interest expense
Deposits 6,898 6,082
Short-term borrowings 330 353
Long-term debt 284 261
------------ -----------
Total interest expense 7,512 6,696
------------ -----------
Net interest income 7,904 6,880
Provision for loan losses 150 120
Net interest income after provision
for loan losses 7,754 6,760
Noninterest income
Income from fiduciary activities 410 404
Service charges on deposit accounts 594 514
Net realized gain on securities 31 64
Net gain on loan sales 281 162
Other service charges and fees 263 197
Other operating income 249 247
------------- -------------
Total noninterest income 1,828 1,588
--------------------------
Noninterest expense
Salaries and employee benefits 3,560 3,014
Occupancy expenses, net 431 379
Equipment expenses 462 525
Other operating expenses 1,590 1,422
--------------------------
Total noninterest expense 6,043 5,340
--------------------------
Income before income taxes 3,539 3,008
Income taxes 1,219 1,033
--------------------------
Net income $ 2,320 $ 1,975
=========== =============
Net income per share $ 1.18 $ 1.01
========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 6
LAFAYETTE BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1997 and 1996
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION> 1997 1996
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,320 $ 1,975
Adjustments to reconcile net income
to net cash from operating activities
Depreciation 319 381
Unrealized loss on other real estate - 56
Premium amortization, net of discount
accretion 167 136
Provision for loan losses 150 120
Net realized gain on securities (31) (64)
Net (gain) loss on :
Other real estate 22 -
Change in assets and liabilities:
Loans held for sale 315 (4,564)
Accrued interest receivable and
other assets 235 141
Accrued interest payable and
other liabilities 284 500
---------- ---------
Net cash from operating activities 3,781 (1,319)
Cash flows from investing activities
Purchase of securities available-for-sale (6,217) (21,629)
Proceeds from sales of securities
available-for-sale 10,437 18,073
Proceeds from maturities of securities
available-for-sale 9,320 9,447
Purchase of securities held-to-maturity (524) (1,482)
Proceeds from maturities of securities
held-to-maturity 2,036 1,095
Loans made to customers, net of
payments collected (23,220) (14,301)
Purchase of FHLB stock (126) (36)
Property and equipment expenditures (130) (547)
Proceeds from sales of other real estate 126 295
----------- ----------
Net cash from investing activities (8,298) (9,085)
Cash flows from financing activities
Net change in deposit accounts 5,822 6,482
Net change in short-term borrowings (9,111) (612)
Proceeds from long-term debt 5,000 -
Payments on long-term debt (608) (868)
Dividends paid (491) (426)
----------- --------
Net cash from financing activities 612 4,576
Net change in cash and cash equivalents (3,905) (5,828)
Cash and cash equivalents at
beginning of year 29,380 34,229
----------- --------
Cash and cash equivalents at end of period $ 25,475 $ 28,401
=========== ===========
Supplemental disclosures of cash flow
information
Cash paid during the period for:
Interest $ 7,344 $ 6,495
Income taxes 988 1,386
Non-cash investing activity
Loans transferred to other real estate $ - $ -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 7
LAFAYETTE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Dollar amounts in thousands)
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The significant accounting policies followed by Lafayette
Bancorporation (the "Corporation") for interim financial reporting
are consistent with the accounting policies followed for annual
financial reporting. The consolidated interim financial
statements have been prepared in accordance with Generally
Accepted Accounting Principles and in accordance with instructions
to Form 10-Q and may not include all information and footnotes
normally disclosed for full annual financial statements. All
adjustments which are, in the opinion of management, necessary for
a fair presentation of the results for the periods reported have
been included in the accompanying unaudited consolidated financial
statements and all such adjustments are of a normal recurring
nature.
NOTE 2 - PER SHARE DATA
The weighted average number of shares used in calculating earnings
and dividends per share amounts were 1,965,050 for the three and
six months ending June 30, 1997, and 1,965,320 for the three and
six months ending June 30, 1996. The weighted average number of
shares have been retroactively restated for stock dividends.
<PAGE>
<PAGE> 8
NOTE 3 - SECURITIES
The amortized cost and estimated market values of securities are
as follows at June 30, 1997:
<TABLE>
<CAPTION>
Amortized Estimated
Cost Market Value
<S> <C> <C>
Securities Available-for-Sale
U.S. Government and its agencies $ 34,535 $ 34,293
Obligations of states and
political subdivisions 11,213 11,318
Corporate obligations 250 250
Mortgage-backed and other
asset-backed securities 29,023 28,583
------------ -----------
$ 75,021 $ 74,444
============ ===========
Securities Held-to-Maturity
Obligations of states and
political subdivisions $ 4,635 $ 4,590
</TABLE> ============ ===========
The amortized cost and estimated market values of securities are
as follows at December 31, 1996:
<TABLE>
<CAPTION> Amortized Estimated
Cost Market Value
<S> <C> <C>
Securities Available-for-Sale
U.S. Government and its agencies $ 36,116 $ 35,938
Obligations of states and
political subdivisions 17,358 17,480
Corporate obligations 1,249 1,301
Mortgage-backed and other
asset-backed securities 33,998 33,487
------------ -----------
$ 88,721 $ 88,206
============ ===========
Securities Held-to-Maturity
Obligations of states and
political subdivisions $6,156 $ 6,147
============ ===========
</TABLE>
<PAGE>
<PAGE> 9
LAFAYETTE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Dollar amounts in thousands)
(Unaudited)
NOTE 4 - LOANS
Loans are comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Commercial and agricultural loans $ 116,874 $ 108,470
Residential real estate loans 119,195 104,547
Installment loans to individuals 55,937 54,924
Commercial paper - 999
------------- ------------
Total loans $ 292,006 $ 268,940
=============== ============
</TABLE>
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is as follows:
<TABLE>
1997 1996
<S> <C> <C>
Balance, January 1 $ 3,198 $ 3,200
Provision charged to operations 150 120
Loans charged off (235) (272)
Recoveries on loans
previously charged off 81 191
------------- -------------
Balance, June 30 $ 3,194 $ 3,239
============= =============
</TABLE>
NOTE 6 - SHORT-TERM BORROWINGS
Short-term borrowings are comprised of the following:
<TABLE>
<CAPTION> June 30, December 31,
1997 1996
<S> <C> <C>
Repurchase agreements $ 12,826 $ 23,497
Treasury tax and loan open-end note 2,584 1,024
--------------- ------------
Total short-term borrowings $ 15,410 $ 24,521
============ ============
</TABLE>
<PAGE>
<PAGE> 10
ITEM 2.
LAFAYETTE BANCORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
Lafayette Bancorporation (the "Corporation") is a one-bank holding
company located in Lafayette, Indiana, and conducts business from
thirteen offices in Tippecanoe and White Counties, Indiana. The
Corporation provides a wide range of commercial and personal
banking activities, including accepting deposits; making
commercial and consumer loans; originating mortgage loans;
providing personal and corporate trust services; providing
investment advisory and brokerage services; and providing auto,
homeowners, and other insurance products.
RESULTS OF OPERATIONS
Net Income
The Corporation earned $1,200, or $.61 per share for the second
quarter of 1997 compared to $974, or $.50 per share for the second
quarter of 1996. Net income for the six months ended June 30,
1997 was $2,320, or $1.18 per share, which was $345, or 17.5%
greater than the $1,975, or $1.00 per share earned for the same
period in 1996. The increase in net income is attributable
primarily to higher net interest income and higher noninterest
income, offset by increases in certain noninterest expenses.
Return on average assets (ROA) was 1.14% and 1.08% for the periods
ending June 30, 1997 and 1996, respectively, while return on
average equity (ROE) was 13.11% and 12.19% for those same periods
ending June 30, 1997 and 1996, respectively.
Net Interest Income
Net interest income is the most significant component of the
Corporation's earnings. Net interest income is the difference
between interest and fees realized on earning assets, primarily
loans and securities, and interest paid on deposits and other
borrowed funds. The net interest margin is this difference
expressed as a percentage of average earning assets. Net interest
income is determined by several factors, including the volume of
earning assets and liabilities, the mix of earning assets and
liabilities, and interest rates. For the six months ended June
30, 1997 and 1996, net interest income was $7,904 and $6,880,
respectively. This represents a $1,024, or 14.9% increase over
the prior year. Net interest income for the second quarter of
1997 was $636, or 18.4% higher than for that same three month
period ending June 30, 1996. The increase in net interest income
during 1997 is primarily attributable to loan growth and a
reduction in rates paid on certain deposits.
Interest income for the six month period ending June 30, 1997 and
1996 was $15,416 and $13,576, respectively. Interest income for
the second quarter of 1997 was $1,024, or 15.0% greater than for
that same quarter in 1996. Interest income increased during 1997
primarily due to increased interest and fees on loans. Interest
and fees on loans increased $1,862, or 17.4%, to $12,593 for the
first six months of 1997, compared to $10,731 for the first six
months of 1996. For the second quarter of 1997, interest and fees
on loans increased $1,047, or 19.2% compared to the second quarter
of 1996. These increases were attributable primarily to the
$44,761, or 19.1% growth experienced in the average balance of the
Corporation's loan portfolio from June, 1996 to June 1997.
Total interest expense for the six month period ending June 30,
1997 and 1996 was $7,512 and $6,696, respectively. For the second
quarter of 1997, total interest expense increased $388, or 11.5%,
compared to the same 1996 time period. Approximately 14.0% growth
in average deposits from June, 1996 to June 1997, in addition to a
shift in deposit mix toward higher paying accounts caused the
increase in total interest expense.
<PAGE>
<PAGE> 11
The following table summarizes the Corporation's net interest
income (on a tax-equivalent basis) for each of the periods
presented. A marginal federal income tax rate of 34% for each
period was used.
<TABLE>
<CAPTION>
Six Months Change from
Ended June 30, Prior Period
1997 1996 Amount Percent
<S> <C> <C> <C> <C>
Interest income $15,690 $13,824 $ 1,866 13.5%
Interest expense 7,512 6,696 816 12.2%
------- ------- -------
Net int. income $ 8,178 $ 7,128 $ 1,050 14.7%
======= ======= =======
Three Months Change from
Ended June 30, Prior Period
1997 1996 Amount Percent
Interest income $7,991 $6,968 $1,023 14.7%
Interest expense 3,766 3,378 388 11.5%
------ ------ ------
Net int. income $4,225 $3,590 $ 635 17.7%
====== ====== ======
</TABLE>
Net interest income, on a tax equivalent basis, for the first six
months of 1997 was $1,050, or 14.7% higher than for that same six
month period ending June 30, 1996. For the second quarter of
1997, the net interest margin, on a tax equivalent basis, was
$635, or 17.7% higher than for the same 1996 time period. The net
interest margin, on a tax equivalent basis for the six months
ending June 30, 1997 and 1996 was 4.40% and 4.31%, respectively.
The increase in the net interest margin in 1997 compared to 1996
was a result of the changes that occurred in the rate and volume
mix of the interest-bearing assets and liabilities. The
Corporation has experienced growth in its average loan portfolio
of approximately $44,761, or 19.1% from June, 1996 to June, 1997,
while average investment securities have declined approximately
$4,865, or 5.2% Because loans are generally higher yielding than
certain securities in the investment security portfolio, this
shift in earning assets has resulted in a positive effect on net
interest income. Also contributing to the increase in the net
interest margin was a reduction in the interest rates paid on
certain interest-bearing deposit accounts, primarily the savings
deposits.
Provision for Loan Losses and Asset Quality
The provision for loan losses represents charges made to earnings
to maintain an adequate allowance for loan losses. The allowance
is maintained at an amount believed by management to be sufficient
to absorb losses inherent in the credit portfolio. Management
conducts, on a quarterly basis, a detailed evaluation of the
adequacy of the allowance.
The consolidated provision for loan losses was $150 and $120 for
the first six months of 1997 and 1996, respectively. The
provision for loan losses increased $30 for the second quarter of
1997, compared to the same 1996 time period. The increase in the
provision for loan losses is attributable to the continued loan
growth the Corporation is experiencing. The allowance for loan
losses at June 30, 1997 was $3,194, or 1.09% of total loans
compared to $3,198, or 1.19% of total loans at December 31, 1996.
Net charge-offs were $154 and $81 for the first six months of 1997
and 1996, respectively, an increase of $73, or 47.4%. The lower
1996 net charge-off amount is a result of approximately $142 in
recoveries recorded during the second quarter.
<PAGE>
<PAGE>12
Nonperforming loans include nonaccrual loans, restructured loans,
and loans delinquent 90 days or more. Loans are classified as
nonaccrual when management believes that collection of interest is
doubtful, typically when payments are past due 90 days, unless the
loans are well secured and in the process of collection.
The following table indicates the composition of nonperforming
loans:
<TABLE>
<CAPTION> June 30, December 31,
1997 1996
<S> <C> <C>
Loans past due 90 days or more $ 1,142 $ 735
Non-accrual loans 239 178
Restructured loans 306 482
--------------- ------------
Total nonperforming loans $ 1,687 $ 1,395
=============== ============
</TABLE>
Management believes overall asset quality has not declined despite
an increase in the nonperforming loan totals. The $407 increase
in loans past due 90 days or more was the result of only one
commercial loan, while the $61 net change in non-accrual loans is
the effect of placing one additional commercial loan on non-
accrual status. Restructured loan totals have declined since
December 31, 1996.
Noninterest Income and Expense
Noninterest income totaled $1,828 for the first six months of
1997, compared to $1,588 for that same period of 1996, an increase
of $240, or 15.1%. Noninterest income for the second quarter
increased $191, or 25.1% to $952 compared to the prior year.
Service charges on deposit accounts, which comprise the largest
component of noninterest income, were up for the first six months
of 1997 and up for the second quarter of 1997 when compared to the
same 1996 time periods. The increase in service charge income was
a result primarily in the increasing number of fee-generating
transactions originated from the two supermarket banking
facilities.
Net gain on loan sales originated and sold in the secondary
mortgage market were $281 and $162 for the first six months of
1997 and 1996 respectively, an increase of $119, or 73.5%. For
the second quarter of 1997, net gain on loan sales were $150, an
increase of $99, or 194.1% from the prior year. Lower mortgage
interest rates, which spurred new home sales and home
refinancings, along with the strength of the local economy were
leading factors in these increases.
Other service charges and fees were $263 and $197 for the first
six months of 1997 and 1996, respectively, and increase of $66, or
33.5%. For the second quarter of 1997, other service charges and
fees increased $59, or 62.8% compared to the prior year. ATM fee
income was $56 higher than the previous year as a result of
surcharges and increased volume. The Corporation began
surcharging all non-bank customers in May, 1997, which accounted
for $31, or 55.4% of the $56 increase.
Noninterest expense totaled $6,043 for the first six months of
1997, compared to $5,340 for that same period of 1996, an increase
of $703, or 13.1%. Total noninterest expense for the second
quarter of 1997 was $425, or 15.8% higher than the prior year.
Salary and employee benefits expense was $3,560 for the first six
months of 1997, an increase of $546, or 18.1%, from the $3,014 for
the first six months of 1996. Total salaries and employee
benefits for the second quarter of 1997 was $1,855, a $359, or
24.0% increase from the 1996 amount. Aside from the normal salary
and wage rate increases, a $287 increase in the value of the stock
appreciation rights recorded accounts for a large portion of the
increase.
<PAGE>
<PAGE> 13
Occupancy expense was $431 for the first six months of 1997, an
increase of $52, or 13.7%, compared to the first six months of
1996. For the second quarter of 1997, occupancy expense increased
$22, or 11.6% compared to the prior year. The addition of the
second supermarket banking facility, along with the September,
1996 acquisition of the Monticello branch from National City Bank,
resulted in higher expenses during 1997.
Equipment expenses were $462 for the first six months of 1997, a
decrease of $63, or 12.0%, compared to the $525 for the first six
months of 1996. For the second quarter of 1997, equipment expense
decreased $29, or 11.0% from the prior year. As a result of a
large number of fixed assets becoming fully depreciated,
depreciation expense significantly declined.
Other operating expenses were $1,590 for the first six months of
1997, an increase of $168, or 11.8%, compared to $1,422 for the
first six months of 1996. For the second quarter of 1997, other
operating expenses increased $73, or 9.9% from the prior year.
Increases in advertising, telephone, postage, legal fees, and
goodwill amortization were leading contributors of higher costs
in this category.
Income Taxes
Income taxes were $1,219 for the first six months of 1997 compared
to $1,033 for the first six months of 1996, an increase of $186,
or 18.0%. Compared to the prior year, income taxes increased
$146, or 29.0% for the second quarter of 1997. This increase can
be attributed primarily to the increased earnings the Corporation
experienced.
FINANCIAL CONDITION
Total assets increased $3,145 to $417,536 at June 30, 1997
compared to $414,391 at December 31, 1996. The majority of the
change was a result of net loans increasing $23,070, while
investment securities and cash and cash equivalents declined
$15,283 and $3,905, respectively.
Total deposits increased $5,822, or 1.70%, to $347,372 at June 30,
1997, compared to the total deposits reported six months earlier.
As of June 30, 1997, short-term borrowings decreased $9,111, or
37.2%, while long-term borrowings increased $4,392, or 47.4% when
compared to December 31, 1996 totals. The change in short-term
borrowings is a result of $12,735 in repurchase agreements
maturing during the first quarter of 1997, while the increase in
long-term borrowings is attributable to $5,000 in additional FHLB
borrowings for the purpose of funding the loan growth the
Corporation is currently experiencing.
Capital
The Corporation and Bank are subject to various regulatory capital
guidelines as required by federal and state banking agencies.
These guidelines define the various components of core capital and
assign risk weights to various categories of assets.
Tier 1 capital consists of shareholders' equity less goodwill,
core deposit intangibles, and the unrealized gain or loss on
securities available-for-sale, as defined by bank regulators. The
definition of Tier 2 capital includes the amount of allowance for
loan losses which does not exceed 1.25% of gross risk weighted
assets. Total capital is the sum of Tier 1 and Tier 2 capital.
The minimum requirements under the capital guidelines are
generally at least a 4.00% leverage ratio (Tier 1 capital divided
by average assets less intangible assets and unrealized
gains/losses), a 4.00% Tier 1 risk-based capital ratio (Tier 1
capital divided by risk-weighted assets), and a 8.00% total
capital ratio (Tier 1 capital plus Tier 2 capital divided by risk-
weighted assets).
<PAGE>
<PAGE> 14
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) requires federal regulatory agencies to define capital
tiers. These are: well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized. Under these regulations, a "well-capitalized"
institution must achieve a Tier 1 risk-based capital ratio of at
least 6.00%, and a total capital ratio of at least 10.00%, and a
leverage ratio of at least 5.00% and not be under a capital
directive order. Failure to meet capital requirements can
initiate regulatory action that could have a direct material
effect on the Corporation's financial statements. If only
adequately capitalized; regulatory approval is required to accept
brokered deposits. If undercapitalized, capital distributions,
asset growth, and expansion is limited, in addition to the
institution being required to submit a capital restoration plan.
Management believes the Corporation and the Bank met all the
capital requirements as of June 30, 1997 and December 31, 1996,
and were well capitalized under the guidelines established by the
banking regulators. To be well capitalized, the Corporation and
Bank must maintain the prompt corrective action capital guidelines
described above.
At June 30, 1997 and December 31, 1996, management was not aware
of any current recommendations by banking regulatory authorities
which, if they were to be implemented, would have, or are
reasonably likely to have, a material effect on the Corporation's
consolidated liquidity, capital resources or operations.
The Corporation's actual consolidated capital amounts and ratios are
presented in the following table. The Bank's actual capital amounts
and ratios are not materially different from the consolidated
amounts below.
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Tier 1 capital
Shareholders' equity $ 36,404 $ 34,646
Less: Intangibles (913) (948)
Add/less: Unrealized loss/(gain)
on securities 382 311
------------ ------------
TOTAL TIER 1 CAPITAL $ 35,873 $ 34,009
============ ============
Total capital
Tier 1 capital $ 35,873 $ 34,009
Allowable allowance for loan losses 3,194 3,198
------------ ------------
TOTAL CAPITAL $ 39,067 $ 37,207
============ ============
RISK WEIGHTED ASSETS $ 293,066 $ 280,860
============= ============
AVERAGE ASSETS $ 407,579 $ 396,534
============= ===========
</TABLE>
<TABLE>
<CAPTION> Actual ratios as of
June 30, December 31, Capital Adequacy Well-
Capitalized
1997 1996 Requirement Requirement
<S> <C> <C> <C> <C>
Tier I Capital
(to average assets) 8.80% 8.69% 4.00% 5.00%
Tier I Capital
(to risk
weighted assets) 12.24% 12.13% 4.00% 6.00%
Total Capital
(to risk
weighted assets) 13.33% 13.27% 8.00% 10.00%
/TABLE
<PAGE>
<PAGE> 15
Liquidity
The consolidated statement of cash flows illustrates the elements
which gave rise to the change in the Corporation's cash and cash
equivalents for the six months ended June 30, 1997 and 1996.
Including net income of $2,320, the net cash from operating
activities for the first six months of 1997 generated $3,781 of
available cash. Net cash from investing activities utilized
$8,298 of available cash, primarily as a result of funding $23,220
in net loans. An increase in deposits and the proceeds from the
net change in long-term debt offset the net decrease in short-term
borrowings to generate $612 in cash for the Corporation from
financing activities. Total cash outflows for the six month
period in 1997 exceeded cash inflows by $3,905 resulting in a cash
and cash equivalent balance of $25,475 at June 30, 1997.
<PAGE>
<PAGE> 16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Corporation's Annual Meeting of Shareholders was held
Monday, April 14, 1997.
(b) The following members were elected to the Corporation's
Board of Directors to hold office as indicated by the term
expiration, or until their successors are duly chosen and
qualified.
<TABLE>
<CAPTION>
Term Against or Broker
Expiration Nominee For Withheld Abstain Non-Votes
<S> <C> <C> <C> <C> <C>
1998 Richard A. Boehning 1,518,002 1,758 6,714 140,103
1998 Joseph A. Bonner 1,520,192 1,362 6,714 140,103
1999 W. L. Hancock 1,473,600 47,954 6,714 140,103
1999 Roy D. Meeks 1,516,956 34,598 6,714 140,103
2000 Robert J. Weeder 1,487,076 34,478 6,714 140,103
</TABLE>
(c) The following matters were also voted upon at the Annual Meeting of
Shareholders
<TABLE>
Against or Broker
Matter For Withheld Abstain Non-Votes
<S> <C> <C> <C> <C>
Approval of audited
financial statements 1,482,317 1,362 6,379 141,024
Approval of Crowe, Chizek
as Independent Accountants 1,517,523 3,538 2,133 141,024
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement of computation of per share earnings.
27 Financial Data Schedule for June 30, 1997
(b) Reports on Form 8-K
No Form 8-K was filed with the SEC during the
quarter ended June 30, 1997.
<PAGE>
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly cause this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: August 12, 1997 By /s/ Robert J. Weeder
------------------------
Robert J. Weeder
President
Date: August 12, 1997 By /s/ Marvin S. Veatch
------------------------
Marvin S. Veatch
Controller
Exhibit 11
<TABLE>
Lafayette Bancorporation
Computation of Earnings Per Share (1)
<CAPTION>
Six Months Six Months
Ended June 30, Ended June 30,
1997 1996
Fully Fully
Primary Diluted Primary Diluted
<S> <C> <C> <C> <C>
Average shares:
Outstanding
Common Shares 1,965,050 1,965,050 1,965,320 1,965,320
Common Stock
Equivalents:
Stock Options 72,072 72,072 47,784 47,784
Assumed Repurchase
of Shares (60145) (54,775) (46,637) (46,637)
Average Common and
Common Equivalent
Shares Outstanding 1,976,977 1,982,347 1,966,467 1,966,467
Net Income $2,320,000 $2,320,000 $1,975,000 $1,975,000
Earnings Per Share (2) $1.17 $1.17 $1.00 $1.00
</TABLE>
(1) Average common shares and common stock equivalents have been
restated for all periods to reflect the 20% stock dividend in 1996.
(2) Stock options are not materially dilutive and have been excluded
from earnings per share in the consolidated statements of income.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001035373
<NAME> LAFAYETTE BANCORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,175
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 74,444
<INVESTMENTS-CARRYING> 4,635
<INVESTMENTS-MARKET> 4,590
<LOANS> 292,006
<ALLOWANCE> 3,194
<TOTAL-ASSETS> 417,536
<DEPOSITS> 347,372
<SHORT-TERM> 15,410
<LIABILITIES-OTHER> 4,693
<LONG-TERM> 13,657
0
0
<COMMON> 1,976
<OTHER-SE> 34,428
<TOTAL-LIABILITIES-AND-EQUITY> 417,536
<INTEREST-LOAN> 12,593
<INTEREST-INVEST> 2,530
<INTEREST-OTHER> 293
<INTEREST-TOTAL> 15,416
<INTEREST-DEPOSIT> 6,898
<INTEREST-EXPENSE> 7,512
<INTEREST-INCOME-NET> 7,904
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 31
<EXPENSE-OTHER> 6,043
<INCOME-PRETAX> 3,539
<INCOME-PRE-EXTRAORDINARY> 3,539
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,320
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
<YIELD-ACTUAL> 4.40
<LOANS-NON> 239
<LOANS-PAST> 1,142
<LOANS-TROUBLED> 306
<LOANS-PROBLEM> 2,552
<ALLOWANCE-OPEN> 3,198
<CHARGE-OFFS> 235
<RECOVERIES> 81
<ALLOWANCE-CLOSE> 3,194
<ALLOWANCE-DOMESTIC> 1,110
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,084
</TABLE>
