<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______ to _______
Commission file number 0-25070.
LSB FINANCIAL CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
Indiana 35-1934975
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Main Street, Lafayette, Indiana 47902
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (317) 742-1064
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such requirements for the past 90 days. YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
CLASS OUTSTANDING AT SEPTEMBER 30, 1996
----- ---------------------------------
Common Stock, par value $.01 per share 917,760
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE>
L S B FINANCIAL CORP.
(Dollars in thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA
December 31, September 30,
Dollars in thousands 1995 1996
Total Assets $158,973 $177,840
Loans Receivable, net 132,433 156,080
Available-for-Sale Securities 12,295 7,226
Short-term Investments 3,595 2,309
Deposits 109,977 116,305
Total Borrowings 29,614 44,228
Shareholders' Equity (net) 18,068 16,716
SELECTED OPERATIONS DATA
<TABLE>
<CAPTION>
Three months ended September 30: Nine months ended September 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Total Interest Income $2,810 $3,360 $7,724 $9,702
Total Interest Expense 1,576 1,944 4,237 5,491
----------------------------------------------------------------------
Net Interest Income 1,234 1,416 3,487 4,211
Provision for Loan Losses 0 0 0 800
----------------------------------------------------------------------
Net Interest Income after provision 1,234 1,416 3,487 3,411
Deposit Account Service Charges 62 79 168 243
Gain(loss) on Sale of Securities 0 0 0 9
Net Gain(loss) on Mortgage Loans Originated for Sale 33 46 44 83
Other Non-interest Income 41 47 272 134
----------------------------------------------------------------------
Total Non-Interest Income 136 172 484 469
Total Non-interest Expense 850 1,034 2,497 3,040
----------------------------------------------------------------------
Income before Income Taxes 520 554 1,474 840
Income Tax Expense 185 209 527 308
----------------------------------------------------------------------
Net Income $ 335 $ 345 $ 947 $ 532
Earnings per Share $ 0.35 $ 0.41 $ 1.00 $ 0.60
Book value per share $19.07 $19.66 $19.07 $19.66
</TABLE>
<PAGE>
LSB FINANCIAL CORP.
STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 7,795 $ 6,168
Available-for-sale securities (market value) 12,295 7,226
Loans held for Sale 968 1,394
Total loans 132,387 156,402
Less: Allowance for loan losses (922) (1,716)
-------------------------
Net loans 131,465 154,686
Premises and equipment, net 3,205 4,104
FHLB stock, at cost 1,500 2,275
Accrued interest receivable 905 998
Other assets 840 989
-------------------------
Total Assets $ 158,973 $ 177,840
=========================
Liabilities and Shareholders' Equity
Liabilities
Deposits $ 109,977 $ 116,305
Advances from FHLB 29,364 44,000
Note payable 250 228
Accrued interest payable 159 185
Advances from borrowers for taxes and insurance 203 332
Accrued expenses and other liabilities 952 74
-------------------------
Total liabilities 140,905 161,124
Shareholders' Equity
Common stock 11 11
Additional paid-in-capital 10,063 10,125
Retained earnings 9,626 10,018
Unearned ESOP shares (739) (674)
Unamortized cost of bank incentive plan (399) (354)
Treasury stock (28,000 and 140,895 shares, at cost) (466) (2,351)
Net unrealized loss on
available-for-sale securities (28) (59)
-------------------------
Total shareholders' equity 18,068 16,716
-------------------------
Total liabilities and shareholders' equity $ 158,973 $ 177,840
=========================
Book value per share $ 19.07 $ 19.66
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1996 1995 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $2,475 $3,173 $6,865 $9,092
Interest on available-for-sale securities 192 104 476 369
Interest on held-to-maturity securities 25 0 90 0
Other interest and dividends 118 83 293 241
-------------------------------------------------------------
Total interest income 2,810 3,360 7,724 9,702
Interest Expense
Interest on deposits 1,288 1,339 3,564 3,966
Interest on borrowings 288 605 673 1,525
-------------------------------------------------------------
Total interest expense 1,576 1,944 4,237 5,491
Net interest income 1,234 1,416 3,487 4,211
Provision for loan losses 0 0 0 800
-------------------------------------------------------------
Net interest income after provision for loan losses 1,234 1,416 3,487 3,411
Noninterest Income
Service charges and fees 62 79 168 243
Net gain on mortgage loans originated for sale 33 46 44 83
Gain on sale of securities 0 0 0 9
Other income 41 47 272 134
-------------------------------------------------------------
Total noninterest income 136 172 484 469
Noninterest Expense
Salaries and benefits 402 519 1,159 1,533
Occupancy and equipment, net 134 160 392 473
FDIC insurance 11 1 126 2
Computer service expense 41 65 124 185
Advertising expense 77 62 192 167
Other operating expenses 185 227 504 680
-------------------------------------------------------------
Total noninterest expense 850 1,034 2,497 3,040
Income before income taxes 520 554 1,474 840
Less: income taxes 185 209 527 308
-------------------------------------------------------------
Net income $ 335 $ 345 $ 947 $ 532
=============================================================
Earnings per share (Note 4) $ 0.35 $ 0.41 $ 1.00 $ 0.60
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Net
Unamortized Unrealized
Additional Unearned Cost of Bank Gain/(Loss)
Common Paid-In Retained ESOP Incentive Treasury on AFS
Stock Capital Earnings Shares Plan Stock Securities Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995 $0 $0 $8,384 $0 $0 $0 ($176) $8,208
Issuance of common stock 9 9,600 9,609
Formation of ESOP (824) (824)
ESOP shares earned 4 41 45
Net income 947 947
Change in net unrealized loss 144 144
--------------------------------------------------------------------------------------
Balance at September 30, 1995 $9 $9,604 $9,331 ($783) $0 $0 ($32) $18,129
======================================================================================
Balance at January 1, 1996 $11 $10,063 $9,626 ($739) ($399) ($466) ($28) $18,068
Issuance of common stock for RRP 22 (22) 0
ESOP shares earned 40 65 105
RRP expense 67 67
Treasury stock acquired (1,885) (1,885)
Net income 532 532
Change in net unrealized loss (31) (31)
Dividends paid (140) (140)
--------------------------------------------------------------------------------------
Balance at September 30, 1996 $11 $10,125 $10,018 ($674) ($354) ($2,351) ($59) $16,716
======================================================================================
</TABLE>
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the 9 months ended September 30,
1995 1996
---------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 947 $ 532
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 159 189
Net amortization on securities 59 45
Gain on sale of securities 0 (9)
Writedown of loans held for sale 0 25
Gain on sale of loans (44) (108)
Loans originated for sale, net of sales proceeds 44 (343)
Deferred loan fees, net (39) 45
Provision for loan losses 0 800
Employee stock ownership plan shares earned 45 105
Change in assets and liabilities
Accrued interest receivable (287) (93)
Other assets 475 (61)
Accrued interest payable 41 26
Other liabilities 254 (878)
---------------------------------
Net cash from operating activities 1,654 275
Cash Flows from Investing Activities
Proceeds from paydowns and maturities of
held-to-maturity securities 1,094 0
Purchase of held-to-maturity securities (501) 0
Purchases of available-for-sale securities (6,373) (2,442)
Proceeds from paydowns and maturities of
available-for-sale securities 2,118 6,619
Sales of available-for-sale securities 0 804
Purchase of Federal Home Loan Bank stock (482) (775)
Loans made to customers net of payments received (22,238) (24,066)
Property and equipment expenditures (88) (1,088)
---------------------------------
Net cash from investing activities (26,470) (20,948)
Cash Flows from Financing Activities
Net change in deposits 1,626 6,328
Proceeds from Federal Home Loan Bank advances 25,000 34,000
Payments on Federal Home Loan Bank advances (10,500) (19,364)
Net change in advances from borrowers
for taxes and insurance 113 129
Payments on note payable (21) (22)
Net proceeds from stock offering 9,609 0
Formation of Employee Stock Option Plan (824) 0
Dividends paid 0 (140)
Treasury stock purchased 0 (1,885)
---------------------------------
Net cash from financing activities 25,003 19,046
---------------------------------
Net change in cash and equivalents 187 (1,627)
Cash and equivalents at January 1 7,067 7,795
---------------------------------
Cash and equivalents at September 30 $7,254 $6,168
=================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
Note 1 - General
The financial statements were prepared in accordance with the instructions for
Form 10-QSB and, therefore, do not include all of the disclosures necessary for
a complete presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles. Except for
the adoption of required accounting changes, these interim financial statements
have been prepared on a basis consistent with the annual financial statements
and include, in the opinion of management, all adjustments, consisting of only
normal recurring adjustments, necessary for a fair presentation of the results
of operations and financial position for and at the end of such interim periods.
Note 2 - Principles of Consolidation
The accompanying financial statements include the accounts of LSB Financial
Corp. (the Company), its wholly owned subsidiary Lafayette Savings Bank, FSB
(the Bank) and the Bank's wholly owned subsidiary, LSB Service Corporation. All
significant intercompany transactions have been eliminated upon consolidation.
Note 3 - Stock Issuance and Conversion
On February 3, 1995, the Company completed the issuance of 1,029,576 shares of
common stock raising net proceeds of $9.6 million. In accordance with its Plan
of Conversion, $4.8 million of the proceeds were utilized to purchase 100% of
the outstanding stock of the Bank in conjunction with its conversion from a
mutual to a stock form of organization. The transaction was accounted for in a
manner similar to the pooling of interests method of accounting for a business
combination. Accordingly, the assets and liabilities of the Bank are presented
in these consolidated financial statements at historical cost.
Note 4 - Earnings per share
Earnings per share are computed based upon the weighted average number of shares
outstanding during the period. Shares issued upon conversion are considered to
have been outstanding since January 1, 1995. Unearned ESOP shares are not
considered to be outstanding for the earnings per share computation. The
following table presents share data used to compute earnings per share.
<TABLE>
<CAPTION>
Quarter ended Year-to-date
September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 918,059 1,029,576 958,435 1,029,576
Shares used to compute
earnings per share 849,569 948,862 887,939 952,615
</TABLE>
The options outstanding at September 30, 1996 were not dilutive.
<PAGE>
Note 5 - Accounting Changes
Effective January 1, 1995, the Company adopted Financial Accounting Standard No.
114, "Accounting by Creditors for the Impairment of a Loan," as amended by FAS
118. Pursuant to this standard, loans considered to be impaired are reduced to
the present value of expected future cash flows or to the fair value of
collateral, by allocating a portion of the allowance for loan losses to such
loans. Loans are deemed impaired when management concludes that it is probable
that the customer will be unable to comply with the contractual terms of the
loan, with respect to the timing and amount of required payments. Management
evaluates loans for impairment in conjunction with the quarterly evaluation of
the allowance for loan losses. Generally, such evaluation is limited to large
commercial and commercial real estate loans. Consumer loans and mortgage loans
secured by 1-to 4 family residential property are generally not evaluated for
impairment. Application of the Standard on January 1, 1995, did not result in
any loans being designated as impaired.
Effective January 1, 1996, the Company adopted Financial Accounting Standard No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Management does not believe the Company has any
material assets subject to this new Standard.
Effective January 1, 1996, the Company adopted Financial Accounting Standard No.
122, "Accounting for Mortgage Servicing Rights." This Standard requires the
basis on mortgage loans originated and sold, with servicing retained, to be
allocated between the mortgage loan and the mortgage servicing right, based upon
the relative fair value of such assets. The effect of this Standard will be to
increase the gain, or reduce the loss, recognized upon the sale of a mortgage
loan and will reduce future servicing fee income. During 1996, application of
this Standard has resulted in approximately $56,000 of additional income upon
the sale of approximately $6.8 million of mortgage loans.
Effective January 1, 1996, the Company adopted Financial Accounting Standard No.
123, "Accounting for Stock Based Compensation." This Standard encourages, but
does not require, entities to use a fair value based method to account for
stock-based compensation plans. If fair value accounting is not adopted,
entities must disclose the pro-forma effect on net income and earnings per
share, had fair value accounting been adopted. The stock options issued by the
Company in 1995 are subject to the requirement of this Standard. The Company did
not account for those options using a fair value based method and intends to
disclose the pro-forma effect on net income and earnings per share in its 1996
annual report.
<PAGE>
MANAGEMENT'S DISCUSSION OF RECENT OPERATING RESULTS
Financial Condition
Comparison of Financial Condition at September 30, 1996 and December
31, 1995.
Total assets increased $18.9 million during the nine months from
December 31, 1995 to September 30, 1996. This increase was primarily due to an
$24.4 million increase in the Company's loan portfolio funded by a $6.4 million
decrease in the Company's securities and short term investments, a $6.3 million
increase in deposits and a $14.6 million increase in borrowings from the Federal
Home Loan Bank. During 1996, the Company has continued its efforts to leverage
equity by increasing the size of its higher-yielding loan portfolio.
Non-performing loans increased from $0 at December 31, 1995 to $2.4 million at
September 30, 1996, consisting of $2.4 million of purchased equipment leases
placed on non-accrual status pending a determination of the collectibility of
principal and interest on such leases, and a real estate mortgage on one single
family residence. As discussed further under "Provision for Loan Losses" below,
on April 1, 1996, the Bank placed $2.4 million of purchased equipment leases on
non-accrual status due to the bankruptcy filing by the Bennett Funding Group,
the originator of the leases. Shareholders' equity decreased from $18.1 million
at December 31, 1995 to $16.7 million at September 30, 1996, a decrease of $1.4
million primarily as a result of the Company's repurchase of an additional $1.9
million of its own stock as part of a planned stock buy-back program. Since the
Bank, unlike most savings associations, is insured by the Bank Insurance Fund
(BIF) of the FDIC, it will not be subject to the one-time assessment recently
levied on members of the Savings Association Insurance Fund (SAIF).
Results of Operations
Comparison of Operating Results for the Nine Months and the Quarter Ended
September 30, 1995 and September 30, 1996.
General. Net income for the nine months ended September 30, 1996 was
$532,000, a decrease of $415,000 or 43.82% from net income of $947,000 for the
nine months ended September 30, 1995, due primarily to an $800,000 provision for
loan losses which was intended to proactively address the possibility of losses
on the purchased equipment leases discussed further under "Provision for Loan
Losses" below, and which largely offset a $724,000 increase in net interest
income. The decrease in net income was also due to a $543,000 increase in
non-interest expense partially due to the preparations for opening a new branch.
The lower level of income before tax resulted in a $219,000 decrease in income
taxes. Net income for the third quarter of 1996 was $345,000 compared to
$335,000 for the same period in 1995, primarily due to a $182,000 increase in
net interest income offset by a $184, 000 increase in non-interest expense.
Earnings per share increased from $0.35 for the third quarter of 1995 to $0.41
for the third quarter of 1996, an increase of 17.14%.
Net Interest Income. Net interest income for the nine months ended
September 30, 1996 increased $724,000, or 20.76% over the same period in 1995.
Net interest income for the third
<PAGE>
quarter of 1996 also increased $182,000, or 14.75% over the same period in 1995.
These increases were primarily attributable to management's continuing focus on
increasing the asset size of the Company by increasing the size of the loan
portfolio while improving earnings by changing the structure of the loan
portfolio to increase the percentage of higher yielding commercial and consumer
loans. The Company's net interest rate spread increased from 3.18% for the nine
months ended September 30, 1995 to 3.26% for the nine months ended September 30,
1996, and the spread for the 1996 quarter, compared to 1995, increased from
3.17% to 3.20%.
Interest income on loans increased $2.2 million or 32.44% for the nine
months ended September 30, 1996 compared to the same nine months in 1995. This
was primarily due to an increase of $36.4 million in average loans outstanding
as the Company continued to aggressively target both residential and commercial
borrowers while adding an increased focus on consumer loans. This increase in
interest income also reflected a slight decrease in the average yield on loans
from 8.36% for the first nine months of 1995 to 8.31% for the first nine months
of 1996, reflecting the Company's more aggressive pricing policies over that
period. Interest income on loans increased $698,000 for the third quarter of
1996 compared to the third quarter of 1995 due to a $37.0 million increase in
average loans, partially offset by a decrease in the average yield on loans from
8.51% to 8.28% for the same period. Interest income lost on the $2.4 million of
equipment leases placed on non-accrual status through the third quarter of 1996
was approximately $123,000.
Interest earned on securities and short term investments decreased
$249,000 for the nine months ended September 30, 1996 compared to the same nine
months in 1995. This was the result of an $8.9 million decrease in average
investments, partially offset by an increase in the average yield on investments
from 5.35% to 5.94% over the same period. Interest earned on securities and
short term investments for the third quarter decreased $148,000 for the quarter
ended September 30, 1996 compared to the same period in 1995 due to a $12.6
million decrease in average investments partially offset by an increase in the
average yield from 5.73% to 6.06%. The higher level of investments in 1995 is
generally the result of the Company investing the proceeds from its February,
1995 stock offering. Most maturing investments have been reinvested in the
Company's loan portfolio in keeping with the Company's plan of increasing its
loan-to-deposit ratio while decreasing its lower yielding investment portfolio.
Interest Expense. Interest expense for the nine months ended September
30, 1996 increased $1.3 million over the same period in 1995. This was primarily
due to an increase of $30.5 million in average interest-bearing liabilities
whose effect was further augmented by an increase in the average cost of
interest bearing liabilities from 4.72% for the first nine months of 1995 to
4.87% for the first nine months of 1996. The increase in interest-bearing
liabilities was driven by a $21.1 million increase in average FHLB advances
taken to fund loan demand and by a $9.3 million increase in average deposits as
customers responded favorably to the Company's efforts to attract depositors,
including an aggressive cross-selling program, competitive rates, creative
targeted marketing techniques, and construction of a new branch in the rapidly
growing south side of Lafayette, an area not otherwise conveniently serviced by
the Company. Interest expense increased $368,000 for the third quarter of 1996
over the same period in 1995. There were no substantive changes in the trend
over the period.
<PAGE>
Provision for Loan Losses. The Company establishes its provision for
loan losses based on an analysis of risk factors including concentrations of
credit, past loss experience, current economic conditions, loan portfolio
composition, collateral, delinquencies and comparable loss experience at other
institutions. Based on this analysis, during the three month periods ended
September 30, 1995 and 1996, the Company made no additional provision for loan
losses. However, during the nine month period ending September 30, 1996 the
Company recorded an $800,000 provision for loan losses primarily in response to
the situation involving Bennett Funding Group (Bennett) of Syracuse, New York
through which the Company owns $2.4 million of equipment leases. On March 29,
1996, the Securities and Exchange Commission filed civil and criminal complaints
against an officer of Bennett and shortly thereafter, Bennett sought Chapter 11
bankruptcy protection. The Bank has been paid interest through March 31, 1996.
Based upon the bankruptcy filing and the uncertainty about when principal and
interest payments might resume, the leases were placed in non-accrual status as
of April 1, 1996 and the Bank has allocated $970,000 of its $1.7 million
allowance for loan losses to these receivables. The Bank's $2.4 million
investment is comprised of numerous small dollar equipment leases. While
management believes that the Bank holds original lease documents, the complaint
alleges various fraudulent actions including that Bennett may have sold the same
leases to two or more buyers. To date management has not been notified of
duplication of any leases it owns. In addition, the court has recently made a
determination on what constitutes a secured lease in this case. The Company
believes the leases it holds fall within this definition. However, management
cannot predict with certainty what effect this matter will have on the Company.
After the $800,000 provision, the Company's allowance equals 1.10% of net loans
receivable.
Non-Interest Income. Non-interest income for the nine months ended
September 30, 1996 decreased by $15,000, or 3.10%, from the same period in 1995
due primarily to a $165,000 state tax refund during this period in 1995. A
comparison of non-interest income excluding the non-recurring tax refund shows
an increase of $150,000 for the nine months ended September 30, 1996 over the
same period in 1995. This was due primarily to a $75,000 increase in service
charges and fees on transaction accounts as well as a $39,000 increase in the
net gain on the sales of mortgage loans including the effect of adopting FAS No.
122 (see note 5). Non-interest income for the third quarter of 1996 increased
by $36,000 over the same period in 1995, primarily due to a $17,000 increase in
service charges and fees on transaction accounts and a $13,000 increase in the
net gain on the sales of mortgage loans.
Non-Interest Expense. Non-interest expense for the nine months ended
September 30, 1996 increased by $543,000, or 21.75%, over the same period in
1995. Non-interest expense for the third quarter of 1996 increased $184,000 over
the same period in 1995. These increases in non-interest expense were due
primarily to a $374,000 increase in salaries for the nine month period with a
comparable $117,000 increase for the third quarter, as additional employees were
hired to keep up with continued loan demand and to allow for expanded product
offerings while continuing to meet the needs of existing customers, as well as
to provide staffing for the Company's new branch scheduled to open early in the
fourth quarter of 1996. Other increases of $169,000 for the first nine months
and $67,000 for the third quarter, principally in occupancy and operating
expenses, were due partly to the leasing of office space for the additional
personnel as well as for additional branch-related expenses. These costs were
partially offset by a $124,000 decrease in FDIC insurance premiums during the
nine month period ended September 30, 1996.
<PAGE>
Income Tax Expense. Income tax expense for the nine months ended
September 30, 1996 decreased $219,000 over the same period in 1995, due
primarily to the $634,000 decrease in income before income taxes.
Liquidity. The Company's liquidity is a measurement of its ability to
raise cash when needed without an adverse impact on earnings. Primary sources of
liquidity are short term investments ranging from overnight deposits in other
banks to securities maturing in one year or less. Federal regulations require
the Company to maintain minimum levels of liquid assets. The current requirement
is that the Company maintain liquid assets totaling 5% of net withdrawable
deposits. At September 30, 1996 the liquid assets of the Bank as defined by
regulation, were $8.3 million or 7.22% of the prior month's average net
withdrawable deposits. The Bank's goal has been to decrease liquid assets while
increasing its loan portfolio and believes this to be an appropriate level.
Based upon short-term projections, management anticipates that liquidity needs
will remain at or near current levels for the near future. The major sources of
funds continue to be deposits, repayment of loans, interest earned on loans and
investments and funds from operations. The Bank also has available advances from
the FHLB as a source a funds to be used when advantageous interest rate risk
matches can be found.
Capital Resources. Shareholders' equity totaled $16.7 million at
September 30, 1996 compared to $18.1 million at December 31, 1995, a decrease of
$1.4 million or 7.48%, primarily due to the planned repurchase by the Company of
an additional 112,895 shares of LSB stock for $1.9 million. Federal regulations
require the Bank to maintain certain minimum levels of regulatory capital. The
regulations currently require tangible capital as defined by regulation to be at
least 1.5% of total assets, as also defined by regulation, that core capital as
defined be 3.0% of total assets, and that risk based capital be at least 8.0% of
risk-based assets as defined by regulations. At September 30, 1996 the Bank's
capital ratios were as follows:
Amount Percent of
(000) applicable assets
------ -----------------
Tangible capital $15,721 8.84%
Requirement 2,666 1.50
------- ----
Excess $13,055 7.34%
======= =====
Core capital $15,721 8.84%
Requirement 5,332 3.00
------- ----
Excess $10,389 5.84%
======= =====
Risk-based Capital $17,272 13.93%
Requirement 9,916 8.00
------- ------
Excess $ 7,356 5.93%
======= ======
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and the Bank, from time to time, are involved as plaintiff
or defendant in various legal actions arising in the normal course of business.
While the ultimate outcome of these proceedings cannot be predicted with
certainty, it is the opinion of management, after consultation with counsel
representing the Bank in the proceedings, that the resolution of any prior and
pending proceedings should not have a material effect on the Company or the
Bank's financial condition or results of operations.
Item 2. CHANGES IN SECURITIES
None to be reported.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None to be reported.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None to be reported.
Item 5. OTHER INFORMATION
None to be reported.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
Exhibit 27 - Financial Data Schedule
Reports on Form 8-K:
On July 11, 1996, the Registrant filed a current report on Form 8-K
announcing the completion of its stock repurchase program. No other reports on
Form 8-K have been filed during the quarter ended September 30, 1996.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LSB FINANCIAL CORP.
(Registrant)
Date October 29, 1996 /S/ JOHN W. COREY
--------------------------------------------
John W. Corey, President
(Principal Executive Officer)
Date October 29, 1996 /S/ MARY JO DAVID
--------------------------------------------
Mary Jo David, Treasurer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON
FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
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0
0
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</TABLE>
