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 June 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 JUNE 30, 1996
----- ----------------------------
Common
Stock, par value $.01 per share _______
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<TABLE>
<CAPTION>
L S B FINANCIAL CORP.
(Dollars in thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA
December 31, June 30,
Dollars in thousands ....... 1995 1996
<S> <C> <C>
Total Assets ................ $158,973 $172,006
Loans Receivable, net ....... 132,433 150,433
Available-for-Sale Securities 12,295 8,287
Short-term Investments ...... 3,595 1,498
Deposits .................... 109,977 114,364
Total Borrowings ............ 29,614 40,735
Shareholders' Equity (net) .. 18,068 16,588
</TABLE>
<TABLE>
<CAPTION>
SELECTED OPERATIONS DATA
Three months ended June 30:Six months ended June 30:
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Total Interest Income ............. $ 2,546 $ 3,218 $ 4,914 $ 6,342
Total Interest Expense ............ 1,396 1,840 2,661 3,547
------- ------- ------- -------
Net Interest Income ............. 1,150 1,378 2,253 2,795
Provision for Loan Losses ......... 0 800 0 800
------- ------- ------- -------
Net Interest Income after provision 1,150 578 2,253 1,995
Deposit Account Service Charges ... 62 94 106 164
Gain(loss) on Sale of Securities .. 0 0 0 9
Net Gain(loss) on Mortgage Loans
Originated for Sale .............. 6 5 11 37
Other Non-interest Income ......... 36 43 231 86
------- ------- ------- -------
Total Non-Interest Income ....... 104 142 348 296
Total Non-Interest Expense ........ 846 987 1,647 2,005
------- ------- ------- -------
Income before Income Taxes ........ 408 (267) 954 286
Income Tax Expense ................ 144 (111) 342 99
------- ------- ------- -------
Net Income ...................... $ 264 ($ 156) $ 612 $ 187
Earnings per Share ................ $ 0.28 ($ 0.18) $ 0.65 $ 0.21
Book value per share .............. $ 18.70 $ 19.24 $ 18.70 $ 19.24
</TABLE>
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
December 31, June 30,
1995 1996
<S> <C> <C>
Assets
Cash and cash equivalents ..................... $ 7,795 $ 5,485
Available-for-sale securities ................. 12,295 8,287
Loans held for Sale ........................... 968 2,299
Total loans ................................... 132,387 149,852
Less: Allowance for loan losses ............. (922) (1,718)
--------- ---------
Net loans ................................. 131,465 148,134
Premises and equipment, net ................... 3,205 3,690
FHLB stock, at cost ........................... 1,500 2,100
Accrued interest receivable ................... 905 997
Other assets .................................. 840 1,014
--------- ---------
$ 158,973 $ 172,006
========= =========
Liabilities and Shareholders' Equity
Liabilities
Deposits ...................................... $ 109,977 $ 114,364
Advances from FHLB ............................ 29,364 40,500
Note payable .................................. 250 235
Accrued interest payable ...................... 159 171
Advances from borrowers for taxes and insurance 203 199
Accrued expenses and other liabilities ........ 952 (51)
--------- ---------
Total liabilities ........................... 140,905 155,418
Shareholders' Equity
Common stock .................................. 11 11
Additional paid-in-capital .................... 10,063 10,112
Retained Earnings ............................. 9,626 9,741
Unearned ESOP shares .......................... (739) (695)
Unamortized cost of bank incentive plan ....... (399) (377)
Treasury stock (28,000 and 127,160
shares, at cost) .............................. (466) (2,131)
Net unrealized holding loss on
available-for-sale securities ............... (28) (73)
--------- ---------
Total shareholders' equity .................. 18,068 16,588
--------- ---------
Total liabilities and shareholders' equity .... $ 158,973 $ 172,006
======== =========
Book value per share .......................... $ 18.70 $ 19.24
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans ........................ $ 2,272 $ 3,020 $ 4,390 $ 5,919
Interest on available-for-sale securities ......... 165 123 284 266
Interest on held-to-maturity securities ........... 31 0 65 0
Other interest and dividends ...................... 78 75 175 157
------- ------- ------- -------
Total interest income ........................... 2,546 3,218 4,914 6,342
Interest Expense
Interest on deposits .............................. 1,169 1,333 2,275 2,628
Interest on borrowings ............................ 227 507 386 919
------- ------- ------- -------
Total interest expense .......................... 1,396 1,840 2,661 3,547
Net interest income ............................... 1,150 1,378 2,253 2,795
Provision for loan losses ....................... 0 800 0 800
------- ------- ------- -------
Net interest income after provision for loan losses 1,150 578 2,253 1,995
Noninterest Income
Service charges and fees .......................... 62 94 106 164
Net gain on mortgage loans originated for sale .... 6 5 11 37
Gain on sale of securities ........................ 0 0 0 9
Other income ...................................... 36 43 231 86
------- ------- ------- -------
Total noninterest income ........................ 104 142 348 296
Noninterest Expense
Salaries and benefits ............................. 384 494 757 1,014
Occupancy and equipment, net ...................... 132 158 258 312
FDIC insurance .................................... 58 1 115 1
Computer service expense .......................... 42 54 83 121
Advertising expense ............................... 64 56 115 105
Other operating expenses .......................... 166 224 319 452
------- ------- ------- -------
Total noninterest expense ....................... 846 987 1,647 2,005
Income before income taxes ........................ 408 (267) 954 286
Less: income taxes .............................. 144 (111) 342 99
------- ------- ------- -------
Net income ........................................ $ 264 ($ 156) $ 612 $ 187
======= ======= ======= =======
Earnings per share (Note 4) ....................... $ 0.28 ($ 0.18) $ 0.65 $ 0.21
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
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 2 24 26
Net Income 612 612
Change in net unrealized loss 122 122
--- ---
Balance at June 30, 1995 $9 $9,602 $8,996 ($800) $0 $0 ($54) $17,753
== ====== ====== ===== == == ==== =======
Balance at January 1, 1996 $11 $10,063 $9,626 ($739) ($399) ($466) ($28) $18,068
Issuance of common stock for RRP 22 (22)
ESOP shares earned 27 44 71
RRP expense 44 44
Treasury stock acquired (1,665) (1,665)
Net Income 187 187
Change in net unrealized loss (45) (45)
Dividends paid (72) (72)
- -------------- ---- ---
Balance at June 30, 1996 $11 $10,112 $9,741 ($695) ($377) ($2,131) ($73) $16,588
=== ======= ====== ===== ===== ======= ==== =======
</TABLE>
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the 6 months ended June 30,
1995 1996
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net Income ..................................... $ 612 $ 187
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization .............. 103 130
Net amortization on investments ................ 36 36
Gain on sale of investments ................ 0 (9)
Writedown of loans held for sale ........... 0 29
Gain on sale of loans ...................... (11) (66)
Loans originated for sale, net of
sales proceeds ........................... 11 (1,294)
Deferred loan fees, net .................... 38 44
Provision for loan losses .................. 0 800
Employee stock ownership plan shares earned 26 71
Change in assets and liabilities
Accrued interest receivable .............. (131) (92)
Other assets ............................. 369 (99)
Accrued interest payable ................. 34 12
Other liabilities ........................ 224 (1,003)
-------- --------
Net cash from operating activities ............. 1,311 (1,254)
Cash Flows from Investing Activities
Proceeds from paydowns and maturities of
held-to-maturity securities ................. 897 0
Purchase of held-to-maturity securities ........ (501) 0
Purchases of available-for-sale securities ..... (4,073) (2,442)
Proceeds from paydowns and maturities of
available-for-sale securities ................ 1,487 5,543
Sales of available-for-sale securities ......... 0 804
Purchase of Federal Home Loan Bank stock ....... (307) (600)
Loans made to customers net of payments received (12,909) (17,513)
Property and equipment expenditures ............ (76) (615)
--- ----
Net cash from investing activities ............. (15,482) (14,823)
Cash Flows from Financing Activities
Net change in deposits ......................... (2,347) 4,387
Proceeds from Federal Home Loan Bank advances .. 17,000 22,000
Payments on Federal Home Loan Bank advances .... (5,500) (10,864)
Net change in advances from borrowers
for taxes and insurance ..................... 39 (4)
Payments on note payable ....................... (14) (15)
Net proceeds from stock offering ............... 9,609 0
Formation of Employee Stock Option Plan ........ (824) 0
Dividends paid ................................. 0 (72)
Treasury stock purchased ....................... 0 (1,665)
Net cash from financing activities ............. 17,963 13,767
Net change in cash and equivalents ............. 3,792 (2,310)
Cash and equivalents at January 1 .............. 7,067 7,795
Cash and equivalents at June 30 ................ $ 10,859 $ 5,485
</TABLE>
See accompanying notes to consolidated financial statements
LSB FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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
June 30 June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 956,763 1,029,576 978,845 1,029,576
Shares used to compute
earnings per share ............ 886,138 948,242 907,141 946,258
</TABLE>
The options outstanding at June 30, 1996 were not dilutive.
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 $35,000 of
additional income upon the sale of approximately $3.9 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 June 30, 1996 and December 31, 1995.
Total assets increased $13.0 million during the six months from December
31, 1995 to June 30, 1996. This increase was primarily due to an $18.0 million
increase in the Company s loan portfolio funded by a $6.1 million decrease in
the Company s securities and short term investments, a $4.4 million increase in
deposits and an $11.1 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 $2.8 million at June 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 real estate mortgages on two single family residences and a
small apartment building. As discussed further in the Provision for Loan Losses
section, 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 $16.6 million at June 30, 1996, a decrease of
$1.5 million primarily as a result of the Company s repurchase of an additional
$1.7 million of its own stock as part of a planned stock buy-back program.
Results of Operations
Comparison of Operating Results for the Six Months and the Quarter Ended June
30, 1995 and June 30, 1996.
General. Net income for the six months ended June 30, 1996 was $187,000, a
decrease of $425,000 or 69.44% from net income of $612,000 for the six months
ended June 30, 1995, due primarily to an $800,000 provision for loan losses with
an after tax effect to income of $483,000, which was intended to proactively
address the possibility of losses on the purchased equipment leases mentioned
above. Net income for the second quarter of 1996 was ($156,000) compared to
$264,000 for the same period in 1995. Without the $800,000 provision for loan
losses, net income for the second quarter of 1996 would have been $327,000.
Another factor contributing to the $425,000 decrease in net income during the
six month period was the receipt of a $165,000 non-recurring state tax refund
during this period in 1995. Offsetting these items was a $542,000 increase in
net interest income during the first two quarters of 1996 compared to the same
period in 1995, primarily due to a $1.4 million increase in interest income
partially offset by a $886,000 increase in interest expense, and by a $358,000
increase in non-interest expenses.
Net Interest Income. Net interest income for the six months ended June 30,
1996 increased $542,000, or 24.06% over the same period in 1995. Net interest
income for the second quarter of 1996 similarly increased $228,000, or 19.83%
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 and changing the structure of the loan portfolio. The
Company's net interest rate spread increased from 3.20% for the six months ended
June 30, 1995 to 3.29% for the six months ended June 30, 1996. Net interest rate
spread for the quarter increased from 3.13% to 3.19%.
Interest income on loans increased $1.5 million or 34.83% for the six
months ended June 30, 1996 compared to the same six months in 1995. This was
primarily due to an increase of $36.1 million in average loans outstanding as
the Bank continued to aggressively target both residential and commercial
borrowers and also began to set up a structure for offering consumer loans. This
increase in interest income also reflected a slight increase in the average
yield on loans from 8.27% for the first six months of 1995 to 8.32% for the
first three months of 1996, reflecting the general rise in interest rates over
that period. Interest income on loans increased $748,000 for the second quarter
of 1996 compared to the second quarter of 1995 due to a $38.5 million increase
in average loans, somewhat offeset by a decrease in average yields on loans from
8.32% to 8.18%. Interest income lost on the $2.4 million of equipment leases
placed on non-accrual status during the second quarter of 1996 was approximately
$60,000.
Interest earned on securities decreased $83,000 for the six months ended
June 30, 1996 compared to the same six months in 1995. This was the result of a
$7.1 million decrease in average investments, partially offset by an increase in
the average yield on investments from 5.13% to 5.88% over the same period.
Interest earned on securities for the second quarter decreased $73,000 due to a
$6.7 million decrease in average investments and an increase in average yields
from 5.18% to 5.80%. The higher level of investments in 1995 generally
represents the Company s investing the proceeds from its February, 1995 stock
offering. Most maturing investments were 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 six months ended June 30, 1996
increased $886,000 over the same period in 1995. This was primarily due to an
increase of $30.8 million in average interest-bearing liabilities whose effect
was further augmented by an increase in the average cost of interest bearing
liabilities from 4.59% for the first six months of 1995 to 4.84% for the first
six months of 1996. The increase in interest-bearing liabilities was driven by
an additional $20.1 million average in FHLB advances taken to fund loan demand
and by a $10.7 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 and creative targeted
marketing techniques. Interest expense increased $444,000 for the second quarter
of 1996 over the same period in 1995 as there were no substantive changes in the
trend over the six month period.
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 six month period ending June 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. However, until management s investigation can
be completed and the effect of the bankruptcy filing evaluated, management
cannot predict with certainty what effect this matter will have on the Company.
After the $800,000 provision, the Company s allowance equals 1.14% of net loans
receivable.
Non-Interest Income. Non-interest income for the six months ended June 30,
1996 decreased by $52,000, or 14.94%, from the same period in 1995 due primarily
to the previously mentioned $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 $113,000 for the six months ended June 30, 1996 over the
same period in 1995. This was due primarily to a $58,000 increase in service
charges and fees on transaction accounts as well as a $35,000 increase in the
net gain on the sales of mortgage loans and securities including the effect of
adopting FAS No. 122 (see note 5) . Non- interest income for the second quarter
of 1996 increased by $38,000 over the same period in 1995, primarily due to a
$32,000 increase in service charges and fees on transaction accounts.
Non-Interest Expense. Non-interest expense for the six months ended June
30, 1996 increased by $358,000, or 21.74%, over the same period in 1995.
Non-interest expense for the second quarter of 1996 increased $141,000 over the
same period in 1995. This increase in non-interest expense was due primarily to
a $257,000 increase in salaries for the six month period with a comparable
$110,000 increase for the second 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. Other increases of
$215,000 for the first six months compared with $88,000 for the second quarter,
principally in occupancy and operating expenses, were due partly to the leasing
of office space for the additional personnel. These costs were partially offset
by a $114,000 decrease in FDIC insurance premiums during the six month period
compared to $57,000 during the second quarter.
Income Tax Expense. Income tax expense for the six months ended June 30,
1996 decreased $243,000 over the same period in 1995, due primarily to the
$668,000 decrease in income before tax.
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 June 30, 1996 the liquid assets of the Bank as defined by
regulation, were $8.6 million or 8.00% 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 $16.6 million at June 30,
1996 compared to $18.1 million at December 31, 1995, a decrease of $1.5 million
or 8.19%, primarily due to the planned repurchase by the Company of an
additional 99,160 shares of LSB stock for $1.7 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 June 30, 1996 the Bank's capital
ratios were as follows:
<TABLE>
<CAPTION>
Amount Percent of
(000) applicable assets
<S> <C> <C>
Tangible capital . $15,308 8.92%
Requirement ...... 2,575 1.50
----- ----
Excess ........... $12,733 7.42%
======= ====
Core capital ..... $15,308 8.92%
Requirement ...... 5,149 3.00
----- ----
Excess ........... $10,159 5.92%
======= ====
Risk-based Capital $16,801 14.08%
Requirement ...... 9,543 8.00
----- ----
Excess ........... $ 7,258 6.08%
======= ====
</TABLE>
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
- -----------------------------------------------------------
(a) On April 17, 1996, LSB Financial Corp. held its Annual Meeting of
Stockholders ("Meeting").
(b) The following directors were elected: Peter Neisel, Jeffrey A. Poxon
and Thomas L. Ryan by the following votes 758,741, 760,341 and 760,284,
respectively.
(c) Stockholders of the Company voted on the following matter at the
Meeting.
Votes Votes Broker
For Against Abstentions Non-votes
Ratification of 754,238 7,750 5,419 -0-
the appointment
of Crowe, Chizek
and Company LLP
as auditors of the
Company for the
fiscal year ended
December 31, 1996.
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 May 30, 1996, the Registrant filed a current report on Form 8-K
announcing its intention to record an $800,000 provision for loan losses. No
other reports on Form 8-K have been filed during the quarter ended June 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. report to be signed on its behalf by the undersigned, report to be
signed on its behalf by the undersigned, thereunto duly authorized.thereunto
duly authorized.
LSB FINANCIAL CORP.
(Registrant)
Date August , 1996 /S/JOHN W. COREY
- ---- ------ ------ ----------------
John W. Corey, President
(Principal Executive Officer)
Date August , 1996 /S/MARY JO DAVID
- ---- ------ ------ ----------------
Mary Jo David, Treasurer
(Principal Financial and Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> .......................... <C>
<PERIOD-TYPE> ................ 6-MOS
<FISCAL-YEAR-END> ............ DEC-31-1996
<PERIOD-END> ................. JUN-30-1996
<CASH> ....................... 3988
<INT-BEARING-DEPOSITS> ....... 1497
<FED-FUNDS-SOLD> ............. 0
<TRADING-ASSETS> ............. 0
<INVESTMENTS-HELD-FOR-SALE> .. 8287
<INVESTMENTS-CARRYING> ....... 0
<INVESTMENTS-MARKET> ......... 0
<LOANS> ...................... 152151
<ALLOWANCE> .................. 1718
<TOTAL-ASSETS> ............... 172006
<DEPOSITS> ................... 114364
<SHORT-TERM> ................. 40500
<LIABILITIES-OTHER> .......... 319
<LONG-TERM> .................. 235
........ 0
.................. 0
<COMMON> ..................... 11
<OTHER-SE> ................... 16577
<TOTAL-LIABILITIES-AND-EQUITY> 172006
<INTEREST-LOAN> .............. 5919
<INTEREST-INVEST> ............ 266
<INTEREST-OTHER> ............. 157
<INTEREST-TOTAL> ............. 6342
<INTEREST-DEPOSIT> ........... 2628
<INTEREST-EXPENSE> ........... 3547
<INTEREST-INCOME-NET> ........ 2795
<LOAN-LOSSES> ................ 800
<SECURITIES-GAINS> ........... 9
<EXPENSE-OTHER> .............. 2005
<INCOME-PRETAX> .............. 286
<INCOME-PRE-EXTRAORDINARY> ... 187
<EXTRAORDINARY> .............. 0
<CHANGES> .................... 0
<NET-INCOME> ................. 187
<EPS-PRIMARY> ................ .21
<EPS-DILUTED> ................ .21
<YIELD-ACTUAL> ............... 0
<LOANS-NON> .................. 2750
<LOANS-PAST> ................. 0
<LOANS-TROUBLED> ............. 0
<LOANS-PROBLEM> .............. 0
<ALLOWANCE-OPEN> ............. 922
<CHARGE-OFFS> ................ 4
<RECOVERIES> ................. 0
<ALLOWANCE-CLOSE> ............ 1718
<ALLOWANCE-DOMESTIC> ......... 1718
<ALLOWANCE-FOREIGN> .......... 0
<ALLOWANCE-UNALLOCATED> ...... 0
</TABLE>
