<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 June 30, 1997
[ ] 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 or principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (765) 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 AUGUST 8, 1997
----- -----------------------------
Common stock, par value $.01 per share 916,350
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE>
L S B FINANCIAL CORP.
(Dollars in thousands, except per shar data)
SELECTED FINANCIAL CONDITION DATA
December 31, June 30,
Dollars in thousands 1996 1997
Total Assets $184,607 $194,117
Loans Receivable, net 159,216 170,692
Available-for-Sale Securities 6,546 8,152
Short-term Investments 5,410 1,040
Deposits 116,949 130,793
Total Borrowings 50,220 45,705
Shareholders' Equity (net) 16,796 17,184
SELECTED OPERATIONS DATA
<TABLE>
<CAPTION>
Three months ended June 30: Six months ended June 30:
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Total Interest Income $3,218 $3,753 $6,342 $7,294
Total Interest Expense 1,840 2,147 3,547 4,149
-----------------------------------------------------------
Net Interest Income 1,378 1,606 2,795 3,145
Provision for Loan Losses 800 24 800 48
-----------------------------------------------------------
Net Interest Income after provision 578 1,582 1,995 3,097
Deposit Account Service Charges 94 108 164 188
Gain(loss) on Sale of Securities 0 0 9 0
Gain(loss) on Mortgage Loans Originated for Sale 5 37 37 105
Other Non-interest Income 43 55 86 106
-----------------------------------------------------------
Total Non-Interest Income 142 200 296 399
Total Non-Interest Expense 987 1,188 2,005 2,314
-----------------------------------------------------------
Income/(loss) before Income Taxes (267) 594 286 1,182
Income Tax Expense/(Benefit) (111) 233 99 463
-----------------------------------------------------------
Net Income/(loss) ($156) $361 $187 $719
Earnings per Share ($0.17) $0.41 $0.21 $0.82
Book value per share $18.33 $19.80 $18.33 $19.80
</TABLE>
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
---------------------------------
Assets
<S> <C> <C>
Cash and cash equivalents $9,798 $6,001
Available-for-sale securities 6,546 8,152
Loans held for sale 6,230 1,062
Total loans 154,701 171,075
Less: Allowance for loan losses (1,715) (1,445)
---------------------------------
Net loans 152,986 169,630
Premises and equipment, net 4,570 4,436
FHLB stock, at cost 2,575 2,600
Accrued interest receivable 1,006 1,097
Other assets 896 1,139
---------------------------------
Total assets $184,607 $194,117
=================================
Liabilities and Shareholders' Equity
Liabilities
Deposits $116,949 $130,793
Advances from FHLB 50,000 45,500
Note payable 220 205
Accrued interest payable 197 186
Advances from borrowers for taxes and insurance 178 156
Accrued expenses and other liabilities 267 93
---------------------------------
Total liabilities 167,811 176,933
Shareholders' Equity
Common stock 11 11
Additional paid-in-capital 10,143 11,163
Retained earnings 10,289 9,879
Unearned ESOP shares (653) (612)
Unamortized cost of recognition and retention plan (332) (287)
Treasury stock, at cost (2,629) (2,942)
Net unrealized loss on available-for-sale-securities (33) (28)
---------------------------------
Total shareholders' equity 16,796 17,184
---------------------------------
Total liabilities and shareholders' equity $184,607 $194,117
=================================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1997 1996 1997
----------------------------------------------------------
Interest Income
<S> <C> <C> <C> <C>
Loans, including related fees $3,020 $3,533 $5,919 $6,867
Available-for-sale securities 168 170 358 327
FHLB stock 30 50 65 100
----------------------------------------------------------
Total interest income 3,218 3,753 6,342 7,294
Interest Expense
Deposits 1,333 1,479 2,628 2,855
Borrowings 507 668 919 1,294
----------------------------------------------------------
Total interest expense 1,840 2,147 3,547 4,149
Net interest income 1,378 1,606 2,795 3,145
Provision for loan losses 800 24 800 48
----------------------------------------------------------
Net interest income after provision for loan losses 578 1,582 1,995 3,097
Noninterest Income
Service charges and fees 94 108 164 188
Net gain on mortgage loans originated for sale 5 37 37 105
Gain on sale of securities 0 0 9 0
Other income 43 55 86 106
----------------------------------------------------------
Total noninterest income 142 200 296 399
Noninterest Expense
Salaries and benefits 494 598 1,014 1,185
Occupancy and equipment, net 158 192 312 380
FDIC insurance 1 4 1 7
Computer service 54 65 121 126
Advertising 56 77 105 140
Other 224 252 452 476
----------------------------------------------------------
Total noninterest expense 987 1,188 2,005 2,314
Income/(loss) before income taxes (267) 594 286 1,182
Less: income taxes (111) 233 99 463
----------------------------------------------------------
Net income/(loss) ($156) $361 $187 $719
==========================================================
Earnings per share (Note 3) ($0.17) $0.41 $0.21 $0.82
Book value per share
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LBS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Unamortized
Cost of Bank Unrealized
Additional Unearned Recognition Gain/(Loss)
Common Paid-In Retained ESOP and Retention Treasury on APS
Stock Capital Earnings Shares Plan Stock Securities Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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)
Cash dividends paid (72) (72)
-----------------------------------------------------------------------------------------------
Balance at June 30, 1996 $11 $10,112 $9,741 ($695) ($377) ($2,131) ($73) $16,588
===============================================================================================
Balance at January 1, 1997 $11 $10,143 $10,289 ($653) ($332) ($2,629) ($33) $16,796
Exercise of stock option 3 3
ESOP shares earned 41 41 82
RRP expense 45 45
Treasury stock acquired (313) (313)
Net income 719 719
Change in unrealized loss 5 5
Cash dividends paid (151) (151)
Stock dividends paid 868 (870) (2)
-----------------------------------------------------------------------------------------------
Balance at June 30, 1997 $11 $11,055 $9,987 ($612) ($287) ($2,942) ($28) $17,184
===============================================================================================
</TABLE>
See accompanying notes to financial statements
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the 6 months ended June 30,
1996 1997
------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $187 $719
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 130 172
Net amortization on securities 36 23
Gain on sale of securities (9) 0
Writedown of loans held for sale 29 0
Gain on sale of loans (66) (105)
Loans originated for sale, net of sales proceeds (1,294) 5,273
Deferred loan fees, net 44 (40)
Provision for loan losses 800 48
Employee stock ownership plan shares earned 71 82
Change in assets and liabilities
Accrued interest receivable (92) (91)
Other assets (99) (202)
Accrued interest payable 12 (11)
Other liabilities (1,003) (174)
------------------------------
Net cash from operating activities (1,254) 5,694
Cash Flows from Investing Activities
Purchases of available-for-sale securities (2,442) (3,476)
Proceeds from paydowns and maturities of
available-for-sale securities 5,543 1,856
Sales of available-for-sale securities 804 0
Purchase of Federal Home Loan Bank stock (600) (25)
Loans made to customers net of payments received (17,513) (16,652)
Property and equipment expenditures (615) (38)
------------------------------
Net cash from investing activities (14,823) (18,335)
Cash Flows from Financing Activities
Net change in deposits 4,387 13,844
Proceeds from Federal Home Loan Bank advances 22,000 21,000
Payments on Federal Home Loan Bank advances (10,864) (25,500)
Net change in advances from borrowers
for taxes and insurance (4) (22)
Payments on note payable (15) (15)
Treasury Stock Purchased (1,665) (313)
Cash dividends paid (72) (153)
Stock options exercised 0 3
------------------------------
Net cash from financing activities 13,767 8,844
Net change in cash and equivalents (2,310) (3,797)
Cash and equivalents at January 1 7,795 9,798
------------------------------
Cash and equivalents at June 30 $5,485 $6,001
==============================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the 6 months ended June 30,
1996 1997
------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $187 $719
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 130 172
Net amortization on securities 36 23
Gain on sale of securities (9) 0
Writedown of loans held for sale 29 0
Gain on sale of loans (66) (105)
Loans originated for sale, net of sales proceeds (1,294) 5,273
Deferred loan fees, net 44 (40)
Provision for loan losses 800 48
Employee stock ownership plan shares earned 71 82
Change in assets and liabilities
Accrued interest receivable (92) (91)
Other assets (99) (202)
Accrued interest payable 12 (11)
Other liabilities (1,003) (174)
------------------------------
Net cash from operating activities (1,254) 5,694
Cash Flows from Investing Activities
Purchases of available-for-sale securities (2,442) (3,476)
Proceeds from paydowns and maturities of
available-for-sale securities 5,543 1,856
Sales of available-for-sale securities 804 0
Purchase of Federal Home Loan Bank stock (600) (25)
Loans made to customers net of payments received (17,513) (16,652)
Property and equipment expenditures (615) (38)
------------------------------
Net cash from investing activities (14,823) (18,335)
Cash Flows from Financing Activities
Net change in deposits 4,387 13,844
Proceeds from Federal Home Loan Bank advances 22,000 21,000
Payments on Federal Home Loan Bank advances (10,864) (25,500)
Net change in advances from borrowers
for taxes and insurance (4) (22)
Payments on note payable (15) (15)
Treasury Stock Purchased (1,665) (313)
Cash dividends paid (72) (153)
Stock options exercised 0 3
------------------------------
Net cash from financing activities 13,767 8,844
Net change in cash and equivalents (2,310) (3,797)
Cash and equivalents at January 1 7,795 9,798
------------------------------
Cash and equivalents at June 30 $5,485 $6,001
==============================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
LSB FINANCIAL CORP.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 subsidiaries, LSB Service Corporation and
Lafayette Insurance and Investments, Inc. Lafayette Insurance and Investments,
Inc. was formed December 30, 1996 and began operations in May of 1997. All
significant intercompany transactions have been eliminated upon consolidation.
Note 3 - Earnings per share
Earnings per share are computed based upon the weighted average number of shares
outstanding during the period. Unearned ESOP shares are not considered to be
outstanding for the earnings per share computation. On June 30, 1997, a 5.00%
stock dividend was paid to shareholders of record on June 3, 1997. This dividend
resulted in the issuance of 44,792 shares with a value at the record date of
$868,000. All share and per share data has been restated to reflect the effect
of this dividend. The following table presents share data used to compute
earnings per share.
<TABLE>
<CAPTION>
Quarter ended Year-to-date
June 30 June 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 936,733 956,763 941,884 978,845
Shares used to compute
earnings per share 871,399 886,138 875,466 907,141
</TABLE>
The options outstanding at June 30, 1997 were not dilutive.
<PAGE>
Note 4 - Accounting Changes
Effective January 1, 1997, the Company adopted Financial Accounting Standard No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities." This standard revises the accounting for
transfers of financial assets, such as loans and securities, and for
distinguishing between sales and secured borrowings. It is effective for some
transactions in 1997 and others in 1998. Management does not expect the effect
on LSB's financial position and results of operations to be significant.
<PAGE>
MANAGEMENT'S DISCUSSION OF RECENT OPERATING RESULTS
Forward Looking Statements
Certain statements in this report that relate to LSB Financial Corp.'s
plans, objectives or future performance may be deemed to be forward-looking
statements within the meaning of the Private Securities Litigation Act of 1995.
Such statements are based on Management's current expectations. Actual
strategies and results in future periods may differ materially from those
currently expected because of various risks and uncertainties. Additional
discussion of factors affecting LSB Financial's business and prospects is
contained in the Company's periodic filings with the Securities and Exchange
Commission.
Financial Condition
Comparison of Financial Condition at June 30, 1997 and December 31,
1996.
Total assets increased $9.5 million during the six months from December
31, 1996 to June 30, 1997. This increase was primarily due to a $16.6 million
increase in the Company's loan portfolio offset by a $5.2 million decrease in
the Company's loans held for sale as the Company continued its efforts to
restructure its balance sheet by increasing the size of its higher-yielding
multi-family, land and land development, construction, commercial real estate
and commercial business loan and consumer loan portfolios. A $13.8 million
increase in deposits was used to fund loan growth and to decrease borrowings
from the Federal Home Loan Bank by $4.5 million. Non-performing loans decreased
from $2.5 million at December 31, 1996 to $2.3 million at June 30, 1997.
Non-performing loans at June 30, 1997 consisted of $2.1 million of purchased
equipment leases, one single family residence and one credit card loan.
Shareholders' equity increased from $16.8 million at December 31, 1996 to $17.2
million at June 30, 1997, an increase of $388,000 primarily due to $719,000 in
net income partially offset by the repurchase of an additional $313,000 of the
Company's stock as part of an ongoing 5.00% stock buy-back program and by
$153,000 in cash dividends to shareholders.
Results of Operations
Comparison of Operating Results for the Six Months and the Quarter Ended June
30, 1996 and June 30, 1997.
General. Net income for the six months ended June 30, 1997 was
$719,000, an increase of $532,000 or 284.49% over net income of $187,000 for the
six months ended June 30, 1996. This increase was due primarily to an $800,000
provision for loan losses in the second quarter of 1996 intended to proactively
address the possibility of losses on $2.4 million in purchased equipment leases.
Without this provision, net income for the first six months of 1996 would have
been approximately $670,000, and 1997's year-to-date net income of $719,000
would represent an increase of $49,000 or 7.31%. This $49,000 increase was
primarily due to a $350,000 increase in net interest income and a $103,000
increase in non- interest income in the first six months of 1997, offset by a
$48,000
<PAGE>
recurring provision for loan losses and a $309,000 increase in operating
expenses. Net income for the second quarter of 1996 was ($156,000) due primarily
to the $800,000 provision for loan losses in the second quarter of 1996,
compared to $361,000 for the same period in 1997.
Net Interest Income. Net interest income for the six months ended June
30, 1997 increased $350,000, or 12.52%, over the same period in 1996. Net
interest income for the second quarter of 1997 similarly increased $228,000, or
16.55%, over the same period in 1996. These increases were primarily
attributable to the success of management's continuing efforts to grow and
restructure the Company's balance sheet by investing funds in higher-yielding
loans, particularly commercial real estate and consumer loans, as opposed to the
lower yielding securities portfolio. The Company's net interest margin (net
interest income divided by average interest-earning assets) decreased from 3.58%
for the six months ended June 30, 1996 to 3.55% for the six months ended June
30, 1997. The decline in yield was offset by increased volume as average
interest-earning assets increased from $156.2 million for the first six months
of 1996 to $177.2 million for the six months of 1997. The interest rate spread
for the first six months increased from 3.29% for 1996 to 3.37% for 1997.
Interest income on loans increased $948,000 or 16.02% for the six
months ended June 30, 1997 compared to the same six months in 1996, primarily
the result of an increase of $20.6 million in average loans outstanding. This
increase was primarily due to an active residential real estate market in 1997
due to continued relatively low interest rate environment and a strong local
economy, and the ongoing success of the Company's focus on higher-yielding
multi-family, land and land development, construction, commercial real estate
and commercial business loan and consumer loan production. These higher-yielding
portfolios increased from $62.2 million, or 39.07% of the total loan portfolio
at December 31, 1996 to $69.0 million, or 40.42% of the total loan portfolio at
June 30, 1997. This increase in volume was also augmented by an increase in the
average yield on loans from 8.32% for the first six months of 1996 to 8.43% for
the first six months of 1997, also a result of the loan portfolio restructuring.
Both the net interest margin and the average yield on loans in 1997 were
negatively impacted by the placement of the purchased equipment leases on
non-accrual status effective April 1, 1996. Interest income on loans increased
$513,000 for the second quarter of 1997 compared to the second quarter of 1996
due primarily to a $19.2 million increase in average loans.
Interest earned on securities, money market investments and FHLB stock
increased $4,000 for the six months ended June 30, 1997 compared to the same six
months in 1996. This was the result of a very slight $386,000 increase in
average investments offset by a slight decrease in the average yield from 7.17%
in 1996 to 7.06% for 1997. Interest earned on these investments for the second
quarter increased $22,000 due to a $2.3 million increase in average investments
offset by a decrease in average yields from 6.33% to 5.96%.
Interest expense for the six months ended June 30, 1997 increased
$602,000 over the same period in 1996. This increase was primarily due to an
increase of $24.0 million in average interest-bearing liabilities, consisting of
an additional $12.2 million in the average balance of customer deposit accounts
and a $11.8 million increase in the average balance of Federal Home Loan Bank
advances drawn to fund loan demand. The average rate paid on interest-bearing
liabilities increased from 4.84% for the first six months of 1996 to 4.86% for
the first six months of 1997. Interest expense
<PAGE>
equipment expense. The increase in salaries and employee benefits, and occupancy
and equipment expenses were incurred in connection with the opening of the
Company's fourth branch in October of 1996.
Income Tax Expense. The Company's income tax provision increased by
$364,000 for the six months ended June 30, 1997 compared to the same period in
1996. This was primarily due to the increase in income before income taxes.
Liquidity. Liquidity management is both a daily and long-term function
for the Bank's senior management. The Bank adjusts its investment strategy,
within the limits established by the investment policy, based upon assessments
of expected loan demand, expected cash flows, FHLB advance opportunities, market
yields and objectives of its asset/liability management program. Base levels of
liquidity have generally been invested in interest-earning overnight and time
deposits with the FHLB of Indianapolis. Funds for which a demand is not foreseen
in the near future are invested in investment and other securities for the
purpose of yield enhancement and asset/liability management.
The Bank is required to maintain minimum levels of liquidity as defined
by regulatory agencies. The liquidity requirement, which can vary, is based upon
a percentage of deposits and short term borrowings and is currently 5.0%. The
Bank's internal policy for liquidity is approximately 8%. The Company's
liquidity ratios at December 31, 1996 and June 30, 1997 were 7.31% and 10.02%,
respectively.
Capital Resources. Shareholders' equity totaled $17.2 million at June
30, 1997 compared to $16.8 million at December 31, 1996, an increase of $388,000
or 2.31%, primarily due to an increase in net income of $719,000 partially
offset by a stock repurchase of $313,000 and cash dividends of $153,000. 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, 1997 the Bank's capital ratios were as follows:
Amount Percent of
(000) applicable assets
------------------------------------
Tangible capital $15,779 8.15%
Requirement 2,903 1.50
------- ----
Excess $12,876 6.65%
======= ====
Core capital $15,779 8.15%
Requirement 5,806 3.00
-------- ----
Excess $ 9,973 5.15%
======== ====
Risk-based Capital $ 16,573 11.12%
Requirement 11,927 8.00
-------- -----
Excess $ 4,646 3.12%
======== =====
<PAGE>
increased $307,000 for the second quarter of 1997 over the same period in 1996
primarily due to a $23.3 million increase in average interest-bearing
liabilities with no substantive change in the average rate for the three month
period.
Provision for Loan Losses. The Company establishes its provision for
loan losses based on a systematic analysis of risk factors in the loan
portfolio. The analysis includes evaluation of concentration of credit, past
loss experience, current economic conditions, the amount and composition of the
loan portfolio, estimated fair value of the underlying collateral, loan
commitments outstanding, delinquencies, industry standards and using the
services of a consultant to assist in the evaluation of its growing commercial
loan portfolio. Management's analysis results in the allocations of allowance
amounts for each loan type. Based on this analysis, during the quarter ended
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 owned $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 Company had been paid
interest through March 31, 1996. The Company's $2.4 million investment is
comprised of numerous small dollar equipment leases. A settlement involving the
restructuring of these loans was reached during the second quarter of 1997 and
resulted in a write down of $319,000 charged to the allowance for loan losses.
Management continues to allocate $651,000 of the allowance to the remaining
leases and loans to cover any potential losses in collecting on the outstanding
leases. It is believed that this reserve allocation will be sufficient to cover
any losses. In addition, the Company provided an additional $48,000 provision
for loan losses during the first six months of 1997. In addition to the Bennett
leases there were $197,000 of non-performing loans at June 30, 1997, consisting
of one single family residence and a $5,000 credit card loan. The allowance for
loan losses to total loans was 1.08% at December 31, 1996 and 0.85% at June 30,
1997. Non-performing loans totaled $2.5 million at December 31, 1996,
representing 1.35% of total assets, and $2.3 million at June 30, 1997,
representing 1.17% of total assets.
Non-Interest Income. Non-interest income for the six months ended June
30, 1997 increased by $103,000, or 34.80%, over the same period in 1996. This
was primarily due to a $24,000 increase in service charges and fees on deposit
accounts due to the increased number of these accounts, and a $68,000 increase
in the gain on the sale of loans in the secondary market. This increase in the
gain on the sale of loans resulted from the increased sales activity and the
absence of a market value adjustment at June 30, 1997. On June 30, 1996, the
Company held $2.3 million of fixed rate mortgage loans in its held for sale
portfolio. The required adjustment to mark these loans to market, which is
recorded as a component of non-interest expense, was ($28,000). There was no
comparable adjustment needed at June 30, 1997. Non-interest income for the
second quarter of 1997 increased by $58,000 over the same period in 1996,
primarily due to a $14,000 increase in service charges and fees on transaction
accounts and a $32,000 increase in the gain on the sale of loans in the
secondary market.
Non-Interest Expense. Non-interest expense for the six months ended
June 30, 1997 increased $309,000 over the same period in 1996. The major
components of this increase included a $171,000 increase in salaries and
employee benefits and a $68,000 increase in occupancy and
<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
---------------------------------------------------
(a) On April 16, 1997, LSB Financial Corp. held its Annual Meeting of
Stockholders ("Meeting").
(b) The following directors were elected: John W. Corey, James A.
Andrew, Philip W. Kemmer and John C. Shen by the following votes 705,726,
710,526, 706,001 and 704,296 respectively.
(c) Stockholders of the Company voted on the following matter at the
meeting.
Votes Votes Broker
For Against Abstentions Non-votes
--- ------- ----------- ---------
Ratification of 715,027 1,025 3,567 -0-
the appointment
of Crowe, Chizek
and Company LLP
as auditors of the
Company for the
fiscal year ended
December 31, 1996.
<PAGE>
Item 5. OTHER INFORMATION
-----------------
None to be reported.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None to be reported.
<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 August 8, 1997 /s/JOHN W. COREY
--------------------- ------------------------------
John W. Corey, President
(Principal Executive Officer)
Date August 8, 1997 /s/MARY JO DAVID
--------------------- ------------------------------
Mary Jo David, Treasurer
(Principal Financial and Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- ------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary information extracted from the quarterly report
on Form 10-QSB for the quarter ended June 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,961
<INT-BEARING-DEPOSITS> 1,040
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,152
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 17,1075
<ALLOWANCE> 1,445
<TOTAL-ASSETS> 194,117
<DEPOSITS> 130,793
<SHORT-TERM> 45,500
<LIABILITIES-OTHER> 435
<LONG-TERM> 205
0
0
<COMMON> 11
<OTHER-SE> 17,173
<TOTAL-LIABILITIES-AND-EQUITY> 176,933
<INTEREST-LOAN> 6,867
<INTEREST-INVEST> 338
<INTEREST-OTHER> 89
<INTEREST-TOTAL> 7,294
<INTEREST-DEPOSIT> 2,855
<INTEREST-EXPENSE> 4,149
<INTEREST-INCOME-NET> 3,145
<LOAN-LOSSES> 48
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,314
<INCOME-PRETAX> 1,182
<INCOME-PRE-EXTRAORDINARY> 1,182
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 719
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.82
<YIELD-ACTUAL> 3.55
<LOANS-NON> 868
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,400
<LOANS-PROBLEM> 1,991
<ALLOWANCE-OPEN> 1,715
<CHARGE-OFFS> 320
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 1,445
<ALLOWANCE-DOMESTIC> 1,445
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
