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, 1999
[ ] 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 JULY 30, 1999
----- ----------------------------
Common stock, par value $.01 per share 1,378,991
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE>
LSB FINANCIAL CORP.
INDEX
PART I. FINANCIAL INFORMATION.......................................1
Item 1. Financial Statements (Unaudited)............................1
Consolidated Statements of Financial Condition ...............................1
Consolidated Statements of Income.............................................2
Consolidated Statements of Changes in Shareholders' Equity....................3
Consolidated Statements of Cash Flow..........................................4
Notes to Consolidated Financial Statements....................................5
Item 2. Management's Discussion of Recent Operating Results......6-11
PART II. OTHER INFORMATION.......................................12-13
SIGNATURES.................................................14
EXHIBIT INDEX..............................................15
<PAGE>
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
December 31, June 30,
1998 1999
------------ --------
<S> <C> <C>
Assets
Cash and cash equivalents $ 9,646 $ 11,168
Available-for-sale securities 12,675 11,653
Loans held for sale 2,694 3,075
Total loans 198,230 213,973
Less: Allowance for loan losses (1,578) (1,638)
--------- ---------
Net loans 196,652 212,335
Premises and equipment, net 5,805 5,868
FHLB stock, at cost 2,825 3,050
Accrued interest receivable and other assets 2,514 2,693
--------- ---------
Total Assets $ 232,811 $ 249,842
========= =========
Liabilities and Shareholders' Equity
Liabilities
Deposits $ 161,781 $ 171,867
Advances from FHLB 51,500 58,000
Note payable 156 139
Accrued interest payable and other liabilities 1,180 961
--------- ---------
Total liabilities 214,617 230,967
Shareholders' Equity
Common stock 9 14
Additional paid-in-capital 8,064 8,103
Retained earnings 10,703 11,390
Unearned ESOP shares (492) (455)
Unamortized cost of recognition and retention plan (152) (107)
Accumulated other comprehensive income 62 (69)
--------- ---------
Total shareholders' equity 18,194 18,876
--------- ---------
Total liabilities and shareholders' equity $ 232,811 $ 249,843
========= =========
See accompanying notes
</TABLE>
<PAGE>
<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,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income
Loans, including related fees $4,285 $3,931 $8,447 $7,771
Available-for-sale securities 242 202 466 419
FHLB stock 58 50 118 101
------ ------ ------ ------
Total interest income 4,585 4,183 9,031 8,291
Interest Expense
Deposits 1,761 1,633 3,531 3,242
Borrowings 829 758 1,635 1,501
------ ------ ------ ------
Total interest expense 2,590 2,391 5,166 4,743
Net interest income 1,995 1,792 3,865 3,548
Provision for loan losses 30 30 60 54
------ ------ ------ ------
Net interest income after provision for loan losses 1,965 1,762 3,805 3,494
Noninterest Income
Service charges and fees 155 147 284 270
Net gain on mortgage loans originated for sale 50 154 108 239
Gain on sale of securities 0 0 0 0
Other 134 87 238 185
------ ------ ------ ------
Total noninterest income 339 388 630 694
Noninterest Expense
Salaries and benefits 754 681 1,498 1,360
Occupancy and equipment, net 230 210 454 407
Computer service 79 63 157 125
Advertising 91 92 186 177
Other 328 302 646 577
------ ------ ------ ------
Total noninterest expense 1,482 1,348 2,941 2,646
Income before income taxes 822 802 1,494 1,542
Less: income taxes 326 332 598 628
------ ------ ------ ------
Net income $ 496 $ 470 $ 896 $ 914
====== ====== ====== ======
Earnings per share (Note 3) $ 0.38 $ 0.35 $ 0.69 $ 0.68
Diluted Earnings per Share $ 0.37 $ 0.33 $ 0.67 $ 0.65
Book value per share $14.48 $13.64 $14.48 $13.64
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
Unamortized
Cost of Accumulated
Additional Unearned Recognition Other
Common Paid-In Retained ESOP and Retention Comprehensive
Stock Capital Earnings Shares Plan Income Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $9 $7,854 $10,677 $(570) $(242) $6 $17,734
Exercise of stock option 1 4 5
ESOP shares earned 84 40 124
RRP expense 45 45
Treasury stock acquired (268) (184) (452)
Dividends paid 1,359 (1,366) (7)
Comprehensive income
Net income 914 914
Change in unrealized gain/(loss) 14 14
-------
Total comprehensive income 928
Balance at June 30, 1998 $10 $9,033 $10,041 $(530) $(197) $20 $18,377
=== ====== ======= ===== ===== === =======
Balance at January 1, 1999 $9 $8,064 $10,703 $(492) $(152) $62 $18,194
Adjustment for stock split 5 (5)
Exercise of stock option 27 27
ESOP shares earned 77 37 114
RRP expense 45 45
Treasury stock acquired (60) (60)
Dividends paid (209) (209)
Comprehensive income
Net income 896 896
Change in unrealized gain/(loss) (131) (131)
-------
Total comprehensive income 765
Balance at June 30, 1999 $14 $8,103 $11,390 $(455) $(107) $(69) $18,876
=== ====== ======= ===== ===== ==== =======
</TABLE>
See accompanying notes
<PAGE>
LSB FINANCIAL CORP.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the six months
ended June 30,
1998 1999
-------- ---------
Cash Flows from Operating Activities
Net Income $ 914 $ 896
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 192 237
Net amortization/(accretion) on securities (8) 31
Gain on sale of securities 0 0
Writedown of loans held for sale 0 0
Gain on sale of loans (239) (154)
Loans originated for sale, net of sales proceeds (767) (227)
Deferred loan fees, net (52) (14)
Provision for loan losses 54 60
Employee stock ownership plan shares earned 124 114
Change in assets and liabilities
Accrued interest receivable (80) (68)
Other assets 397 22
Accrued interest payable (7) 17
Other liabilities 116 (244)
-------- --------
Net cash from operating activities 644 670
Cash Flows from Investing Activities
Purchases of available-for-sale securities (5,462) (1,482)
Proceeds from paydowns and maturities of
available-for-sale securities 2,574 2,254
Sales of available-for-sale securities 0 0
Purchase of Federal Home Loan Bank stock (225) (225)
Loans made to customers net of payments received (9,475) (15,729)
Property and equipment expenditures (223) (300)
-------- --------
Net cash from investing activities (12,811) (15,482)
Cash Flows from Financing Activities
Net change in deposits 9,771 10,086
Proceeds from Federal Home Loan Bank advances 6,000 29,000
Payments on Federal Home Loan Bank advances (4,500) (22,500)
Net change in advances from borrowers
for taxes and insurance 44 8
Payments on note payable (16) (17)
Treasury Stock Purchased (268) (60)
Dividends paid (191) (209)
Stock options exercised 5 27
-------- --------
Net cash from financing activities 10,845 16,335
Net change in cash and equivalents (1,322) 1,523
Cash and equivalents at January 1 9,938 9,646
-------- --------
Cash and equivalents at June 30 $ 8,616 $ 11,169
======== ========
See accompanying notes
<PAGE>
LSB FINANCIAL CORP.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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. 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., its wholly owned subsidiary Lafayette Savings Bank, FSB and Lafayette
Savings' wholly owned subsidiaries, LSB Service Corporation and Lafayette
Insurance and Investments, Inc. 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. Diluted earnings per share further assume the
issuance of any potentially dilutive shares. Unearned ESOP shares are not
considered to be outstanding for the earnings per share computation. On June 4,
1999, a 3-for-2 stock split in the form of a 50.00% stock dividend was paid to
shareholders of record on May 14, 1999. This dividend resulted in the issuance
of an additional 459,365 shares. All share and per share data has been restated
to reflect the effect of this split. The following table presents information
about the number of shares used to compute earnings per share and the results of
the computations:
<TABLE>
<CAPTION>
Quarter ended Six months ended
June 30 June 30
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding
(excluding unearned ESOP shares) 1,301,408 1,345,580 1,299,439 1,347,567
Shares used to compute diluted
earnings per share 1,352,561 1,402,488 1,346,667 1,402,331
Earnings per share $0.38 $0.35 $0.69 $0.68
Diluted earnings per share $0.37 $0.33 $0.67 $0.65
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
FORWARD LOOKING STATEMENTS
LSB Financial Corp. and its wholly-owned subsidiary Lafayette Savings
Bank, FSB may from time to time make written or oral forward-looking statements,
including statements contained in our filings with the Securities and Exchange
Commission, including this Quarterly Report on Form 10-QSB and its exhibits, and
in other communications by us, which are made in good faith pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "may", "could", "should", "would", "believe", "anticipate", "estimate",
"expect", "intend", "plan" and similar expressions are intended to identify
forward-looking statements. References in this Form 10-QSB to "we", "us", and
"our" refer to LSB Financial and/or Lafayette Savings as the context requires.
Forward-looking statements include statements with respect to our beliefs,
plans, objectives, goals, expectations, anticipations, estimates and intentions,
that are subject to significant risks and uncertainties. The following factors,
many of which are subject to change based on various other factors beyond our
control, could cause our financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements:
o the strength of the United States economy in general and the strength
of the local economies in which we conduct our operations;
o the effects of, and changes in, trade, monetary and fiscal policies and
laws, including interest rate policies of the Federal Reserve Board;
o inflation, interest rate, market and monetary fluctuations;
o the timely development of and acceptance of our new products and
services and the perceived overall value of these products and services
by users, including the features, pricing and quality compared to
competitors' products and services;
o the willingness of users to substitute competitors' products and
services for our products and services;
o the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance);
o the impact of technological changes;
o acquisitions;
o changes in consumer spending and saving habits; and
o our success at managing the risks involved in the foregoing.
This list of important factors is not exclusive. We do not undertake to
update any forward-looking statement, whether written or oral, that we may make.
<PAGE>
IMPACT OF THE YEAR 2000
The approaching millennium is causing organizations of all types to review
their computer systems for the ability to properly accommodate the year 2000.
When computer systems were first developed, two digits were used to designate
the year in date calculations and "19" was assumed for the century. As a result,
there is significant concern about the integrity of date sensitive calculations
when the calendar rolls over to January 1, 2000. An older system could interpret
01/01/00 as January 1, 1900 potentially causing major problems including but not
limited to calculating interest, payment, delinquency and/or maturity dates. An
internal committee comprised of four officers has been formed to address the
potential risk that the year 2000 poses for Lafayette Savings. This committee
reports to the audit committee of the board and the full board of directors
quarterly or more often as warranted.
Financial institution regulators recently have increased their focus upon
year 2000 compliance issues and have issued guidance concerning the
responsibilities of senior management and directors. The Federal Financial
Institutions Examination Council has issued several interagency statements on
Year 2000 Project Management Awareness. These statements require financial
institutions to, among other things, examine the year 2000 issue with respect to
their customers, suppliers and borrowers. These statements also require each
federally insured financial institution to survey its exposure, measure its risk
and prepare a plan to address the year 2000 issue. In addition, the federal
banking regulators have issued safety and soundness guidelines to be followed by
insured depository institutions to assure resolution of any year 2000 problems.
Accurate data processing is essential to our operations. A lack of
accurate processing by our vendors or us could have a significant adverse impact
on our financial condition and results of operations. We have been assured by
our outside data processing service that their computer services will function
properly on and after January 1, 2000. We have, however, developed a contingency
plan in the unlikely event that our data processing service does not function
properly on or after January 1, 2000. This plan focuses on conducting operations
in a manual mode, including the recording of transactions on spreadsheets.
We have also received year 2000 updates from most of our material,
non-information system providers, including but not limited to security cameras,
credit card and ATM card processors, the vault alarm, check printers, telephone
systems, participation loan servicers, and institutions we invest through or
with. Based on these updates, we do not anticipate any significant year 2000
issues. We have identified certain hardware and software that was not Year 2000
compliant and have purchased, installed and tested replacement equipment and
software. Our anticipated expenditure on this equipment is approximately
$184,000.
In addition to expenses related to our own systems, we could incur losses
if loan payments are delayed due to year 2000 problems affecting any of our
significant borrowers or impairing the payroll systems of large employers in our
market area. We have been communicating with our vendors to assess their
progress in evaluating their systems and implementing any corrective measures
required by them to be prepared for the year 2000. We have also sent year 2000
readiness request letters to certain borrowers. These borrowers were selected
<PAGE>
based on the aggregate amounts owed to Lafayette Savings, the type of loans
outstanding, and the perceived year 2000 risk based on our knowledge of the loan
customers and their operations. We have been advised by such parties that they
have plans in place to address and correct the issues associated with the year
2000 problem; however, no assurance can be given as to the adequacy of these
plans or to the timeliness of their implementation. Currently, due to the types
of borrowers doing business with us and the nature of our loans with these
borrowers, we do not consider the year 2000 issue as part of our underwriting
criteria.
FINANCIAL CONDITION
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1999 AND DECEMBER 31, 1998.
Our total assets increased from $232.8 million to $249.8 million, or $17.0
million, during the six months from December 31, 1998 to June 30, 1999. This
increase was primarily due to a $15.7 million increase in our loan portfolio
augmented by a $381,000 increase in loans held for sale as we continued our
efforts to grow by aggressively seeking to attract new residential mortgage
borrowers and to increase the size of our higher-yielding multi-family,
commercial real estate, land and land development and consumer loan portfolios.
Cash and cash equivalents and securities increased $501,000. We used a $10.1
million increase in deposits and a $6.5 million increase in Federal Home Loan
Bank Advances to fund loan growth and provide liquidity for future lending
activity. Nonperforming loans remained constant at $2.7 million, consisting
primarily of $2.1 million of purchased equipment leases. Shareholders' equity
increased from $18.2 million at December 31, 1998 to $18.9 million at June 30,
1999, an increase of $682,000 due primarily to net income partially offset by
the payment of a cash dividend.
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS AND THE QUARTER ENDED JUNE
30, 1998 AND JUNE 30, 1999.
GENERAL. Net income for the six months ended June 30, 1999 was $896,000, a
decrease of $18,000 or 1.97% from net income of $914,000 for the six months
ended June 30, 1998. This decrease was primarily due to a $295,000 increase in
operating expenses and a $64,000 decrease in non- interest income in the first
six months of 1999, offset by a $317,000 increase in net interests income and a
$30,000 decrease in the provision for income taxes. Net income for the second
quarter of 1999 was $496,000 compared to $470,000 for the same period in 1998
due primarily to a $203,000 increase in net interest income offset by a $134,000
increase in non-interest expenses and a $49,000 decrease in non-interest income.
NET INTEREST INCOME. Net interest income for the six months ended June 30,
1999 was $3.9 million, an increase of $317,000, or 8.93%, over the same period
in 1998. Net interest income for the second quarter of 1999 increased $203,000,
or 11.33%, over the same period in 1998. These increases were primarily volume
driven due to management's success in growing the balance sheet. Our net
interest margin (net interest income divided by average interest-earning assets)
decreased from 3.51% for the six months ended June 30, 1998 to 3.28% for the six
<PAGE>
months ended June 30, 1999. The decline in net interest margin was offset by
increased volume as average interest-earning assets increased from $201.9
million for the first six months of 1998 to $235.6 million for the six months of
1999. The interest rate spread for the first six months decreased from 3.36% for
1998 to 3.07% for 1999.
Interest income on loans increased $676,000 or 8.70% for the six months
ended June 30, 1999 compared to the same six months in 1998, primarily the
result of an increase of $25.3 million in average loans outstanding. This
increase was primarily due to an active residential real estate market in 1999
due to continued low interest rates, a strong local economy and the ongoing
success of our focus on increasing our portfolio of higher yielding multi-family
and commercial real estate, land development and consumer loans. These
higher-yielding portfolios increased from $92.4 million at December 31, 1998 to
$99.3 million at June 30, 1999. Despite this increase, the average yield on
loans decreased from 8.44% for the first six months of 1998 to 8.07% for the
first six months of 1998, due to continued low interest rates and the increasing
number of 3-year adjustable rate mortgages repricing to substantially lower
interest rates. Interest income on loans increased $354,000 for the second
quarter of 1999 compared to the second quarter of 1998 due primarily to a $27.4
million increase in average loans.
Interest earned on other investments and Federal Home Loan Bank stock
increased by $64,000 for the six months ended June 30, 1999 compared to the same
period in 1998. This was the result of an overall $8.4 million increase in the
average balance of other investments, offset by a decrease in the average yield
from 5.84% for the first two quarters of 1998 to 4.46% over the same period in
1999 partially due to our maintaining higher levels of short-term investments to
fund loans as short-term data processing conversion problems were resolved.
Interest expense for the six months ended June 30, 1999 increased $423,000
or 8.92% over the same period in 1998. This increase was primarily due to an
increase of $29.1 million in average interest-bearing liabilities, consisting of
an additional $21.8 million in the average balance of customer deposit accounts
and a $7.3 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 decreased slightly from 4.85% for the first six months of 1998 to
4.60% the same period in 1999. Interest expense increased $199,000 for the
second quarter of 1999 over the same period in 1998 primarily due to a $31.7
million increase in average interest-bearing liabilities partially offset by a
decrease in the average rate paid from 4.88% for the three month period in 1998
to 4.55% for the same period in 1999.
PROVISION FOR LOAN LOSSES. We establish our 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 and industry standards. From time to time, management also uses
the services of a consultant to assist in the evaluation of its growing
multi-family and commercial real estate loan portfolio. Management's analysis
results in the allocations of allowance amounts for each loan type. The majority
of our non-performing loans relate to a situation involving the Bennett Funding
<PAGE>
Group of Syracuse, New York through which we acquired $2.4 million of equipment
leases. Management has allocated $651,000 of the $1.6 million allowance to the
remaining leases and the related restructured loan to provide for potential
losses. Management believes that this reserve allocation will be sufficient to
cover any anticipated losses. We also recorded a $60,000 provision for loan
losses during the six months of 1999 as a result of analyzing our current loan
portfolios. This compares to a $54,000 provision for the first six months of
1998. In addition to the $2.1 million of Bennett Funding Group leases there were
$667,000 of non-performing or restructured loans at June 30, 1999. At June 30,
1999, our allowance equaled 0.75% of gross loans receivable compared to 0.80% at
June 30, 1998.
NON-INTEREST INCOME. Non-interest income for the six months ended June 30,
1999 decreased by $64,000, or 9.22%, compared to the same period in 1998. This
was primarily due to a $131,000 decrease in the gain on the sale of mortgage
loans in the secondary market resulting from the decreased sales activity and
lower average gains on loans sold, a $14,000 increase in service charges and
fees on deposit accounts due to the increased number of these accounts, a
$32,000 increase in fees on various debit and credit card products and a $21,000
increase in income from our insurance and investment subsidiary. Non-interest
income for the second quarter of 1999 decreased by $49,000 compared to the same
period in 1998, primarily due to a $104,000 decrease in the gain on the sale of
loans in the secondary market partially offset by a $47,000 increase in service
charges and various fees.
NON-INTEREST EXPENSE. Non-interest expense for the six months ended June
30, 1999 increased $295,000 over the same period in 1998. The major components
of this increase included a $138,000 increase in salaries and employee benefits
due to normal cost of living adjustments and the addition of 7.5 full time
equivalent employees, a $47,000 increase in occupancy and equipment expense due
to the purchase of a building to house back-office operations and a $32,000
increase in data processing costs due partially to Year 2000 remediation
efforts. Non-interest expense for the second quarter of 1999 increased by
$134,000 over the same period in 1998, primarily due to a $73,000 increase in
salaries and employee benefits, a $20,000 increase in occupancy expenses due to
the purchase of a building to house back-office operations and a $16,000
increase in data processing costs.
INCOME TAX EXPENSE. The Company's income tax provision decreased by
$30,000 for the six months ended June 30, 1999 compared to the same period in
1998. This was primarily due to the decrease in income before income taxes. The
Company's income tax provision for the second quarter of 1999 decreased $6,000
over the same period in 1998.
LIQUIDITY. Liquidity management is both a daily and long-term function for
the Bank's senior management. Lafayette Savings 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.
<PAGE>
Lafayette Savings 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
4.0%. Our internal policy for liquidity is 6% to 8%; however, at December 31,
1998 and June 30, 1999 our liquidity ratio was 11.77% and 10.56%, respectively.
Because of the decrease in the number of loans being refinanced, the offsetting
decrease in the need for additional short-term funding should make it possible
to bring the liquidity levels back within the desired range.
CAPITAL RESOURCES. Shareholders' equity totaled $18.9 million at June 30,
1999 compared to $18.2 million at December 31, 1998, an increase of $682,000 or
3.75%. Increases due to net income of $896,000 and $159,000 due to benefit plans
were partially offset by $209,000 of cash dividends paid to shareholders,
$60,000 used to repurchase our common stock in the open market and a $131,000
unrealized holding loss on available-for-sale securities. Federal regulations
require Lafayette Savings 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 4.0% of total assets, and that risk based
capital be at least 8.0% of risk-based assets as defined by regulations. At June
30, 1999 Lafayette Savings' capital ratios were as follows:
Amount Percent of
(000) applicable assets
------- -----------------
Tangible capital $17,525 7.02%
Requirement 3,746 1.50
------- -----
Excess $13,779 5.52%
======= =====
Core capital $17,525 7.02%
Requirement 9,988 4.00
------- -----
Excess $ 7,537 3.02%
======= =====
Risk-based Capital $18,575 11.54%
Requirement 12,877 8.00
------- -----
Excess $ 5,698 3.54%
======= =====
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, we 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 us in the
proceedings, that the resolution of any prior and pending proceedings should not
have a material effect on our 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 21, 1999, LSB Financial Corp. held its Annual Meeting of
Stockholders ("Meeting").
(b) Not applicable.
(c) Stockholders of the Company voted on the following matters at the
meeting.
Election of the following persons as directors of the Company for terms of three
years:
Votes Votes
For Withheld
--- --------
Peter Neisel 621,646 3,886
Thomas R. McCully 621,470 4,062
Jeffrey A. Poxon 621,866 3,666
Mary Jo David 622,087 3,445
<PAGE>
Votes Votes Broker
For Against Abstentions Non-votes
Ratification of 619,614 1,883 4,035 -0-
the appointment
of Crowe, Chizek
and Company LLP
as auditors of the
Company for the
fiscal year ended
December 31, 1999.
Item 5. OTHER INFORMATION
None to be reported.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
See Exhibit Index
(b) Reports on Form 8-K
On April 21, 1999, the Registrant filed a Current Report on
Form 8-K with the SEC which contained a copy of the press
release announcing a 3 for 2 stock split payable June 4, 1999,
to shareholders of record at the close of business on May 14,
1999.
<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 5, 1999 /s/John W. Corey
-------------- -------------------------------------
John W. Corey, President
(Principal Executive Officer)
Date August 5, 1999 /s/Mary Jo David
-------------- -------------------------------------
Mary Jo David, Treasurer
(Principal Financial and Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- ------
11 Computation of Per Share Earnings
27 Financial Data Schedule
<TABLE>
<CAPTION>
LSB FINANCIAL CORP.
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
(Dollars in thousands)
For the three months ended
June 30, 1999 June 30, 1998
----------------------------------- -----------------------------------
Weighted Weighted
Average Per share Average Per share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to common shareholders $ 496 1,301,408 $0.38 $ 470 1,345,580 $0.35
Effect of dilutive securities
Options 51,153 56,908
Diluted EPS
Income available to common shareholders 496 1,352,561 $0.37 $ 470 1,402,488 $0.33
For the six months ended
June 30, 1999 June 30, 1998
----------------------------------- -----------------------------------
Basic EPS
Income available to common shareholders $ 896 1,299,439 $0.69 $ 914 1,347,567 $0.68
Effect of dilutive securities
Options 47,228 54,764
Diluted EPS
Income available to common shareholders 896 1,346,667 $0.67 $ 914 1,402,330 $0.65
</TABLE>
<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, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1597
<INT-BEARING-DEPOSITS> 9572
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11653
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 217048
<ALLOWANCE> (1638)
<TOTAL-ASSETS> 249843
<DEPOSITS> 171867
<SHORT-TERM> 58000
<LIABILITIES-OTHER> 961
<LONG-TERM> 139
0
0
<COMMON> 9
<OTHER-SE> 18867
<TOTAL-LIABILITIES-AND-EQUITY> 249843
<INTEREST-LOAN> 8447
<INTEREST-INVEST> 454
<INTEREST-OTHER> 130
<INTEREST-TOTAL> 9031
<INTEREST-DEPOSIT> 3531
<INTEREST-EXPENSE> 5166
<INTEREST-INCOME-NET> 3865
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2941
<INCOME-PRETAX> 1494
<INCOME-PRE-EXTRAORDINARY> 1494
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 896
<EPS-BASIC> 0.69
<EPS-DILUTED> 0.67
<YIELD-ACTUAL> 3.28
<LOANS-NON> 1338
<LOANS-PAST> 0
<LOANS-TROUBLED> 1400
<LOANS-PROBLEM> 1524
<ALLOWANCE-OPEN> (1578)
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> (1638)
<ALLOWANCE-DOMESTIC> (1638)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 160
</TABLE>
