SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
_____________________.
Commission file number: 0-25910
LOGANSPORT FINANCIAL CORP.
(Exact name of registrant specified in its charter)
Indiana 35-1945736
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
723 East Broadway
P.O. Box 569
Logansport, Indiana 46947
(Address of principal executive offices
including Zip Code)
(219) 722-3855
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of the Registrant's common stock, without par value, as of
November 3, 1997 was 1,260,920.
<PAGE>
Logansport Financial Corp.
Form 10-Q
Index
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Condensed Statements of
Financial Condition as of September 30, 1997
and December 31, 1996 (Unaudited)
Consolidated Condensed Statements of
Income for the three and nine months ended
September 30, 1997 and 1996 (Unaudited )
Consolidated Condensed Statements of Changes
in Shareholders' Equity for the nine months
ended September 30, 1997 and 1996 (Unaudited)
Consolidated Condensed Statements of Cash
Flows for the nine months ended September 30, 1997
and 1996 (Unaudited)
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports of Form 8-K 15
SIGNATURES 16
<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
Assets 1997 1996
<S> <C> <C>
Cash $ 483,960 $ 997,552
Short-term interest bearing deposits 3,831,121 2,761,126
----------- -----------
Total cash and cash equivalents 4,315,081 3,758,678
Interest bearing deposits 100,000 100,000
Securities available for sale 16,038,351 14,303,105
Loans 61,229,636 57,038,066
Allowance for loan losses (235,814) (235,970)
------------- ------------
Net loans 60,993,822 56,802,096
Real estate owned 105,686 -
Premises and equipment 467,385 476,325
Federal Home Loan Bank stock, at cost 494,000 386,500
Cash value of life insurance 1,067,242 1,040,242
Other assets 2,219,670 801,547
----------- -------------
Total assets $85,801,237 $77,668,493
========== ==========
Liabilities
Deposits $61,741,234 $57,396,200
Borrowings 5,500,000 3,400,000
Dividends payable 126,062 125,638
Other liabilities 2,223,072 1,319,767
----------- -----------
Total liabilities 69,590,368 62,241,605
---------- ----------
Shareholders' Equity
Common stock, 5,000,000 shares authorized,
no par value; 1,260,620 shares issued 7,562,762 7,518,062
Retained earnings-substantially restricted 9,081,899 8,587,979
Shares acquired by stock benefit plans (430,197) (522,382)
Net unrealized losses on securities available
for sale, net of related tax effects (3,595) (156,771)
-------------- ------------
Total shareholders' equity 16,210,869 15,426,888
---------- ----------
Total liabilities and shareholders' equity $85,801,237 $77,668,493
========== ==========
</TABLE>
<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- ----------------
1997 1996 1997 1996
---- ---- ---- ----
Interest Income
<S> <C> <C> <C> <C>
Loans $1,296,949 $1,142,036 $3,729,466 $3,250,330
Investment securities
Taxable 206,852 243,004 609,170 731,503
Tax-exempt 29,223 31,573 89,454 94,107
Other interest and dividends 59,806 36,511 166,492 119,198
----------- ----------- ---------- ----------
Total interest income 1,592,830 1,453,124 4,594,582 4,195,138
--------- --------- --------- ---------
Interest Expense
Deposits 731,697 656,729 2,123,531 1,922,390
Borrowings 72,764 27,303 170,715 56,102
----------- ----------- ---------- -----------
Total interest expense 804,461 684,032 2,294,246 1,978,492
---------- ---------- --------- ---------
Net Interest Income 788,369 769,092 2,300,336 2,216,646
Provision for losses on loans 9,000 3,000 17,000 9,000
------------ ------------ ----------- ------------
Net Interest Income After Provision
for Losses on Loans 779,369 766,092 2,283,336 2,207,646
---------- ---------- --------- ---------
Other Income
Service charges on deposit accounts 26,893 19,553 64,420 48,639
Net realized losses on sales of securities (19,093) (34,392) (50,620) (26,516)
Recoveries on previously
written-off securities - - 13,083 17,291
Other income 11,611 13,007 37,182 35,717
----------- ----------- ----------- -----------
Total other income 19,411 (1,832) 64,065 75,131
----------- ------------- ----------- -----------
Other Expenses
Salaries and employee benefits 178,841 172,932 531,470 478,489
Net occupancy expenses 9,138 9,435 29,436 29,505
Equipment expenses 8,296 8,722 26,284 29,107
Deposit insurance expense 9,256 368,955 27,451 428,553
Computer processing fees 27,102 24,512 72,444 68,526
Other expenses 92,766 72,924 274,456 255,264
----------- ----------- ---------- ----------
Total other expenses 325,399 657,480 961,541 1,289,444
---------- ---------- ---------- ---------
Income Before Income Tax 473,381 106,780 1,385,860 993,333
Income tax expense 176,622 25,457 514,200 355,428
---------- ----------- ---------- ----------
Net Income $ 296,759 $ 81,323 $ 871,660 $ 637,905
========== =========== ========== ==========
Earnings per share $.23 $.06 $.69 $.48
=== === === ===
Weighted average shares outstanding 1,260,593 1,322,500 1,258,594 1,322,500
</TABLE>
<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statements of Shareholders' Equity
(Unaudited)
Nine Months Ended
September 30,
1997 1996
---- ----
Beginning balance $15,426,888 $20,454,270
Net proceeds from exercise of stock options 44,700 -
Contribution for unearned compensation - (614,567)
Amortization of unearned compensation 92,185 61,456
Dividends (377,740) (4,364,250)
Net change in unrealized gain (loss)
on securities available for sale 153,176 (248,321)
Net income 871,660 637,905
------------ ----------
Ending balance $16,210,869 $15,926,493
========== ==========
<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
<S> <C> <C>
1997 1996
Operating Activities
Net income $ 871,660 $ 637,905
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 17,000 9,000
Securities (gains) losses 50,620 26,516
Gain on sale of foreclosed real estate (1,136) (869)
Securities amortization, net 70,056 31,697
Amortization of unearned compensation 92,185 61,457
Depreciation 27,889 28,082
Change in
Other assets (20,592) 408,159
Other liabilities 80,602 166,764
----------- ----------
Net cash provided by operating activities 1,188,284 1,368,711
--------- ---------
Investing Activities
Purchase of securities available for sale (6,375,063) (7,913,134)
Proceeds from available for sale maturities 750,000 1,490,000
Proceeds from sales of securities 2,216,645 5,750,174
Payments on mortgage and asset-backed securities 1,103,843 2,495,946
Purchase of Federal Home Loan Bank Stock (107,500) (38,300)
Net changes in loans (4,313,110) (5,926,981)
Investment in real estate owned (166) (242)
Purchase of premises and equipment (18,949) (73,278)
----------- -----------
Net cash used by investing activities (6,744,300) (4,215,815)
--------- ---------
</TABLE>
<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
<S> <C> <C>
1997 1996
Financing Activities
Net change in
Noninterest-bearing, interest-bearing
demand and savings deposits $1,849,294 $1,085,549
Certificates of deposit 2,495,740 2,386,838
Short-term borrowings (1,400,000) -
Payment of Federal Home Loan Bank advances (6,000,000) -
Proceeds from Federal Home Loan Bank advances 9,500,000 2,000,000
Contribution for unearned compensation (614,567)
Proceeds from exercise of stock options 44,700 -
Dividends (377,315) (396,750)
---------- -----------
Net cash provided by financing activities 6,112,419 4,461,070
--------- ---------
Net Change in Cash and Cash Equivalents 556,403 1,613,966
Cash and Cash Equivalents, Beginning of Period 3,758,678 3,242,579
--------- ---------
Cash and Cash Equivalents, End of Period $4,315,081 $4,856,545
========= =========
Additional Cash Flow and Supplementary
Information
Interest paid $2,278,266 $1,967,831
========= =========
Income tax paid $ 556,105 $ 552,329
========== ==========
Dividends payable $ 126,062 $4,099,750
========== =========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of Logansport Financial Corp. (the "Company") and its subsidiary,
Logansport Savings Bank, FSB, (the "Bank").
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and disclosures required by generally accepted
accounting principles for complete financial statements. Accordingly, these
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 1996. In the opinion of management, the
financial statements reflect all adjustments necessary to present fairly the
Company's financial position as of September 30, 1997, results of operations for
the three and nine month periods ended September 30, 1997 and 1996 and cash
flows for the nine month periods ended September 30, 1997 and 1996.
NOTE B: Plan of Conversion and Other Matters
Effective June 13, 1995, the Bank completed its conversion from a federally
chartered mutual savings bank to a federally chartered stock savings bank (the
"Conversion"), and became a wholly-owned subsidiary of the Company. In the
Conversion, the Company sold 1,322,500 shares of Common Stock, with no par value
("Common Stock"), for $10.00 per share and used all proceeds except $3,982,500
to acquire complete ownership of the Bank. Net proceeds of the Company's stock
issuance, after costs, were $12,670,006.
At a meeting of the Company's shareholders on April 9, 1996, the Board of
Directors submitted for shareholder approval a stock option plan (the "Stock
Option Plan"), and at that time made certain awards pursuant to the Stock Option
Plan. The plan was approved by the Company's shareholders. Common Stock in an
aggregate amount of 10.0% of the shares issued in the Conversion (132,250
shares) were reserved for issuance upon the exercise of options granted under
the Stock Option Plan. Options were granted under the Stock Option Plan for
108,691 shares of common stock and have an exercise price per share equal to
$12.50, the fair market value of the shares on the date of grant. Pursuant to
the terms of the Option Plan and in order to ensure equivalent economic
consequence to the option holders following the special cash distribution paid
by the Company on December 10, 1996, the number of options granted was adjusted
to 129,340 at a per share option price of $10.53. The Company accounts for
stock-based compensation as prescribed in Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, with appropriate proforma
disclosures made in the notes to its annual financial statements.
Additionally, at a meeting of the Company's shareholders held on April 9, 1996,
the Board of Directors submitted for shareholder approval a Management
Recognition and Retention Plan and Trust (the "RRP"). The RRP was approved by
the shareholders. The Bank contributed funds to the RRP to enable it to acquire
an aggregate amount of Common Stock equal to up to 4.0% of the shares issued in
the Conversion, (52,900 shares) either directly from the Company or in the open
market. Shares awarded under the RRP vest at a rate of 20% at the end of each
full twelve months of service with the Bank after the date of grant. As of April
9, 1996, the number of shares awarded under the RRP was 46,675. All of these
shares were acquired in the open market for an average price of $13.17
NOTE C: Cash Dividends and Earnings Per Share
A cash dividend of $.10 per common share was declared on September 9, 1997,
payable on October 10, 1997, to shareholders of record as of September 22, 1997.
Earnings per share was computed based upon the weighted average common shares
outstanding during the period subsequent to the Bank's conversion to a stock
savings bank on June 13,1995.
NOTE D: Recent Accounting Pronouncements
In June 1996, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers of Financial Assets, Servicing Rights, and Extinguishment of
Liabilities", that provides accounting guidance on transfers of financial
assets, servicing of financial assets, and extinguishment of liabilities. SFAS
No. 125 introduces an approach to accounting for transfers of financial assets
that provides a means of dealing with more complex transactions in which the
seller disposes of only a partial interest in the assets, retains rights or
obligations, makes use of special purpose entities in the transaction, or
otherwise has continuing involvement with the transferred assets. The new
accounting method, the financial components approach, provides that the carrying
amount of the financial assets transferred be allocated to components of the
transaction based on their relative fair values. SFAS No. 125 provides criteria
for determining whether control of assets has been relinquished and whether a
sale has occurred. If the transfer does not qualify as a sale, it is accounted
for as a secured borrowing. Transactions subject to the provisions of SFAS No.
125 include, among others, transfers involving repurchase agreements,
securitizations of financial assets, loan participations, factoring
arrangements, and transfers of receivables with recourse.
An entity that undertakes an obligation to service financial assets recognizes
either a servicing asset or liability for the servicing contract (unless related
to a securitization of assets, and all the securitized assets are retained and
classified as held-to-maturity). A servicing asset or liability that is
purchased or assumed is initially recognized at its fair value. Servicing assets
and liabilities are amortized in proportion to and over the period of estimated
net servicing income or net servicing loss and are subject to subsequent
assessments for impairment based on fair value.
SFAS No. 125 provides that a liability is removed from the balance sheet only if
the debtor either pays the creditor and is relieved of its obligation for the
liability or is legally released from being the primary obligor.
SFAS No. 125 is effective for transfers and servicing of financial assets and
extinguishment of liabilities occurring after December 31, 1997, and is to be
applied prospectively. Earlier or retroactive application is not permitted.
Management does not believe that adoption of SFAS No. 125 will have a material
adverse effect on the Corporation's consolidated financial position or results
of operations.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
requires companies to present basic earnings per share and, if applicable,
diluted earnings per share, instead of primary and fully diluted earnings per
share, respectively. Basic earnings per share is computed without including
potential common shares, i.e., no dilutive effect. Diluted earnings per share is
computed taking into consideration common shares outstanding and dilutive
potential common shares, including options, warrants, convertible securities and
contingent stock agreements. SFAS No. 128 is effective for periods ending after
December 15, 1997. Early adoption is not permitted. Based upon the provisions of
SFAS No. 128, the Corporation's basic and diluted earnings per share for the
three month period ended September 30, 1997 would have each been $.23. Basic and
diluted earnings per share for the three month period ended September 30, 1996
would have each been $.06.
In February 1997, the FASB issued SFAS No. 129, "Disclosures of Information
about Capital Structure." SFAS No. 129 consolidated existing accounting
guidance relating to disclosure about a company's capital structure. SFAS
No. 129 is effective for financial statements for periods ending after
December 15, 1997. SFAS No. 129 is not expected to have a material impact
on the Corporation's financial statements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. It does not require a
specific format for that financial statement but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement.
SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. SFAS No. 130 is not expected to
have a material impact on the Corporation's financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 significantly changes the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about reportable segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 uses a
"management approach" to disclose financial and descriptive information about
the way that management organizes the segments within the enterprise for making
operating decisions and assessing performance. For many enterprises, the
management approach will likely result in more segments being reported. In
addition, SFAS No. 131 requires significantly more information to be disclosed
for each reportable segment than is presently being reported in annual financial
statements and also requires that selected information be reported in interim
financial statements. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. SFAS No. 131 is not expected to have a material impact on the
Corporation's financial statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Forward-Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Corporation's operations and the Corporation's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount and adequacy of the allowance
for losses on loans and the effect of certain accounting pronouncements.
Financial Condition
Total assets were $85.8 million at September 30, 1997 compared to $77.7 million
at December 31, 1996, an increase of $8.1 million or 10.5%. Funds were obtained
primarily from a growth in deposits of $4.3 million and an increase in Federal
Home Loan Bank advances, and were invested in securities and loans. The Bank
also recorded a $1.5 million equity investment in a limited partnership which
will construct and manage residential real estate apartments for low and
moderate income residents. This investment reflects a 49.5% participation in the
partnership and is expected to generate significant tax credits for the Bank in
future years. The investment resulted in an increase to total assets of $1.5
million with a corresponding increase in other liabilities: however, no capital
contributions were required at inception. Capital contributions are due over the
course of the next twelve years and will be used to repay principal and interest
of tax exempt bonds and equity bridge loans used to finance construction of the
development. Securities increased from $14.3 million at December 31, 1996 to
$16.0 at September 30, 1997. Net loans increased $4.2 million, or 7.4%, from
$56.8 million at December 31, 1996 to $61.0 million at September 30, 1997. Loan
demand has been strong in the second and third quarters after a flat first
quarter performance.
Deposits were $61.7 million at September 30, 1997 compared to $57.4 million at
December 31, 1996, or an increase of $4.3 million in the first three quarters of
1997. Management continued its effort to achieve a moderate rate of growth in
the deposit portfolio through marketing and pricing strategies. The Bank
currently has a $1.5 million putable advance due in two years from the Federal
Home Loan Bank. The rate is guaranteed for one year, until January of 1998, at
which time the Federal Home Loan Bank may convert the advance to a periodic
adjustable advance. If this is done the Bank has the option to prepay the
advance without a fee. The Bank also has $3.0 million in short-term adjustable
rate advances. During the quarter ended September 30, 1997, the Bank obtained a
two year fixed rate advance which was used to purchase securities.
Shareholders' equity was $16.2 million at September 30, 1997 and $15.4 million
at December 31, 1996. The payment of dividends, a decrease in the unrealized
loss on securities available for sale, the amortization of unearned
compensation, the exercise of stock options, and net income combined to result
in an increase of $783,981 for the nine months ended September 30, 1997.
<PAGE>
Results of Operations
Comparison of the Three Months Ended September 30, 1997 and September 30, 1996
Net income for the Company for the three months ended September 30, 1997 was $
296,759 compared with $81,323 for the three months ended September 30, 1996, or
an increase of $215,436. This increase is the result of the one-time assessment
to recapitalize the Savings Association Insurance Fund which took place in the
quarter ending September 30, 1996. The pretax charge was approximately $338,000
and the after tax effect was $204,000. Without the assessment in the quarter
ending September 30, 1996, net income would have been $285,323. Interest income
increased $139,706 for the three months ended September 30, 1997 compared to
September 30, 1996. The major contributor to the increase in interest income was
the growth in the loan portfolio and the slightly higher interest rates that
have resulted as ARM loans repriced. Interest expense increased $120,429 or
17.6% for the three months ended September 30, 1997 compared to the three months
ended September 30, 1996. The increase in the volume of deposits and advances
have been the primary cause of this increase as the over-all cost of deposits
has increased only 4 basis points from the quarter ended September 30, 1996. Net
interest income for the three months ended September 30, 1997 was $788,369
compared to $769,092 at September 30, 1996, an increase of $19,277 or 2.5%.
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by the
Company, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the Company's
market area, and other factors related to the collectibility of the Company's
loan portfolio. As a result of such analysis, management recorded a $9,000
provision for losses on loans for the quarter ended September 30, 1997 and
$3,000 for the quarter ended September 30, 1996. One property was taken into
real estate owned for the quarter ended September 30, 1996 and was sold during
the quarter for a gain of $869. One property was taken into real estate owned
for the quarter ended September 30, 1997 and remained there at quarter end.
Non-performing loans were $318,000, or 0.52% of loans, at September 30, 1997 and
$406,000, or 0.71% of loans, at December 31, 1996. Loan loss reserves amounted
to $235,814, or 0.39% of total loans, at September 30, 1997 compared to
$235,970, or 0.41% at December 31, 1996. There can be no assurance that the loan
loss allowance of the Association will be adequate to cover losses on
nonperforming assets in the future.
Realized losses on the sale of available for sale securities amounted to $19,093
in the quarter ending September 30, 1997 and $34,392 in the quarter ending
September 30, 1996. Service charges on deposit accounts increased by $7,340, or
37.5%, from September 30, 1997 over September 30, 1996.
Total other expenses increased $27,618 without considering the decrease of
$359,699 in deposit insurance expense. Salaries and employee benefits increased
$5,909, or 3.4% as a result of general and merit pay increases for the 1997
year. Other expenses experienced an increase of $19,842 or 27.2%. Other expenses
were $92,766 for the three months ended September 30, 1997 compared to $72,924
for the three months ended September 30, 1996. Approximately $14,000 of the
increase is related to advertising increases and costs associated with increased
account volume. In the quarter ending September 30, 1997 the Bank also recorded
a charitable donation of $8,000 as it donated a property held in real estate
owned at June 30, 1997 to Habitat for Humanity of Cass County, Indiana, Inc.
The Company's effective tax rate for the three months ended September 30,
1997 was 37.3% compared to 23.8% for the three months ended September 30,1996.
Comparison of the Nine Months Ended September 30, 1997 and September 30, 1996
Net income for the Company for the nine months ended September 30, 1997 was
$871,660 compared with $637,905 for the nine months ended September 30, 1996.
This is an increase of $233,755 or 36.6%. Without the SAIF assessment, net
income would have increased $29,755 or 3.5%. Interest income increased $399,444
for the nine months ended September 30, 1997 compared to September 30, 1996.
Interest expense increased $315,754 resulting in an improvement in net interest
income of $83,690 or 3.8%, when comparing the nine months ended September 30,
1997 to the nine months ended September 30, 1996.
The provision for loan losses was $17,000 for the nine months ended September
30, 1997 and $9,000 for the nine months ended September 30, 1996. The growth in
loans outstanding resulted in a need for an additional loan loss provision but
has not resulted in an increase in nonperforming loans as discussed in the
previous section.
Realized losses on the sale of available for sale securities were $50,620 for
the nine months ending September 30, 1997 and $26,516 for the nine months ending
September 30, 1996. Service charges on deposit accounts increased $15,781, or
32.4%. This increase is a result of an increase in the volume of transaction
accounts and new service charges imposed. There was a nonrecurring recovery on
securities previously written off of $17,291 in the nine months ended September
30, 1996 and $13,083 in the nine months ended September 30, 1997.
Total other expenses increased $73,199 or 8.5%, for the nine months ended
September 30, 1997 compared to the nine months ended September 30, 1996 after
eliminating the $401,102 difference related to deposit insurance expense. The
increases were concentrated in two areas, salaries and employee benefits and
other expenses. Salary and employee benefits increased $52,981, or 11.1%. This
is a result of general and merit pay increases and amortization of the expense
associated with the RRP which was approved April 9, 1996 at the shareholder's
meeting. The plan was effective for six months of the nine month period ending
September 30, 1996 and resulted in amortization expense of $61,456. The plan was
effective for nine months of the nine month period ending September 30, 1997 and
resulted in amortization expense of $92,185.
Other expenses increased $19,192 for the nine months ended September 30, 1997
compared to the nine months ended September 30, 1996. Approximately $5,000 of
the increase in cost is associated with an increase in the volume of checking
accounts and the additional services connected with these accounts such as
issuing ATM cards. Advertising expense also increased by $12,000 as new and
additional means were used to promote the Bank's products.
The Company's effective tax rate for the nine months ended September 30,1997
was 37.1% compared to 35.8% for the nine months ended September 30, 1996.
Capital Resources
Pursuant to OTS capital regulations, savings associations must currently meet a
1.5% tangible capital requirement, a 3% leverage ratio (or core capital)
requirement, and total risk-based capital to risk-weighted assets ratio of 8%.
At September 30, 1997, the Bank's tangible capital ratio was 18.7%, its leverage
ratio was 18.7%, and its risk-based capital to risk-weighted assets ratio was
35.2%. Therefore, the Bank's capital significantly exceeded all of the capital
requirements currently in effect. The following table provides the minimum
regulatory capital requirements and the Bank's capital ratios as of September
30, 1997.
Capital Standard Required Bank's Excess
- ---------------- -------- ------ ------
Tangible (1.5%) 1,283,000 16,009,000 14,726,000
Core (3.0%) 2,565,000 16,009,000 13,444,000
Risk-based (8.0%) 3,696,000 16,245,000 12,549,000
Liquidity
The standard measure of liquidity for savings associations is the ratio of cash
and eligible investments to a certain percentage of net withdrawable savings
account and borrowings due within one year. The minimum required ratio is
currently set by the Office of Thrift Supervision at 5%, of which 1% must be
comprised of short-term investments. At September 30, 1997 the Company's ratio
was 11.19%, of which 6.95% was comprised of short-term investments.
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Bank nor the Company were during the three-month period ended
September 30, 1997 or are as of the date hereof involved in any legal proceeding
of a material nature. From time to time, the Bank is a party to legal
proceedings wherein it enforces its security interests in connection with its
mortgage and other loans.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are attached to this report on Form 10-Q:
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant filed one report on Form 8-K during the fiscal quarter
ended September 30, 1997. The report was filed on August 19, 1997 and
reported a change in Registrant's Certifying Accountant.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on behalf of the
undersigned thereto duly authorized.
Logansport Financial Corp.
Date: November 11,1997 By: /s/ Thomas G. Williams
Thomas G. Williams, President
and Chief Executive Officer
Date: November 11, 1997 By: /s/ Dottye Robeson
Dottye Robeson, Secretary
and Treasurer
<PAGE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 483,960
<INT-BEARING-DEPOSITS> 3,831,121
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16,038,351
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<LOANS> 61,229,636
<ALLOWANCE> 235,814
<TOTAL-ASSETS> 85,801,237
<DEPOSITS> 61,741,234
<SHORT-TERM> 5,500,000
<LIABILITIES-OTHER> 2,349,134
<LONG-TERM> 0
0
0
<COMMON> 7,562,762
<OTHER-SE> 8,648,107
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<INTEREST-LOAN> 3,729,466
<INTEREST-INVEST> 698,624
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<INTEREST-TOTAL> 4,594,582
<INTEREST-DEPOSIT> 2,123,531
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<INTEREST-INCOME-NET> 2,300,336
<LOAN-LOSSES> 17,000
<SECURITIES-GAINS> (50,620)
<EXPENSE-OTHER> 961,541
<INCOME-PRETAX> 1,385,860
<INCOME-PRE-EXTRAORDINARY> 871,660
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 871,660
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
<YIELD-ACTUAL> 3.98
<LOANS-NON> 318
<LOANS-PAST> 318
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