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
MARCH 31, 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
May 1, 1997 was 1,258,328.
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<PAGE>
Logansport Financial Corp.
Form 10-Q
Index
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Condensed Statement of
Financial Condition as of March 31,
1997(Unaudited) and December 31, 1996
Consolidated Condensed Statement of Income
for the three months ended
March 31, 1997 and 1996 (Unaudited)
Consolidated Condensed Statement of
Changes in Shareholders' Equity
for the three months ended March 31,
1997 and 1996 (Unaudited)
Consolidated Condensed Statement of
Cash Flows for the three months
ended March 31, 1997 and 1996 (Unaudited)
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports of Form 8-K 13
SIGNATURES
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<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ----------
<S> <C> <C>
Assets
Cash $ 1,359,472 $ 997,552
Short-term interest bearing deposits 3,695,056 2,761,126
----------- ----------
Total cash and cash equivalents 5,054,528 3,758,678
Interest bearing deposits 100,000 100,000
Securities available for sale 14,604,198 14,303,105
Loans 57,132,454 57,038,066
Allowance for loan losses (238,970) (235,970)
----------- -----------
Net loans 56,893,484 56,802,096
Premises and equipment 469,494 476,325
Federal Home Loan Bank stock, at cost 386,500 386,500
Cash value of life insurance 1,049,242 1,040,242
Other assets 741,030 801,547
----------- --------
Total assets $ 79,298,476 $ 77,668,493
=========== ===========
Liabilities
Deposits $ 59,388,836 $ 57,396,200
Borrowings 3,500,000 3,400,000
Dividends payable 125,638 125,638
Other liabilities 698,605 1,319,767
----------- -------------
Total liabilities 63,713,079 62,241,605
----------- -----------
Shareholders' Equity
Common stock 7,518,062 7,518,062
Retained earnings-substantially restricted 8,734,313 8,587,979
Unearned compensation (491,654) (522,382)
Net unrealized gain (loss) on securities
available for sale, net of tax (175,324) (156,771)
----------- ---------------
Total shareholders' equity 15,585,397 15,426,888
----------- -----------
Total liabilities and shareholders' equity $ 79,298,476 $ 77,668,493
=========== ===========
</TABLE>
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<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Interest Income
Loans $1,197,418 $ 1,031,545
Investment securities
Taxable 193,407 235,747
Tax-exempt 30,706 30,854
Other interest and dividend income 53,316 40,557
----------- -----------
Total interest income 1,474,847 1,338,703
----------- -----------
Interest Expense
Deposits 684,347 626,932
Borrowings 44,194 13,814
----------- -----------
Total interest expense 728,541 640,746
----------- -----------
Net Interest Income 746,306 697,957
Provision for losses on loans 3,000 3,000
----------- -----------
Net Interest Income After Provision for
Losses on Loans 743,306 694,957
----------- -----------
Other Income
Service charges on deposit accounts 18,481 13,338
Net realized gains(losses) on sales of securities (31,527) 11,240
Recoveries on previously written-
off securities 3,374
Other income 12,916 11,247
----------- -----------
Total other income 3,244 35,825
----------- -----------
Other Expenses
Salaries and employee benefits 171,692 140,744
Net occupancy expenses 11,330 11,348
Equipment expenses 10,332 11,074
Deposit insurance expense 8,965 29,721
Computer processing fees 22,885 23,575
Other expenses 90,910 80,774
----------- -----------
Total other expenses 316,114 297,236
----------- -----------
Income Before Income Tax 430,436 433,546
Income tax expense 158,464 159,657
----------- -----------
Net Income $ 271,972 $ 273,889
========= ===========
Earnings per share $ 0.22 $ 0.21
========= ===========
Weighted average shares outstanding 1,256,375 1,322,500
</TABLE>
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<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Shareholders' Equity
(Unaudited)
Three Months Ended
March 31,
1997 1996
----------- -----------
Beginning balance $ 15,426,888 $ 20,454,270
Amortization of unearned compensation 30,728
Dividends (125,638) (132,250)
Net change in unrealized gain (loss)
on securities available for sale (18,553) (123,156)
Net income 271,972 273,889
----------- -----------
Ending balance $ 15,585,397 $ 20,472,753
=========== ===========
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<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities
Net income $ 271,972 $ 273,889
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 3,000 3,000
Security (gains) losses 31,527 (11,240)
Gain on sale of foreclosed real estate (1,136)
Securities (accretion) amortization, net 15,119 (1,926)
Depreciation 10,530 9,060
Amortization of unearned compensation 30,728
Change in
Other assets 63,686 436,089
Other liabilities 81,135 15,733
----------- -----------
Net cash provided by operating activities 506,561 724,605
----------- -----------
Investing Activities
Purchase of securities available for sale (2,536,498) (4,001,005)
Proceeds from available for sale maturities 150,000 650,000
Proceeds from sales of securities 1,067,562 2,091,259
Payments on mortgage and asset-backed
securities 238,178 1,387,017
Net change in loans (93,086) (1,494,358)
Investment in real estate owned (166)
Purchase of premises and equipment (3,699) (42,678)
----------- -----------
Net cash used by investing activities (1,177,709) (1,409,765)
----------- -----------
</TABLE>
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<PAGE>
LOGANSPORT FINANCIAL CORP.
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
----------- ----------
<S> <C> <C>
Financing Activities
Net change in
Noninterest-bearing, interest-bearing
demand and savings deposits 561,381 969,013
Certificates of deposit 1,431,255 842,357
Short-term borrowings (1,400,000)
Proceeds from Federal Home Loan Bank advances 3,500,000
Payment of Federal Home Loan Bank advances (2,000,000)
Dividends (125,638) (132,250)
----------- ----------
Net cash provided by financing
activities 1,966,998 1,679,120
----------- ----------
Net Change in Cash and Cash Equivalents 1,295,850 993,960
Cash and Cash Equivalents, Beginning of Period 3,758,678 3,242,579
----------- ----------
Cash and Cash Equivalents, End of Period $ 5,054,528 $ 4,236,539
========== ===========
Additional Cash Flow and Supplementary
Information
Interest paid $712,371 $630,508
Income tax paid 31,000 90,800
Dividends payable 125,638 132,250
</TABLE>
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<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. In the opinion of
management, the financial statements reflect all adjustments necessary to
present fairly the Company's financial position as of March 31, 1997, results of
operations for the three month periods ending March 31, 1997 and 1996 and cash
flows for the three month periods ending March 31, 1997 and 1996.
NOTE B: Plan of Conversion
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 had 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 audited financial statements.
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<PAGE>
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 will 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 per share of
$13.17
NOTE C: Cash Dividends
A cash dividend of $.10 per common share was declared on March 11, 1997, payable
on April 10, 1997, to stockholders of record as of March 20, 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: Repurchase Program
In October, 1996, the Company announced its intention to repurchase, from time
to time, on the open market up to 5% of the Company's common stock, or 66,125
shares. During the remainder of 1996, the Company purchased the 66,125 shares
pursuant to this program for $798,744 or an average price per share of $12.08.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Financial Condition
Total assets were $79.3 million at March 31, 1997 compared to $77.7 million at
December 31, 1996, an increase of $1.6 million or 2.1%. This increase was funded
primarily from a growth in deposits. Cash and cash equivalents increased
approximately $1.3 million, or 34.5%, from $3.8 million at December 31, 1996 to
$5.1 million at March 31, 1997. Efforts to reinvest the growth of deposits in
new loans and investments are on-going; however, the interest rate environment
contributed to the time required to obtain quality investments and resulted in
the increase in cash equivalents. Securities increased slightly from $14.3
million at December 31, 1996 to $14.6 million at March 31, 1997. During the
quarter $1.2 million of structured notes were sold and reinvested in higher
yielding mortgage-backed securities.
Loans increased $.1 million, or .17%, from $57.0 million at December 31, 1996 to
$57.1 million at March 31, 1997. Mortgage loan origination exceeded $2.3 million
for the quarter; however, a large number of payoffs and a weak demand for
consumer loans combined to result in very minimal growth to the total loan
portfolio.
Deposits were $59.4 million at March 31, 1997 compared to $57.4 million at
December 31, 1996, or an increase of $2.0 million in the first quarter of 1997.
During the three months ended March 31, 1997, the Company's note to another bank
was repaid with the proceeds of a Bank dividend to the Company. During the
quarter the Bank obtained a $1.5 million putable advance due in two years from
the Federal Home Loan Bank. The rate is guaranteed for one year 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 $2.0 million in short-term adjustable rate advances.
Shareholders' equity was $15.6 million at March 31, 1997 and $15.4 million at
December 31, 1996. The payment of dividends, an increase in the unrealized
(loss) on securities available for sale, the amortization of unearned
compensation and quarterly net income combined to result in an increase of
$158,509 for the quarter.
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<PAGE>
Results of Operations
Comparison of the Three Months Ended March 31, 1997 and March 31, 1996
- -----------------------------------------------------------------------
Net income for the Company for the three months ended March 31, 1997 was
$271,972 compared with $273,889 for three months ended March 31, 1996. This was
a decrease of $1,917 or .70%. Net interest income increased $48,349 while other
expenses increased $18,878 and taxes decreased $1,193. The major contributor to
the increase in interest income was the growth in the loan portfolio the past
calendar year. Loans were $51.4 million at March 31, 1996 compared to $57.1
million at March 31, 1997.
The provision for loan losses was $3,000 for the three months ended March 31,
1997 and 1996. One property was taken into real estate owned in the period ended
March 31, 1997 and was sold at a gain before quarter-end. Non-performing loans
decreased to $356,000, or 0.62% of loans at March 31, 1997 from $406,000, or
0.71% of loans at December 31, 1996. Loan loss reserves amounted to $238,970, or
.42% of total loans at March 31, 1997 compared to $235,970, or 0.41% at December
31, 1996.
Other income decreased by $32,581, primarily because of $31,527 of losses on the
sale of securities available for sale. During the quarter, $1.2 million of
various structured notes were sold at a loss in order to reinvest the proceeds
in higher yielding mortgage-backed securities. The increase in the yield of the
new investments will off set the loss over the next year but resulted in a
decline of first quarter net income. Service charges on deposit accounts
increased by $5,143 or 38.6% from March 31, 1997 over March 31, 1996.
Total other expenses increased $18,878 or 6.4% in the period ending March 31,
1997 compared to March 31, 1996. Salaries and employee benefits increased
$30,948 or 22.0%. This increase was a result of the amortization of unearned
compensation related to the Bank's RRP Plan adopted April 9, 1996. There was no
expense related to this plan during the quarter ended March 31, 1996. Expense
related to this plan was $30,728 per quarter. Deposit insurance expense
decreased $20,756 or 69.8% from $29,721 for the quarter ending March 31, 1996 to
$8,965 for the quarter ending March 31, 1997. This was due to the
recapitalization of the Savings Association Insurance Fund and the resulting
decline in the assessment. The increase in other expenses of $10,136 relates to
increases in legal expense, accounting fees, and printing expenses.
The Company's effective tax rate for the three months ended March 31, 1997 and
March 31, 1996 was 36.8%.
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<PAGE>
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 March 31, 1997, the Bank's tangible capital ratio was 19.4%, its leverage
ratio was 19.4%, and its risk-based capital to risk-weighted assets ratio was
37.1%. 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 March 31,
1997.
Capital Standard Required Bank's Excess
- ---------------- -------- ----------- -----------
Tangible (1.5%) $1,184,000 $15,337,000 $14,153,000
Core (3.0%) 2,368,000 15,337,000 12,969,000
Risk-based (8.0%) 3,359,000 15,576,000 12,217,000
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 March 31, 1997 the Company's ratio was
11.4%, of which 8.0% was comprised of short-term investments.
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<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Bank nor the Company were during the three-month period ended March
31, 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:
3(1) The Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit 3(1) to the
Registration Statement on Form S-1 (Registration No.
33-89788).
3(2) The Code of By-Laws of the Registrant are incorporated by
reference to Exhibit 3(2) to the Registration Statement on
Form S-1 (Registration No. 33-89788).
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the fiscal quarter
ended March 31, 1997.
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<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: May 12, 1997 By: /s/ Thomas G. Williams
--------------------------- ----------------------
Thomas G. Williams, President and
Chief Executive Officer
Date: May 12, 1997 By: /s/ Dottye Robeson
--------------------------- ------------------
Dottye Robeson, Secretary and
Treasurer
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000939928
<NAME> Logansport Financial Corporation
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 5,055
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,604
<INVESTMENTS-CARRYING> 14,604
<INVESTMENTS-MARKET> 14,604
<LOANS> 57,132
<ALLOWANCE> (239)
<TOTAL-ASSETS> 79,298
<DEPOSITS> 59,389
<SHORT-TERM> 3,500
<LIABILITIES-OTHER> 824
<LONG-TERM> 0
<COMMON> 7,515
0
0
<OTHER-SE> 8,067
<TOTAL-LIABILITIES-AND-EQUITY> 79,298
<INTEREST-LOAN> 1,197
<INTEREST-INVEST> 193
<INTEREST-OTHER> 84
<INTEREST-TOTAL> 1,474
<INTEREST-DEPOSIT> 684
<INTEREST-EXPENSE> 44
<INTEREST-INCOME-NET> 746
<LOAN-LOSSES> (3)
<SECURITIES-GAINS> (32)
<EXPENSE-OTHER> 316
<INCOME-PRETAX> 430
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
<YIELD-ACTUAL> 4.01
<LOANS-NON> 356
<LOANS-PAST> 356
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 236
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<ALLOWANCE-CLOSE> 239
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 239
</TABLE>
