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, 2000 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 1, 2000 was 1,083,510.
-1-
<PAGE>
Logansport Financial Corp.
Form 10-Q
Index
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Statements of Financial
Condition as of September 30, 2000
and December 31, 1999
Consolidated Statements of Earnings
for the three and nine months ended September 30,
2000 and 1999
Consolidated Statements of Shareholders'
Equity for the nine months ended
September 30, 2000 and 1999
Consolidated Statements of Cash Flows
for the nine months ended
September 30, 2000 and 1999
Notes to Consolidated Condensed Financial
Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports of Form 8-K 16
SIGNATURES
-2-
<PAGE>
LOGANSPORT FINANCIAL CORP.
<TABLE>
<CAPTION>
Consolidated Statements of Financial Condition
(In thousands, except share data)
September 30, December 31,
ASSETS 2000 1999
<S> <C> <C>
Cash and due from banks $ 746 $ 1,336
Interest-bearing deposits in other financial institutions 4,141 3,810
------- -------
Cash and cash equivalents 4,887 5,146
Investment securities available for sale-at market 9,911 8,539
Mortgage-backed securities available for sale-at market 5,263 5,898
Loans receivable-net 100,848 90,900
Office premises and equipment-at depreciated cost 1,860 1,902
Federal Home Loan Bank stock - at cost 1,773 1,273
Investment in real estate partnership 1,350 1,485
Accrued interest receivable on loans 543 416
Accrued interest receivable on mortgage-backed securities 43 47
Accrued interest receivable on investments 166 115
Prepaid expenses and other assets 60 45
Cash surrender value of life insurance 1,216 1,184
Prepaid income tax 184 46
Deferred income tax asset 390 472
------- -------
Total assets $128,494 $117,468
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 77,054 $ 76,011
Advances from the Federal Home Loan Bank 33,000 23,000
Notes payable 1,237 1,307
Accrued interest and other liabilities 704 1,004
------- -------
Total liabilities 111,995 101,322
Shareholders' equity
Common stock 5,515 5,979
Retained earnings-restricted 11,337 10,734
Less shares acquired by stock benefit plan (137) (239)
Accumulated comprehensive loss, unrealized losses on securities designated
as available for sale, net of related tax effects (216) (328)
------- -------
Total shareholders' equity 16,499 16,146
------- -------
Total liabilities and shareholders' equity $128,494 $117,468
======= =======
</TABLE>
-3-
<PAGE>
LOGANSPORT FINANCIAL CORP.
<TABLE>
<CAPTION>
Consolidated Statements of Earnings
(Unaudited)
(In thousands, except share data)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Interest income
Loans $2,075 $1,658 $5,894 $4,707
Mortgage-backed securities 95 96 289 316
Investment securities 165 122 515 285
Interest-bearing deposits and other 118 69 307 188
----- ----- ----- -----
Total interest income 2,453 1,945 7,005 5,496
Interest expense
Deposits 984 860 2,903 2,432
Borrowings 446 200 1,138 453
----- ----- ----- -----
Total interest expense 1,430 1,060 4,041 2,885
----- ----- ----- -----
Net interest income 1,023 885 2,964 2,611
Provision for losses on loans 71 41 212 122
----- ----- ----- -----
Net interest income after provision for
losses on loans 952 844 2,752 2,489
Other income (loss)
Service charges on deposit accounts 43 40 117 102
Loss on sale of investments and mortgage-backed securities (16) - (16) -
Loss on equity investment (85) (36) (171) (86)
Other operating 50 40 161 106
----- ----- ----- -----
Total other income (loss) (8) 44 91 122
General, administrative and other expense
Employee compensation and benefits 289 222 881 666
Occupancy and equipment 53 41 143 117
Federal deposit insurance premiums 4 10 12 30
Data processing 44 38 121 110
Other operating 100 86 315 320
----- ----- ----- -----
Total general, administrative and other expense 490 397 1,472 1,243
----- ----- ----- -----
Earnings before income taxes 454 491 1,371 1,368
Income tax expense 124 173 411 497
----- ----- ----- -----
NET EARNINGS $ 330 $ 318 $ 960 $ 871
===== ===== ===== =====
Other comprehensive income, net of tax
unrealized gains (losses) on securities, net of tax $ 185 $ (132) $ 123 $ (362)
Reclassification adjustment for realized gains included in
earnings, net of tax of $5 (11) - (11) -
----- ----- ----- -----
COMPREHENSIVE INCOME $ 504 $ 186 $1,072 $ 509
===== ===== ===== =====
EARNINGS PER SHARE
Basic (based on net earnings) $.30 $.27 $.88 $.73
=== === === ===
Diluted (based on net earnings) $.30 $.27 $.88 $.72
=== === === ===
</TABLE>
-4-
<PAGE>
LOGANSPORT FINANCIAL CORP.
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
(Unaudited)
(In thousands, except share data)
Nine months ended
September 30,
2000 1999
<S> <C> <C>
Balance at January 1 $16,146 $16,488
Issuance of shares under stock option plan - 5
Amortization of stock benefit plan 102 96
Purchase of shares (464) -
Cash dividends of $.33 per share (357) (395)
Unrealized gains (losses) on securities designated as
available for sale, net of related tax effects 112 (362)
Net earnings 960 871
------ ------
Balance at September 30 $16,499 $16,703
====== ======
Accumulated other comprehensive income $ (216) $ (207)
====== ======
</TABLE>
-5-
<PAGE>
LOGANSPORT FINANCIAL CORP.
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
September 30,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 960 $ 871
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 80 59
Amortization of premiums on investments and
mortgage-backed securities 21 85
Amortization expense of stock benefit plan 102 96
Loss on sale of investments and mortgage-backed securities 16 -
Provision for losses on loans 212 122
Loss of equity investment 171 86
Increase (decrease) in cash, due to changes in:
Accrued interest receivable on loans (127) (80)
Accrued interest receivable on mortgage-backed securities 4 14
Accrued interest receivable on investments (51) (68)
Prepaid expenses and other assets (15) (6)
Accrued interest and other liabilities (300) (235)
Federal income taxes
Current (138) (81)
Deferred 25 20
------ ------
Net cash provided by operating activities 960 883
Cash flows provided by (used in) investing activities:
Proceeds from sale of investment securities designated as available for sale 1,914 -
Purchase of investment securities (3,970) (4,020)
Maturities/calls of investment securities 800 375
Purchase of Federal Home Loan Bank stock (500) (456)
Principal repayments on mortgage-backed securities 651 1,681
Loan disbursements (39,009) (31,653)
Investment in real estate partnership (36) (32)
Principal repayments on loans 28,849 17,562
Purchases and additions to office premises and equipment (38) (445)
Increase in cash surrender value of life insurance policy (32) (32)
------ ------
Net cash used in investing activities (11,371) (17,020)
------ ------
</TABLE>
-6-
<PAGE>
LOGANSPORT FINANCIAL CORP.
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
September 30,
2000 1999
<S> <C> <C>
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts $ 1,043 $ 6,808
Proceeds from Federal Home Loan Bank advances 24,000 24,000
Repayment of Federal Home Loan Bank advances (14,000) (13,000)
Repayment of note payable (70) (68)
Proceeds from the exercise of stock options - 5
Purchase of shares (464) -
Dividends on common stock (357) (395)
------ ------
Net cash provided by financing activities 10,152 17,350
------ ------
Net increase (decrease) in cash and cash equivalents (259) 1,213
Cash and cash equivalents, beginning of period 5,146 4,328
------ ------
Cash and cash equivalents, end of period $ 4,887 $ 5,541
====== ======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowings $ 4,021 $ 2,872
====== ======
Income taxes $ 526 $ 559
====== ======
Dividends payable at end of period $ 119 $ 132
====== ======
</TABLE>
-7-
<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, 1999. In the opinion of management, the
financial statements reflect all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the Company's financial position
as of September 30, 2000, results of operations for the three and nine month
periods ended September 30, 2000 and 1999 and cash flows for the nine month
periods ended September 30, 2000 and 1999.
NOTE B: Earnings Per Share and Dividends Per Share
Basic earnings per share is computed based upon the weighted-average shares
outstanding during the period. Weighted-average common shares outstanding
totaled 1,093,247 and 1,199,005 for the nine month periods ended September 30,
2000 and 1999, respectively and 1,083,510 and 1,199,210 for the three month
periods ended September 30, 2000 and 1999, respectively. Diluted earnings per
share is computed taking into consideration common shares outstanding and
dilutive potential common shares to be issued under the Company's stock option
plan. Weighted-average common shares deemed outstanding for purposes of
computing diluted earnings per share totaled 1,093,247 and 1,213,148 for the
nine months ended September 30, 2000 and 1999, respectively, and 1,087,538 and
1,202,566 for the three months ended September 30, 2000 and 1999, respectively.
Incremental shares related to the assumed exercise of stock options included in
the computation of diluted earnings per share totaled 14,143 for the nine month
period ended September 30, 1999, and 4,028 and 3,356 for the three month periods
ended September 30, 2000 and 1999, respectively.
A cash dividend of $.11 per common share was declared on August 30, 2000 ,
payable on October 10, 2000, to stockholders of record as of September 20, 2000.
NOTE C: Recent Accounting Pronouncements
In September 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities" which requires entities to
recognize all derivatives in their financial statements as either assets or
liabilities measured at fair value. SFAS No. 133 also specifies new methods of
accounting for hedging transactions, prescribes the items and transactions that
may be hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.
-8-
<PAGE>
NOTE C: Recent Accounting Pronouncements (continued)
The definition of a derivative financial instrument is complex, but in general,
it is an instrument with one or more underlyings, such as an interest rate or
foreign exchange rate, that is applied to a notional amount, such as an amount
of currency, to determine the settlement amount(s). It generally requires no
significant initial investment and can be settled net or by delivery of an asset
that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to transfer
held-to-maturity debt securities to the available-for-sale or trading category
without calling into question their intent to hold other debt securities to
maturity in the future. SFAS No. 133 is not expected to have a material impact
on the Company's financial position or results of operations.
In September 2000 the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which revises
the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but carries
over most of the provisions of SFAS No. 125 without reconsideration. SFAS No.
140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The Statement is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. SFAS No. 140 is not expected to have a material effect
on the Company's financial position or results of operations.
The foregoing discussion of the effects of recent accounting pronouncements
contains forward-looking statements that involve risks and uncertainties.
Changes in economic circumstances or interest rates could cause the effects of
the accounting pronouncements to differ from management's foregoing assessment.
-9-
<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 Company's operations and the Company'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 Company'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 loan losses and the effect of recent accounting pronouncements.
Discussion of Financial Condition Changes from December 31, 1999 to September
30, 2000
The Corporation reported total assets of $128.5 million at September 30, 2000,
compared to $117.5 million at December 31, 1999, an increase of $11.0 million,
or 9.4%. This increase was funded from an additional $10.0 million in FHLB
advances and growth in deposits of $1.0 million. Cash and cash equivalents
decreased by approximately $259,000 from $5.1 million at December 31, 1999, to
$4.9 million at September 30, 2000. The growth in assets was reinvested
primarily in loans which increased by $9.9 million and investment and
mortgage-backed securities which increased by $737,000.
Net loans increased by $9.9 million, or 10.9%, from $90.9 million at December
31, 1999 to $100.8 million at September 30, 2000. Loan originations amounted to
$39.0 million for the nine months ended September 30, 2000, while principal
repayments amounted to $28.8 million. During the nine months ended September 30,
2000, loan origination volume exceeded that of the comparable period in 1999 by
$7.4 million, or 23.2%. Loan originations during 2000 were comprised primarily
of loans secured by one to four family residential, nonresidential, commercial
real estate and other commercial property. The one to four family residential
loans totaled $57.9 million at December 31, 1999 and $61.5 million at September
30, 2000. The commercial and nonresidential loan portfolios totaled $21.6
million at September 30, 2000, compared to $17.5 million at December 31, 1999.
Deposits totaled $77.1 million at September 30, 2000, an increase of $1.0
million, or 1.4%, in the first nine months of 2000. Borrowings consisted of
$33.0 million of FHLB advances and a $1.2 million note payable related to an
equity investment in low income housing.
Shareholders' equity was $16.5 million at September 30, 2000 and $16.1 million
at December 31, 1999. The payment of dividends and repurchase of stock
contributed to a decrease in equity, while a decrease in the unrealized loss on
securities available for sale, earnings and the amortization of the stock
benefit plan increased equity.
-10-
<PAGE>
Results of Operations
Comparison of the Nine Months Ended September 30, 2000 and September 30, 1999
Net earnings for the Company for the nine months ended September 30, 2000
totaled $960,000, compared with $871,000 for the nine months ended September 30,
1999, an increase of $89,000, or 10.2%. Net interest income increased $353,000,
while general, administrative and other expense increased $229,000 and taxes
decreased $86,000 due to the availability of low income housing tax credits. The
major contributor to the increase in net interest income was the growth in the
loan portfolio the past calendar year. Loans totaled $100.8 million at September
30, 2000 compared to $87.0 million at September 30, 1999. However, the impact of
such growth was partially offset by a corresponding increase in deposits and
advances and a decrease in the net interest margin. The interest rate spread
amounted to 2.89% at September 30, 2000, compared to 2.98% at September 30,
1999, and the net interest margin totaled 3.34% and 3.53% for the nine month
periods ended September 30, 2000 and 1999, respectively.
The provision for losses on loans totaled $212,000 for the nine months ended
September 30, 2000 and $122,000 for the nine months ended September 30, 1999. No
properties were in real estate owned for the quarter ended September 30, 2000 or
September 30, 1999. Non-performing loans decreased to $176,000, or .17% of loans
at September 30, 2000 from $666,000 or .72% of loans at December 31, 1999. Loan
loss reserves amounted to $639,000, or .62% of total loans at September 30, 2000
compared to $440,000 or.47% at December 31, 1999. The current period provision
was attributable primarily to the growth in the commercial and nonresidential
loan portfolios, which represented approximately 21.3% of the total loan
portfolio at September 30, 2000, compared to 18.9% at December 31, 1999.
Other income amounted to $91,000 for the nine months ended September 30, 2000, a
decrease of $31,000 from the 1999 nine month period. Service charges on deposit
accounts increased by $15,000, or 14.7%, and other operating income increased by
$55,000, or 51.9%, mainly due to additional fees related to loan processing and
increased sales of insurance related to mortgage loans. Such increases were
partially offset by an $85,000 increase in the pre-tax loss from an equity
investment in a low income housing tax credit investment and a loss on the sale
of investment securities of $16,000.
General, administrative and other expense increased by $229,000, or 18.4%, in
the nine month period ended September 30, 2000 compared to September 30, 1999.
Employee compensation and benefits increased $215,000, or 32.3%, as a result of
salary increases and additional personnel compared to the same period in 1999,
coupled with a one time charge of $38,000 due to the retirement of personnel.
Data processing fees increased $11,000, or 10.0%, due to loan and deposit
growth. Occupancy and equipment expense increased $26,000, or 22.2%, due
primarily to a full nine months of depreciation related to the purchase of new
equipment and the new banking facility, while the corresponding period in 1999
reflected only six months in the new facility. Other operating expenses
decreased $5,000, or 1.6%, compared to the period ended September 30, 1999, due
primarily to the effects of a non-recurring charge of $35,000 related to deposit
operations recorded in the 1999 period. This charge was partially recovered in
the fourth quarter of 1999. Excluding the effects of this non-recurring charge,
other operating expenses increased by $30,000, due primarily to pro-rata
increases related to the Company's overall growth year to year.
-11-
<PAGE>
The Company's effective tax rate for the nine month periods ended September 30,
2000 and 1999 was 30.0% and 36.3%, respectively. The reduction for the 2000
period was due to the availability of additional tax credits from the low income
housing equity investment.
Results of Operations
Comparison of the Three Months Ended September 30, 2000 and September 30, 1999
Net earnings for the Company for the three months ended September 30, 2000
totaled $330,000, compared with $318,000 for the three months ended September
30, 1999, an increase of $12,000, or 3.8%. Net interest income increased
$138,000, while general, administrative and other expense increased $93,000 and
taxes decreased $49,000 due to the availability of low income housing tax
credits. The major contributor to the increase in net interest income was the
growth in the loan portfolio the past calendar year. The interest rate spread
amounted to 2.89% and 2.98% at September 30, 2000 and 1999, respectively.
The provision for losses on loans totaled $71,000 for the three months ended
September 30, 2000 and $41,000 for the three months ended September 30, 1999. No
properties were in real estate owned for the quarter ended September 30, 2000 or
September 30, 1999. The increase in the provision was primarily attributable to
the growth in the loan portfolio.
Service charges on deposit accounts increased by $3,000 and other operating
income increased by $10,000. However, a pre-tax loss on the equity investment of
$85,000 and a loss on the sale of investment of securities of $16,000 combined
for an overall loss in the other income category.
Total general, administrative and other expense increased by $93,000, or 23.4%,
in the period ended September 30, 2000 compared to the same period ended
September 30, 1999. Employee compensation and benefits increased $67,000, or
30.2%, as a result of salary increases and additional personnel compared to the
1999 quarter. Data processing fees increased $6,000, or 15.8%, due to loan and
deposit growth. Other operating expenses increased $14,000, or 16.3%, compared
to the quarter ended September 30, 1999, due primarily to the Corporation's
overall growth year to year.
The Company's effective tax rate for the three months ended September 30, 2000
was 27.3% and was 35.2% for the three months ended September 30, 1999. The
decrease in the effective tax rate was primarily attributable to tax credits
available from the Corporation's investment in a low income housing investment.
-12-
<PAGE>
Capital Resources
Pursuant to OTS capital regulations, savings associations must currently meet a
1.5% tangible capital requirement, a 4% leverage ratio (or core capital)
requirement, and total risk-based capital to risk-weighted assets ratio of 8%.
At September 30, 2000, the Bank's tangible capital ratio was 12.64%, its
leverage ratio was 12.64%, and its risk-based capital to risk-weighted assets
ratio was 20.91%. 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, 2000.
<TABLE>
<CAPTION>
Capital Standard Required Bank's Excess
---------------- -------- ------ ------
(In thousands)
<S> <C> <C> <C>
Tangible (1.5%) $1,927 $16,237 $14,310
Core (4.0%) 5,139 16,237 11,098
Risk-based (8.0%) 6,456 16,876 10,420
</TABLE>
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
accounts and borrowings due within one year. The minimum required ratio is
currently set by the Office of Thrift Supervision at 4%. At September 30, 2000
the Bank's regulatory liquidity ratio was 20.98%.
-13-
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Bank, like other savings associations, is subject to interest rate risk to
the degree that its interest-bearing liabilities, primarily deposits with short
and medium-term maturities, mature or reprice at different rates than its
interest-earning assets. Management of the Bank believes it is critical to
manage the relationship between interest rates and the effect on the Bank's net
portfolio value ("NPV"). Generally, NPV is the discounted present value of the
difference between incoming cash flows on interest-earning and other assets and
outgoing cash flows on interest-bearing liabilities. Management of the Bank's
assets and liabilities is done within the context of the marketplace, regulatory
limitations and within limits established by the Board of Directors on the
amount of change in NPV which is acceptable given certain interest rate changes.
The Office of Thrift Supervision ("OTS") issued a regulation, effective January
1, 1994, which uses a net market value methodology to measure the interest rate
risk exposure of thrift institutions. Under OTS regulations, an institution's
"normal" level of interest rate risk in the event of an assumed change in
interest rates, is a decrease in the institution's NPV in an amount not
exceeding 2% of the present value of its assets. Thrift institutions with over
$300 million in assets or less than a 12% risk-based capital ratio are required
to file OTS Schedule CMR. Data from schedule CMR is used by the OTS to calculate
changes in NPV (and the related "normal" level of interest rate risk based upon
certain interest rate changes (discussed below). Institutions which do not meet
either of the filing requirements are not required to file OTS Schedule CMR, but
may do so voluntarily. The Bank does not currently meet either of these
requirements, but it does voluntarily file Schedule CMR. Presented below, as of
June 30, 2000, the latest available date, is an analysis performed by the OTS of
the Bank's interest rate risk as measured by changes in NPV for instantaneous
and sustained parallel shifts in the yield curve, in 100 basis point increments,
up and down 300 basis points and in accordance with OTS regulations. As
illustrated in the table, the Bank's NPV is more sensitive to rising rates than
declining rates. This occurs principally because, as rates rise, the market
value of the Bank's investments, adjustable-rate mortgage loans (many of which
have maximum per year adjustments of 1%), fixed-rate loans and mortgage-backed
securities declines due to the rate increase. The value of the Bank's deposits
and borrowings change in approximately the same proportion in rising and falling
rate scenarios.
<TABLE>
<CAPTION>
Change Net Portfolio Value NPV as % of PV of Assets
In Rates $ Amount $ Change % Change NPV Ratio Change
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
+300bp 9,839 -7,020 -42% 8.07% -488bp
+200bp 12,345 -4,514 -27% 9.89% -306bp
+100bp 14,743 -2,116 -13% 11.55% -140bp
0bp 16,859 12.95%
-100bp 18,375 1,516 +9% 13.90% +95bp
-200bp 19,228 2,369 +14% 14.40% +145bp
-300bp 20,138 3,279 +19% 14.93% +198bp
</TABLE>
-14-
<PAGE>
Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock
Pre-shock NPV Ratio: NPV as % of PV of Assets 12.95%
Exposure Measure: Post-Shock NPV Ratio 9.89%
Sensitivity Measure: Change in NPV Ratio 306bp
As with any method of measuring interest rate risk, certain shortcomings are
inherent in the method of analysis presented in the foregoing table. For
example, although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable-rate loans, have features which
restrict changes in interest rates on a short-term basis and over the life of
the asset. Further, in the event of a change in interest rates, expected rates
of prepayments on loans and early withdrawals from certificates could likely
deviate significantly from those assumed in calculating the table.
-15-
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Bank nor the Company were, during the nine-month period ended
September 30, 2000, 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 is incorporated by
reference to Exhibit 3.2 to the Form 10-Q for the period
ended September 30, 1997, filed with the Commission on
August 13, 1997.
27 Financial Data Schedule for the nine month period ended
September 30, 2000.
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the fiscal quarter
ended September 30, 2000.
-16-
<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 13, 2000 By:/s/ David G. Wihebrink
-------------------- ---------------------------------
David G. Wihebrink, President and
Chief Executive Officer
Date: November 13, 2000 By:/s/ Dottye Robeson
-------------------- ---------------------------------
Dottye Robeson, Secretary and
Treasurer
-17-
