-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RjEfWvtqLdRf2zF+l6MT7FUUwYAxcQ2eH7lpjFfOn0fob8gS8pqTfcthPsDraYmY I70OGS/d5ubr0IQ9btMdOw== 0000908834-04-000371.txt : 20040517 0000908834-04-000371.hdr.sgml : 20040517 20040517120056 ACCESSION NUMBER: 0000908834-04-000371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOGANSPORT FINANCIAL CORP CENTRAL INDEX KEY: 0000939928 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 351945736 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25910 FILM NUMBER: 04810617 BUSINESS ADDRESS: STREET 1: 723 E BROADWAY STREET 2: PO BOX 569 CITY: LOGANSPORT STATE: IN ZIP: 46947 BUSINESS PHONE: 2197223855 MAIL ADDRESS: STREET 1: 723 EAST BROADWAY STREET 2: P O BOX 569 CITY: LOGANSPORT STATE: IN ZIP: 46947 10-Q 1 log_10qmay.txt PERIOD ENDED MARCH 31, 2004 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, 2004 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) (574) 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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] The number of shares outstanding of the Registrant's common stock as of May 10, 2004 was 876,193 common shares without par value. 1 Logansport Financial Corp. Form 10-Q Index Page No. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition as of March 31, 2004 and December 31, 2003 3 Consolidated Statements of Earnings for the three months ended March 31, 2004 and 2003 4 Consolidated Statements of Shareholders' Equity for the three months ended March 31, 2004 and 2003 5 Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003 6 Notes to Consolidated Condensed Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 2
LOGANSPORT FINANCIAL CORP. Consolidated Statements of Financial Condition (In thousands, except share data) March 31, December 31, ASSETS 2004 2003 (unaudited) Cash and due from banks $ 989 $ 707 Interest-bearing deposits in other financial institutions 12,592 13,696 -------- -------- Cash and cash equivalents 13,581 14,403 Investment securities designated as available for sale - at market 15,080 12,242 Mortgage-backed securities designated as available for sale - at market 14,659 20,307 Loans receivable - net 103,079 102,353 Office premises and equipment - at depreciated cost 1,677 1,694 Real estate acquired through foreclosure 34 - Federal Home Loan Bank stock - at cost 2,139 2,080 Investment in real estate limited partnership 938 950 Accrued interest receivable on loans 458 409 Accrued interest receivable on mortgage-backed securities 51 70 Accrued interest receivable on investments and interest-bearing deposits 156 166 Prepaid expenses and other assets 122 164 Cash surrender value of life insurance 1,343 1,343 Deferred income tax asset 551 619 Prepaid income taxes - 24 -------- -------- Total assets $153,868 $156,824 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $ 98,440 $103,757 Advances from the Federal Home Loan Bank 36,027 34,027 Notes payable 1,928 1,919 Accrued interest and other liabilities 787 765 Accrued income taxes 52 - -------- -------- Total liabilities 137,234 140,468 Commitments - - Shareholders' equity Preferred stock - no par value, 2,000,000 shares authorized; none issued - - Common stock - no par value, 5,000,000 shares authorized; 876,193 and 877,444 shares at aggregate value issued and outstanding at March 31, 2004 and December 31, 2003, respectively 1,816 1,824 Retained earnings - restricted 14,585 14,445 Less shares acquired by stock benefit plan - (23) Accumulated comprehensive income, unrealized gains on securities designated as available for sale, net of related tax effects 233 110 -------- -------- Total shareholders' equity 16,634 16,356 -------- -------- Total liabilities and shareholders' equity $153,868 $156,824 ======== ========
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LOGANSPORT FINANCIAL CORP. Consolidated Statements of Earnings (In thousands, except share data) Three months ended March 31, 2004 2003 Interest income Loans $1,692 $1,921 Mortgage-backed securities 166 131 Investment securities 120 96 Interest-bearing deposits and other 44 47 ------ ------ Total interest income 2,022 2,195 Interest expense Deposits 591 640 Borrowings 494 477 ------ ------ Total interest expense 1,085 1,117 ------ ------ Net interest income 937 1,078 Provision for losses on loans 60 90 ------ ------ Net interest income after provision for losses on loans 877 988 Other income Service charges on deposit accounts 55 54 Gain on sale of investments and mortgage-backed securities 39 81 Gain on sale of loans 10 5 Loss on equity investment (23) (24) Other operating 42 25 ------ ------ Total other income 123 141 General, administrative and other expense Employee compensation and benefits 367 353 Occupancy and equipment 52 61 Data processing 83 49 Other operating 154 157 ------ ------ Total general, administrative and other expense 656 620 ------ ------ Earnings before income taxes 344 509 Income tax expense 81 145 ------ ------ NET EARNINGS $ 263 $ 364 ====== ====== Other comprehensive income (loss), net of tax effects - unrealized gains (losses) on securities 123 (43) ------ ------ COMPREHENSIVE INCOME $ 386 $ 321 ====== ====== EARNINGS PER SHARE Basic (based on net earnings) $ 0.30 $ 0.43 ====== ====== Diluted (based on net earnings) $ 0.29 $ 0.41 ====== ======
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LOGANSPORT FINANCIAL CORP. Consolidated Statements of Shareholders' Equity (In thousands, except share data) Three months ended March 31, 2004 2003 Balance at January 1, $16,356 $15,373 Issuance of shares under stock option plan - 29 Amortization expense of stock benefit plan 4 6 Proceeds from termination of stock benefit plan 19 - Retirement of stock in stock benefit plan (8) - Cash dividends of $.14 per share in both 2004 and 2003 (123) (120) Unrealized gains ( losses) on securities designated as available for sale, net of related tax effects 123 (43) Net earnings 263 364 ------- ------- Balance at March 31, $16,634 $15,609 ======= ======= Accumulated other comprehensive income $ 233 $ 484 ======= =======
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LOGANSPORT FINANCIAL CORP. Consolidated Statements of Cash Flows (In thousands) Three months ended March 31, 2004 2003 Cash flows from operating activities: Net earnings for the period $ 263 $ 364 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 27 27 Amortization of premiums on investments and mortgage-backed securities 39 7 Amortization expense of stock benefit plan 4 6 Federal Home Loan Bank stock dividends (59) - Gain on sale of investments and mortgage-backed securities (39) (81) Loans originated for sale in the secondary market (483) (190) Proceeds from sale of loans in the secondary market 489 193 Gain on sale of loans (6) (3) Provision for losses on loans 60 90 Loss on equity investment 23 24 Increase (decrease) in cash, due to changes in: Accrued interest receivable on loans (49) (33) Accrued interest receivable on mortgage-backed securities 19 7 Accrued interest receivable on investments 10 (2) Prepaid expenses and other assets 42 1 Accrued interest and other liabilities 22 78 Federal income taxes Current 76 138 Deferred 5 7 ------- ------- Net cash provided by operating activities 443 633 Cash flows provided by (used in) investing activities: Purchase of investment securities (5,171) (2,159) Maturities/calls of investment securities 2,414 825 Proceeds from sale of investment securities 72 - Purchases of mortgage-backed securities - (5,073) Proceeds from sale of mortgage-backed securities 4,592 5,025 Principal repayments on mortgage-backed securities 1,088 1,012 Loan disbursements (10,284) (11,459) Purchase of loans (185) - Principal repayments on loans 9,650 12,016 Investment in real estate partnership (11) (13) Purchases and additions to office premises and equipment (10) (2) ------- ------- Net cash provided by investing activities 2,155 172 ------- ------- Net cash provided by operating and investing activities (subtotal carried forward) 2,598 805 ------- -------
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LOGANSPORT FINANCIAL CORP. Consolidated Statements of Cash Flows (Continued) (In thousands) Three months ended March 31, 2004 2003 Net cash provided by operating and investing activities (subtotal brought forward) $ 2,598 $ 805 Cash flows provided by (used in) financing activities: Net decrease in deposit accounts (5,317) (4,635) Proceeds from Federal Home Loan Bank advances 2,000 3,000 Repayment of Federal Home Loan Bank advances - (3,000) Proceeds from note payable 85 125 Repayment of note payable (76) (75) Proceeds from exercise of stock options - 29 Retirement of stock in RRP plan (8) - Proceeds from termination of RRP plan 19 - Dividends on common stock (123) (120) ------- ------- Net cash used in financing activities (3,420) (4,676) ------- ------- Net decrease in cash and cash equivalents (822) (3,871) Cash and cash equivalents, beginning of period 14,403 13,517 ------- ------- Cash and cash equivalents, end of period $13,581 $ 9,646 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest on deposits and borrowings $ 1,085 $ 1,110 ======= ======= Supplemental disclosure of noncash investing activities: Recognition of mortgage servicing rights in accordance with SFAS No. 140 $ 4 $ 2 ======= ======= Transfers from loans to real estate acquired through foreclosure $ 34 $ 153 ======= ======= Supplemental disclosure of noncash financing activities: Dividends payable at end of period $ 123 $ 120 ======= ======= Unrealized gains (losses) on securities designated as available for sale, net of related tax effects $ 123 $ (43) ======= =======
7 Logansport Financial Corp. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the three month periods ended March 31, 2004 and 2003 NOTE A: Basis of Presentation The unaudited interim consolidated 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 accounting principles generally accepted in the United States of America 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, 2003. In the opinion of management, the financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Logansport Financial Corp.'s (the "Company") financial position as of March 31, 2004, and its results of operations and cash flows for the three month periods ended March 31, 2004 and 2003. The results of operations for the three month period ended March 31, 2004, are not necessarily indicative of the results which may be expected for the entire year. NOTE B: Principles of Consolidation The unaudited interim consolidated financial statements include the accounts of the Company and its subsidiary, Logansport Savings Bank, FSB (the "Bank"). All significant intercompany items have been eliminated. NOTE C: Earnings Per Share and Dividends Per Share Basic earnings per share is computed based upon the weighted-average shares outstanding during the period. Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares issuable under the Company's stock option plan. The computations are as follows: For the three months ended March 31, 2004 2003 Weighted-average common shares outstanding (basic) 876,537 850,333 Dilutive effect of assumed exercise of stock options 25,349 27,723 ------- ------- Weighted-average common shares outstanding (diluted) 901,886 878,056 ======= ======= A cash dividend of $.14 per common share was declared on March 1, 2004, payable on April 12, 2004, to stockholders of record as of March 12, 2004. 8 NOTE D: Critical Accounting Policies Certain of the Company's accounting policies are important to the portrayal of the Company's financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but without limitation, changes in interest rates, changes in the performance of the economy or changes in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses and determining the carrying value of mortgage servicing rights. The Company's critical accounting policies are discussed in detail in its Shareholder Annual Report for the year ended December 31, 2003 (incorporated by reference into the Company's 10K filing) in Note A of the Notes to the Consolidated Financial Statements under "Allowance for Loan Losses." If management were to underestimate the allowance for loan losses, earnings could be reduced in the future as a result of greater than expected net loan losses. Overestimations of the required allowance could result in future increases in income, as loan loss recoveries increase or provisions for losses on loans decrease. Mortgage servicing rights are accounted for pursuant to the provisions of SFAS No. 140. "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," which requires that the Company recognize as separate assets, rights to service mortgage loans for others, regardless of how those servicing rights are acquired. An institution that acquires mortgage servicing rights through either the purchase or origination of mortgage loans and sells those loans with servicing rights retained must allocate some of the cost of the loans to the mortgage servicing rights. SFAS No. 140 requires that capitalized mortgage servicing rights and capitalized excess servicing receivables be assessed for impairment. Impairment is measured based on fair value. The mortgage servicing rights recorded by the Company, calculated in accordance with the provisions of SFAS No. 140, were segregated into pools for valuation purposes, using as pooling criteria the loan term and coupon rate. Once pooled, each grouping of loans was evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from each portfolio. Earnings were projected from a variety of sources including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income, and costs to service the loans. The present value of future earnings is the "economic" value of the pool, i.e., the net realizable present value to an acquiror of the acquired servicing. Fluctuations in the fair value of mortgage servicing rights may affect net earnings, as this asset is carried at the lower of amortized cost or fair value. NOTE E: Stock Option Plans In 1996, the Board of Directors adopted a Stock Option Plan that provided for the issuance of 132,250 shares of common stock at the fair value at the date of grant. During 1999, the Board of Directors adopted a second Stock Option Plan that provided for the issuance of 115,000 shares of common stock at the fair value at the date of grant. The Company accounts for its stock option plans in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," which contains a fair value-based method for valuing stock-based compensation that entities may use, which measures compensation cost at the grant date based on the fair value of the award. Compensation is then recognized over the service period, which is usually the vesting period. Alternatively, SFAS No. 123 permits entities to continue to account for stock options and similar equity instruments under Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Entities that continue to account for stock options using APB Opinion No. 25 are required to make pro forma disclosures of net earnings and earnings per share, as if the fair value-based method of accounting defined in SFAS No. 123 had been applied. The Company applies APB Opinion No. 25 and related Interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for the plans. Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant dates for awards under the plans consistent with the accounting method utilized in SFAS No. 123, there would have been no material effect on the Company's net earnings and earnings per share for the three month periods ended March 31, 2004 and 2003. 9
NOTE E: Stock Option Plans (continued) A summary of the status of the Company's stock option plans as of March 31, 2004 and December 31, 2003 and 2002, and changes during the periods ending on those dates is presented below: March 31, December 31, 2004 2003 2002 Weighted- Weighted- Weighted- average average average exercise exercise exercise Shares price Shares price Shares price Outstanding at beginning of period 50,650 $10.56 79,136 $10.63 106,796 $10.61 Granted - - - - - - Exercised - - (28,486) 10.76 (27,660) 10.53 Forfeited - - - - - - ------ ------ ------ ------ -------- ------ Outstanding at end of period 50,650 $10.56 50,650 $10.56 79,136 $10.63 ====== ====== ====== ====== ======== ====== Options exercisable at period-end 50,650 $10.56 50,650 $10.56 78,636 $10.61 ====== ====== ====== ====== ======== ======
The following information applies to options outstanding at March 31, 2004: Number outstanding 50,650 Range of exercise prices $10.53- $13.75 Weighted-average exercise price $10.56 Weighted-average remaining contractual life 2.1 years NOTE F: Benefit Plans Employees of the Savings Bank participate in a defined benefit pension plan to which contributions are made for the benefit of the employees. Estimated contributions are determined yearly based on the actual valuation of the plan at June 30th each year. For the quarter ended March 31, 2004 and 2003, $34,000 and $21,000 were expensed related to the service costs of this plan. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 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, management's assessment of the Company's interest rate risk and the effect of recent accounting pronouncements. Discussion of Financial Condition Changes from December 31, 2003 to March 31, 2004 The Company reported total assets of $153.9 million at March 31, 2004, a decrease of $3.0 million, or 1.9%, compared to December 31, 2003. Cash and cash equivalents decreased by $822,000, from $14.4 million at December 31, 2003, to $13.6 million at March 31, 2004. Investment and mortgage-backed securities totaled $29.7 million at March 31, 2004, a decrease of $2.8 million, or 8.6%, over the December 31, 2003 total. Purchases of securities totaling $5.2 million were offset by repayments, calls and maturities of $3.5 million and sales of $4.7 million. Net loans increased from $102.4 million at December 31, 2003 to $103.1 million at March 31, 2004. Loan originations and purchases, including loans originated for sale, amounted to $11.0 million for the three months ended March 31, 2004, while principal repayments amounted to $9.7 million. Loan originations during 2004 were comprised primarily of loans secured by nonresidential and commercial real estate, other commercial property and commercial leases. The commercial and nonresidential loan portfolios totaled $41.1 million at March 31, 2004, compared to $39.8 million at December 31, 2003. Loans secured by one- to four-family residential real estate totaled $50.4 million at March 31, 2004, compared to $51.2 million at December 31, 2003. The Company is currently servicing a portfolio of $6.5 million one-to-four family residential real estate loans. Deposits totaled $98.4 million at March 31, 2004, a decrease of $5.3 million or 5.1%, from the balance at December 31, 2003. Borrowings at March 31, 2004, were comprised of $36.0 million of FHLB advances, a $943,000 note payable related to an equity investment in low income housing, and a $985,000 line of credit. Shareholders' equity totaled $16.6 million at March 31, 2004, an increase of $278,000, or 1.7%, over the $16.4 million total at December 31, 2003. The increase resulted from net earnings of $263,000 and an increase of $123,000 in the unrealized gains on securities available for sale, which were partially offset by dividends paid of $123,000. Results of Operations Comparison of the Three Months Ended March 31, 2004 and March 31, 2003 Net earnings for the three months ended March 31, 2004 totaled $263,000, compared with $364,000 for the three months ended March 31, 2003, a decrease of $101,000, or 27.7%. Net interest income decreased by $141,000, total other income decreased by $18,000 and general, administrative and other expense increased by $36,000, while the provision for losses on loans decreased by $30,000 and income taxes decreased by $64,000. 11 Comparison of the Three Months Ended March 31, 2004 and March 31, 2003 (continued) Interest income on loans decreased by $229,000, or 11.9%, for the three months ended March 31, 2004, compared to the same quarter in 2003, due primarily to a decrease in the yield on loans and a decline in the outstanding balance. Interest income on mortgage-backed securities, investments and other interest-earning assets totaled $330,000 for the three months ended March 31, 2004, a $56,000, or 20.4%, increase over the 2003 quarter. The increase was due primarily to an increase in the average balance outstanding year to year. Interest expense on deposits decreased by $49,000, or 7.7%, as the average cost of deposits decreased. Interest expense on borrowings increased by $17,000, or 3.6%, due primarily to the additional draws on a line of credit and additional FHLB advances. The decreases in the level of yields on interest-earning assets and the average cost of interest-bearing liabilities were due primarily to the overall decrease in interest rates in the economy. As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $141,000, or 13.1%. The Company maintains an allowance for loan losses that reflects an estimate of inherent losses based upon the types and categories of outstanding loans, as well as problem loans and current economic conditions in the Company's market area. The provision for losses on loans totaled $60,000 for the three month period ended March 31, 2004 and $90,000 for the three month period ended March 31, 2003. The Company's loss allowance to total gross loans and nonperforming loans was 1.7% and 133.8%, respectively, compared to 1.7% and 115.6% at December 31, 2003. The provision for losses on loans was primarily attributable to the increasing percentage of commercial loans in the portfolio. Based on management's review of the loan portfolio, the allowance for loan losses at March 31, 2004 is considered adequate to cover potential losses inherent in the loan portfolio. However, there can be no assurance that additions to the allowance will not be necessary in future periods, which could adversely affect the Company's results of operations. During the three month period ended March 31, 2004, one single family dwelling was acquired via foreclosure. Other income totaled $123,000 for the three months ended March 31, 2004, a $18,000, or 12.8%, decrease over the 2003 quarter. This consisted of a $10,000 gain on the sale of loans and a $39,000 gain on the sale of securities. Service charges on deposit accounts contributed $55,000. General, administrative and other expense totaled $656,000 for the three-month period ended March 31, 2004, an increase of $36,000, or 5.8%, compared to the three month period ended March 31, 2003. Occupancy and equipment expenses declined by $9,000, or 14.8%, primarily as a result of reduced property tax expense. Employee compensation and benefits increased by $14,000, primarily due to increased contributions to the defined benefit retirement plan. Data processing expenses increased $34,000 due to costs associated with converting the Company's data processing system to a new provider. Logansport Financial Corp. is investigating the possibility of de-listing its stock and de-registering with the Securities and Exchange Commission ("SEC"). This strategy would reduce future expenses associated with SEC reporting requirements, as well as NASDAQ filing fees, but would also result in the Company's common stock no longer being quoted on the NASDAQ Small Cap Market. In order to de-register, the Company must first have fewer than 300 shareholders. The Company's shares trade infrequently and residents of Indiana hold many shares. Therefore, it is management's belief that any negative impact on the liquidity of the shares as a result of a de-registration and de-listing would be minimal. The provision for income taxes totaled $81,000 for the three months ended March 31, 2004, a decrease of $64,000, or 44.1%, compared to the same period in 2003. The decrease was due to a $165,000, or 32.4%, decrease in pre-tax earnings. The Company's effective tax rates for the three-month periods ended March 31, 2004 and 2003, were 23.5% and 28.5%, respectively. The effective tax rate remains low due to the tax credits available from the Company's investment in a low income housing partnership. 12 Capital Resources Pursuant to Office of Thrift Supervision ("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 March 31, 2004, the Bank's tangible and leverage capital ratios were each 11.3%, and its risk-based capital to risk-weighted assets ratio was 19.5%. 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 levels as of March 31, 2004. Capital Standard Required Bank Excess - ---------------- -------- ---- ------ (In thousands) Tangible (1.5%) $2,302 $17,351 $15,049 Core (4.0%) 6,140 17,351 11,211 Risk-based (8.0%) 7,608 18,545 10,937 Off-balance Sheet Arrangements As of the date of this report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement, or other contractual arrangement to which an entity unconsolidated with the Company is a party under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Bank, like other financial institutions, 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. The Office of Thrift Supervision ("OTS") uses a net market value methodology to measure the interest rate risk exposure of thrift institutions. As a part of its efforts to monitor its interest rate risk, the Bank utilizes the "net portfolio value" ("NPV") methodology to assess its exposure to interest rate risk. 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. Presented below, as of December 31 2003 (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 in accordance with OTS regulations. As illustrated in the table, the Bank's NPV is more sensitive to declining rates than rising rates. This occurs principally because, as rates rise, the market value of the Bank's investments, adjustable-rate mortgage loans and mortgage-backed securities increase due to the rate increases. Conversely, as interest rates decline, the market value of these adjustable-rate assets will decrease. The value of the Bank's deposits and borrowings change in approximately the same proportion in rising or falling rate scenarios. Change Net Portfolio Value NPV as % of PV of Assets In Rates $ Amount $ Change % Change NPV Ratio Change (Dollars in thousands) +300bp $18,484 $ (781) (4)% 11.74% (5)bp +200bp 19,410 145 1 12.14 35 bp +100bp 19,642 377 2 12.14 35 bp - 19,265 - - 11.79 -100bp 18,169 (1,096) (6) 11.05 (74)bp 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk (continued) Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock Pre-shock NPV Ratio: NPV as % of PV of Assets 11.79% Exposure Measure: Post-Shock NPV Ratio 11.05% Sensitivity Measure: Change in NPV Ratio 74bp 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. Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the most recent fiscal quarter covered by this quarterly report (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and are designed to ensure that material information relating to the Company would be made known to such officers by others within the Company on a timely basis. (b) Changes in internal controls. There were no significant changes in the Company's internal control over financial reporting identified in connection with the Company's evaluation of controls that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 14 Part II. OTHER INFORMATION Item 1. Legal Proceedings Neither the Bank nor the Company were, during the three-month period ended March 31, 2004, 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 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities On March 1, 2004, the Company cancelled and reclassified as authorized and unissued 1,251 shares that had been returned to it as a result of the termination of the Logansport Savings Bank, FSB Recognition and Retention Plan and Trust. The Company paid no consideration for the shares. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The following exhibits are attached to this report on Form 10-Q: 31(1) Certification required by 17 C.F.R. Section 240.13a-14(a) 31(2) Certification required by 17 C.F.R. Section 240.13a-14(a) 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. The Registrant filed one report on Form 8-K filed during the quarter ended March 31, 2004. Date of Report: February 3, 2004 Items Reported: Press release dated February 3, 2004 announcing results of operations for the year ended December 31, 2003. 15 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 10, 2004 By: /s/ David G. Wihebrink --------------------- ------------------------------------- David G. Wihebrink, President and Chief Executive Officer Date: May 10, 2004 By: /s/ Dottye Robeson --------------------- ------------------------------------- Dottye Robeson, Secretary and Treasurer 16 EX-31 2 log_10qmay311.txt WIHEBRINK CERTIFICATION Exhibit 31(1) CERTIFICATION I, David G. Wihebrink, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Logansport Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 10, 2004 /s/David G. Wihebrink -------------------------------- David G. Wihebrink President and Chief Executive Officer EX-31 3 log_10qmay312.txt ROBESON CERTIFICATION Exhibit 31(2) CERTIFICATION I, Dottye Robeson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Logansport Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: May 10, 2004 /s/Dottye Robeson -------------------------------- Dottye Robeson Secretary and Treasurer EX-32 4 log_10qmay32.txt SOX CERTIFICATION Exhibit 32 CERTIFICATION By signing below, each of the undersigned officers hereby certifies pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge, (i) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Logansport Financial Corp. Signed this 10th day of May, 2004 /s/David G. Wihebrink /s/Dottye Robeson - ------------------------------------- ------------------------ President and Chief Executive Officer Secretary and Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Logansport Financial Corp. and will be retained by Logansport Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----