-----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, ThYfj0detfLuBoFpp6PhC7V30XwP/g9mZ7rrK49rSOyu2QqgTebYI7vCHzVZoPtO Pg8/XLW2RR3nRuZ5ULe63g== 0001046386-01-500013.txt : 20010515 0001046386-01-500013.hdr.sgml : 20010515 ACCESSION NUMBER: 0001046386-01-500013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 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: SEC FILE NUMBER: 000-25910 FILM NUMBER: 1632725 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 lfc10q_33101.txt LOGANSPORT FINANCIAL 10Q 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, 2001 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 April 27, 2001 was 1,083,510. -1- 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 March 31, 2001 and December 31, 2000 Consolidated Statements of Earnings for the three months ended March 31, 2001 and 2000 Consolidated Statements of Shareholders' Equity for the three months ended March 31, 2001 and 2000 Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000 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 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports of 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 2001 2000 Cash and due from banks $ 461 $ 576 Interest-bearing deposits in other financial institutions 10,394 8,634 ------- ------- Cash and cash equivalents 10,855 9,210 Investment securities available for sale-at market 7,711 8,322 Mortgage-backed securities available for sale-at market 4,938 5,165 Loans receivable-net 104,012 102,418 Office premises and equipment-at depreciated cost 1,831 1,843 Federal Home Loan Bank stock - at cost 1,973 1,973 Investment in real estate partnership 1,241 1,284 Accrued interest receivable on loans 506 548 Accrued interest receivable on mortgage-backed securities 40 41 Accrued interest receivable on investments 122 107 Prepaid expenses and other assets 58 64 Cash surrender value of life insurance 1,244 1,234 Deferred income tax asset 323 403 ------- ------- Total assets $134,854 $132,612 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $ 81,329 $ 79,454 Advances from the Federal Home Loan Bank 34,000 34,000 Notes payable 1,165 1,237 Accrued interest and other liabilities 956 906 Accrued income taxes 49 2 ------- ------- Total liabilities 117,499 115,599 Shareholders' equity Common stock 5,515 5,515 Retained earnings-restricted 11,697 11,526 Less shares acquired by stock benefit plan (69) (103) Accumulated comprehensive income, unrealized gains on securities designated as available for sale, net of related tax effects 212 75 ------- ------- Total shareholders' equity 17,355 17,013 ------- ------- Total liabilities and shareholders' equity $134,854 $132,612 ======= =======
-3- LOGANSPORT FINANCIAL CORP.
Consolidated Statements of Earnings (In thousands, except share data) Three months ended March 31, 2001 2000 Interest income Loans $2,148 $1,865 Mortgage-backed securities 83 98 Investment securities 125 163 Interest-bearing deposits and other 145 83 ----- ----- Total interest income 2,501 2,209 Interest expense Deposits 1,000 909 Borrowings 529 334 ----- ----- Total interest expense 1,529 1,243 ----- ----- Net interest income 972 966 Provision for losses on loans 86 71 ----- ----- Net interest income after provision for losses on loans 886 895 Other income Service charges on deposit accounts 61 32 Loss on equity investment (61) (26) Other operating 52 44 ----- ----- Total other income 52 50 General, administrative and other expense Employee compensation and benefits 294 296 Occupancy and equipment 58 45 Federal deposit insurance premiums 4 4 Data processing 47 39 Other operating 132 103 ----- ----- Total general, administrative and other expense 535 487 ----- ----- Earnings before income taxes 403 458 Income tax expense 102 151 ----- ----- NET EARNINGS $ 301 $ 307 ===== ===== Other comprehensive income (loss), net of tax - unrealized gains (losses) on securities 137 (14) ----- ----- COMPREHENSIVE INCOME $ 438 $ 293 ===== ===== EARNINGS PER SHARE Basic (based on net earnings) $0.28 $0.28 ==== ==== Diluted (based on net earnings) $0.27 $0.28 ==== ====
-4- LOGANSPORT FINANCIAL CORP.
Consolidated Statements of Shareholders' Equity (In thousands, except share data) Three months ended March 31, 2001 2000 Balance at January 1 $17,013 $16,146 Purchase of shares - (464) Amortization of stock benefit plan 34 34 Cash dividends of $.12 per share in 2001 and $.11 per share in 2000 (130) (119) Unrealized gains (losses) on securities designated as available for sale, net of related tax effects 137 (14) Net earnings 301 307 ------ ------ Balance at March 31 $17,355 $15,890 ====== ====== Accumulated other comprehensive income (losses) $ 212 $ (342) ====== ======
-5- LOGANSPORT FINANCIAL CORP.
Consolidated Statements of Cash Flows (In thousands) Three months ended March 31, 2001 2000 Cash flows from operating activities: Net earnings for the period $ 301 $ 307 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 29 27 Amortization of premiums on investments and mortgage-backed securities 12 12 Amortization expense of stock benefit plan 34 34 Provision for losses on loans 86 71 Loss on equity investment 61 26 Increase (decrease) in cash, due to changes in: Accrued interest receivable on loans 42 16 Accrued interest receivable on mortgage-backed securities 1 2 Accrued interest receivable on investments (15) (62) Prepaid expenses and other assets 6 11 Accrued interest and other liabilities 50 15 Federal income taxes Current 47 111 Deferred 9 6 ------ ------ Net cash provided by operating activities 663 576 Cash flows provided by (used in) investing activities: Purchase of investment securities (253) (1,779) Maturities/calls of investment securities 1,025 - Purchase of Federal Home Loan Bank stock - (150) Principal repayments on mortgage-backed securities 262 246 Loan disbursements (12,257) (10,832) Investment in real estate partnership (18) (21) Principal repayments on loans 10,577 8,179 Purchases and additions to office premises and equipment (17) (22) Increase in cash surrender value of life insurance policy (10) (11) ------ ------ Net cash used in investing activities (691) (4,390) ------ ------ Net cash used in operating and investing activities (subtotal carried forward) (28) (3,814) ------ ------
-6- LOGANSPORT FINANCIAL CORP.
Consolidated Statements of Cash Flows (Continued) (In thousands) Three months ended March 31, 2001 2000 Net cash used in operating and investing activities (subtotal brought forward) $ (28) $(3,814) Cash provided by (used in) financing activities: Net increase in deposit accounts 1,875 5,037 Proceeds from Federal Home Loan Bank advances 2,000 5,000 Repayment of Federal Home Loan Bank advances (2,000) (2,000) Repayment of note payable (72) (70) Purchase of shares - (464) Dividends on common stock (130) (119) ------ ------ Net cash provided by financing activities 1,673 7,384 ------ ------ Net increase in cash and cash equivalents 1,645 3,570 Cash and cash equivalents, beginning of period 9,210 5,146 ------ ------ Cash and cash equivalents, end of period $10,855 $ 8,716 ====== ====== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest on deposits and borrowings $ 1,435 $ 1,210 ====== ====== Income taxes $ 45 $ 35 ====== ====== Dividends payable at end of period $ 130 $ 119 ====== ====== Supplemental disclosure of noncash financing activities: Unrealized gains (losses) on securities designated as available for sale, net of related tax effects $ 137 $ (14) ====== ======
-7- 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 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, 2000. 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 March 31, 2001, results of operations and cash flows for the three month periods ended March 31, 2001 and 2000. 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 1,083,510 and 1,112,829 for the three-month periods ended March 31, 2001 and 2000, respectively. Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares issued under the Company's stock option plan. Weighted-average common shares deemed outstanding for purposes of computing diluted earnings per share totaled 1,096,918 and 1,112,829 for the three-month periods ended March 31, 2001 and 2000, respectively. Incremental shares related to the assumed exercise of stock options included in the calculation of diluted earnings per share totaled 13,408 for the three month period ended March 31, 2001. Options to purchase 125,915 shares of common stock with a weighted-average exercise price of $10.59 were outstanding at March 31, 2000, but were excluded from the computation of common share equivalents because their exercise prices were greater than the average market price of the common shares. A cash dividend of $.12 per common share was declared on March 1, 2001, payable on April 10, 2001, to stockholders of record as of March 16, 2001. -8- 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. 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. Management adopted SFAS No. 133 effective January 1, 2001, as required, without 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- 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, 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, 2000 to March 31, 2001 The Company reported total assets of $134.9 million at March 31, 2001, compared to $132.6 million at December 31, 2000, an increase of $2.3 million, or 1.7%. This increase was funded by a growth in deposits of $1.9 million and undistributed first quarter earnings. Cash and cash equivalents increased by approximately $1.7 million from $9.2 million at December 31, 2000, to $10.9 million at March 31, 2001. Investment and mortgage-backed securities decreased by $838,000, due primarily to maturities and calls of securities totaling $1.0 million, which were partially offset by securities purchased of $253,000. Net loans increased by $1.6 million, or 1.6%, from $102.4 million at December 31, 2000 to $104.0 million at March 31, 2001. Loan originations amounted to $12.3 million for the three months ended March 31, 2001, while principal repayments amounted to $10.6 million. During the three months ended March 31, 2001, loan origination volume exceeded that of the comparable period in 2000 by $1.4 million, or 13.2%. Loan originations during 2001 were comprised primarily of nonresidential and commercial real estate, other commercial property and commercial leases. The commercial and nonresidential loan portfolios totaled $24.9 million at March 31, 2001, compared to $22.5 million at December 31, 2000. Originations of one- to four-family residential loans totaled $2.5 million, while repayments were $2.9 million. The one- to four-family residential loans totaled $62.3 million at December 31, 2000 and $61.9 million at March 31, 2001. Deposits totaled $81.3 million at March 31, 2001, an increase of $1.9 million, or 2.4%, in the first three months of 2001. Proceeds from deposit growth were generally used to fund new loan originations. Borrowings consisted of $34.0 million of FHLB advances and a $1.2 million note payable related to an equity investment in low income housing. Shareholders' equity was $17.4 million at March 31, 2001 and $17.0 million at December 31, 2000. The payment of dividends decreased equity, while an increase in the unrealized gains on securities available for sale, net earnings and the effects of amortization of the stock benefit plan increased equity. -10- Results of Operations Comparison of the Three Months Ended March 31, 2001 and March 31, 2000 Net earnings for the three months ended March 31, 2001 totaled $301,000, compared with $307,000 for the three months ended March 31, 2000, a decrease of $6,000, or 2.0%. Net interest income increased by $6,000, while general, administrative and other expense increased by $48,000 and taxes decreased by $49,000. The major contributor to the increase in net interest income was the growth in the loan portfolio the past calendar year. Interest income on loans increased by $283,000, or 15.2%, for the three months ended March 31, 2001, compared to the same quarter in 2000. This increase was due primarily to an $11.2 million, or 12.0%, increase in the weighted-average balance of loans outstanding, coupled with an increase in the average yield year to year. Interest expense on deposits increased by $91,000, or 10.0%, due primarily to a $1.2 million, or 1.5%, increase in the weighted-average balance of deposits outstanding and an increase in the cost of deposits year to year. Interest expense on borrowings increased by $195,000, or 58.4%, due primarily to a $10.3 million, or 43.2%, increase in the weighted-average balance of borrowings outstanding and an increase in the cost of such borrowings. The interest rate spread amounted to 2.96% and 2.87% at March 31, 2001 and 2000, respectively. The provision for losses on loans totaled $86,000 for the three months ended March 31, 2001 and $71,000 for the three months ended March 31, 2000. No properties were in real estate owned for the quarter ended March 31, 2001 or March 31, 2000. Nonperforming loans amounted to $371,000, or .36% of loans at March 31, 2001, compared to $336,000, or .32% of loans at December 31, 2000. Loan loss reserves amounted to $846,000, or .81% of total loans at March 31, 2001, compared to $760,000, or .73% of total loans at December 31, 2000. The increase in the provision for losses on loans was primarily attributable to the growth in the loan portfolio and the increasing percentage of commercial loans in the portfolio. There can be no assurance that the Company's allowance for loan losses will be adequate to cover losses on nonperforming assets in the future. Service charges on deposit accounts increased by $29,000, or 90.6%, and other operating income increased by $8,000, or 18.2%, for the three month period ended March 31, 2001, compared to the 2000 quarter. However, an increase in the pre-tax loss on the equity investment of $35,000 resulted in an overall increase of only $2,000 in the other income category. Total general, administrative and other expense increased by $48,000, or 9.9%, for the three-month period ended March 31, 2001, compared to the same period ended March 31, 2000. Employee compensation and benefits decreased by $2,000 compared to the 2000 quarter, which contained additional expenses related to the retirement of the Company's president. Data processing fees increased by $8,000, or 20.5%, due to costs associated with loan and deposit growth. Other operating expenses increased by $29,000, or 28.2%, compared to the quarter ended March 31, 2000, due primarily to the Company's overall growth year to year. The provision for income taxes totaled $102,000 for the three months ended March 31, 2001, a decrease of $49,000, or 32.5%, from the same period in 2000. The decrease was due to a $55,000, or 12.0%, decrease in pre-tax earnings and an increase in tax credits available. The Company's effective tax rates for the three-month periods ended March 31, 2001 and 2000, were 25.3% and 33.0%, respectively. The decrease in the effective tax rate was primarily attributable to tax credits available from the Company's investment in a low income housing partnership. -11- 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, 2001, the Bank's tangible and leverage capital ratios were each 11.1%, and its risk-based capital to risk-weighted assets ratio was 18.4%. 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, 2001.
Capital Standard Required Bank's Excess - ---------------- -------- ------ ------ (In thousands) Tangible (1.5%) $2,016 $14,939 $12,923 Core (4.0%) 5,375 14,939 9,564 Risk-based (8.0%) 6,854 15,785 8,931
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 OTS at 4%. At March 31, 2001 the Bank's regulatory liquidity ratio was 21.8%. -12- 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 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 December 31, 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.
Change Net Portfolio Value NPV as % of PV of Assets In Rates $ Amount $ Change % Change NPV Ratio Change (Dollars in thousands) +300bp $12,013 $(5,986) (33)% 9.49% -395bp +200bp 14,618 (3,381) (19)% 11.27% -217bp +100bp 16,476 (1,523) (8)% 12.49% -95bp - 17,999 - - 13.44% - - -100bp 19,081 1,082 6% 14.09% +65bp - -200bp 20,210 2,211 12% 14.75% +131bp - -300bp 21,696 3,697 21% 15.61% +217bp
-13- Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock Pre-shock NPV Ratio: NPV as % of PV of Assets 13.44% Exposure Measure: Post-Shock NPV Ratio 11.27% Sensitivity Measure: Change in NPV Ratio 217bp 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. -14- Part II. OTHER INFORMATION Item 1. Legal Proceedings Neither the Bank nor the Company were, during the three-month period ended March 31, 2001, 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 March 31, 1997, filed with the Commission on August 13, 1997. 10.1 Employment Agreement between Logansport Financial Corp. and David G. Wihebrink. (b) Reports on Form 8-K. The Registrant filed no reports on Form 8-K during the fiscal quarter ended March 31, 2001. -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 14, 2001 By:/s/ David G. Wihebrink ------------------ --------------------------------- David G. Wihebrink, President and Chief Executive Officer Date: May 14, 2001 By:/s/ Dottye Robeson ------------------ --------------------------------- Dottye Robeson, Secretary and Treasurer -15- EX-10.1 2 lfc10q_ex101.txt LOGANSPORT 10Q EXHIBIT 10.1 EMPLOYMENT AGREEMENT This Agreement, made and dated as of April 10, 2001, by and between Logansport Savings Bank, FSB, a federal savings bank ("Employer"), and David G. Wihebrink, a resident of Cass County, Indiana ("Employee"). W I T N E S S E T H - - - - - - - - - - WHEREAS, Employee is employed by Employer as its President and has made valuable contributions to the profitability and financial strength of Employer; WHEREAS, Employer desires to encourage Employee to continue to make valuable contributions to Employer's business operations and not to seek or accept employment elsewhere; WHEREAS, Employee desires to be assured of a secure minimum compensation from Employer for his services over a defined term; WHEREAS, Employer desires to assure the continued services of Employee on behalf of Employer on an objective and impartial basis and without distraction or conflict of interest in the event of an attempt by any person to obtain control of Employer or Logansport Financial Corp. (the "Holding Company"), the Indiana corporation which owns all of the issued and outstanding capital stock of Employer; WHEREAS, Employer recognizes that when faced with a proposal for a change of control of Employer or the Holding Company, Employee will have a significant role in helping the Boards of Directors assess the options and advising the Boards of Directors on what is in the best interests of Employer, the Holding Company, and its shareholders, and it is necessary for Employee to be able to provide this advice and counsel without being influenced by the uncertainties of his own situation; WHEREAS, Employer desires to provide fair and reasonable benefits to Employee on the terms and subject to the conditions set forth in this Agreement; WHEREAS, Employer desires reasonable protection of its confidential business and customer information which it has developed over the years at substantial expense and assurance that Employee will not compete with Employer for a reasonable period of time after termination of his employment with Employer, except as otherwise provided herein. NOW, THEREFORE, in consideration of these premises, the mutual covenants and undertakings herein contained and the continued employment of Employee by Employer as its President, Employer and Employee, each intending to be legally bound, covenant and agree as follows: 1. Upon the terms and subject to the conditions set forth in this Agreement, Employer employs Employee as Employer's President, and Employee accepts such employment. 2. Employee agrees to serve as Employer's President and to perform such duties in that office as may reasonably be assigned to him by Employer's Board of Directors; provided, however, that such duties shall be performed in or from the offices of Employer currently located at Logansport, Indiana, and shall be of the same character as those previously performed by Employee and generally associated with the office held by Employee. Employee shall not be required to be absent from the location of the principal executive offices of Employer on travel status or otherwise more than 45 days in any calendar year. Employer shall not, without the written consent of Employee, relocate or transfer Employee to a location more than 30 miles from Employer's primary office. Employee shall render services to Employer as President in substantially the same manner and to substantially the same extent as Employee rendered his services to Employer before the date hereof. While employed by Employer, Employee shall devote substantially all his business time and efforts to Employer's business during regular business hours and shall not engage in any other related business. Employer shall nominate the Employee to successive terms as a member of Employer's Board of Directors and shall use its best efforts to elect and re-elect Employee as a member of such Board. 3. The term of this Agreement shall begin on the date hereof (the "Effective Date") and shall end on the date which is three years following such date; provided, however, that such term shall be extended automatically for an additional year on each anniversary of the Effective Date if Employer's Board of Directors determines by resolution that the performance of the Employee has met the Board's requirements and standards and that this Agreement should be extended prior to such anniversary of the Effective Date, unless either party hereto gives written notice to the other party not to so extend within ninety (90) days prior to such anniversary, in which case no further automatic extension shall occur and the term of this Agreement shall end two years subsequent to the anniversary as of which the notice not to extend for an additional year is given (such term, including any extension thereof shall herein be referred to as the "Term"). 4. Employee shall receive an annual salary of $150,000 ("Base Compensation") payable at regular intervals in accordance with Employer's normal payroll practices now or hereafter in effect, part of which may be deferred pursuant to the agreement of Employer and Employee. Employer may consider and declare from time to time increases in the salary it pays Employee and thereby increases in his Base Compensation. Prior to a Change of Control, Employer may also declare decreases in the salary it pays Employee if the operating results of Employer are significantly less favorable than those for the fiscal year ending December 31, 1999, and Employer makes similar decreases in the salary it pays to other executive officers of Employer. After a Change in Control, Employer shall consider and declare salary increases based upon the following standards: Inflation; Adjustments to the salaries of other senior management personnel; and -2- Past performance of Employee and the contribution which Employee makes to the business and profits of Employer during the Term. Any and all increases or decreases in Employee's salary pursuant to this section shall cause the level of Base Compensation to be increased or decreased by the amount of each such increase or decrease for purposes of this Agreement. The increased or decreased level of Base Compensation as provided in this section shall become the level of Base Compensation for the remainder of the Term of this Agreement until there is a further increase or decrease in Base Compensation as provided herein. 5. So long as Employee is employed by Employer pursuant to this Agreement, he shall be included as a participant in all present and future employee benefit, retirement, and compensation plans generally available to employees of Employer, consistent with his Base Compensation and his position as President of Employer, including, without limitation, Employer's or the Holding Company's pension plan, Stock Option Plan, Recognition and Retention Plan and Trust, Employee Stock Ownership Plan, and hospitalization, disability and group life insurance plans, each of which Employer agrees to continue in effect on terms no less favorable than those currently in effect as of the date hereof (as permitted by law) during the Term of this Agreement unless prior to a Change of Control the operating results of Employer are significantly less favorable than those for the fiscal year ending December 31, 1999, and unless (either before or after a Change of Control) changes in the accounting, legal, or tax treatment of such plans would adversely affect Employer's operating results or financial condition in a material way, and the Board of Directors of Employer or the Holding Company concludes that modifications to such plans need to be made to avoid such adverse effects. 6. So long as Employee is employed by Employer pursuant to this Agreement, Employee shall receive reimbursement from Employer for all reasonable business expenses incurred in the course of his employment by Employer, upon submission to Employer of written vouchers and statements for reimbursement. Employee shall attend, upon the prior approval of Employer's Board of Directors, those professional meetings, conventions, and/or similar functions that he deems appropriate and useful for purposes of keeping abreast of current developments in the industry and/or promoting the interests of Employer. So long as Employee is employed by Employer pursuant to the terms of this Agreement, Employer shall continue in effect vacation policies applicable to Employee no less favorable from his point of view than those written vacation policies in effect on the date hereof. So long as Employee is employed by Employer pursuant to this Agreement, Employee shall be entitled to office space and working conditions no less favorable than were in effect for him on the date hereof. 7. Subject to the respective continuing obligations of the parties, including but not limited to those set forth in subsections 9(A), 9(B), 9(C) and 9(D) hereof, Employee's employment by Employer may be terminated prior to the expiration of the Term of this Agreement as follows: -3- (A) Employer, by action of its Board of Directors and upon written notice to Employee, may terminate Employee's employment with Employer immediately for cause. For purposes of this subsection 7(A), "cause" shall be defined as (i) personal dishonesty, (ii) incompetence, (iii) willful misconduct, (iv) breach of fiduciary duty involving personal profit, (v) intentional failure to perform stated duties, (vi) willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or (vii) any material breach of any provision of this Agreement. (B) Employer, by action of its Board of Directors may terminate Employee's employment with Employer without cause at any time; provided, however, that the "date of termination" for purposes of determining benefits payable to Employee under subsection 8(B) hereof shall be the date which is 60 days after Employee receives written notice of such termination. (C) Employee, by written notice to Employer, may terminate his employment with Employer immediately for cause. For purposes of this subsection 7(C), "cause" shall be defined as (i) any action by Employer's Board of Directors to remove the Employee as President of Employer, except where the Employer's Board of Directors properly acts to remove Employee from such office for "cause" as defined in subsection 7(A) hereof, (ii) any action by Employer's Board of Directors to materially limit, increase, or modify Employee's duties and/or authority as President of Employer, (iii) any failure of Employer to obtain the assumption of the obligation to perform this Agreement by any successor or the reaffirmation of such obligation by Employer, as contemplated in section 20 hereof; or (iv) any material breach by Employer of a term, condition or covenant of this Agreement. (D) Employee, upon sixty (60) days written notice to Employer, may terminate his employment with Employer without cause. (E) Employee's employment with Employer shall terminate in the event of Employee's death or disability. For purposes hereof, "disability" shall be defined as Employee's inability by reason of illness or other physical or mental incapacity to perform the duties required by his employment for any consecutive One Hundred Eighty (180) day period, provided that notice of any termination by Employer because of Employee's "disability" shall have been given to Employee prior to the full resumption by him of the performance of such duties. 8. In the event of termination of Employee's employment with Employer pursuant to section 7 hereof, compensation shall continue to be paid by Employer to Employee as follows: -4- (A) In the event of termination pursuant to subsection 7(A) or 7(D), compensation provided for herein (including Base Compensation) shall continue to be paid, and Employee shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in sections 5 and 6 hereof, through the date of termination specified in the notice of termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Employee's participation in such plans through such date shall be paid when due under those plans. The date of termination specified in any notice of termination pursuant to subsection 7(A) shall be no later than the last business day of the month in which such notice is provided to Employee. (B) In the event of termination pursuant to subsection 7(B) or 7(C), compensation provided for herein (including Base Compensation) shall continue to be paid, and Employee shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in sections 5 and 6 hereof, through the date of termination specified in the notice of termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Employee's participation in such plans through such date shall be paid when due under those plans. In addition, Employee shall be entitled to continue to receive from Employer his Base Compensation at the rates in effect at the time of termination (1) for three additional l2-month periods if the termination follows a Change of Control or (2) for the remaining Term of the Agreement if the termination does not follow a Change of Control. In addition, during such periods, Employer will maintain in full force and effect for the continued benefit of Employee each employee welfare benefit plan and each employee pension benefit plan (as such terms are defined in the Employee Retirement Income Security Act of 1974, as amended) in which Employee was entitled to participate immediately prior to the date of his termination, unless an essentially equivalent and no less favorable benefit is provided by a subsequent employer of Employee. If the terms of any employee welfare benefit plan or employee pension benefit plan of Employer do not permit continued participation by Employee, Employer will arrange to provide to Employee a benefit substantially similar to, and no less favorable than, the benefit he was entitled to receive under such plan at the end of the period of coverage. For purposes of this Agreement, a "Change of Control" shall mean an acquisition of "control" of the Holding Company or of Employer within the meaning of 12 C.F.R. ss.574.4(a) (other than a change of control resulting from a trustee or other fiduciary holding shares of Common Stock under an employee benefit plan of the Holding Company or any of its subsidiaries). Notwithstanding anything to the contrary in the foregoing, any benefits payable under this subsection 8(B) shall be subject to the limitations on severance benefits set forth in Regulatory Bulletin 27a of the Office of Thrift Supervision, as in effect on the Effective Date. -5- (C) In the event of termination pursuant to subsection 7(E), compensation provided for herein (including Base Compensation) shall continue to be paid, and Employee shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in sections 5 and 6 hereof, (i) in the event of Employee's death, through the date of death, or (ii) in the event of Employee's disability, through the date of proper notice of disability as required by subsection 7(E). Any benefits payable under insurance, health, retirement and bonus plans as a result of Employer's participation in such plans through such date shall be paid when due under those plans. (D) Employer will permit Employee or his personal representative(s) or heirs, during a period of three months following Employee's termination of employment by Employer for the reasons set forth in subsections 7(B) or (C), if such termination follows a Change of Control, to require Employer, upon written request, to purchase all outstanding stock options previously granted to Employee under any Holding Company stock option plan then in effect whether or not such options are then exercisable at a cash purchase price equal to the amount by which the aggregate "fair market value" of the shares subject to such options exceeds the aggregate option price for such shares. For purposes of this Agreement, the term "fair market value" shall mean the higher of (1) the average of the highest asked prices for Holding Company shares in the over-the-counter market as reported on the NASDAQ system if the shares are traded on such system for the 30 business days preceding such termination, or (2) the average per share price actually paid for the most highly priced 1% of the Holding Company shares acquired in connection with the Change of Control of the Holding Company by any person or group acquiring such control. 9. In order to induce Employer to enter into this Agreement, Employee hereby agrees as follows: (A) While Employee is employed by Employer and for a period of three years after termination of such employment for any reason, Employee shall not divulge or furnish any trade secrets (as defined in IND. CODEss. 24-2-3-2) of Employer or any confidential information acquired by him while employed by Employer concerning the policies, plans, procedures or customers of Employer to any person, firm or corporation, other than Employer or upon its written request, or use any such trade secret or confidential information directly or indirectly for Employee's own benefit or for the benefit of any person, firm or corporation other than Employer, since such trade secrets and confidential information are confidential and shall at all times remain the property of Employer. -6- (B) For a period of three years after termination of Employee's employment by Employer for reasons other than those set forth in subsections 7(B) or (C) of this Agreement, Employee shall not directly or indirectly provide banking or bank-related services to or solicit the banking or bank-related business of any customer of Employer at the time of such provision of services or solicitation which Employee served either alone or with others while employed by Employer in any city, town, borough, township, village or other place in which Employee performed services for Employer while employed by it, or assist any actual or potential competitor of Employer to provide banking or bank-related services to or solicit any such customer's banking or bank-related business in any such place. (C) While Employee is employed by Employer and for a period of one year after termination of Employee's employment by Employer for reasons other than those set forth in subsections 7(B) or (C) of this Agreement, Employee shall not, directly or indirectly, as principal, agent, or trustee, or through the agency of any corporation, partnership, trade association, agent or agency, engage in any banking or bank-related business which competes with the business of Employer as conducted during Employee's employment by Employer within a radius of twenty-five (25) miles of Employer's main office. (D) If Employee's employment by Employer is terminated for any reason, Employee will turn over immediately thereafter to Employer all business correspondence, letters, papers, reports, customers' lists, financial statements, credit reports or other confidential information or documents of Employer or its affiliates in the possession or control of Employee, all of which writings are and will continue to be the sole and exclusive property of Employer or its affiliates. If Employee's employment by Employer is terminated during the Term of this Agreement for reasons set forth in subsections 7(B) or (C) of this Agreement, Employee shall have no obligations to Employer with respect to noncompetition under this section 9. 10. Any termination of Employee's employment with Employer as contemplated by section 7 hereof, except in the circumstances of Employee's death, shall be communicated by written "Notice of Termination" by the terminating party to the other party hereto. Any "Notice of Termination" pursuant to subsections 7(A), 7(C) or 7(E) shall indicate the specific provisions of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. 11. If Employee is suspended and/or temporarily prohibited from participating in the conduct of Employer's affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(3) or (g)(1)), Employer's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, Employer shall (i) pay Employee all or part of the compensation withheld while its obligations under this Agreement were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. -7- 12. If Employee is removed and/or permanently prohibited from participating in the conduct of Employer's affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(4) or (g)(1)), all obligations of Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties to the Agreement shall not be affected. 13. If Employer is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under this Agreement shall terminate as of the date of default, but this provision shall not affect any vested rights of Employer or Employee. 14. All obligations under this Agreement shall be terminated except to the extent determined that the continuation of the Agreement is necessary for the continued operation of Employer: (i) by the Director of the Office of Thrift Supervision or his or her designee (the "Director"), at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of Employer under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director at the time the Director approves a supervisory merger to resolve problems related to operation of Employer or when Employer is determined by the Director to be in an unsafe and unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. 15. Anything in this Agreement to the contrary notwithstanding, in the event that the Employer's independent public accountants determine that any payment by the Employer to or for the benefit of the Employee, whether paid or payable pursuant to the terms of this Agreement, would be non-deductible by the Employer for federal income tax purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then the amount payable to or for the benefit of the Employee pursuant to this Agreement shall be reduced (but not below zero) to the Reduced Amount. For purposes of this section 15, the "Reduced Amount" shall be the amount which maximizes the amount payable without causing the payment to be non-deductible by the Employer because of Section 280G of the Code. Any payments made to Employee pursuant to this Agreement or otherwise, are subject to and conditional upon their compliance with 12 U.S.C. ss.1828(k) and any regulations promulgated thereunder, to the extent applicable to such parties. -8- 16. If a dispute arises regarding the termination of Employee pursuant to section 7 hereof or as to the interpretation or enforcement of this Agreement and Employee obtains a final judgment in his favor in a court of competent jurisdiction or his claim is settled by Employer prior to the rendering of a judgment by such a court, all reasonable legal fees and expenses incurred by Employee in contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for in this Agreement or otherwise pursuing his claim shall be paid by Employer, to the extent permitted by law. 17. Should Employee die after termination of his employment with Employer while any amounts are payable to him hereunder, this Agreement shall inure to the benefit of and be enforceable by Employee's executors, administrators, heirs, distributees, devisees and legatees and all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee or other designee or, if there is no such designee, to his estate. 18. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to Employee: David G. Wihebrink 3714 Tomlinson Drive Logansport, Indiana 46947 If to Employer: Logansport Savings Bank, FSB 723 East Broadway P.O. Box 569 Logansport, Indiana 46947 or to such address as either party hereto may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 19. The validity, interpretation, and performance of this Agreement shall be governed by the laws of the State of Indiana, except as otherwise required by mandatory operation of federal law. 20. Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer, by agreement in form and substance satisfactory to Employee to expressly assume and agree to perform this Agreement in the same manner and same extent that Employer would be required to perform it if no such succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession shall be a material intentional breach of this Agreement and shall entitle Employee to terminate his employment with Employer pursuant to subsection 7(C) hereof. As used in this Agreement, "Employer" shall mean Employer as hereinbefore defined and any successor to its business or assets as aforesaid. -9- 21. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Employee and Employer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time. No agreements or representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 22. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement which shall remain in full force and effect. 23. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. 24. This Agreement is personal in nature and neither party hereto shall, without consent of the other, assign or transfer this Agreement or any rights or obligations hereunder except as provided in section 17 and section 20 above. Without limiting the foregoing, Employee's right to receive compensation hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by his will or by the laws of descent or distribution as set forth in section 17 hereof, and in the event of any attempted assignment or transfer contrary to this paragraph, Employer shall have no liability to pay any amounts so attempted to be assigned or transferred. IN WITNESS WHEREOF, the parties have caused the Agreement to be executed and delivered as of the day and year first above set forth. LOGANSPORT SAVINGS BANK, FSB By: /s/ Charles J. Evans -------------------------------------- Charles J. Evans, Senior Vice President "Employer" /s/ David G. Wihebrink -------------------------------------- David G. Wihebrink "Employee" -10- The undersigned, Logansport Financial Corp., sole shareholder of Employer, agrees that if it shall be determined for any reason that any obligations on the part of Employer to continue to make any payments due under this Agreement to Employee is unenforceable for any reason, Logansport Financial Corp., agrees to honor the terms of this Agreement and continue to make any such payments due hereunder to Employee pursuant to the terms of this Agreement. LOGANSPORT FINANCIAL CORP. By:/s/ Charles J. Evans -------------------------------- Charles J. Evans, Vice President -11- -----END PRIVACY-ENHANCED MESSAGE-----