-----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, LLso8GVJiJF7QjMG6svNYnBMSGrbxNJgT6EKSYHcEvEzfhnVQvKh4Bm57ICb9Djt 0J8VwO4F96mo0PKQ09ElDg== 0001046386-97-000010.txt : 19971113 0001046386-97-000010.hdr.sgml : 19971113 ACCESSION NUMBER: 0001046386-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD 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: 97715796 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 QUARTERLY FINANCIALS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________________. Commission file number: 0-25910 LOGANSPORT FINANCIAL CORP. (Exact name of registrant specified in its charter) Indiana 35-1945736 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 723 East Broadway P.O. Box 569 Logansport, Indiana 46947 (Address of principal executive offices including Zip Code) (219) 722-3855 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares of the Registrant's common stock, without par value, as of November 3, 1997 was 1,260,920. Logansport Financial Corp. Form 10-Q Index Page No. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements 3 Consolidated Condensed Statements of Financial Condition as of September 30, 1997 and December 31, 1996 (Unaudited) Consolidated Condensed Statements of Income for the three and nine months ended September 30, 1997 and 1996 (Unaudited ) Consolidated Condensed Statements of Changes in Shareholders' Equity for the nine months ended September 30, 1997 and 1996 (Unaudited) Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 (Unaudited) Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports of Form 8-K 15 SIGNATURES 16 LOGANSPORT FINANCIAL CORP. Consolidated Condensed Statements of Financial Condition (Unaudited)
September 30, December 31, Assets 1997 1996 Cash $ 483,960 $ 997,552 Short-term interest bearing deposits 3,831,121 2,761,126 ----------- ----------- Total cash and cash equivalents 4,315,081 3,758,678 Interest bearing deposits 100,000 100,000 Securities available for sale 16,038,351 14,303,105 Loans 61,229,636 57,038,066 Allowance for loan losses (235,814) (235,970) ------------- ------------ Net loans 60,993,822 56,802,096 Real estate owned 105,686 - Premises and equipment 467,385 476,325 Federal Home Loan Bank stock, at cost 494,000 386,500 Cash value of life insurance 1,067,242 1,040,242 Other assets 2,219,670 801,547 ----------- ------------- Total assets $85,801,237 $77,668,493 ========== ========== Liabilities Deposits $61,741,234 $57,396,200 Borrowings 5,500,000 3,400,000 Dividends payable 126,062 125,638 Other liabilities 2,223,072 1,319,767 ----------- ----------- Total liabilities 69,590,368 62,241,605 ---------- ---------- Shareholders' Equity Common stock, 5,000,000 shares authorized, no par value; 1,260,620 shares issued 7,562,762 7,518,062 Retained earnings-substantially restricted 9,081,899 8,587,979 Shares acquired by stock benefit plans (430,197) (522,382) Net unrealized losses on securities available for sale, net of related tax effects (3,595) (156,771) -------------- ------------ Total shareholders' equity 16,210,869 15,426,888 ---------- ---------- Total liabilities and shareholders' equity $85,801,237 $77,668,493 ========== ==========
LOGANSPORT FINANCIAL CORP. Consolidated Condensed Statements of Income (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------- ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- Interest Income Loans $1,296,949 $1,142,036 $3,729,466 $3,250,330 Investment securities Taxable 206,852 243,004 609,170 731,503 Tax-exempt 29,223 31,573 89,454 94,107 Other interest and dividends 59,806 36,511 166,492 119,198 ----------- ----------- ---------- ---------- Total interest income 1,592,830 1,453,124 4,594,582 4,195,138 --------- --------- --------- --------- Interest Expense Deposits 731,697 656,729 2,123,531 1,922,390 Borrowings 72,764 27,303 170,715 56,102 ----------- ----------- ---------- ----------- Total interest expense 804,461 684,032 2,294,246 1,978,492 ---------- ---------- --------- --------- Net Interest Income 788,369 769,092 2,300,336 2,216,646 Provision for losses on loans 9,000 3,000 17,000 9,000 ------------ ------------ ----------- ------------ Net Interest Income After Provision for Losses on Loans 779,369 766,092 2,283,336 2,207,646 ---------- ---------- --------- --------- Other Income Service charges on deposit accounts 26,893 19,553 64,420 48,639 Net realized losses on sales of securities (19,093) (34,392) (50,620) (26,516) Recoveries on previously written-off securities - - 13,083 17,291 Other income 11,611 13,007 37,182 35,717 ----------- ----------- ----------- ----------- Total other income 19,411 (1,832) 64,065 75,131 ----------- ------------- ----------- ----------- Other Expenses Salaries and employee benefits 178,841 172,932 531,470 478,489 Net occupancy expenses 9,138 9,435 29,436 29,505 Equipment expenses 8,296 8,722 26,284 29,107 Deposit insurance expense 9,256 368,955 27,451 428,553 Computer processing fees 27,102 24,512 72,444 68,526 Other expenses 92,766 72,924 274,456 255,264 ----------- ----------- ---------- ---------- Total other expenses 325,399 657,480 961,541 1,289,444 ---------- ---------- ---------- --------- Income Before Income Tax 473,381 106,780 1,385,860 993,333 Income tax expense 176,622 25,457 514,200 355,428 ---------- ----------- ---------- ---------- Net Income $ 296,759 $ 81,323 $ 871,660 $ 637,905 ========== =========== ========== ========== Earnings per share $.23 $.06 $.69 $.48 === === === === Weighted average shares outstanding 1,260,593 1,322,500 1,258,594 1,322,500
LOGANSPORT FINANCIAL CORP. Consolidated Condensed Statements of Shareholders' Equity (Unaudited) Nine Months Ended September 30, 1997 1996 ---- ---- Beginning balance $15,426,888 $20,454,270 Net proceeds from exercise of stock options 44,700 - Contribution for unearned compensation - (614,567) Amortization of unearned compensation 92,185 61,456 Dividends (377,740) (4,364,250) Net change in unrealized gain (loss) on securities available for sale 153,176 (248,321) Net income 871,660 637,905 ------------ ---------- Ending balance $16,210,869 $15,926,493 ========== ========== LOGANSPORT FINANCIAL CORP. Consolidated Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1997 1996 Operating Activities Net income $ 871,660 $ 637,905 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 17,000 9,000 Securities (gains) losses 50,620 26,516 Gain on sale of foreclosed real estate (1,136) (869) Securities amortization, net 70,056 31,697 Amortization of unearned compensation 92,185 61,457 Depreciation 27,889 28,082 Change in Other assets (20,592) 408,159 Other liabilities 80,602 166,764 ----------- ---------- Net cash provided by operating activities 1,188,284 1,368,711 --------- --------- Investing Activities Purchase of securities available for sale (6,375,063) (7,913,134) Proceeds from available for sale maturities 750,000 1,490,000 Proceeds from sales of securities 2,216,645 5,750,174 Payments on mortgage and asset-backed securities 1,103,843 2,495,946 Purchase of Federal Home Loan Bank Stock (107,500) (38,300) Net changes in loans (4,313,110) (5,926,981) Investment in real estate owned (166) (242) Purchase of premises and equipment (18,949) (73,278) ----------- ----------- Net cash used by investing activities (6,744,300) (4,215,815) --------- ---------
LOGANSPORT FINANCIAL CORP. Consolidated Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1997 1996 Financing Activities Net change in Noninterest-bearing, interest-bearing demand and savings deposits $1,849,294 $1,085,549 Certificates of deposit 2,495,740 2,386,838 Short-term borrowings (1,400,000) - Payment of Federal Home Loan Bank advances (6,000,000) - Proceeds from Federal Home Loan Bank advances 9,500,000 2,000,000 Contribution for unearned compensation (614,567) Proceeds from exercise of stock options 44,700 - Dividends (377,315) (396,750) ---------- ----------- Net cash provided by financing activities 6,112,419 4,461,070 --------- --------- Net Change in Cash and Cash Equivalents 556,403 1,613,966 Cash and Cash Equivalents, Beginning of Period 3,758,678 3,242,579 --------- --------- Cash and Cash Equivalents, End of Period $4,315,081 $4,856,545 ========= ========= Additional Cash Flow and Supplementary Information Interest paid $2,278,266 $1,967,831 ========= ========= Income tax paid $ 556,105 $ 552,329 ========== ========== Dividends payable $ 126,062 $4,099,750 ========== =========
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE A: Basis of Presentation The unaudited interim consolidated condensed financial statements include the accounts of Logansport Financial Corp. (the "Company") and its subsidiary, Logansport Savings Bank, FSB, (the "Bank"). The unaudited interim consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and disclosures required by generally accepted accounting principles for complete financial statements. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of management, the financial statements reflect all adjustments necessary to present fairly the Company's financial position as of September 30, 1997, results of operations for the three and nine month periods ended September 30, 1997 and 1996 and cash flows for the nine month periods ended September 30, 1997 and 1996. NOTE B: Plan of Conversion and Other Matters Effective June 13, 1995, the Bank completed its conversion from a federally chartered mutual savings bank to a federally chartered stock savings bank (the "Conversion"), and became a wholly-owned subsidiary of the Company. In the Conversion, the Company sold 1,322,500 shares of Common Stock, with no par value ("Common Stock"), for $10.00 per share and used all proceeds except $3,982,500 to acquire complete ownership of the Bank. Net proceeds of the Company's stock issuance, after costs, were $12,670,006. At a meeting of the Company's shareholders on April 9, 1996, the Board of Directors submitted for shareholder approval a stock option plan (the "Stock Option Plan"), and at that time made certain awards pursuant to the Stock Option Plan. The plan was approved by the Company's shareholders. Common Stock in an aggregate amount of 10.0% of the shares issued in the Conversion (132,250 shares) were reserved for issuance upon the exercise of options granted under the Stock Option Plan. Options were granted under the Stock Option Plan for 108,691 shares of common stock and have an exercise price per share equal to $12.50, the fair market value of the shares on the date of grant. Pursuant to the terms of the Option Plan and in order to ensure equivalent economic consequence to the option holders following the special cash distribution paid by the Company on December 10, 1996, the number of options granted was adjusted to 129,340 at a per share option price of $10.53. The Company accounts for stock-based compensation as prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, with appropriate proforma disclosures made in the notes to its annual financial statements. Additionally, at a meeting of the Company's shareholders held on April 9, 1996, the Board of Directors submitted for shareholder approval a Management Recognition and Retention Plan and Trust (the "RRP"). The RRP was approved by the shareholders. The Bank contributed funds to the RRP to enable it to acquire an aggregate amount of Common Stock equal to up to 4.0% of the shares issued in the Conversion, (52,900 shares) either directly from the Company or in the open market. Shares awarded under the RRP vest at a rate of 20% at the end of each full twelve months of service with the Bank after the date of grant. As of April 9, 1996, the number of shares awarded under the RRP was 46,675. All of these shares were acquired in the open market for an average price of $13.17 NOTE C: Cash Dividends and Earnings Per Share A cash dividend of $.10 per common share was declared on September 9, 1997, payable on October 10, 1997, to shareholders of record as of September 22, 1997. Earnings per share was computed based upon the weighted average common shares outstanding during the period subsequent to the Bank's conversion to a stock savings bank on June 13,1995. NOTE D: Recent Accounting Pronouncements In June 1996, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers of Financial Assets, Servicing Rights, and Extinguishment of Liabilities", that provides accounting guidance on transfers of financial assets, servicing of financial assets, and extinguishment of liabilities. SFAS No. 125 introduces an approach to accounting for transfers of financial assets that provides a means of dealing with more complex transactions in which the seller disposes of only a partial interest in the assets, retains rights or obligations, makes use of special purpose entities in the transaction, or otherwise has continuing involvement with the transferred assets. The new accounting method, the financial components approach, provides that the carrying amount of the financial assets transferred be allocated to components of the transaction based on their relative fair values. SFAS No. 125 provides criteria for determining whether control of assets has been relinquished and whether a sale has occurred. If the transfer does not qualify as a sale, it is accounted for as a secured borrowing. Transactions subject to the provisions of SFAS No. 125 include, among others, transfers involving repurchase agreements, securitizations of financial assets, loan participations, factoring arrangements, and transfers of receivables with recourse. An entity that undertakes an obligation to service financial assets recognizes either a servicing asset or liability for the servicing contract (unless related to a securitization of assets, and all the securitized assets are retained and classified as held-to-maturity). A servicing asset or liability that is purchased or assumed is initially recognized at its fair value. Servicing assets and liabilities are amortized in proportion to and over the period of estimated net servicing income or net servicing loss and are subject to subsequent assessments for impairment based on fair value. SFAS No. 125 provides that a liability is removed from the balance sheet only if the debtor either pays the creditor and is relieved of its obligation for the liability or is legally released from being the primary obligor. SFAS No. 125 is effective for transfers and servicing of financial assets and extinguishment of liabilities occurring after December 31, 1997, and is to be applied prospectively. Earlier or retroactive application is not permitted. Management does not believe that adoption of SFAS No. 125 will have a material adverse effect on the Corporation's consolidated financial position or results of operations. In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which requires companies to present basic earnings per share and, if applicable, diluted earnings per share, instead of primary and fully diluted earnings per share, respectively. Basic earnings per share is computed without including potential common shares, i.e., no dilutive effect. Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares, including options, warrants, convertible securities and contingent stock agreements. SFAS No. 128 is effective for periods ending after December 15, 1997. Early adoption is not permitted. Based upon the provisions of SFAS No. 128, the Corporation's basic and diluted earnings per share for the three month period ended September 30, 1997 would have each been $.23. Basic and diluted earnings per share for the three month period ended September 30, 1996 would have each been $.06. In February 1997, the FASB issued SFAS No. 129, "Disclosures of Information about Capital Structure." SFAS No. 129 consolidated existing accounting guidance relating to disclosure about a company's capital structure. SFAS No. 129 is effective for financial statements for periods ending after December 15, 1997. SFAS No. 129 is not expected to have a material impact on the Corporation's financial statements. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. It does not require a specific format for that financial statement but requires that an enterprise display an amount representing total comprehensive income for the period in that financial statement. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. SFAS No. 130 is not expected to have a material impact on the Corporation's financial statements. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 significantly changes the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about reportable segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. SFAS No. 131 uses a "management approach" to disclose financial and descriptive information about the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. For many enterprises, the management approach will likely result in more segments being reported. In addition, SFAS No. 131 requires significantly more information to be disclosed for each reportable segment than is presently being reported in annual financial statements and also requires that selected information be reported in interim financial statements. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997. SFAS No. 131 is not expected to have a material impact on the Corporation's financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. Forward-Looking Statements In addition to historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Economic circumstances, the Corporation's operations and the Corporation's actual results could differ significantly from those discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences are discussed herein but also include changes in the economy and interest rates in the nation and the Corporation's market area generally. Some of the forward-looking statements included herein are the statements regarding management's determination of the amount and adequacy of the allowance for losses on loans and the effect of certain accounting pronouncements. Financial Condition Total assets were $85.8 million at September 30, 1997 compared to $77.7 million at December 31, 1996, an increase of $8.1 million or 10.5%. Funds were obtained primarily from a growth in deposits of $4.3 million and an increase in Federal Home Loan Bank advances, and were invested in securities and loans. The Bank also recorded a $1.5 million equity investment in a limited partnership which will construct and manage residential real estate apartments for low and moderate income residents. This investment reflects a 49.5% participation in the partnership and is expected to generate significant tax credits for the Bank in future years. The investment resulted in an increase to total assets of $1.5 million with a corresponding increase in other liabilities: however, no capital contributions were required at inception. Capital contributions are due over the course of the next twelve years and will be used to repay principal and interest of tax exempt bonds and equity bridge loans used to finance construction of the development. Securities increased from $14.3 million at December 31, 1996 to $16.0 at September 30, 1997. Net loans increased $4.2 million, or 7.4%, from $56.8 million at December 31, 1996 to $61.0 million at September 30, 1997. Loan demand has been strong in the second and third quarters after a flat first quarter performance. Deposits were $61.7 million at September 30, 1997 compared to $57.4 million at December 31, 1996, or an increase of $4.3 million in the first three quarters of 1997. Management continued its effort to achieve a moderate rate of growth in the deposit portfolio through marketing and pricing strategies. The Bank currently has a $1.5 million putable advance due in two years from the Federal Home Loan Bank. The rate is guaranteed for one year, until January of 1998, at which time the Federal Home Loan Bank may convert the advance to a periodic adjustable advance. If this is done the Bank has the option to prepay the advance without a fee. The Bank also has $3.0 million in short-term adjustable rate advances. During the quarter ended September 30, 1997, the Bank obtained a two year fixed rate advance which was used to purchase securities. Shareholders' equity was $16.2 million at September 30, 1997 and $15.4 million at December 31, 1996. The payment of dividends, a decrease in the unrealized loss on securities available for sale, the amortization of unearned compensation, the exercise of stock options, and net income combined to result in an increase of $783,981 for the nine months ended September 30, 1997. Results of Operations Comparison of the Three Months Ended September 30, 1997 and September 30, 1996 Net income for the Company for the three months ended September 30, 1997 was $ 296,759 compared with $81,323 for the three months ended September 30, 1996, or an increase of $215,436. This increase is the result of the one-time assessment to recapitalize the Savings Association Insurance Fund which took place in the quarter ending September 30, 1996. The pretax charge was approximately $338,000 and the after tax effect was $204,000. Without the assessment in the quarter ending September 30, 1996, net income would have been $285,323. Interest income increased $139,706 for the three months ended September 30, 1997 compared to September 30, 1996. The major contributor to the increase in interest income was the growth in the loan portfolio and the slightly higher interest rates that have resulted as ARM loans repriced. Interest expense increased $120,429 or 17.6% for the three months ended September 30, 1997 compared to the three months ended September 30, 1996. The increase in the volume of deposits and advances have been the primary cause of this increase as the over-all cost of deposits has increased only 4 basis points from the quarter ended September 30, 1996. Net interest income for the three months ended September 30, 1997 was $788,369 compared to $769,092 at September 30, 1996, an increase of $19,277 or 2.5%. A provision for losses on loans is charged to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted by the Company, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Company's market area, and other factors related to the collectibility of the Company's loan portfolio. As a result of such analysis, management recorded a $9,000 provision for losses on loans for the quarter ended September 30, 1997 and $3,000 for the quarter ended September 30, 1996. One property was taken into real estate owned for the quarter ended September 30, 1996 and was sold during the quarter for a gain of $869. One property was taken into real estate owned for the quarter ended September 30, 1997 and remained there at quarter end. Non-performing loans were $318,000, or 0.52% of loans, at September 30, 1997 and $406,000, or 0.71% of loans, at December 31, 1996. Loan loss reserves amounted to $235,814, or 0.39% of total loans, at September 30, 1997 compared to $235,970, or 0.41% at December 31, 1996. There can be no assurance that the loan loss allowance of the Association will be adequate to cover losses on nonperforming assets in the future. Realized losses on the sale of available for sale securities amounted to $19,093 in the quarter ending September 30, 1997 and $34,392 in the quarter ending September 30, 1996. Service charges on deposit accounts increased by $7,340, or 37.5%, from September 30, 1997 over September 30, 1996. Total other expenses increased $27,618 without considering the decrease of $359,699 in deposit insurance expense. Salaries and employee benefits increased $5,909, or 3.4% as a result of general and merit pay increases for the 1997 year. Other expenses experienced an increase of $19,842 or 27.2%. Other expenses were $92,766 for the three months ended September 30, 1997 compared to $72,924 for the three months ended September 30, 1996. Approximately $14,000 of the increase is related to advertising increases and costs associated with increased account volume. In the quarter ending September 30, 1997 the Bank also recorded a charitable donation of $8,000 as it donated a property held in real estate owned at June 30, 1997 to Habitat for Humanity of Cass County, Indiana, Inc. The Company's effective tax rate for the three months ended September 30, 1997 was 37.3% compared to 23.8% for the three months ended September 30,1996. Comparison of the Nine Months Ended September 30, 1997 and September 30, 1996 Net income for the Company for the nine months ended September 30, 1997 was $871,660 compared with $637,905 for the nine months ended September 30, 1996. This is an increase of $233,755 or 36.6%. Without the SAIF assessment, net income would have increased $29,755 or 3.5%. Interest income increased $399,444 for the nine months ended September 30, 1997 compared to September 30, 1996. Interest expense increased $315,754 resulting in an improvement in net interest income of $83,690 or 3.8%, when comparing the nine months ended September 30, 1997 to the nine months ended September 30, 1996. The provision for loan losses was $17,000 for the nine months ended September 30, 1997 and $9,000 for the nine months ended September 30, 1996. The growth in loans outstanding resulted in a need for an additional loan loss provision but has not resulted in an increase in nonperforming loans as discussed in the previous section. Realized losses on the sale of available for sale securities were $50,620 for the nine months ending September 30, 1997 and $26,516 for the nine months ending September 30, 1996. Service charges on deposit accounts increased $15,781, or 32.4%. This increase is a result of an increase in the volume of transaction accounts and new service charges imposed. There was a nonrecurring recovery on securities previously written off of $17,291 in the nine months ended September 30, 1996 and $13,083 in the nine months ended September 30, 1997. Total other expenses increased $73,199 or 8.5%, for the nine months ended September 30, 1997 compared to the nine months ended September 30, 1996 after eliminating the $401,102 difference related to deposit insurance expense. The increases were concentrated in two areas, salaries and employee benefits and other expenses. Salary and employee benefits increased $52,981, or 11.1%. This is a result of general and merit pay increases and amortization of the expense associated with the RRP which was approved April 9, 1996 at the shareholder's meeting. The plan was effective for six months of the nine month period ending September 30, 1996 and resulted in amortization expense of $61,456. The plan was effective for nine months of the nine month period ending September 30, 1997 and resulted in amortization expense of $92,185. Other expenses increased $19,192 for the nine months ended September 30, 1997 compared to the nine months ended September 30, 1996. Approximately $5,000 of the increase in cost is associated with an increase in the volume of checking accounts and the additional services connected with these accounts such as issuing ATM cards. Advertising expense also increased by $12,000 as new and additional means were used to promote the Bank's products. The Company's effective tax rate for the nine months ended September 30,1997 was 37.1% compared to 35.8% for the nine months ended September 30, 1996. Capital Resources Pursuant to OTS capital regulations, savings associations must currently meet a 1.5% tangible capital requirement, a 3% leverage ratio (or core capital) requirement, and total risk-based capital to risk-weighted assets ratio of 8%. At September 30, 1997, the Bank's tangible capital ratio was 18.7%, its leverage ratio was 18.7%, and its risk-based capital to risk-weighted assets ratio was 35.2%. Therefore, the Bank's capital significantly exceeded all of the capital requirements currently in effect. The following table provides the minimum regulatory capital requirements and the Bank's capital ratios as of September 30, 1997. Capital Standard Required Bank's Excess - ---------------- -------- ------ ------ Tangible (1.5%) 1,283,000 16,009,000 14,726,000 Core (3.0%) 2,565,000 16,009,000 13,444,000 Risk-based (8.0%) 3,696,000 16,245,000 12,549,000 Liquidity The standard measure of liquidity for savings associations is the ratio of cash and eligible investments to a certain percentage of net withdrawable savings account and borrowings due within one year. The minimum required ratio is currently set by the Office of Thrift Supervision at 5%, of which 1% must be comprised of short-term investments. At September 30, 1997 the Company's ratio was 11.19%, of which 6.95% was comprised of short-term investments. Part II. OTHER INFORMATION Item 1. Legal Proceedings Neither the Bank nor the Company were during the three-month period ended September 30, 1997 or are as of the date hereof involved in any legal proceeding of a material nature. From time to time, the Bank is a party to legal proceedings wherein it enforces its security interests in connection with its mortgage and other loans. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The following exhibits are attached to this report on Form 10-Q: (27) Financial Data Schedule (b) Reports on Form 8-K. The Registrant filed one report on Form 8-K during the fiscal quarter ended September 30, 1997. The report was filed on August 19, 1997 and reported a change in Registrant's Certifying Accountant. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on behalf of the undersigned thereto duly authorized. Logansport Financial Corp. Date: November 11,1997 By: /s/ Thomas G. Williams Thomas G. Williams, President and Chief Executive Officer Date: November 11, 1997 By: /s/ Dottye Robeson Dottye Robeson, Secretary and Treasurer EX-27 2 9/30/97 FINANCIALS
9 9-MOS DEC-31-1996 JAN-01-1997 SEP-30-1997 483,960 3,831,121 0 0 16,038,351 0 0 61,229,636 235,814 85,801,237 61,741,234 5,500,000 2,349,134 0 0 0 7,562,762 8,648,107 85,801,237 3,729,466 698,624 166,492 4,594,582 2,123,531 2,294,246 2,300,336 17,000 (50,620) 961,541 1,385,860 871,660 0 0 871,660 .69 .69 3.98 318 318 0 0 235,970 18 1 235,814 0 0 235,814
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