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Securities and Exchange Commission
WASHINGTON, D. C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended: December 31, 2004
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from _________________to_________________
Commission File Number: 0-23010
LAUREL CAPITAL GROUP, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1717451
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2724 Harts Run Road
Allison Park, Pennsylvania 15101
- ------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (412) 487-7404
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 reports) and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
The number of shares outstanding for each of the issuer's classes of common
stock, as of the latest practicable date is:
Class: Common stock, par value $.01 per share
Outstanding at February 1, 2005: 1,940,021 shares
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
INDEX
PAGE
----
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of
December 31, 2004 and June 30, 2004 ..................................... 1
Consolidated Statements of Operations for the Three
and Six Months ended December 31, 2004 and 2003 ......................... 2
Consolidated Statement of Stockholders' Equity for the
Six Months ended December 31, 2004 ...................................... 3
Consolidated Statements of Cash Flows for the Six
Months ended December 31, 2004 and 2003 ................................. 4
Notes to Unaudited Consolidated Financial Statements .................... 5-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................................... 12-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk .............. 20
Item 4. Controls and Procedures ................................................. 20
Part II - Other Information
Item 1. Legal Proceedings ....................................................... 21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ............. 21
Item 3. Defaults Upon Senior Securities ......................................... 21
Item 4. Submission of Matters to a Vote of Security Holders ..................... 21
Item 5. Other Information ....................................................... 21
Item 6. Exhibits ................................................................ 21
Signatures ......................................................................... 22
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(In thousands)
December 31, June 30,
2004 2004
------------ --------
(unaudited)
ASSETS
Cash $ 2,091 $ 1,991
Money market investments 283 283
Interest-earning deposits with other institutions 15,326 25,401
Investment securities available for sale 45,131 47,669
Investment securities held to maturity (market value of $13,165 and $12,183) 13,201 12,210
Mortgage-backed securities available for sale 17,068 21,024
Loans receivable, held for sale 953 1,130
Loans receivable 199,915 175,323
Allowance for loan losses (1,988) (2,032)
------------ --------
Loans receivable, net 197,927 173,291
Federal Home Loan Bank stock 2,071 1,879
Other repossessed assets 350 -
Accrued interest receivable:
Loans 674 659
Interest-earning deposits and investments 309 384
Mortgage-backed securities 74 80
Office properties and equipment, net of accumulated depreciation 2,168 2,243
Goodwill 2,158 2,158
Other intangible assets 1,334 1,511
Prepaid income tax - 129
Prepaid expenses and sundry assets 7,381 7,333
------------ --------
Total Assets $ 308,499 $299,375
------------ --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings deposits $ 254,652 $246,179
Federal Home Loan Bank advances 21,605 21,609
Advance deposits by borrowers for taxes and insurance 1,882 2,142
Accrued interest payable 797 619
Accrued income taxes 191 -
Other accrued expenses and sundry liabilities 1,670 1,701
------------ --------
Total Liabilities 280,797 272,250
------------ --------
Stockholders' Equity:
Common stock, $.01 par value; 5,000,000
shares authorized; 2,464,691 and 2,453,274 shares
issued, respectively 25 24
Additional paid-in capital 6,318 6,243
Treasury stock, at cost (524,670 and 524,670 shares) (8,238) (8,238)
Retained earnings 29,555 29,380
Accumulated other comprehensive income, net of tax 544 218
Stock held in deferred compensation trust (502) (502)
------------ --------
Total Stockholders' Equity 27,702 27,125
------------ --------
Total Liabilities and Stockholders' Equity $ 308,499 $299,375
------------ --------
See accompanying notes to unaudited consolidated financial statements
-1-
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three and Six Months Ended December 31, 2004 and 2003
(In thousands, except per share data)
Three months ended Six months ended
December 31, December 31,
------------------ ----------------
2004 2003 2004 2003
------ ------ ------ ------
Interest income:
Loans $2,648 $2,440 $5,185 $5,125
Mortgage-backed securities 174 90 360 230
Investments 513 459 1,010 946
Interest-earning deposits 89 179 193 334
------ ------ ------ ------
Total interest income 3,424 3,168 6,748 6,635
Interest expense:
Savings deposits 1,242 1,213 2,437 2,581
Borrowings 321 319 642 651
------ ------ ------ ------
Total interest expense 1,563 1,532 3,079 3,232
------ ------ ------ ------
Net interest income before provision
for loan losses 1,861 1,636 3,669 3,403
Provision for loan losses 3 3 6 6
------ ------ ------ ------
Net interest income after provision
for loan losses 1,858 1,633 3,663 3,397
------ ------ ------ ------
Other income:
Service charges 276 247 562 575
Net gain on the sale of securities available for sale - 13 - 13
Gain on the sale of loans held for sale - 1 6 7
Income from bank owned life insurance 63 75 127 140
Other operating income 20 22 33 43
------ ------ ------ ------
Total other income 359 358 728 778
------ ------ ------ ------
Operating expenses:
Compensation, payroll taxes and
fringe benefits 723 753 1,440 1,454
Premises and occupancy costs 210 217 417 410
Federal insurance premiums 9 10 18 20
Net loss on real estate owned - 1 - 1
Data processing expense 102 103 203 218
Professional fees 93 58 156 107
Amortization of core deposit intangible 88 102 177 204
Other operating expenses 324 339 610 679
------ ------ ------ ------
Total operating expenses 1,549 1,583 3,021 3,093
------ ------ ------ ------
Income before income taxes 668 408 1,370 1,082
------ ------ ------ ------
Provision for income taxes:
Federal 173 40 353 208
State 34 15 68 51
------ ------ ------ ------
Total income taxes 207 55 421 259
------ ------ ------ ------
Net income $ 461 $ 353 $ 949 $ 823
====== ====== ====== ======
Earnings per share
Basic $ 0.24 $ 0.19 $ 0.49 $ 0.44
====== ====== ====== ======
Diluted $ 0.23 $ 0.18 $ 0.48 $ 0.42
====== ====== ====== ======
Dividends per share $ 0.20 $ 0.20 $ 0.40 $ 0.40
====== ====== ====== ======
See accompanying notes to unaudited consolidated financial statements
-2-
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity
(Unaudited)
For the Six Months Ended December 31, 2004
(In thousands)
Accumulated
Other Stock Held in
Additional Comprehensive Deferred Total
Common Paid-in Treasury Retained Income, Compensation Stockholders'
Stock Capital Stock Earnings Net of Tax Trust Equity
------ ---------- -------- -------- ------------- ------------- ------------
Balance, June 30, 2004 $ 24 $ 6,243 ($8,238) $ 29,380 $ 218 ($ 502) $ 27,125
Comprehensive income:
Net income - - - 949 - - 949
Other comprehensive income,
net of tax $168 - - - - 326 - 326
------ ---------- -------- -------- ------------- ------------- ------------
Total comprehensive income - - - 949 326 - 1,275
Other stock option activity - (39) - - - - (39)
Stock options exercised
(11,417) shares 1 114 - - - - 115
Dividends on common stock
at $0.40 per share - - - (774) - - (774)
------ ---------- -------- -------- ------------- ------------- ------------
Balance, December 31, 2004 $ 25 $ 6,318 ($8,238) $ 29,555 $ 544 ($ 502) $ 27,702
====== ========== ======== ======== ============= ============= ============
See accompanying notes to unaudited consolidated financial statements
-3-
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended December 31, 2004 and 2003
(In thousands)
2004 2003
------- -------
Net income: $ 949 $ 823
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 137 134
Provision for loan losses 6 6
Net gain on sale of investment securities available for sale - (41)
Net loss on sale of mortgage-backed securities available for sale - 28
Gain on the sale of loans held for sale (6) (7)
Loss on the sale of REO 1 -
Net amortization of deferred loan costs 121 56
Origination of loans held for sale (242) (341)
Proceeds from sale of loans held for sale 425 499
Decrease in accrued interest receivable 66 228
Increase in accrued interest payable 178 174
Amortization of the core deposit intangible 177 204
Increase in cash surrender value (104) (126)
Increase (decrease) in taxes payable 320 (248)
Other - net (148) (521)
------- -------
Net cash provided by operating activities 1,880 868
------- -------
Investing activities:
Purchase of investment securities held to maturity (8,300) (12,000)
Purchase of investment securities available for sale (1,293) (2,450)
Purchase of mortgage-backed securities available for sale - (3,302)
Proceeds from sale of investment securities available for sale - 1,553
Proceeds from sale of mortgage-backed securities available for sale - 1,457
Principal repayments and maturities of investment securities available for sale 4,325 4,325
Principal repayments and maturities of investment securities held to maturity 7,315 8,000
Principal repayments and maturities of mortgage-backed securities available for sale 3,966 4,557
Principal repayments and maturities of mortgage-backed securities held to maturity - 4
(Increase) decrease in loans receivable (25,164) 21,115
(Increase) decrease in FHLB stock (192) 221
Proceeds from the sale of REO 39 -
Additions to office properties and equipment (62) (107)
------- -------
Net cash (used) provided by investing activities (19,366) 23,373
------- -------
Financing activities:
Net decrease in demand and club accounts (32) (4,477)
Net increase (decrease) in time deposit accounts 8,505 (12,300)
Net decrease in FHLB advances (4) (3,060)
Decrease in advance deposits by borrowers for taxes and insurance (260) (1,035)
Stock options exercised 76 312
Acquisition of treasury stock - (686)
Dividends paid (774) (751)
------- -------
Net cash provided (used) by financing activities 7,511 (21,997)
------- -------
Net change in cash and cash equivalents (9,975) 2,244
Cash and cash equivalents at beginning of period 27,675 53,425
------- -------
Cash and cash equivalents at end of period $17,700 $55,669
------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
------- -------
Cash paid during the period for:
Interest on savings deposits $ 2,259 $ 2,407
Interest on FHLB advances 642 709
Income taxes 175 578
Transfer of loans to other real estate owned 401 -
Cash paid during the period for interest includes interest credited on
deposits of $1,846 and $1,955 for the six months ended December 31, 2004
and 2003, respectively.
See accompanying notes to unaudited consolidated financial statements
-4-
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND JUNE 30, 2004
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and, therefore, do not include
all the information or footnotes necessary for a complete presentation of
financial condition, results of operations and cash flows in conformity with
accounting principles generally accepted in the United States of America.
However, all adjustments, consisting only of normal recurring adjustments which,
in the opinion of management, are necessary for a fair presentation, have been
included. Significant accounting policies have not changed since June 30, 2004.
The results of operations for the three and six months ended December 31, 2004
are not necessarily indicative of the results which may be expected for the
entire fiscal year. The unaudited consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and the
notes thereto included in Laurel Capital Group, Inc.'s (the "Company") 2004
Annual Report to Stockholders. All amounts presented in the Notes to Unaudited
Consolidated Financial Statements are presented in thousands except share and
per share data.
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Basic earnings per share:
Net income $ 461 $ 353 $ 949 $ 823
Weighted average shares outstanding 1,936,811 1,879,262 1,933,293 1,881,017
Earnings per share $ 0.24 $ 0.19 $ 0.49 $ 0.44
Diluted earnings per share:
Net income $ 461 $ 353 $ 949 $ 823
Weighted average shares outstanding 1,936,811 1,879,262 1,933,293 1,881,017
Dilutive effect of employee
stock options 63,748 95,601 61,059 100,717
---------- ---------- ---------- ----------
Diluted weighted shares outstanding 2,000,559 1,974,863 1,994,352 1,981,734
Earnings per share $ 0.23 $ 0.18 $ 0.48 $ 0.42
Options to purchase 143,662 and 155,079 shares of common stock were outstanding
at December 31, 2004 and 2003, respectively. The dilutive effect of these
options was included in the computation of diluted earnings per share because
the option exercise price for these options was less than
-5-
the average market price of the common shares resulting in none of the options
having an antidilutive effect.
SECURITIES
The Company accounts for investments in debt and equity securities in accordance
with the Financial Accounting Standards Board's ("FASB") Statement No. 115
("SFAS 115"). SFAS 115 requires that investments be classified as either: (1)
Securities Held to Maturity- reported at amortized cost, (2) Trading Securities-
reported at fair value, or (3) Securities Available for Sale- reported at fair
value. Unrealized gains and losses for trading securities are reported in
earnings while unrealized gains and losses for securities available for sale are
reported as other comprehensive income in stockholders' equity.
COMPREHENSIVE INCOME
The Company reports Comprehensive Income in accordance with SFAS No. 130 which
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. 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. For the six
months ended December 31, 2004 and 2003, the Company's total comprehensive
income was $1,275 and $586, respectively. Total comprehensive income is
comprised of net income of $949 and $823, respectively, and other comprehensive
income (loss) of $326 and $(237), net of tax, respectively. Other comprehensive
income consists of unrealized gains and losses on investment securities and
mortgage-backed securities available for sale, net of tax.
LOANS RECEIVABLE
Loans receivable are stated at unpaid principal balances net of the allowance
for loan losses, net deferred loan fees and discounts. Financial institutions
are subject to the risk of loan losses as one of the costs of lending. While the
Company recognizes as losses all loans that are determined to be uncollectible,
experience dictates that at any point in time, losses may exist in the portfolio
which cannot be specifically identified. As a result, a provision for such
unidentifiable losses is established and charged against current earnings to
represent management's best estimate of such probable losses. The Company
accounts for impaired loans in accordance with SFAS 114, "Accounting by
Creditors for Impairment of a Loan" and SFAS 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures", an amendment of SFAS
114. These statements address the accounting by creditors for impairment of
certain loans. They apply to all creditors and to all loans, uncollateralized as
well as collateralized, except for large groups of smaller-balance homogeneous
loans that are collectively evaluated for impairment. Laurel Savings Bank (the
"Bank") considers all one-to-four family residential
-6-
mortgage loans and all consumer loans (as presented in Note 4) to be
smaller-balance homogeneous loans. Loans within the scope of these statements
are considered impaired when, based on current information and events, it is
probable that all principal and interest will not be collected in accordance
with the contractual terms of the loans. Management determines the impairment of
loans based on knowledge of the borrower's ability to repay the loan according
to the contractual agreement, the borrower's repayment history and the fair
value of collateral for certain collateral dependent loans. Pursuant to SFAS 114
paragraph 8, management does not consider an insignificant delay or
insignificant shortfall to impair a loan. Management has determined that a delay
less than 90 days will be considered an insignificant delay and that an amount
less than $5 will be considered an insignificant shortfall. The Bank does not
apply SFAS 114 using major risk characteristics for groups of loans, but on a
loan by loan basis. All loans are charged off when management determines that
principal and interest are not collectible.
The accrual of interest on all loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due or when
the loan becomes 90 days past due, whichever occurs first. All unpaid accrued
interest on such loans is reserved. Such interest ultimately collected is
credited to income in the period of recovery or applied to reduce principal if
there is sufficient doubt about the collectability of principal. Consumer loans
more than 120 days or 180 days delinquent (depending on the nature of the loan)
are generally required to be written off.
Any excess of the Bank's recorded investment in the loans over the measured
value of the loans in accordance with FAS 114 is provided for in the allowance
for loan losses. The Bank reviews its loans for impairment on a quarterly basis.
Loans receivable classified as held for sale are recorded in the financial
statements in the aggregate at the lower of cost or market.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, the Company has defined cash and cash
equivalents as cash, money market investments and interest-earning deposits with
other institutions.
(2) CONTINGENT LIABILITIES
The Company is subject to asserted and unasserted potential claims encountered
in the normal course of business. In the opinion of management and legal
counsel, the resolution of these claims is not expected to have a material
adverse effect on the Company's financial position, liquidity or results of
operations.
-7-
(3) INVESTMENT AND MORTGAGE-BACKED SECURITIES
Investment and mortgage-backed securities available for sale are comprised
of the following:
Amortized Gross Unrealized Fair
Cost Gains Losses Value
--------- ------- ---------- --------
At December 31, 2004:
Municipal obligations $ 8,013 $ 561 $ - $ 8,574
FHLMC preferred stock 750 41 - 791
FNMA common stock 583 129 - 712
FHLMC common stock 684 348 - 1,032
Agency Notes 8,446 14 14 8,446
Corporate notes 1,077 48 - 1,125
Shay Financial Services ARM Fund 23,567 - 313 23,254
CRA Qualified Investment Fund 1,000 - 18 982
Other 220 - 5 215
--------- ------- ---------- --------
44,340 1,141 350 45,131
Mortgage-backed securities available for sale 17,034 138 104 17,068
--------- ------- ---------- --------
Total $ 61,374 $ 1,279 $ 454 $ 62,199
========= ======= ========== ========
At December 31, 2004, the contractual maturities of the debt securities
available for sale are:
Amortized Fair
Cost Value
--------- --------
Due in one year or less $ 998 $ 993
Due after one year through five years $ 1,552 $ 1,558
Due after five years through ten years 5,575 5,723
Due after ten years 26,445 26,939
--------- --------
Total $ 34,570 $ 35,213
========= ========
Mortgage-backed securities have various contractual maturity dates. Actual
repayments may be different due to prepayments on the loans underlying the
securities. The FNMA stock, FHLMC stock, Community Reinvestment Act (CRA)
Qualified Investment Fund and Shay Financial Services ARM Fund have no
stated maturity.
Note: Proceeds from the sale of investment and mortgage-backed securities
available for sale during the six months ended December 31, 2004 and
December 31, 2003 were $- and $3,010, respectively. Net realized gains on
those sales were $- and $13, respectively.
Investment securities held to maturity are comprised of the following:
Amortized Gross Unrealized Fair
Cost Gains Losses Value
--------- ----- ---------- --------
At December 31, 2004
Corporate and Agency bonds $ 11,205 $ 7 $ 43 $ 11,169
Commercial Paper 1,996 - - 1,996
--------- ----- ---------- --------
Total $ 13,201 $ 7 $ 43 $ 13,165
========= ===== ========== ========
At December 31, 2004, the contractual maturities of the debt securities held to
maturity are:
Amortized Fair
Cost Value
--------- --------
Due in one year or less $ 4,896 $ 4,886
Due after one year through five years 6,307 6,275
Due after five years through ten years - -
Due after ten years 1,998 2,004
--------- --------
Total $ 13,201 $ 13,165
========= ========
-8-
(4) Loans Receivable
Loans receivable are comprised of the following:
December 31, June 30,
2004 2004
------------ --------
First mortgage loans:
1 to 4 family dwellings $ 153,152 $125,304
Multi-family dwellings 1,533 1,616
Commercial 4,152 6,322
Construction and development loans 3,705 5,247
------------ --------
162,542 138,489
Commercial and other loans 1,174 1,475
Consumer loans:
Loans secured by savings accounts 256 285
Installment loans 37,436 38,010
------------ --------
38,866 39,770
------------ --------
Loans receivable, net of unearned discounts 201,408 178,259
Less: Allowance for loan losses (1,988) (2,032)
Loans in process (2,203) (3,459)
Net deferred loan origination costs 710 523
------------ --------
Loans receivable, net $ 197,927 $173,291
------------ --------
Changes in the allowance for loan losses for the six months ended December 31,
2004 and 2003 are as follows:
December 31, December 31,
2004 2003
----------- ------------
Balance at beginning of the fiscal year $ 2,032 $ 2,006
Provision for losses 6 6
Charge-offs (53) (29)
Recoveries 3 1
----------- ------------
Allowance for loan losses $ 1,988 $ 1,984
----------- ------------
At December 31, 2004, there were no loans that are considered to be impaired
under SFAS 114.
December 31,
2004 2003
------------ ------------
Non-accrual loans $ 1,205 $ 1,595
Non-accrual loans as a percent of total loans, net 0.61% 1.00%
All loans 90 days or more past due are reported as non-accrual.
-9-
(5) GUARANTEES
The Company issues standby letters of credit in the normal course of business.
Letters of credit are issued for a one-year period. The Company would be
required to perform under the standby letters of credit when drawn upon by the
guaranteed, in the case of nonperformance by the Company's customer. The maximum
potential amount of future payments the Company could be required to make under
these guarantees is $30 of which 100% is fully collateralized. Currently, the
Company has not recognized a liability for the outstanding obligations, as the
amount of the liability is insignificant. There are no recourse provisions that
would enable the Company to recover any amounts from third parties.
(6) STOCK-BASED COMPENSATION
SFAS 123 allows companies to expense an estimated fair value of stock options or
to continue to measure compensation expense for stock option plans using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25
("APB No. 25"). Entities that elect to continue to measure compensation expense
based on APB No. 25 must provide pro forma disclosures of net income and
earnings per share as if the fair value method of accounting had been applied.
The Company has elected to continue to measure compensation cost using the
intrinsic value method prescribed by APB No. 25. Had the Company used the fair
value method, net income and earnings per share would have been as follows (In
thousands, except per share data):
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
-------- --------- -------- --------
Net Income
As reported $ 461 $ 353 $ 949 $ 823
Deduct total stock-based compensation expense
determined under fair-value based method for
all awards, net of tax - (1) - (4)
-------- --------- -------- --------
Pro forma $ 461 $ 352 $ 949 $ 819
Basic earnings per share
As reported $ 0.24 $ 0.19 $ 0.49 $ 0.44
Pro forma $ 0.24 $ 0.19 $ 0.49 $ 0.44
Diluted earnings per share
As reported $ 0.23 $ 0.18 $ 0.48 $ 0.42
Pro forma $ 0.23 $ 0.18 $ 0.48 $ 0.41
There was no stock-based employee compensation expense included in reported net
income during the three and six months ended December 31, 2004 and 2003.
-10-
(7) GOODWILL AND OTHER INTANGIBLE ASSETS
There have been no changes in the carrying value of goodwill during the six
months ended December 31, 2004.
The following table provides information for intangible assets subject to
amortization for the periods indicated:
For the six months ended
December 31,
2004 2003
------- -------
Amortized intangible assets:
Core deposit intangible - gross $ 1,511 $ 1,905
Less: accumulated amortization (177) (204)
------- -------
Core deposit intangible - net $ 1,334 $ 1,701
======= =======
The following information shows the actual amortization expense for the current
period and the estimated amortization expense for each of the five succeeding
fiscal years:
For the six months ended
12/31/04 $ 177
For the fiscal year ending
6/30/05 340
For the fiscal year ending
6/30/06 290
For the fiscal year ending
6/30/07 243
For the fiscal year ending
6/30/08 199
For the fiscal year ending
6/30/09 158
(8) POST-RETIREMENT BENEFITS
For the six months ended December 31, 2004, the Company had service costs and
interest costs of $58 and $1, respectively, related to the Supplemental
Executive Retirement Plan and the Trustee Deferred Compensation/Retirement Plan.
-11-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BALANCE SHEET DATA
At December 31,
2004 2003
---- ----
(In thousands except per share data)
------------------------------------
(Unaudited)
Total assets $308,499 $302,725
Interest-earning deposits with other institutions 15,326 53,550
Investment securities available for sale 45,131 44,708
Investment securities held to maturity 13,201 13,198
Mortgage-backed securities available for sale 17,068 10,640
Loans receivable, held for sale 953 1,288
Loans receivable, net 197,927 160,010
Savings deposits 254,652 248,803
FHLB advances 21,605 21,612
Retained earnings 29,555 29,280
Stockholders' equity 27,702 27,145
Stockholders' equity per share $ 14.28 $ 14.44
STATISTICAL PROFILE
Three months ended Six months ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
---- ---- ---- ----
Average yield earned on all interest-earning assets 4.71% 4.52% 4.65% 4.61%
Average rate paid on all interest-bearing liabilities 2.41 2.37 2.38 2.42
Average interest rate spread 2.30 2.15 2.27 2.19
Net yield on average interest-earning assets 2.56 2.34 2.53 2.36
Average interest-earning assets as a percentage of
average interest-bearing liabilities 113.18 109.36 113.10 108.88
Return on average assets (1) 0.60 0.46 0.62 0.53
Return on average equity (1) 6.68 5.20 6.91 6.04
Average equity to average assets 9.01 8.91 8.99 8.77
- ----------
(1) Amounts are annualized.
-12-
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
GENERAL. Laurel Capital Group, Inc.'s (the "Company") only significant asset is
the stock it owns of its wholly-owned subsidiary, Laurel Savings Bank (the
"Bank"). The Company's net income for the three months ended December 31, 2004
was $461,000 compared to $353,000 for the same period in the prior year. The
increase of $108,000 or 30.59% was primarily the result of a $225,000 increase
in net interest income and a $34,000 decrease in total operating expense
partially offset by a $152,000 increase in income taxes. These and other
significant fluctuations are discussed below.
NET INTEREST INCOME. The Company's operating results depend substantially on the
Bank's net interest income, which is determined by the average interest rate
spread between the Bank's interest-earning assets and interest-bearing
liabilities and the relative amounts of such assets and liabilities. Net
interest income increased by $225,000 or 13.75% during the three months ended
December 31, 2004 as compared to the same period of the prior year. The increase
was primarily due to an increase in the average balance of net earning assets of
$9.9 million or 41.12%. Additionally, the average interest rate spread increased
from 2.15% for the quarter ended December 31, 2003 to 2.30% for the quarter
ended December 31, 2004.
Interest income on loans receivable and loans held for sale increased by
$208,000 or 8.52% during the three months ended December 31, 2004 as compared to
the same period in the prior year. This increase was primarily due to an
increase in the average outstanding balance of loans receivable of $35.6 million
or 22.64% compared to the same period in the prior year. The increase in the
average outstanding balance of loans receivable was primarily due to a $39.4
million or 33.94% increase in the average outstanding balance of mortgage loans,
partially offset by a $3.5 million or 8.25% decrease in the average outstanding
balance of consumer and other loans. The increase in the average outstanding
balance of loans receivable was primarily the result of increased loan
originations coupled with the continued slowdown of loan repayments. These
increases were partially offset by a decrease in the average yield on loans
receivable from 6.15% to 5.44% for the three months ended December 31, 2003 and
2004, respectively. The decrease in the average yield was primarily due to the
generally lower interest rate environment, the repricing of higher yielding
loans and the increased origination of adjustable rate mortgages that
traditionally carry lower introductory rates of interest.
Interest on mortgage-backed securities available for sale increased by $84,000
or 93.33% during the quarter ended December 31, 2004 as compared to the December
31, 2003 quarter. This increase was primarily due to a $9.0 million or 97.11%
increase in the average outstanding balance of mortgage-backed securities from
the quarter ended December 31, 2003 to the quarter ended December 31, 2004. This
increase was partially offset by a decrease in the average yield on
mortgage-backed securities from 3.89% for the quarter ended December 31, 2003 to
3.82% for the quarter ended December 31, 2004. The increase in the average
outstanding balance was primarily due to mortgage-backed securities purchased
during the period ended December 31, 2004. At December 31, 2004, the Bank's
portfolio of mortgage-backed securities available for sale had net unrealized
gains of $34,000. This
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portfolio consists of fixed and adjustable rate securities with an average yield
of 4.14% at December 31, 2004. Rising interest rates would decrease the
unrealized gains in this portfolio if the fixed rate securities were not sold.
There were no mortgage-backed securities held to maturity. In periods of rising
interest rates, unrealized losses could occur due to the timing difference of
when the securities re-price. See Note 3 of "Notes to Unaudited Consolidated
Financial Statements."
Interest income on investment securities held to maturity and investment
securities available for sale increased during the three months ended December
31, 2004 compared to the same period in 2003. The increase of $54,000 or 11.76%
from the comparable period in 2003 was primarily due to an increase in the
average yield on investment securities from 3.19% for the quarter ended December
31, 2003 to 4.18% for the quarter ended December 31, 2004. Also contributing to
the increased income was an increase in the average outstanding balance of $2.4
million or 4.18% during the period. The increase in the average outstanding
balance was the result of increased purchases of securities during the period.
At December 31, 2004, the Bank's portfolio of investment securities available
for sale and investment securities held to maturity had net unrealized gains
(losses) of $791,000 and ($36,000), respectively. See Note 3 of "Notes to
Unaudited Consolidated Financial Statements."
Interest income on interest-earning deposits decreased during the three months
ended December 31, 2004 by $90,000 or 50.28% from the comparable period in 2003.
This decrease was primarily due to a decrease of $36.7 million or 66.34% in the
average outstanding balance of interest-earning deposits. This decrease was
partially offset by an increase in the average yield earned on such deposits
from 1.29% for the quarter ended December 31, 2003 to 1.89% for the quarter
ended December 31, 2004. The decrease in the average balance was primarily due
to the utilization of interest-earning deposits to fund loans and security
purchases from December 31, 2003 to December 31, 2004.
Interest expense on interest-bearing deposits increased by $29,000 or 2.39% for
the quarter ended December 31, 2004, compared to the same period in 2003. The
increase was primarily due to an increase in the average interest rate paid on
savings deposits from 2.06% for the three months ended December 31, 2003 to
2.09% for the three months ended December 31, 2004, reflecting the rising
interest rate environment in the 2004 period. Additionally, the average
outstanding balance of interest-bearing deposits increased $2.1 million or 0.90%
from December 31, 2003 to December 31, 2004.
Interest expense on borrowings increased $2,000 or 0.63% for the quarter ended
December 31, 2004 compared to the quarter ended December 31, 2003 primarily due
to an increase in the average rate paid on such advances from 5.43% at December
31, 2003 to 5.81% at December 31, 2004. This increase was partially offset by a
$1.4 million decrease in the average outstanding balance of FHLB advances.
PROVISION FOR LOAN LOSSES. The Bank provided $3,000 to its allowance for loan
losses for each of the quarters ended December 31, 2004 and 2003, respectively.
Such provisions were the result of an analysis of the allowance for loan losses
in connection with a review of the Bank's loan portfolio.
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At December 31, 2004, the Bank's allowance for loan losses amounted to $2.0
million or 1.00% of the total loan portfolio. At December 31, 2003 the Bank's
allowance for loan losses amounted to $2.0 million or 1.24% of the total loan
portfolio.
A review of the loan portfolio is conducted, at least quarterly, by management
to determine that the allowance for loan losses is appropriate to absorb
estimated loan losses. In determining the appropriate level of the allowance for
loan losses, consideration is given to general economic conditions,
diversification of loan portfolios, historic loss experience, identified credit
problems, delinquency levels and adequacy of collateral. In consideration of the
above, management has assessed the risks in the loan portfolio and has
determined that no significant changes have occurred during the three months
ended December 31, 2004. Thus, the level of the allowance for loan losses is
substantially unchanged from June 30, 2004. Although management believes that
the current allowance for loan losses is appropriate, future additions to the
reserve may be necessary due to changes in economic conditions and other
factors. In addition, as an integral part of their periodic examination, certain
regulatory agencies review the adequacy of the Bank's allowance for loan losses
and may direct the Bank to make additions to the allowance based on their
judgment. No such additions were required to be made during the Company's most
recent examination.
OTHER INCOME. Total other income increased by $1,000 or 0.28% to $359,000 for
the quarter ended December 31, 2004 as compared to the same period in 2003. This
was the result of an increase in service charge income of $28,000, mostly offset
by a $13,000 decrease in net gains on the sale of investments and
mortgage-backed securities available for sale, an $12,000 decrease in income
from bank owned life insurance and a $2,000 decrease in other operating income.
OPERATING EXPENSES. Total operating expenses decreased by $34,000 or 2.15%
during the quarter ended December 31, 2004 as compared to the same quarter in
2003. This decrease was primarily due to a $30,000 decrease in compensation and
benefits, a $15,000 decrease in other operating expenses, a $14,000 decrease in
the amortization of core deposit intangible and a $7,000 decrease in premises
and occupancy expense. These decreases were partially offset by a $35,000
increase in professional fees. The decrease in other operating expenses was the
result of increased efficiencies attained throughout the period with regard to
various items.
INCOME TAX EXPENSE. Income tax expense increased by $152,000 for the quarter
ended December 31, 2004 as compared to the quarter ended December 31, 2003 as a
result of increased pre-tax income and an increase in the effective tax rate.
The increase in the effective tax rate for the quarter ended December 31, 2004
resulted primarily from the reduction of tax-free income recorded during the
quarter ended December 31, 2004.
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COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003
GENERAL. The Company's net income for the six months ended December 31, 2004 was
$949,000 compared to $823,000 for the same period in the prior year. The
increase of $126,000 or 15.31% was primarily the result of a $266,000 increase
in net interest income and a $72,000 decrease in total operating expense
partially offset by a $162,000 increase in income taxes and a $50,000 decrease
in other income. These and other significant fluctuations are discussed below.
NET INTEREST INCOME. Net interest income increased by $266,000 or 7.82% during
the six months ended December 31, 2004 as compared to the same period of the
prior year. The increase was primarily due to an increase in the average balance
of net earning assets of $10.2 million or 43.26%. Additionally, the average
interest rate spread increased from 2.19% for the six months ended December 31,
2003 to 2.27% for the six months ended December 31, 2004.
Interest income on loans receivable and loans held for sale increased by $60,000
or 1.17% during the six months ended December 31, 2004 as compared to the same
period in the prior year. This increase was primarily due to an increase in the
average outstanding balance of loans receivable of $24.4 million or 14.76%
compared to the same period in the prior year. The increase in the average
outstanding balance of loans receivable was primarily due to a $28.2 million or
23.13% increase in the average outstanding balance of mortgage loans, partially
offset by a $3.8 million or 8.83% decrease in the average outstanding balance of
consumer and other loans. The increase in the average outstanding balance of
loans receivable was primarily the result of increased loan originations coupled
with the continued slowdown of loan repayments. These increases were partially
offset by a decrease in the average yield on loans receivable from 6.21% to
5.47% for the six months ended December 31, 2003 and 2004, respectively. The
decrease in the average yield was primarily due to the generally lower interest
rate environment, the repricing of higher yielding loans and the increased
origination of adjustable rate mortgages that traditionally carry lower
introductory rates of interest.
Interest on mortgage-backed securities available for sale increased by $130,000
or 56.52% during the six months ended December 31, 2004 as compared to the same
period in the prior year. This increase was primarily due to an $8.6 million or
80.34% increase in the average outstanding balance of mortgage-backed securities
from December 31, 2003 to December 31, 2004. This increase was partially offset
by a decrease in the average yield on mortgage-backed securities from 4.31% for
the six months ended December 31, 2003 to 3.74% for the six months ended
December 31, 2004. The increase in the average outstanding balance was primarily
due to mortgage-backed securities purchased during the period. See "Comparison
of the Three Months Ended December 31, 2004 and 2003 - Net Interest Income."
Interest income on investment securities held to maturity and investment
securities available for sale increased during the six months ended December 31,
2004 compared to the same period in 2003. The increase of $64,000 or 6.77% from
the comparable period in 2003 resulted from an increase in the average yield on
investment securities from 3.27% for the six months ended December 31, 2003 to
3.38% for the six months ended
-16-
December 31, 2004. Also contributing to the increased income was an increase in
the average outstanding balance of $1.9 million or 3.28% during the period. The
increase in the average outstanding balance was the result of increased
purchases of securities during the period. See "Comparison of the Three Months
Ended December 31, 2004 and 2003 - Net Interest Income."
Interest income on interest-earning deposits decreased during the six months
ended December 31, 2004 by $141,000 or 42.22% from the comparable period in
2003. This decrease was primarily due to a decrease of $32.2 million or 58.86%
in the average outstanding balance of interest-earning deposits. This decrease
was partially offset by an increase in the average yield earned on such deposits
from 1.21% for the six months ended December 31, 2003 to 1.70% for the six
months ended December 31, 2004. The decrease in the average balance was
primarily due to the utilization of interest-earning deposits to fund loans and
security purchases from December 31, 2003 to December 31, 2004.
Interest expense on interest-bearing deposits decreased by $144,000 or 5.58% for
the six months ended December 31, 2004, compared to the same period in 2003. The
decrease was primarily due to a decrease in the average interest rate paid on
savings deposits from 2.13% for the six months ended December 31, 2003 to 2.05%
for the six months ended December 31, 2004. Additionally, the average
outstanding balance of interest-bearing deposits decreased $5.3 million or 2.21%
for the six months ended December 31, 2004 compared to the six months ended
December 31, 2003.
Interest expense on borrowings decreased $9,000 or 1.38% for the six months
ended December 31, 2004 compared to the six months ended December 31, 2003
primarily due to $2.2 million decrease in the average outstanding balance of
FHLB advances. This decrease was partially offset by an increase in the average
rate paid on such advances from 5.35% at December 31, 2003 to 5.81% at December
31, 2004.
PROVISION FOR LOAN LOSSES. The Bank provided $6,000 to its allowance for loan
losses for each of the six months ended December 31, 2004 and 2003,
respectively. Such provisions were the result of an analysis of the allowance
for loan losses in connection with a review of the Bank's loan portfolio. See
"Comparison of the Three Months Ended December 31, 2004 and 2003 - Provision for
Loan Losses."
OTHER INCOME. Total other income decreased by $50,000 or 6.43% to $728,000 for
the six months ended December 31, 2004 as compared to the same period in 2003.
This was primarily the result of a decrease in service charge income of $13,000,
a $13,000 decrease in net gains on the sale of investments and mortgage-backed
securities available for sale, a $13,000 decrease in income from bank owned life
insurance and a $10,000 decrease in other operating income.
OPERATING EXPENSES. Total operating expenses decreased by $72,000 or 2.33%
during the six months ended December 31, 2004 as compared to the same period in
2003. This decrease was primarily due to a $69,000 decrease in other operating
expenses, a $27,000 decrease in the amortization of core deposit intangible, a
$15,000 decrease in data processing expense and a $14,000 decrease in
compensation and benefits. These decreases were partially offset by a $49,000
increase in professional fees and a $7,000 increase in premises and occupancy
expense. The decrease in other operating
-17-
expenses was the result of increased efficiencies attained throughout the period
with regard to various items.
INCOME TAX EXPENSE. Income tax expense increased by $162,000 for the six months
ended December 31, 2004 as compared to the six months ended December 31, 2003 as
a result of increased pre-tax income and an increase in the effective tax rate.
The increase in the effective tax rate for the six months ended December 31,
2004 resulted primarily from the reduction of tax-free income recorded during
the six months ended December 31, 2004.
FINANCIAL CONDITION AND CAPITAL RESOURCES
Total assets increased by $9.1 million or 3.05% from June 30, 2004 to December
31, 2004. The largest increase was a $24.6 million increase in loans receivable,
net partially offset by a $10.1 million decrease in interest-earning deposits
with other institutions, a $4.0 million decrease in mortgage-backed securities
available for sale and a $2.5 million decrease in investment securities
available for sale. The largest components of change in liabilities were a $8.5
million increase in savings deposits and a $260,000 decrease in advance deposits
by borrowers for taxes and insurance. Funds from interest-earning deposits with
other institutions, deposits and repayments or maturities of investment and
mortgage-backed securities were used to fund loan originations and security
purchases.
Under regulations adopted by the Federal Deposit Insurance Corporation ("FDIC"),
the Bank is required to maintain Tier I (Core) capital equal to at least 4% of
the Bank's adjusted total assets, and Tier II (Supplementary) risk-based capital
equal to at least 8% of the risk-weighted assets. At December 31, 2004, the Bank
exceeded all of these requirements, with Tier I and Tier II ratios of 7.71% and
16.24%, respectively.
The following table sets forth certain information concerning the Bank's
regulatory capital at December 31, 2004.
Tier I Tier I Tier II
Core Risk-Based Risk-Based
Capital Capital Capital
-------- ---------- ----------
(Dollar amounts in thousands)
Equity capital (1) $ 23,403 $ 23,403 $ 23,403
Plus general valuation allowances (2) - - 1,971
-------- ---------- ----------
Total regulatory capital 23,403 23,403 25,374
Minimum required capital 12,137 6,251 12,503
-------- ---------- ----------
Excess regulatory capital $ 11,266 $ 17,152 $ 12,871
======== ========== ==========
Minimum required capital to be well
capitalized under Prompt Corrective
Action Provisions $ 15,172 $ 9,375 $ 15,625
======== ========== ==========
Regulatory capital as a percentage (3) 7.71% 14.98% 16.24%
Minimum required capital percentage 4.00 4.00 8.00
-------- ---------- ----------
Excess regulatory capital percentage 3.71% 10.98% 8.24%
======== ========== ==========
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Minimum required capital percentage
to be well capitalized under Prompt
Corrective Action Provisions 5.00% 6.00% 10.00%
======== ========== ==========
- ----------
(1) Represents equity capital of the Bank as reported to the FDIC and the
Pennsylvania Department of Banking on Form 041 for the three months
ended December 31, 2004.
(2) Limited to 1.25% of risk adjusted assets.
(3) Tier I capital is calculated as a percentage of adjusted total assets
of $303,435. Tier I and Tier II risk-based capital are calculated as
percentage of adjusted risk-weighted assets of $156,253.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have been prepared in
accordance with accounting principles generally accepted in the United States of
America, which require the measurement of financial position and operating
results in terms of historical dollars without considering changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a
more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or in the same magnitude as the prices of goods and
services as measured by the consumer price index.
CRITICAL ACCOUNTING POLICIES
Certain critical accounting policies affect the more significant judgments and
estimates used in the preparation of the consolidated financial statements. The
Company's single most critical accounting policy relates to the Company's
allowance for loan loss, which reflects the estimated losses resulting from the
inability of the Company's borrowers to make required loan payments. If the
financial condition of the Company's borrowers were to deteriorate, resulting in
an impairment of their ability to make payments, the Company's estimates would
be updated, and additional provisions for loan losses may be required. Further
discussion of the estimates used in determining the allowance for loan loss is
contained in the discussion on "Provision for Loan Losses" on page 14 herein.
ACCOUNTING DEVELOPMENTS
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004)
"Share-Based Payment" ("SFAS 123R"). SFAS 123R requires companies to recognize
in the income statement the grant-date fair value of stock options and other
equity based compensation issued to employees. The Statement is effective for
interim or annual periods beginning after June 15, 2005. The Company does not
anticipate any material impact on the Company's results of operations as a
result of adoption of this statement since all of the Company's current
outstanding options are vested.
-19-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of the Company's asset and liability management policies as
well as the potential impact of interest rate changes upon the market value of
the Company's portfolio equity, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 2004 Annual Report to
Stockholders. There has been no material change in the Company's asset and
liability position or market value of portfolio equity since June 30, 2004.
ITEM 4. CONTROLS AND PROCEDURES
Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of December 31, 2004. Based on such evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and regulations and are
operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred
during the second fiscal quarter of fiscal 2005 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. In
addition, in those and other portions of this document, the words "anticipate,"
"believe," "estimate," "except," "intend," "should" and similar expressions, or
the negative thereof, as they relate to the Company or the Company's management,
are intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future looking events and are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary from those described herein as anticipated,
believed, estimated, expected or intended. Factors that could have a material
adverse effect on our operations and future prospects include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Board of Governors
of the Federal Reserve System, the quality or composition of the loan or
investment portfolios, demand for loan products, deposit flows, competition,
demand for financial services in our market area and accounting principles,
policies and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements contained herein, and you should not place
undue reliance on such statements, which reflect our position as of the date of
this report.
-20-
LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings at the present time
other than those generally associated with the normal course of
business. In the opinion of management and legal counsel, the
resolution of these claims are not expected to have a material adverse
effect on the Company's financial position, liquidity or results of
operations.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits
31.1 Certification of Chief Executive Officer Pursuant to Rules
13a-14 and 15d-14 of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Rules
13a-14 and 15d-14 of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to section
906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to section
906 of the Sarbanes-Oxley Act of 2002
-21-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
LAUREL CAPITAL GROUP, INC.
/s/ Edwin R. Maus
- -------------------
Edwin R. Maus
President and Chief Executive Officer
/s/ John A. Howard, Jr.
- -----------------------
John A. Howard, Jr.
Senior Vice President and
Chief Financial Officer
Date: February 14, 2005
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