##### Table of Contents



Securities and Exchange Commission
 WASHINGTON, D. C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended: September 30, 2005
 or
 o
    
    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.
  Pennsylvania
    
    25-1717451(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer
Identification No.)
 2724 Harts Run Road
Allison Park, Pennsylvania
    
    15101(Address of principal executive office)
    
    (Zip Code)
  þ o
 o þ
 o þ




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LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 Index
 PAGEPart I  Financial InformationItem 1.
    
    Financial Statements (Unaudited)Consolidated Statements of Financial Condition as of
September 30, 2005 and June 30, 2005
    
    
    1Consolidated Statements of Operations for the three
months ended September 30, 2005 and 2004
    
    
    2Consolidated Statement of Stockholders Equity for the
three months ended September 30, 2005
    
    
    3Consolidated Statements of Cash Flows for the three
months ended September 30, 2005 and 2004
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5-11Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12-18Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4.
    
    Controls and Procedures
    
    
    19Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    20Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3.
    
    Defaults Upon Senior Securities
    
    
    20Item 4.
    
    Submission of Matters to a Vote of
Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits
    
    
    21Signatures
    
    
    22EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Financial Statements
 LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 
   September 30,
    
    June 30,2005
    
    2005(unaudited)ASSETSCash
    
    $
    1,521
    
    
    $
    2,146Interest-earning deposits with other institutions
    
    
    7,802
    
    
    
    10,825Total Cash and Cash Equivalents
    
    
    9,323
    
    
    
    12,971Investment securities available for sale
    
    
    44,197
    
    
    
    45,539Investment securities held to maturity (market value of $13,159 and $10,845)
    
    
    13,312
    
    
    
    10,918Mortgage-backed securities available for sale
    
    
    11,684
    
    
    
    13,002Loans receivable, held for sale
    
    
    540
    
    
    
    947Loans receivable
    
    
    215,051
    
    
    
    211,738Allowance for loan losses
    
    
    (1,999
    )
    
    
    (1,989
    )Loans receivable, net
    
    
    213,052
    
    
    
    209,749Federal Home Loan Bank stock
    
    
    2,011
    
    
    
    1,878Real estate owned
    
    
    35
    
    
    
    37Accrued interest receivable:Loans
    
    
    718
    
    
    
    733Interest-earning deposits and investments
    
    
    252
    
    
    
    287Mortgage-backed securities
    
    
    48
    
    
    
    66Office properties and equipment, net of accumulated depreciation
    
    
    2,210
    
    
    
    2,277Goodwill
    
    
    2,158
    
    
    
    2,158Other intangible assets
    
    
    1,095
    
    
    
    1,170Prepaid expenses and sundry assets
    
    
    8,399
    
    
    
    8,069Total Assets
    
    $
    309,034
    
    
    $
    309,801LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Savings deposits
    
    $
    254,893
    
    
    $
    254,891Federal Home Loan Bank advances
    
    
    21,600
    
    
    
    21,602Advance deposits by borrowers for taxes and insurance
    
    
    1,168
    
    
    
    2,713Accrued interest payable
    
    
    1,463
    
    
    
    765Accrued income taxes
    
    
    93
    
    
    
    90Other accrued expenses and sundry liabilities
    
    
    1,944
    
    
    
    1,936Total Liabilities
    
    
    281,161
    
    
    
    281,997Stockholders Equity:Common stock, $.01 par value; 5,000,000
shares authorized; 2,509,298 and 2,467,670 shares
issued, respectively
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    6,905
    
    
    
    6,465Treasury stock, at cost (524,670 shares)
    
    
    (8,238
    )
    
    
    (8,238
    )Retained earnings
    
    
    29,972
    
    
    
    29,878Accumulated other comprehensive (loss) income, net of tax
    
    
    (268
    )
    
    
    176Stock held in deferred compensation trust ( 32,402 shares)
    
    
    (523
    )
    
    
    (502
    )Total Stockholders Equity
    
    
    27,873
    
    
    
    27,804Total Liabilities and Stockholders Equity
    
    $
    309,034
    
    
    $
    309,801
 See accompanying notes to unaudited consolidated financial statements
 1




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##### Table of Contents



LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 
   
 Three months endedSeptember 30,2005
    
    
    2004Interest income:Loans
    
    $
    2,826
    
    
    $
    2,537Mortgage-backed securities
    
    
    108
    
    
    
    186Investments
    
    
    562
    
    
    
    497Interest-earning deposits
    
    
    69
    
    
    
    104Total interest income
    
    
    3,565
    
    
    
    3,324Interest expense:Savings deposits
    
    
    1,390
    
    
    
    1,195Borrowings
    
    
    321
    
    
    
    321Total interest expense
    
    
    1,711
    
    
    
    1,516Net interest income before provision
for loan losses
    
    
    1,854
    
    
    
    1,808Provision for loan losses
    
    
    
    
    
    
    3Net interest income after provision
for loan losses
    
    
    1,854
    
    
    
    1,805Other income:Service charges
    
    
    254
    
    
    
    286Gain on the sale of loans held for sale
    
    
    6
    
    
    
    6Income from bank owned life insurance
    
    
    67
    
    
    
    64Other operating income
    
    
    16
    
    
    
    13Total other income
    
    
    343
    
    
    
    369Operating expenses:Compensation, payroll taxes and
fringe benefits
    
    
    780
    
    
    
    717Premises and occupancy costs
    
    
    221
    
    
    
    207Federal insurance premiums
    
    
    8
    
    
    
    9Net loss on real estate owned
    
    
    2
    
    
    
    Data processing expense
    
    
    110
    
    
    
    101Professional fees
    
    
    60
    
    
    
    63Amortization of core deposit intangible
    
    
    76
    
    
    
    89Other operating expenses
    
    
    250
    
    
    
    286Total operating expenses
    
    
    1,507
    
    
    
    1,472Income before income taxes
    
    
    690
    
    
    
    702Provision for income taxes:Federal
    
    
    159
    
    
    
    180State
    
    
    41
    
    
    
    34Total income taxes
    
    
    200
    
    
    
    214Net income
    
    $
    490
    
    
    $
    488Earnings per shareBasic
    
    $
    0.25
    
    
    $
    0.25Diluted
    
    $
    0.25
    
    
    $
    0.25Dividends per share
    
    $
    0.20
    
    
    $
    0.20
 See accompanying notes to unaudited consolidated financial statements
 2




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##### Table of Contents



LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 
   
 AccumulatedOther
    
    
    Stock Held inAdditional
    
    
    
    
    
    
    
    
    
    
    Comprehensive
    
    
    Deferred
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    Loss,
    
    
    Compensation
    
    
    StockholdersStock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Net of Tax
    
    
    Trust
    
    
    EquityBalance, June 30, 2005
    
    $
    25
    
    
    $
    6,465
    
    
    $
    (8,238
    )
    
    $
    29,878
    
    
    $
    176
    
    
    $
    (502
    )
    
    $
    27,804Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    490
    
    
    
    
    
    
    
    
    
    
    
    490Other comprehensive loss,
net of tax $(229)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (444
    )
    
    
    
    
    
    
    (444
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    490
    
    
    
    (444
    )
    
    
    
    
    
    
    46Stock options exercised
(41,628 shares)
    
    
    
    
    
    
    440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    440Dividends on common stock
at $0.20 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (396
    )Stock purchased by deferred
compensation trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    (21
    )Balance, September 30, 2005
    
    $
    25
    
    
    $
    6,905
    
    
    $
    (8,238
    )
    
    $
    29,972
    
    
    $
    (268
    )
    
    $
    (523
    )
    
    $
    27,873
 See accompanying notes to unaudited consolidated financial statements
 3




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##### Table of Contents



LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 
 
 
 2005
    
    2004Net income:
    
    $
    490
    
    
    $
    488Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    68
    
    
    
    68Provision for loan losses
    
    
    
    
    
    
    3Gain on the sale of loans held for sale
    
    
    (6
    )
    
    
    (6
    )Net amortization of deferred loan costs
    
    
    63
    
    
    
    57Net decrease
(increase) of loans held for sale
    
    
    121
    
    
    
    (141
    )Proceeds from sale of loans held for sale
    
    
    292
    
    
    
    321Decrease in accrued interest receivable
    
    
    68
    
    
    
    101Increase in accrued interest payable
    
    
    698
    
    
    
    609Amortization of the core deposit intangible
    
    
    75
    
    
    
    89Increase in cash surrender value
    
    
    (54
    )
    
    
    (53
    )Increase in taxes payable
    
    
    3
    
    
    
    250Other  net
    
    
    (66
    )
    
    
    (67
    )Net cash provided by operating activities
    
    
    1,752
    
    
    
    1,719Investing activities:Purchase of investment securities held to maturity
    
    
    (2,394
    )
    
    
    (3,300
    )Purchase of investment securities available for sale
    
    
    (216
    )
    
    
    (1,139
    )Principal repayments and maturities of investment securities available for sale
    
    
    1,000
    
    
    
    4,065Principal repayments and maturities of investment securities held to maturity
    
    
    
    
    
    
    5,315Principal repayments and maturities of mortgage-backed securities available for sale
    
    
    1,211
    
    
    
    1,857Increase in loans receivable
    
    
    (3,366
    )
    
    
    (12,908
    )Purchase of FHLB stock
    
    
    (133
    )
    
    
    (105
    )Purchase of office properties and equipment
    
    
    (1
    )
    
    
    (18
    )Net cash used by investing activities
    
    
    (3,899
    )
    
    
    (6,233
    )Financing activities:Net decrease in demand and club accounts
    
    
    (1,735
    )
    
    
    (2,648
    )Net increase in time deposit accounts
    
    
    1,737
    
    
    
    8,022Repayment of FHLB advances
    
    
    (2
    )
    
    
    (2
    )Decrease in advance deposits by borrowers for taxes and insurance
    
    
    (1,545
    )
    
    
    (1,195
    )Stock options exercised
    
    
    440
    
    
    
    Dividends paid
    
    
    (396
    )
    
    
    (386
    )Net cash (used) provided by financing activities
    
    
    (1,501
    )
    
    
    3,791Net change in cash and cash equivalents
    
    
    (3,648
    )
    
    
    (723
    )Cash and cash equivalents at beginning of period
    
    
    12,971
    
    
    
    27,675Cash and cash equivalents at end of period
    
    $
    9,323
    
    
    $
    26,952SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for:Interest on savings deposits
    
    $
    692
    
    
    $
    586Interest on FHLB advances
    
    
    321
    
    
    
    321Income taxes
    
    
    233
    
    
    
    77Transfer of loans to other real estate owned
    
    
    
    
    
    
    40Cash paid during the period for interest includes interest credited on deposits of $480
and $396 for the three months ended September 30, 2005 and 2004, respectivelyInvestment securities held to maturity totaling $2,000 were purchased during the period
ended September 30, 2004 but did not settle until subsequent to the period end. There
were no such purchases during the period ended September 30, 2005
 See accompanying notes to unaudited consolidated financial statements
 4




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##### Table of Contents



LAUREL CAPITAL GROUP, INC. AND SUBSIDIARY
 
 Notes to Unaudited Consolidated Financial Statements
 September 30, 2005 and June 30, 2005
 (Dollar amounts in thousands, except per share data)
 (1) Summary of Significant Accounting Policies
 Basis of Presentation
  Earnings Per Share
  Three Months EndedSeptember 30,2005
    
    
    2004Basic earnings per share:Net income
    
    $
    490
    
    
    $
    488Weighted average shares outstanding
    
    
    1,963,743
    
    
    
    1,928,604Earnings per share
    
    $
    0.25
    
    
    $
    0.25Diluted earnings per share:Net income
    
    $
    490
    
    
    $
    488Weighted average shares outstanding
    
    
    1,963,743
    
    
    
    1,928,604Dilutive effect of employee
stock options
    
    
    32,499
    
    
    
    60,205Diluted weighted shares outstanding
    
    
    1,996,242
    
    
    
    1,988,809Earnings per share
    
    $
    0.25
    
    
    $
    0.25
  5




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##### Table of Contents



Securities
  Comprehensive Income
  Loans Receivable
  6




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##### Table of Contents



Cash and Cash Equivalents
  Recent Accounting Developments
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  7




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##### Table of Contents



Share-Based Payment
 Exchanges of Nonmonetary Assets  An Amendment of APB
Opinion No. 29. Accounting for Nonmonetary Transactions,
 Accounting Changes and Errors Corrections, a replacement
of APB Opinion No. 20 and FAS No. 3
 (2) Contingent Liabilities
  8




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##### Table of Contents



(3)
    
    INVESTMENT AND MORTGAGE-BACKED SECURITIES
  Amortized
    
    Gross Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueAt September 30, 2005:Municipal obligations
    
    $
    7,644
    
    
    $
    482
    
    
    $
    
    
    
    $
    8,126Freddie Mac preferred stock
    
    
    750
    
    
    
    4
    
    
    
    
    
    
    
    754Fannie Mae common stock
    
    
    583
    
    
    
    
    
    
    
    135
    
    
    
    448Freddie Mac common stock
    
    
    684
    
    
    
    107
    
    
    
    
    
    
    
    791Agency Notes
    
    
    8,950
    
    
    
    
    
    
    
    104
    
    
    
    8,846Corporate notes
    
    
    509
    
    
    
    
    
    
    
    35
    
    
    
    474Shay Financial Services ARM Fund
    
    
    24,147
    
    
    
    
    
    
    
    577
    
    
    
    23,570CRA Qualified Investment Fund
    
    
    1,000
    
    
    
    
    
    
    
    24
    
    
    
    976Other
    
    
    220
    
    
    
    
    
    
    
    8
    
    
    
    21244,487
    
    
    
    593
    
    
    
    883
    
    
    
    44,197Mortgage-backed securities available for sale
    
    
    11,801
    
    
    
    49
    
    
    
    166
    
    
    
    11,684Total
    
    $
    56,288
    
    
    $
    642
    
    
    $
    1,049
    
    
    $
    55,881
  Amortized
    
    FairCost
    
    ValueDue after one year through five years
    
    $
    5,063
    
    
    $
    4,994Due after five years through ten years
    
    
    3,760
    
    
    
    3,937Due after ten years
    
    
    20,081
    
    
    
    20,199Total
    
    $
    28,904
    
    
    $
    29,130
    Amortized
    
    Gross Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueAt September 30, 2005Corporate and Agency bonds
    
    $
    12,318
    
    
    $
    
    
    
    $
    152
    
    
    $
    12,166Commercial Paper
    
    
    994
    
    
    
    
    
    
    
    1
    
    
    
    993Total
    
    $
    13,312
    
    
    $
    
    
    
    $
    153
    
    
    $
    13,159
  Amortized
    
    FairCost
    
    ValueDue in one year or less
    
    $
    3,894
    
    
    $
    3,884Due after one year through five years
    
    
    8,420
    
    
    
    8,291Due after five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    998
    
    
    
    984Total
    
    $
    13,312
    
    
    $
    13,159
 9




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##### Table of Contents



(4) Loans Receivable
  September 30,
    
    June 30,2005
    
    2005First mortgage loans:1 to 4 family dwellings
    
    $
    169,578
    
    
    $
    165,844Multi-family dwellings
    
    
    1,001
    
    
    
    1,462Commercial
    
    
    3,474
    
    
    
    4,437Construction and development loans
    
    
    4,563
    
    
    
    5,095178,616
    
    
    
    176,838Commercial and other loans
    
    
    690
    
    
    
    665Consumer loans:Loans secured by savings accounts
    
    
    148
    
    
    
    155Installment loans
    
    
    37,522
    
    
    
    36,48338,360
    
    
    
    37,303Loans receivable, net of unearned discounts
    
    
    216,976
    
    
    
    214,141Less: Allowance for loan losses
    
    
    (1,999
    )
    
    
    (1,989
    )Loans in process
    
    
    (2,855
    )
    
    
    (3,290
    )Net deferred loan origination costs
    
    
    930
    
    
    
    887Loans receivable, net
    
    $
    213,052
    
    
    $
    209,749
  September 30,
    
    September 30,2005
    
    2004Balance at beginning of the fiscal year
    
    $
    1,989
    
    
    $
    2,032Provision for losses
    
    
    
    
    
    
    3Charge-offs
    
    
    (2
    )
    
    
    (45
    )Recoveries
    
    
    12
    
    
    
    2Allowance for loan losses
    
    $
    1,999
    
    
    $
    1,992
  September 30,2005
    
    2004Non-accrual loans
    
    $
    752
    
    
    $
    1,985Non-accrual loans as a percent of total loans, net
    
    
    0.35
    %
    
    
    1.07
    %
 
 All loans 90 days or more past due are reported as non-accrual. 10




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##### Table of Contents



(5) Guarantees
  (6) Goodwill and Other Intangible Assets
   For the three months endedSeptember 302005
    
    
    2004Amortized intangible assets:Core deposit intangible  gross
    
    $
    1,170
    
    
    $
    1,511Less: accumulated amortization
    
    
    (75
    )
    
    
    (89
    )Core deposit intangible  net
    
    $
    1,095
    
    
    $
    1,422
  For the three months ended 9/30/05
    
    $
    75For the fiscal year ended 6/30/06
    
    
    290For the fiscal year ended 6/30/07
    
    
    243For the fiscal year ended 6/30/08
    
    
    199For the fiscal year ended 6/30/09
    
    
    158For the fiscal year ended 6/30/10
    
    
    120
 (7) Post-retirement Benefits
  11




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##### Table of Contents



At September 30,2005
    
    
    2004(In thousands except per share data)(Unaudited)Total assets
    
    $
    309,034
    
    
    $
    306,633Interest-earning deposits with other institutions
    
    
    7,802
    
    
    
    24,227Investment securities available for sale
    
    
    44,197
    
    
    
    45,159Investment securities held to maturity
    
    
    13,312
    
    
    
    12,194Mortgage-backed securities available for sale
    
    
    11,684
    
    
    
    19,231Loans receivable, held for sale
    
    
    540
    
    
    
    956Loans receivable, net
    
    
    213,052
    
    
    
    186,099Savings deposits
    
    
    254,893
    
    
    
    251,553FHLB advances
    
    
    21,600
    
    
    
    21,607Retained earnings
    
    
    29,972
    
    
    
    29,482Stockholders equity
    
    
    27,873
    
    
    
    27,505Stockholders equity per share
    
    $
    14.05
    
    
    $
    14.26
 STATISTICAL PROFILE
 Three months endedSeptember 30,2005
    
    
    2004Average yield earned on all interest-earning assets
    
    
    4.82
    %
    
    
    4.58
    %Average rate paid on all interest-bearing liabilities
    
    
    2.63
    
    
    
    2.34Average interest rate spread
    
    
    2.19
    
    
    
    2.24Net yield on average interest-earning assets
    
    
    2.55
    
    
    
    2.49Average interest-earning assets as a percentage of
average interest-bearing liabilities
    
    
    116.73
    
    
    
    113.02Return on average assets (1)
    
    
    0.63
    
    
    
    0.64Return on average equity (1)
    
    
    7.05
    
    
    
    7.14Average equity to average assets
    
    
    8.98
    
    
    
    8.96
 
 (1)
    
    Amounts are annualized. 12




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COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
 GENERAL.
 NET INTEREST INCOME.
   13




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PROVISION FOR LOAN LOSSES.
   14




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OTHER INCOME.
 OPERATING EXPENSES.
 INCOME TAX EXPENSE.
 FINANCIAL CONDITION AND CAPITAL RESOURCES
  15




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##### Table of Contents



Tier I
    
    
    Tier I
    
    
    Tier IICore
    
    
    Risk-Based
    
    

Risk-BasedCapital
    
    
    Capital
    
    
    Capital(Dollar amounts in thousands)Equity capital (1)
    
    $
    23,934
    
    
    $
    23,934
    
    
    $
    23,934Plus general valuation allowances (2)
    
    
    
    
    
    
    
    
    
    
    1,999Total regulatory capital
    
    
    23,934
    
    
    
    23,934
    
    
    
    25,933Minimum required capital
    
    
    12,266
    
    
    
    6,414
    
    
    
    12,828Excess regulatory capital
    
    $
    11,668
    
    
    $
    17,520
    
    
    $
    13,105Minimum required capital to be well
capitalized under Prompt Corrective
Action Provisions
    
    $
    15,333
    
    
    $
    9,621
    
    
    $
    16,035Regulatory capital as a percentage (3)
    
    
    7.80
    %
    
    
    14.93
    %
    
    
    16.17
    %Minimum required capital percentage
    
    
    4.00
    
    
    
    4.00
    
    
    
    8.00Excess regulatory capital percentage
    
    
    3.80
    %
    
    
    10.93
    %
    
    
    8.17
    %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 September 30, 2005.(2)
    
    Limited to 1.25% of risk adjusted assets.(3)
    
    Tier I capital is calculated as a percentage of adjusted total assets of $306,653. Tier I
and Tier II risk-based capital are calculated as percentage of adjusted risk-weighted assets
of $160,349. 16




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IMPACT OF INFLATION AND CHANGING PRICES
  CRITICAL ACCOUNTING POLICIES
   Allowance for Loan Losses.
  17




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Other Than Temporary Decline.
 Deferred Income Taxes. Accounting for Income
Taxes
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  18




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Item 4. CONROLS AND PROCEDURES
   FORWARD LOOKING STATEMENTS
  19




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Legal Proceedings
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submission of Matters to a Vote of Security Holders
 A.
    
    The Annual Meeting of Stockholders was held on October 27, 2005
and the following items were submitted to the stockholders of the Company for
approval:
 1.
    
    To elect two directors for terms of three years or until
their successors have been elected and qualified
 Richard S. HamiltonFor:
    
    
    1,765,071Withheld:
    
    
    5,091J. Harold NorrisFor:
    
    
    1,757,799Withheld:
    
    
    12,363
 2.
    
    To ratify the appointment of S.R. Snodgrass, A.C., as the
Companys independent auditors for the fiscal year ending June 30, 2006
 For:
    
    
    1,759,468Against:
    
    
    2,349Abstain:
    
    
    8,345
 
 Other Information
  20




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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 200231.2
    
    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 200232.1
    
    Certification of Chief Executive Officer pursuant to section 906
of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to section 906
of the Sarbanes-Oxley Act of 2002
 21




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SIGNATURES
  LAUREL CAPITAL GROUP, INC./s/ Edwin R. MausEdwin R. MausPresident and Chief Executive Officer/s/ John A. Howard, Jr.John A. Howard, Jr.Senior Vice President and
Chief Financial Officer  22