<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-28070
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Jacksonville Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Texas 75-2632781
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Commerce at Neches
Jacksonville, Texas 75766
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(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (903) 586-9861
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
----- -----
As of May 5, 1997, the latest practicable date, 2,674,668 shares of the
registrant's common stock, $.01 par value, were issued and 2,541,468 shares
were outstanding.
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information Page
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<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 1997 (Unaudited) and September 30,
1996 (Audited) 3
Consolidated Statements of Earnings for the
Six and Three Months Ended March 31, 1997
and 1996 (Unaudited) 4
Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 1997 and 1996
(Unaudited) 5
Consolidated Statements of Stockholders' Equity
for the Six Months Ended March 31, 1997
(Unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of 9-13
Financial Condition and Results of Operations
for the Six and Three Months ended March 31, 1997
<CAPTION>
PART II. Other Information Page
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<S> <C>
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
</TABLE>
2
<PAGE> 3
JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, September 30,
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1997 1996
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(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash on hand and in banks $ 1,755 $ 2,778
Interest-bearing deposits 3,963 2,415
Investment securities:
Held-to-maturity, approximate fair market
value of $19,825 and $26,378, respectively 19,955 26,447
Available-for-sale 6,369 7,359
Mortgage-backed certificates:
Held-to-maturity, approximate fair market
value of $11,241 and $12,107, respectively 11,285 12,107
Available-for-sale 4,871 -
Loans receivable, net 161,884 158,034
Accrued interest receivable 1,509 1,633
Foreclosed real estate, net 987 1,051
Premises and equipment, net 3,426 3,256
Stock in Federal Home Loan Bank of Dallas, at cost 1,792 1,740
Mortgage servicing rights 299 232
Federal income taxes receivable 152 585
Prepaid expenses and other assets 102 219
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Total assets $ 218,349 $ 217,856
============= =============
LIABILITIES
Deposits $ 178,807 $ 174,328
FHLB Advances 2,000 2,000
Advances from borrowers for taxes and insurance 1,843 3,518
SAIF special assessment payable - 1,070
Accrued expenses and other liabilities 1,296 1,150
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Total liabilities 183,946 182,066
DEFERRED INCOME
Gain on sale of real estate owned 276 359
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 25,000,000 shares
authorized; 2,674,668 and 2,664,265 shares
issued at 1997 and 1996, respectively 27 27
Additional paid-in capital 22,416 22,297
Retained earnings, substantially restricted 15,476 14,747
Less:
Treasury shares, at cost (102,700 shares) (1,471) -
Shares acquired by Employee Stock Ownership Plan (1,454) (1,528)
Shares acquired by Management Recognition Plan (766) (24)
Net of unrealized loss on decline in market value
of securities available for sale (101) (88)
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Total stockholders' equity 34,127 35,431
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Total liabilities and stockholders' equity $ 218,349 $ 217,856
============= =============
</TABLE>
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
---------------------- ----------------------
1997 1996 1997 1996
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable $ 6,699 $ 5,837 $ 3,394 $ 2,980
Mortgage-backed securities 513 254 277 141
Investment securities 863 1,098 403 524
Other 152 184 61 90
--------- --------- --------- ---------
Total interest income 8,227 7,373 4,135 3,735
INTEREST EXPENSE
Other 89 10 58 -
Deposits 4,236 4,231 2,111 2,120
--------- --------- --------- ---------
Total interest expense 4,325 4,241 2,169 2,120
--------- --------- --------- ---------
Net interest income 3,902 3,132 1,966 1,615
PROVISION FOR LOSSES ON LOANS 5 - - -
--------- --------- --------- ---------
Net interest income after
provision for losses on loans 3,897 3,132 1,966 1,615
NONINTEREST INCOME
Fees and deposit service charges 525 520 239 287
Real estate operations, net 96 22 47 14
Other 47 45 29 30
--------- --------- --------- ---------
Total noninterest income 668 587 315 331
NONINTEREST EXPENSE
Compensation and benefits 1,584 1,469 809 779
Occupancy and equipment 258 214 129 110
Insurance expense 137 223 17 113
Provisions for real estate losses - - - -
Other 569 509 273 247
--------- --------- --------- ---------
Total noninterest expense 2,548 2,415 1,228 1,249
INCOME BEFORE TAXES ON INCOME 2,017 1,304 1,053 697
TAXES ON INCOME 679 452 367 251
--------- --------- --------- ---------
Net earnings $ 1,338 $ 852 $ 686 $ 446
========= ========= ========= =========
Earnings per share $ .54 $ .32 $ .28 $ .17
========= ========= ========= =========
</TABLE>
4
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,338 $ 852
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 106 85
Amortization/Accretion of securities 14 53
Provision for losses on loans and losses
on real estate 5 -
Loans originated for sale (7,744) (5,801)
Loans sold 7,744 5,801
Gain on sale of other real estate (114) (19)
Gain on loans sold (67) -
Accrual of MRP awards 94 49
ESOP compensation accrued 120 9
Change in assets and liabilities:
Decrease (increase) in accrued interest receivable 124 (29)
Decrease in prepaid expenses and other assets 117 77
Increase in federal income taxes receivable 433 317
Decrease in accrued expenses and other liabilities (924) (247)
Decrease in deferred income (83) (49)
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Net cash provided by operating activities 1,163 1,098
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on maturity of investment securities 7,953 13,442
Purchase of investment securities (498) (7,000)
Net principal payments (origination) on loans (3,842) (8,195)
Proceeds from sale of foreclosed real estate 165 345
Purchase of mortgage-backed securities (4,983) (6,000)
Principal paydowns on mortgage-back securities 934 832
Capital expenditures (276) (175)
Purchase of stock in FHLB Dallas (52) (54)
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Net cash used in investing activities (599) (6,805)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 4,479 1,150
Net decrease in advances for taxes and insurance (1,675) (1,937)
Proceeds from sale of common stock - 14,518
Dividends paid (609) (216)
Advances from FHLB 3,000 -
Payment of FHLB Advances (3,000) -
Proceeds from stock options exercised 73 -
Purchase of MRP shares (836) -
Purchase of treasury stock (1,471) -
Payment of ESOP loan - (358)
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Net cash (used in) provided by financing activities (39) 13,157
---------- ----------
Net increase in cash and cash equivalents 525 7,450
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,193 8,051
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,718 $ 15,501
========== ==========
</TABLE>
5
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Total
Stockholders'
Equity
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<S> <C>
Balance at September 30, 1996 $ 35,431
Net change in unrealized loss on securities (13)
Accrual of MRP awards 94
Accrual of ESOP compensation 120
Cash dividends (609)
Net earnings 1,338
MRP awards (836)
Exercise of 10,403 option shares 73
Purchase of 102,700 treasury shares (1,471)
-----------
Balance at March 31, 1997 $ 34,127
===========
</TABLE>
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited financial statements were prepared in accordance with
instructions for Form 10-Q and, therefore, do not include information or
footnotes necessary for a complete presentation of financial position,
results of operations, and cash flows in conformity with generally accepted
accounting principles. However, all adjustments (consisting only of normal
recurring adjustments) which, in the opinion of management, are necessary for
a fair presentation of the financial statements have been included. The
results of operations for the three and six month periods ended March 31,
1997 and 1996 are not necessarily indicative of the results which may be
expected for an entire fiscal year.
NOTE 2 - CONVERSIONS
On March 31, 1994, Jacksonville Savings and Loan Association (Jacksonville)
completed its reorganization into the mutual holding company form of
organization whereby Jacksonville (i) formed Jacksonville Savings and Loan
Association (Association), a Texas-chartered stock savings and loan
association, (ii) transferred substantially all of its assets and liabilities
to the Stock Association in exchange for common stock, $.01 par value per
share (Common Stock), of the Stock Association, and (iii) reorganized from a
state-chartered mutual savings and loan association to a federally-chartered
mutual holding company known as "Jacksonville Federal Mutual Holding Company"
(Holding Company) (collectively the Reorganization). As part of the
Reorganization, the Association issued 731,250 shares of Common Stock to
members of the public and 1,137,500 shares of its Common Stock to the Holding
Company.
On September 20, 1995, the Boards of Directors of the Association and the
Mutual Holding Company adopted a Plan of Conversion and Agreement and Plan of
Reorganization (Plan) which was consummated March 29, 1996. Pursuant to the
Plan, (1) the Mutual Holding Company converted to an interim federal stock
savings association and simultaneously merged into the Association, the
Mutual Holding Company ceased to exist and the 1,137,500 shares or 60.8% of
the outstanding shares of the Association's common stock held by the Mutual
Holding Company were cancelled, and (2) the Association then merged into an
interim institution (Interim) formed as a wholly-owned subsidiary of
Jacksonville Bancorp, Inc. (Company), a newly formed Texas corporation formed
in connection with the reorganization, with the Association being the
surviving entity; and, (3) the outstanding shares of the Association's common
stock (other than those held by the Mutual Holding Company, which were
cancelled) were converted into shares of common stock of the Company pursuant
to a ratio which resulted in the holders of such shares owning in the
aggregate approximately that same percentage of the Company as they owned of
the Association. The Company offered for sale pursuant to the Plan
additional shares equal to 60.8% of the common shares of the Company.
Consummation of the Plan was approved by (i) the members of the Mutual
Holding Company, (ii) the stockholders of the Association, and (iii) various
regulatory agencies.
In connection with this Plan, the Company issued 1,618,409 new shares of
stock to the public. The shares of the Association stock owned by the public
were exchanged for 1,045,996 shares of Company stock. Immediately after
conversion, 2,664,265 shares were outstanding including shares held by the
Employee Stock Ownership Plan and shares held by the Management Recognition
Plan.
7
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - EARNINGS PER SHARE
Earnings per share for the three and six month periods ended March 31, 1997
and 1996 have been computed by dividing net earnings by the weighted average
number of shares outstanding. Shares controlled by the ESOP are accounted
for in accordance with Statement of Position 93-6 under which unallocated
shares are not considered in the weighted average number of shares of common
stock outstanding. Earnings per share for the periods ended March 31, 1996,
have been adjusted using the exchange ratio of 1.41785 and adjusted for
additional shares acquired by the ESOP.
NOTE 4 - RECLASSIFICATION OF PREVIOUS STATEMENTS
Certain items previously reported have been reclassified to conform with the
current period's reporting format.
NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123 "Accounting for Stock-Based Compensation." This statement requires
either; (a) recognition of compensation cost in earnings for stock-based
compensation plans based the fair value of stock options; or (b) pro forma
disclosures of what earnings and per share amounts would have been had the
fair value method been used for expense recognition. Management is
continuing to evaluate the impact of this statement and plans to present pro
forma disclosures in its full set of financial statements for the year ending
September 30, 1997.
NOTE 6 - ALLOWANCE FOR LOAN LOSSES AND NON-PERFORMING ASSETS
Activity in the allowance for loan losses for the six month periods ended
March 31, is summarized as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
1996 1995
-------- --------
<S> <C> <C>
Balance at beginning of the period $ 1,100 $ 1,000
Provision charged to income 5 -
Charge-offs - -
Recoveries 5 -
-------- --------
Balance at end of period $ 1,100 $ 1,000
======== ========
</TABLE>
The following table sets forth the amounts and categories of Jacksonville's
non-performing assets at the dates indicated:
<TABLE>
<CAPTION>
(Dollars in Thousands)
March 31, September 30,
1997 1996
-------- --------
<S> <C> <C>
Non-accruing loans:
Single-family residential $ 355 $ 465
Multi-family residential - -
Commercial - -
Construction - -
Land 523 321
Commercial business - -
Consumer 25 29
-------- --------
Total non-accruing loans 903 815
Accruing loans 90 days or more delinquent - -
-------- --------
Total non-performing loans 903 815
Real estate owned 987 1,051
-------- --------
Total non-performing assets $ 1,890 $ 1,866
======== ========
Total debt restructurings $ 385 $ 387
======== ========
</TABLE>
8
<PAGE> 9
JACKSONVILLE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Discussion of Changes in Financial Condition from September 30, 1996 to March
31, 1997.
At March 31, 1997, the assets of Jacksonville Bancorp, Inc., (the
"Company") totaled $218.3 million, which represents an increase of $0.4 million
from the $217.9 million held on September 30, 1996. During the six month
period, the Company announced its approval from the Office of Thrift
Supervision, ( "OTS"), to repurchase up to 5% of its outstanding shares. At
March 31, 1997, Jacksonville Bancorp, Inc. had successfully bought 102,700
shares which was placed in "Treasury Stock."
Investments in interest-bearing deposits increased by $1.5 million to
$4 million at March 31, 1997 due primarily to the decision by management to use
the Federal Home Loan Bank as its depository institution for its branch
operations rather than to use local banks at each location.
Investment Securities, held-to-maturity and available-for-sale,
decreased by $6.5 million and $990,000, to $19.9 million and $6.4 million,
respectively, at March 31, 1997. This decrease was primarily due to maturities
of investment securities with the proceeds used for funding of loans, meeting
withdrawal demands, and purchasing of adjustable rate mortgage-backed
securities.
Mortgage-backed certificates, held-to-maturity, decreased by $822,000
from September 30, 1996 to March 31, 1997 due to principal reduction of the
securities. Mortgage-backed certificates, available-for-sale, increased by
$4.9 million during the same period primarily from management's decision to
purchase adjustable rate mortgage-backed products rather than investing in
lower yielding Treasury and Agency securities.
Loans receivable, net increased during the period by $3.9 million to
$161.9 million at March 31, 1997. This increase was primarily due to the
decision to continue to hold most of its 15 year fixed rate loans in lieu of
selling them on the secondary market.
Foreclosed real estate, net declined slightly from $1.1 million at
September 30, 1996, to $987,000 at March 31, 1997. This decline was primarily
due to the company's continued effort to dispose of real estate owned.
Premises and equipment increased by $170,000 from $3.26 million at
September 30, 1996 to $3.43 million at March 31, 1997. This increase was
primarily due to the completion and furnishing of the Palestine Branch Annex.
9
<PAGE> 10
Mortgage servicing rights increased from $232,000 at September 30, 1996
to $299,000 at March 31, 1997. This is a result of management's decision to
continue to sell its 30-year product to the Federal Home Loan Mortgage
Corporation, ("FHLMC"), and retain servicing on these loans.
Federal Income Taxes Receivable at March 31, 1997 was $152,000 compared
to $585,000 at September 30, 1996. This decease of $433,000 was due primarily
to timing of payments made during the period.
Prepaid expenses decreased by $117,000 from $219,000 at September 30,
1996 to $102,000 at March 31, 1997. This decline was primarily due to
decreases in prepaid Savings Association Insurance Fund ("SAIF") premiums and
other insurance premiums.
Deposits for the six month period increased by $4.5 million from the
total at September 30, 1996 of $174.3 million to a total of $178.8 million at
March 31, 1997. These numbers reflect a slight increase in new deposits as
well as compounded interest on existing accounts.
Federal Home Loan Bank Advances remained at $2 million on March 31,
1997, the same amount that was due to the bank on September 30, 1996. During
the six month period the company borrowed an additional $3 million on a short
term basis. This amount was paid off before March 31, 1997.
Advances from borrowers for taxes and insurance decreased from $3.5
million at September 30, 1996 to $1.8 million at March 31, 1997. This decrease
was primarily due to the payment of real estate taxes which typically takes
place in the last quarter of each calendar year.
The SAIF special assessment payable, reported at September 30, 1996 in
the amount of $1.07 million, was paid during the first quarter of the fiscal
year. At March 31, 1997 the payable had been eliminated.
Accrued expenses and other liabilities increased from $1.15 million at
September 30, 1996 to $1.30 million at March 31, 1997. This $150,000 increase
was primarily due to the establishment of a $227,000 accounts payable for the
payment of accrued interest on loans sold to FHLMC, and the increase in
deferred compensation expense of $39,000. These were partially offset by a
$113,000 reduction in the reserve for employee bonuses which were paid in the
last calendar quarter.
Deferred Income, gain on sale of real estate owned, declined from
$359,000 at September 30, 1996 to $276,000 at March 31, 1997. This decrease
was primarily the result of the recognition of deferred profits from the sale
of real estate owned as payments were received on the related loans.
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<PAGE> 11
Stockholder's equity decreased during the period by $1.3 million from
$35.4 million at September 30, 1996 to $34.1 million at March 31, 1997.
Paid-in capital increased by $119,000 during the period as the result of the
exercise of 10,403 option shares at an exercised price of $73,000, and the
recognition of the difference in the current market price and cost of the
Employee Stock Ownership Plan shares released during the period amounting to
$46,000. Retained earnings increased by $729,000 as a result of net income for
the period after dividends. Treasury shares increased by $1.5 million during
the period as a result of the repurchase of 102,700 shares during the period.
Shares acquired by the Employee Stock Ownership Plan decreased by $74,000 due
to the principal payments made on the Employee Stock Ownership Plan Trust loans
during the period. Shares acquired by the Management Recognition Plan
increased by $742,000 during the period due to the purchase of 64,736 shares
by the 1996 Management Recognition Plan Trust at a cost of $836,000 and the
accrual of $94,000 in Management Recognition Plan awards. Net unrealized
losses on securities available-for-sale increased by $13,000 during the period
based on market values at March 31, 1997.
Comparison of Operating Results for the three and six months ended March 31,
1997 and 1996.
Net Income for the three months ended March 31, 1997,
totaled $686,000 as compared to $446,000 for the three months ended
March 31, 1996. The increase of $240,000 was primarily due to an increase in
total interest income of $400,000; an increase of $49,000 in total interest
expense; a decrease in non-interest income of $16,000; a decrease of $21,000 in
non-interest expense; and an increase of $116,000 in federal income taxes.
Net income for the six months ended March 31, 1997 was $1.34 million compared
to $852,000 for the same period in 1996. The increase of $486,000 was
primarily due to an increase in net interest income after provisions for loan
losses of $765,000, and an increase of $81,000 in total non-interest income,
offset by an increase of $133,000 in total non-interest expense, and an
increase in federal income taxes of $227,000.
Net Interest Income
The Company's net interest income before provisions for loan losses was
$1.97 million for the three months ended March 31, 1997. This amount
represents an increase of $351,000 from the $1.62 million of net interest
income before provisions for loan losses for the three month period ended March
31, 1996. For the six months ended March 31, 1997, net interest income before
provision for loan losses increased by $770,000 to $3.9 million from the
comparable period ended March 31, 1996. The increase for the three months and
six months ended March 31, 1997 was primarily due to an increase in interest
income from a larger loans receivable portfolio and mortgage-back securities
portfolio. During the same periods, interest expense increased by $49,000 and
$84,000, respectively.
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Provisions for Losses on Loans
The provisions for losses on loans are the result of management's
decision to have adequate reserves based on historical experience, industry
standards, the amount of non-performing assets, general economic conditions in
the Company's market area, and the collectability of the loan portfolio. Based
on these factors, the loan loss provision was increased by $5,000 for the six
months ended March 31, 1997, from the comparable prior period. No provisions
were made during the quarter ended March 31, 1997.
Non-Interest Income
Non-interest income consists primarily of fees collected on mortgage
loans, service charges on deposit accounts and income from real estate
operations. This income decreased by $16,000 for the three month period ended
March 31, 1997, as compared to the three month period ended March 31, 1996,
amounting to $315,000 and $331,000 for the respective periods. This decrease
was due primarily to a reduction in fees and deposit service charges of
$48,000, a $1,000 decrease in other non-interest income, partially offset by an
increase of $33,000 in real estate operations, net. For the six months ended
March 31, 1997, non-interest income increased by $81,000 from $587,000 to
$668,000, primarily due to an increase in income from real estate operations,
net. Income from real estate operations, net, increased by $74,000 for the
period primarily as a result of a $44,000 increase in the gain on the sale of
real estate owned, a $20,000 gain from the sale of non-foreclosed properties, a
reduction of $24,000 in expenses related to real estate owned, partially offset
by a $18,000 reduction in rental income from real estate owned properties.
Non-Interest Expense
For the three months ended March 31, 1997, non-interest expense
decreased by $21,000 when compared with the comparable period ended March 31,
1996. The decrease consisted primarily of a reduction in insurance expense of
$96,000, representing the lowered rates on insurance of accounts after the
special assessment paid to the Federal Deposit Insurance Corporation, offset by
an aggregate increase of $75,000 in compensation and benefits, occupancy and
equipment, and other non-interest expenses. Non-interest expense increased by
$133,000 for the six month period ended March 31, 1997, to $2.55 million. This
increase was primarily due to a $115,000 increase in compensation and benefits
due to the purchase of shares for the 1996 Management Recognition Plan and an
increase in Employee Stock Ownership Plan benefits. Also contributing was a
$44,000 increase in occupancy and equipment, a $60,000 increase in other
non-interest expense, partially offset by a reduction in insurance expense of
$86,000.
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<PAGE> 13
Taxes
The provision for income tax amounted to $367,000 and $679,000 for the
three and six months ended March 31, 1997, respectively, compared to $251,000
and $452,000 during the three and six months ended March 31, 1996,
respectively. The higher provisions for income tax were due to the increase in
earnings for the periods.
Liquidity
The OTS regulations require the Company's subsidiary, Jacksonville
Savings and Loan Association, (the "Association"), to maintain an average
daily balance of liquid assets (cash, certain time deposits, banker's
acceptances and specified United States Government, state or federal
obligations) equal to a monthly average of not less than 5% of its net
withdrawable deposits plus short-term borrowings. For the month ended March
31, 1997, the Association's average liquidity position was $ 28.1 million or
15.4% compared to $ 36.7 million or 20.1% at September 30, 1996.
Regulatory Capital Requirements
The Association is required to maintain specific amounts of capital
pursuant to OTS regulations. Under these standards, savings associations must
maintain "tangible" capital equal to at least 1.5% of adjusted total assets;
"core" capital equal to at least 3% of adjusted total assets; and "total"
capital (a combination of "core" and "supplementary" capital) equal to at least
8% of "risk-weighted" assets. At March 31, 1997, the Association's tangible,
core, and total capital were 13.9%, 13.9% and 28.0%,respectively. All three
capital figures exceeded the applicable requirements.
Recent Developments
The Association completed the purchase of two automated teller
machines for the Tyler and Palestine branch locations. The automated teller
machines began operations in April, 1997. Management expects to have
automated teller machines at other locations within one to two years.
On April 4, 1997, the Company completed the repurchase of the initial
5% stock buy-back, totaling 133,200 shares. On April 24, 1997 O.T.S. approved
a second 5% stock repurchase for 127,073 shares. These shares will be purchased
at the prevailing market price from time-to-time over a six month period
depending on market conditions.
Due to the success of adding a consumer loan department to the
Palestine facility, it is the intention of management to open a consumer loan
department in the Tyler branch in the third calendar quarter of 1997.
13
<PAGE> 14
JACKSONVILLE BANCORP, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Jacksonville Bancorp, Inc., is involved only in routine
legal proceedings occurring in the ordinary course of the
Association's business which in the aggregate are believed by
management to be immaterial to the financial condition of the
Association.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Press Release dated May 5, 1997
<PAGE> 15
JACKSONVILLE SAVINGS & LOAN ASSOCIATION
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.
Jacksonville Savings and Loan Association
DATE: May 5, 1997 By: Jerry Chancellor
------------------------- ---------------------------------
Jerry Chancellor
President
DATE: May 5, 1997 By: Bill W. Taylor
-------------------------- ----------------------------------
Bill W. Taylor
Exec. Vice President and
Chief Financial Officer
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