<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 December 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
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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
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As of February 1997, the latest practicable date, 2,674,668 shares of the
registrant's common stock, $.01 par value, were issued and 2,443,568 shares were
outstanding.
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
INDEX
PART I. Financial Information
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Page
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Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of September 30, 1997 (Audited) and December 31,
1997 (Unaudited) 3
Consolidated Statements of Earnings for the
Three Months Ended December 31, 1997
and 1996 (Unaudited) 4
Consolidated Statements of Cash Flows for
the Three Months Ended December 31, 1997 and
1996 (Unaudited) 5
Consolidated Statements of Changes in
Stockholders' Equity for the Three Months Ended
December 31, 1997 (Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
for the Three Months Ended December 31, 1997
PART II. Other Information
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Page
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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
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, September 30,
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1997 1997
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(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash on hand and in banks $ 1,457 $ 1,336
Interest-bearing deposits 2,730 2,778
Investment securities:
Held-to-maturity, at cost 21,960 22,462
Available-for-sale, at estimated market value 3,494 3,469
Mortgage-backed certificates:
Held-to-maturity, at cost 8,964 9,825
Available-for-sale, at estimated market value 13,235 11,392
Loans receivable, net 175,018 174,044
Accrued interest receivable 1,965 1,952
Foreclosed real estate, net 547 526
Premises and equipment, net 3,511 3,389
Stock in Federal Home Loan Bank of Dallas, at cost 1,872 1,844
Mortgage servicing rights 452 438
Federal income taxes receivable - 325
Prepaid expenses and other assets 200 164
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Total assets $ 235,405 $ 233,944
============= =============
LIABILITIES
Deposits $ 196,033 $ 192,033
FHLB Advances 2,000 2,000
Other borrowings 65 -
Advances from borrowers for taxes and insurance 1,365 3,923
Federal income tax payable 119 -
Accrued expenses and other liabilities 1,185 1,982
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Total liabilities 200,767 199,938
DEFERRED INCOME
Gain on sale of real estate owned 201 218
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 25,000,000
shares authorized; 2,674,568 shares issued 27 27
Additional paid-in capital 22,512 22,471
Retained earnings, substantially restricted 17,283 16,788
Less:
Treasury shares, at cost (231,100 shares) (3,424) (3,424)
Shares acquired by Employee Stock Ownership Plan (1,340) (1,378)
Shares acquired by Management Recognition Plan (641) (682)
Net of unrealized loss on decline in market value
of securities available for sale 20 (14)
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Total stockholders' equity 34,437 33,788
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Total liabilities and stockholders' equity $ 235,405 $ 233,944
============= =============
</TABLE>
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
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1997 1996
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<S> <C> <C>
INTEREST INCOME
Loans receivable $ 3,738 $ 3,305
Mortgage-backed securities 346 236
Investment securities 381 460
Other 59 91
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Total interest income 4,524 4,092
INTEREST EXPENSE
Other 30 31
Deposits 2,376 2,125
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Total interest expense 2,406 2,156
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Net interest income 2,118 1,936
PROVISION FOR LOSSES ON LOANS - 5
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Net interest income after
provision for losses on loans 2,118 1,931
NONINTEREST INCOME
Fees and deposit service charges 332 286
Real estate operations, net 24 49
Other 31 18
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Total noninterest income 387 353
NONINTEREST EXPENSE
Compensation and benefits 860 775
Occupancy and equipment 136 129
Insurance expense 43 120
Other 287 296
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Total noninterest expense 1,326 1,320
INCOME BEFORE TAXES ON INCOME 1,179 964
TAXES ON INCOME 396 312
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Net earnings $ 783 $ 652
========== ==========
EARNINGS PER SHARE
Basic $ .34 $ .26
========== ==========
Diluted $ .32 $ .26
========== ==========
</TABLE>
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
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1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 783 $ 652
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 52 53
Amortization/Accretion of securities 4 9
Provision for losses on loans and real estate - 5
Loans originated for sale (8,514) (4,346)
Loans sold 8,514 4,346
Gain on sale of other real estate (32) (63)
Accrual of MRP awards 41 52
Release of ESOP shares 79 59
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable (13) 78
(Increase) decrease in prepaid expenses and
other assets (36) 140
Increase in mortgage servicing rights (14) (45)
Decrease in FIT receivable 444 398
Decrease in accrued expenses and other liabilities (797) (1,291)
Decrease in deferred income (17) (53)
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Net cash provided by (used in) operating
activities 494 (6)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (1,500) -
Proceeds on maturity of investment securities 2,007 5,477
Net principal payments (origination) on loans (964) (320)
Proceeds from sale of foreclosed real estate 1 9
Purchase of mortgage-backed securities (2,171) (4,983)
Principal paydowns on mortgage-back securities 1,189 642
Capital expenditures (174) (157)
Purchase of stock in FHLB (28) (26)
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Net cash (used in) provided by investing
activities (1,640) 642
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 4,000 2,029
Net decrease in advances for taxes and insurance (2,558) (2,551)
Purchase of treasury stock - (375)
Dividends paid (288) (310)
Advances from FHLB - 3,000
Proceeds from other borrowings 65 -
Purchase of MRP shares - (836)
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Net cash provided by financing activities 1,219 957
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Net increase in cash and cash equivalents 73 1,593
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,114 5,193
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,187 $ 6,786
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</TABLE>
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JACKSONVILLE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Total
Stockholders'
Equity
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<S> <C>
BALANCE AT SEPTEMBER 30, 1997 $ 33,788
Net change in unrealized gain on securities 34
Accrual of MRP awards 41
Accrual of ESOP compensation 79
Cash dividends (288)
Net earnings 783
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BALANCE AT DECEMBER 31, 1997 $ 34,437
==========
</TABLE>
See accompanying notes to consolidated financial statements.
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JACKSONVILLE BANCORP, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
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-month periods ended December 31, 1997 and 1996 are
not necessarily indicative of the results which may be expected for an entire
fiscal year.
NOTE 2 - EARNINGS PER SHARE
Basic earnings per share for the three month periods ended December 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. Diluted earnings per share have been computed, giving effect to
outstanding stock purchase options by application of the treasury stock
method.
Following is a summary of shares used for calculating basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the Quarter Ended December 31, 1997
---------------------------------------
Per-share
Income Shares Amount
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<S> <C> <C> <C>
Basic EPS
Income available to
common stockholders $783 2,305,271 $ .34
======
Effect of dilutive
stock options - 106,155
---- ---------
Diluted EPS
Income available to
common stockholders $783 2,411,426 $ .32
==== ========= ======
</TABLE>
NOTE 3 - RECLASSIFICATION OF PREVIOUS STATEMENTS
Certain items previously reported have been reclassified to conform with the
current period's reporting format. The most significant change involves the
method of computing and reporting earnings per share, as described in Note 2.
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<PAGE> 8
Jacksonville Bancorp, Inc.
Management Discussion and Analysis
of Financial Condition and Results of Operation
Discussion of Changes in Financial Condition from September 30, 1997 to December
31, 1997.
At December 31, 1997, assets of Jacksonville totaled $235.4 million
compared to $233.9 million at September 30, 1997. The increase in assets was
funded through growth in the deposit portfolio of $4 million.
Interest-bearing deposits decreased sightly from $2.8 million at
September 30, 1997 to $2.7 million at December 31, 1997. The investment
securities portfolio declined during the quarter from a total of $25.9 million
at September 30, 1997 to $25.5 million at December 31, 1997. The $477,000
decrease was the result of the maturity of investment securities in the
portfolio. Mortgage-backed securities increased from $21.2 million at September
30, 1997 to $22.2 million at December 31, 1997, as a result of purchasing an
adjustable mortgage-backed security during the period. Loans receivable, net
increased $974,000 from $174.0 million at September 30, 1997 to $175.0 million
at December 31, 1997. Premises and equipment, net increased from $3.4 million at
September 30, 1997 to $3.5 million at December 31, 1997 primarily as a result of
leasehold improvements and furniture in the new in-store branch in Longview.
Federal income taxes receivable decreased by $325,000 from September 30, 1997 to
December 31, 1997 as a result of the timing of payments and accruals made during
the quarter. Prepaid expenses and other assets increased from $164,000 at
September 30, 1997 to $200,000 at December 31, 1997. This increase was primarily
the result of an increase in accounts receivable from drafts in transit for
collection.
At December 31, 1997, the liabilities of Jacksonville totaled $200.8
million as compared to $199.9 million at September 30, 1997. Deposits grew $4
million for the quarter from $192.0 million to $196.0 million principally as a
result of interest credited to accounts during the quarter and growth in savings
deposits. FHLB advances remained at $2.0 million for the quarter. Advances from
borrowers for taxes and insurance decreased by $2.5 million from $3.9 million at
September 30, 1997 to $1.4 million at December 31, 1997 as a result of the
payment from customer escrow accounts of all amounts due to taxing agencies
during the quarter.
At December 31, 1997, stockholders' equity totaled $34.4 million
compared to $33.8 million at September 30, 1997. This $649,000 increase was
primarily the result of an increase of $495,000 in retained earnings as a result
of the net income for the quarter after dividends; an increase in additional
paid in capital of $41,000; a reduction in ESOP and MRP Plans of $79,000 and an
increase of $34,000 in unrealized gain/loss on securities, available for sale.
At December 31, 1997, Jacksonville's Tier 1 leveraged, Tier 1 risk
based and total risk based capital were all substantially in excess of required
minimums.
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Comparison of Operating Results for the three month period ended December 31,
1997 to the three month period ended December 31,1996.
Jacksonville reported net income of $783,000 for the three months ended
December 31, 1997 compared to $652,000 for the three months ended December 31,
1996. The increase in net income of $131,000 was due to an increase in net
interest income of $182,000; an increase of $34,000 in noninterest income; a
decrease in provision for loan losses on loans of $5,000, partially offset by an
increase in noninterest expenses of $6,000, and an increase in Federal Income
Tax of $84,000.
Net Interest Income
Total interest income increased by $432,000 during the three months
ended December 31, 1997 compared to the same period in the prior year. Interest
income from loans receivable increased $433,000 due primarily to an increase in
the average balance of loans in the comparative periods . Interest on
mortgage-backed securities increased $110,000 from $236,000 for the quarter
ended December 31, 1996 to $346,000 for the quarter ended December 31, 1997.
Interest on investment securities decreased $79,000 from $460,000 for the
quarter ended December 31, 1996 to $381,000 at December 31, 1997 as the average
balance of the portfolio during the comparable quarters decreased as
Jacksonville shifted funds from investment securities to mortgage-backed
certificates and loan fundings. Other interest income decreased from $91,000 for
the three month period ended December 31, 1996 to $59,000 for the comparable
period ended December 31, 1997.
Total interest expense increased by $250,000 during the three months
ended December 31, 1997 compared to the same period in 1996, primarily due to
increases in deposit volume.
Provision for Losses on Loans
Jacksonville recorded no provision for the quarter ended December 31,
1997 as compared to a $5,000 provision during the same period in the prior year.
The provision is consistent with management's estimate which takes into account
the adequacy of the allowance for loan losses for the loan portfolio by loan
types.
Noninterest Income
Total noninterest income increased from $353,000 during the three
months ended December 31, 1996 to $387,000 for the same period in 1997. The
$34,000 increase was the result of a $46,000 increase in fees and deposit
service charges; an increase of $13,000 in other noninterest income, offset by a
reduction in real estate operations, net of $25,000.
Noninterest Expense
Total noninterest expense increased by $6,000 during the three months
ended December 31, 1997 compared to the three months ended December 31, 1996.
Compared to the 1996 quarter, compensation and benefits increased by $85,000 and
occupancy and equipment increased by $7,000. These increases were
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<PAGE> 10
principally the result of the addition of personnel to staff a consumer loan
department in Tyler, Texas and to staff the new in-store branch in Longview,
Texas. The cost of accruing the management recognition plan awards and employee
stock ownership plan allocations also contributed to the increase in the
compensation and benefits expense during the quarter. Insurance expense and
other noninterest expense decreased by $77,000 and $9,000, respectively, for the
quarter ended December 31, 1997 as compared to the 1996 quarter. The $77,000
decrease in insurance expense was primarily the results of lower deposit
insurance premiums.
Income Tax Expense
For the three months ended December 31, 1996 and December 31, 1997, the
provisions for income tax amounted to $312,000 and $396,000, respectively. The
higher provisions for income tax during the quarter ended December 31, 1997 was
due to the higher taxes resulting from increased earnings during the quarter.
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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 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
8K dated October 15, 1997 - Approval for first in-store branch
8K dated December 3, 1997 - Opening of in-store branch
8K dated December 9, 1997 - Announces Earnings
8K dated December 10, 1997 - Declaration of Dividends
<PAGE> 12
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 BANCORP, INC.
DATE: 2-9-98 By: /s/ JERRY CHANCELLOR
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Jerry Chancellor, President
DATE: 2-9-98 By: /s/ BILL W. TAYLOR
-------------------------- -----------------------------
Bill W. Taylor
Exec. Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,457
<INT-BEARING-DEPOSITS> 2,730
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16,729
<INVESTMENTS-CARRYING> 30,924
<INVESTMENTS-MARKET> 31,047
<LOANS> 176,184
<ALLOWANCE> 1,165
<TOTAL-ASSETS> 235,405
<DEPOSITS> 196,033
<SHORT-TERM> 2,000
<LIABILITIES-OTHER> 2,935
<LONG-TERM> 0
0
0
<COMMON> 27
<OTHER-SE> 34,410
<TOTAL-LIABILITIES-AND-EQUITY> 235,405
<INTEREST-LOAN> 3,738
<INTEREST-INVEST> 727
<INTEREST-OTHER> 59
<INTEREST-TOTAL> 4,524
<INTEREST-DEPOSIT> 2,376
<INTEREST-EXPENSE> 2,406
<INTEREST-INCOME-NET> 2,118
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,326
<INCOME-PRETAX> 1,179
<INCOME-PRE-EXTRAORDINARY> 1,179
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 783
<EPS-PRIMARY> .34
<EPS-DILUTED> .32
<YIELD-ACTUAL> 8.0
<LOANS-NON> 719
<LOANS-PAST> 0
<LOANS-TROUBLED> 392
<LOANS-PROBLEM> 1,863
<ALLOWANCE-OPEN> 1,192
<CHARGE-OFFS> 27
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,165
<ALLOWANCE-DOMESTIC> 1,165
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,165
</TABLE>
