UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 0-22937
NSS BANCORP, INC.
(Exact name of registrant as specified in its charter)
Connecticut 06-1485317
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
48 Wall Street, Norwalk, Connecticut
(Address of principal executive offices)
06852 (203) 838-4545
(Zip Code) (Registrant's telephone #)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as the latest practicable date.
Class: Common Stock, par value $.01 per share
Outstanding at March 31, 1998: 2,373,429 shares
TABLE OF CONTENTS
Page
PART I - CONSOLIDATED FINANCIAL INFORMATION
A. Consolidated Statements of Financial Condition 1
B. Consolidated Statements of Operations 2
C. Consolidated Statements of Shareholders' Equity 3
D. Consolidated Statements of Cash Flows 4-5
E. Notes to Consolidated Financial Statements 6-7
F. Management's Discussion and Analysis 8-22
G. Quantitative and Qualitative Disclosures about Market Risk 22
H. Selected Consolidated Financial Highlights 23-24
PART II - OTHER INFORMATION 25
PART III - SIGNATURES 26
NSS BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
March 31, December 31,
1998 1997
ASSETS (in thousands)
<S> <C> <C>
Cash and Due from Banks $ 18,622 $ 11,486
Interest Bearing Deposits in Other Banks 13,778 5,555
Federal Funds Sold 3,000 5,000
Securities:
Trading, at Fair Value 2,018 1,830
Available-for-Sale, at Fair Value 185,499 178,667
Loans Receivable, Net of allowance for credit losses
of $5,577 as of March 31, 1998 and $5,832 as of
December 31, 1997, respectively 418,273 425,812
Loans Held-for-Sale, at Lower of Cost or Market 3,363 5,311
Accrued Interest Receivable 4,185 3,859
Investment in Federal Home Loan Bank Stock,
At Cost 7,347 7,347
Other Real Estate Owned, Net 192 574
Bank Premises and Equipment, Net 3,781 3,738
Deferred Income Tax Asset, Net 217 361
Goodwill 1,442 1,524
Other Assets 6,954 3,158
Total Assets $668,671 $654,222
LIABILITIES
Deposits
Non-interest Bearing $ 28,054 $ 27,471
Savings, Money Market and NOW Accounts 191,469 174,873
Time Accounts 236,376 241,867
Total Deposits 455,899 444,211
Borrowed Funds 156,299 151,671
Accrued Expenses and Other Liabilities 2,205 2,202
Total Liabilities 614,403 598,084
SHAREHOLDERS' EQUITY
Preferred Stock ($.01 par value, 500,000 shares
authorized, none outstanding) - -
Common Stock ($.01 par value, 7,000,000 shares
authorized, issued 2,485,571 as of March 31 and
2,460,370 as of December 31; outstanding 2,373,429
as of March 31 and 2,434,096 as of December 31) 25 25
Additional Paid-In Capital 24,872 24,199
Retained Earnings 32,240 31,048
Net Unrealized Gain on Securities
Available-for-Sale 1,139 1,129
Total 58,276 56,401
Less: Unearned ESOP Shares 216 263
Treasury Stock (90,500 shares as of March 31)
at Cost 3,792 -
Total Shareholders' Equity 54,268 56,138
Total Liabilities and Shareholders' Equity $668,671 $654,222
</TABLE>
See accompanying notes to consolidated financial statements.
NSS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
<TABLE>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans, Including Fees $ 8,407 $ 7,963
Investment Securities and Other
Taxable Interest 2,638 2,574
Dividends 635 308
Total 11,680 10,845
INTEREST EXPENSE
Deposits 4,310 4,215
Borrowed Funds 2,265 1,970
Total 6,575 6,185
NET INTEREST INCOME 5,105 4,660
Provision for Credit Losses - -
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 5,105 4,660
NON-INTEREST INCOME
Customer Service Fees 207 201
Loan Servicing Fees 103 116
Trust Department Fees 149 141
Net Gain on Sale of Loans and Securities 330 25
Credit Card Fees 337 294
Other 209 83
Total Non-Interest Income 1,335 860
NON-INTEREST EXPENSE
Compensation and Benefits 2,018 1,872
Occupancy, Equipment and Data Processing 641 672
Regulatory Assessments 13 15
OREO Holding Costs and Expenses 30 84
Sale of OREO (Gains) Losses, Net (30) (180)
Credit Card Expense 297 247
Goodwill Amortization 82 81
Other 1,131 994
Total Non-Interest Expense 4,182 3,785
EARNINGS BEFORE INCOME TAXES 2,258 1,735
Provision for Income Taxes 820 691
NET EARNINGS $1,438 $1,044
EARNINGS PER SHARE - BASIC $0.59 $0.43
EARNINGS PER SHARE - ASSUMING DILUTION $0.56 $0.42
Weighted average shares outstanding (excluding unearned ESOP)
(in thousands)
Basic 2,420 2,400
Assuming Dilution 2,573 2,490
</TABLE>
See accompanying notes to consolidated financial statements.
NSS BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
Total
Additional Gains Unearned Shareholders'
Common Paid-In Retained (Losses)On ESO Treasury
Shares Stock Capital Earnings Securities Shares Stock Equity
($ in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance -
December 31,
1994 2,329,670 $24 $22,838 $16,225 $(603) ($971) $ - $37,513
Net Earnings - - - 4,778 - - - 4,778
ESOP Shares
Committed for
Release 26,556 - 168 - - 266 - 434
Stock Options
Exercised 8,494 - 127 - - - - 127
Adjustment of
Unrealized
Gains, Net - - - - 743 - - 743
Balance -
December 31,
1995 2,364,720 24 23,133 21,003 140 (705) - 43,595
Net Earnings 5,702 5,702
Adjustment of Unrealized Gains
(Losses), Net (246) (246)
Stock Options
Exercised 6,665 103 103
Shares Distributed
to Advisory
Board 230 5 5
Cash Dividends Paid
on Common
Stock (366) (366)
ESOP Shares
Committed to be
Released 25,697 - 304 - - 256 - 560
Balance -
December 31,
1996 2,397,312 24 23,545 26,339 (106) (449) - 49,353
Net Earnings - - - 5,565 - - - 5,565
Adjustment of
Unrealized Gains
(Losses), Net - - - - 1,235 - - 1,235
Stock Options
Exercised 18,201 1 272 - - - - 273
Shares Distributed
to Advisory
Board 40 - 1 - - - - 1
Cash Dividends
Paid on Common
Stock - - - (856) - - - (856)
ESOP Shares
Committed to be
Released 18,543 - 381 - - 186 - 567
Balance -
December 31,
1997 2,434,096 25 24,199 31,048 1,129 (263) - 56,138
Net Earnings - - - 1,438 - - - 1,438
Adjustment of
Unrealized Gains
(Losses), Net - - - - 10 - - 10
Stock Options
Exercised 21,516 - 386 - - - - 386
Cash Dividends
Paid on Common
Stock - - - (246) - - - (246)
Long-Term
Incentive
Compensation
Plan Shares 3,685 - 142 - - - - 142
ESOP Shares
Committed to be
Released 4,632 - 145 - - 47 - 192
Treasury Stock (90,500) - - - - - (3,792) (3,792)
Balance -
March 31,
1998 2,373,429 $25 $24,872 $32,240 $1,139 ($216)($3,792) $54,268
</TABLE>
See accompanying notes to consolidated financial statements.
NSS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) In Cash & Cash Equivalents
<TABLE>
Three Months Ended
March 31,
1998 1997
($ in thousands)
<S> <C> <C>
Cash Flows from Operating Activities
Net Earnings $ 1,438 $ 1,044
Adjustments to Reconcile Net Earnings to Net Cash
Provided (Used) by Operating Activities
Provision for Credit Losses - -
Provision for Estimated OREO Losses - -
Deferred Income Tax 158 234
Provision for ESOP Benefit Cost 7 45
Depreciation and Amortization 150 149
Goodwill Amortization 82 81
Net Amortization of Discounts and
Premiums on Securities 316 149
Net (Gains) Losses on Sales of Loans and
Investments (121) 74
Net on Sales of OREO (30) (180)
Net (Increase) Decrease in Trading Securities (188) 1,829
Increase in Accrued Interest Receivable (409) (346)
(Increase ) Decrease in Other Assets (3,635) 37
Decrease in Accrued Expense and Other Liabilities (3) (897)
Total Adjustments (3,673) 1,175
Net Cash Provided by (Applied to) Operating
Activities (2,235) 2,219
Cash Flows from Investing Activities
Proceeds from:
Sales of Loans, Investments and Mortgage
Backed Securities 18,746 20,485
Maturities of Investments and Mortgage
Backed Securities 8,334 4,923
Sales of Other Real Estate Owned 481 356
Purchases of Investment and Mortgage
Backed Securities (28,619) (44,693)
Net Decrease (Increase) in Loans 3,863 (13,709)
Additions to OREO - -
Additions to Goodwill - (95)
Additions to Bank Premises and Equipment (193) (417)
Net Cash Provided by (Applied to) Investing
Activities 2,612 (33,150)
Cash Flows from Financing Activities
Net Increase (Decrease) in Deposits 11,679 (1,933)
Repayments of FHLBB Advances and Other Borrowings (25,058) (29,054)
Net Increase (Decrease) in Repurchase Agreements 5,892 (3,100)
Advances from FHLB of Boston 20,000 62,489
Proceeds from Exercised Stock Options 715 -
Proceeds from Advances from Credit Line 3,792 -
Purchase of Treasury Stock (3,792) -
Cash Dividends (246) (122)
Net Cash Provided by (Applied to) Financing
Activities 12,982 28,280
Increase (Decrease) in Cash and Cash Equivalents 13,359 (2,651)
Cash and Cash Equivalents - Beginning 22,041 18,851
Cash and Cash Equivalents - Ending $35,400 $16,200
</TABLE>
See accompanying notes to consolidated financial statements.
NSS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) In Cash & Cash Equivalents
<TABLE>
Three Months Ended
March 31,
1998 1997
($ in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<S> <C> <C>
Cash Paid During the Period For:
Interest $6,522 $6,161
Income Taxes $820 $691
Non-Cash Investing and Financing Activities:
Loans Receivable Transferred to OREO $1,294 $248
Loans Originated in Connection with Sale of OREO $1,225 $298
Exchange of Loans for Mortgage-Backed Securities $1,176 $ -
Transfer of Loans Receivable to Loans-Held-For-Sale$3,363 $ -
</TABLE>
See accompanying notes to consolidated financial statements.
NSS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
NOTE 1 - NATURE OF BUSINESS AND REGULATIONS
NSS Bancorp. Inc. (Bancorp) is the holding company for NSS Bank (Bank) (formerly
Norwalk Savings Society). NSS Bank is a Connecticut state-chartered savings
bank which provides a full range of banking services to its local area customers
in and around southern Fairfield County, Connecticut. The Bank is subject to
competition from various other financial institutions, and is also subject to
the regulations of certain Federal and State agencies and undergoes periodic
examination by those regulatory authorities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements in this report have not been
audited, with the exception of the information derived from the Consolidated
Statement of Financial Condition as of December 31, 1997, which information
should be read in conjunction with the Company's audited financial statements
and footnotes thereto included in its Annual Report to Shareholders for the
year ended December 31, 1997.
The consolidated financial statements include the accounts of Bancorp, Bank, and
the Bank's wholly owned subsidiary, NSS Realty Corporation (NSS Realty). All
significant intercompany accounts and transactions have been eliminated in
consolidation. In the opinion of management, all adjustments necessary for a
fair presentation of financial position and results of operations for the
interim periods presented have been made, and all such adjustments are of a
normal recurring nature.
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated statement of financial condition
and income and expenses for the periods presented. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant change in
the near-term related to the determination of the allowance for credit losses
and valuation of other real estate owned ("OREO"). In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowances for losses. Such agencies may require
the Bank to recognize additions to the allowances based on their judgment of
information available to them at the time of their examination.
On April 22, 1998, Bancorp's Board of Directors declared a cash dividend of
thirteen cents ($.13) per share to common shareholders of record May 10,1998 and
payable on May 29, 1998.
NOTE 3 - SUPPLEMENTAL DISCLOSURES
Additional information and supporting disclosures as to effective income tax
rates, investment securities, loans, other real estate owned and related
allowances for losses are included in Management's Discussion and Analysis.
NSS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
NOTE 4 - OTHER SIGNIFICANT MATTERS
On February 23, 1994, the Board of Directors unanimously adopted and
approved the Bank's plan of Conversion (Conversion) to convert from a
Connecticut-chartered mutual to a Connecticut-chartered capital stock savings
bank through amendment of its mutual charter and the sale of common stock to
the Bank's depositors and others.
The Bank commenced its subscription offering on May 4, 1994, and concluded the
offering on June 9, 1994. A total of 2,426,740 shares were issued on June 15,
1994, the effective issuance date of the securities.
As part of the Conversion, the Board of Directors adopted a tax-qualified
employee stock ownership plan (ESOP). The ESOP Trustee borrowed the funds to
purchase Conversion stock in an amount equal to 5% of the total number of
shares issued in the Conversion. The Trustee for the ESOP acquired 121,337
shares in connection with the stock conversion through the subscription
offering. The shares were purchased with a loan obtained from a third party,
guaranteed by the Company, reflected as "Other Borrowings" on the Consolidated
Statements of Financial Condition.
At the 1997 Annual Meeting, shareholders approved the formation of a bank
holding company, and NSS Bancorp, Inc. was organized effective October 1, 1997.
Consolidated financial information for all periods prior to October 1, 1997
reflect the financial conditions and results of operations of only the Bank and
NSS Realty.
In February 1998 the Company obtained a $15 million line of credit from another
bank in connection with its Treasury Stock Repurchase Program. The line of
credit calls for interest at prime, with a one year interest-only payment
requirement and a four year principal and interest repayment term. The balance
outstanding was $3.8 million at March 31, 1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
NSS Bancorp, Inc. (the "Company" or "NSS Bancorp") is the holding company for
NSS Bank ("NSS" or the "Bank"). The Company's principal asset consists of all
of the outstanding shares of the Bank. NSS Bancorp was formed effective
October 1, 1997, and is subject to regulation by the Board of Governors of the
Federal Reserve System.
NSS Bank was founded in 1849 and is a Connecticut-chartered capital stock
savings bank, with deposits insured by the Federal Deposit Insurance Corporation
("FDIC"), headquartered in Norwalk, Connecticut. Its initial public offering of
common stock was effective June 15, 1994. Formerly Norwalk Savings Society,
in February 1998 the Bank changed its name to NSS Bank to better reflect the
nature of its operations.
As a result of the successful completion of its public offering, the Bank had
sufficient capital to meet regulatory requirements, deal with its
non-performing assets, restructure its balance sheet to improve its operating
results, and position itself for long term growth.
In 1996 and continuing into 1997, the Bank embarked on a program of expanding
its business products and services as well as continuing to provide a full
range of personal banking products and services. The Bank acquired certain
assets and assumed essentially all of the liabilities of Fairfield First Bank
& Trust Company ("FFB&T") in an FDIC-assisted transaction and opened a full
service branch office in Darien.
In October 1997 the Bank formed NSS Bancorp, a holding company, that will
allow the Company to expand or enter into other financial service activities,
capitalizing on its newly acquired business customer base and affording it the
opportunity to expand its services to its existing consumer relationships.
This reemphasis has not changed the Company's strong commitment to the
communities where its business and consumer customers live and work.
In order to respond to the community's significant demand for credit, and at
the same time manage balance sheet growth, in 1997 and continuing in 1998, the
Bank expanded its correspondent loan program, whereby it acts as an agent for
third party lenders and receives a fee for its origination efforts.
Early in 1997, the Bank adopted an income tax strategy to grow the investment
securities portfolio with callable preferred securities which provide dividend
income, a substantial portion of which is exempt from State and Federal income
taxation. The result of this strategy is a lower than normal effective income
tax rate for the Company.
In December 1997, the Company adopted a stock repurchase program under which
the Company agreed to repurchase up to 15% of its issued and outstanding common
stock at market prices in negotiated and/or open market purchases. The original
program was scheduled to expire on March 31, 1998 but was extended through the
end of 1998. Under this program, in February and March 1998, the Company
acquired 90,500 shares at a cost of $3.8 million.
The Company reported net earnings of $1.4 million, or basic and diluted
earnings per common share of $0.59 and $0.56, respectively, for the three
months ended March 31, 1998.
During the three months ended March 31, 1998, the Company declared a $0.10
dividend on common stock to its shareholders. The Company's stock price rose
from $37.75 per share on January 1, 1998 to $47.25 per share on March 31, 1998.
The Company's tier one leverage capital ratio was 7.8% as of March 31,1998,
qualifying it as "well capitalized" according to standards established by bank
regulatory authorities.
RESULTS OF OPERATIONS
Comparison of Operating Results for the Three Months Ended
March 31, 1998 and 1997
General
Net earnings for the three months ended March 31, 1998 were $1.4 million, or
$0.59 and $0.56 per common share, on a basic and diluted basis, respectively.
The Bank's net earnings were $1.0 million, or $0.43 and $0.42 per common share
on a basic and diluted basis, respectively, for the comparable period of 1997.
The continued improvement in asset quality in 1997 and 1998 resulted in no
need for a provision for credit losses in either three month period.
There was a significant increase in correspondent loan program fees for the
three months ended March 31, 1998 compared to 1997.
There was a significant increase in gains from the sales of securities and
loans for the three months ended March 31, 1998 compared to the same period in
1997.
Net Interest Income
Net interest income, which is the primary source of income for the Bank, is the
difference between the interest, fees and dividends earned on loans and
investments, and the interest paid on deposits and borrowings.
Net interest income was $5.1 million for the three months ended March 31,
1998, an increase of 9.5% over the $4.7 million for the three months ended March
31, 1997. The $445 thousand increase resulted from an increase in interest
income of $835 thousand partially offset by a $390 thousand increase in interest
expense. The $835 thousand increase in interest income was attributable to a
$748 thousand increase in volume and an $87 thousand increase in rate, while
the $390 thousand increase in interest expense resulted from a $429 thousand
increase due to volume and a $39 thousand decrease related to rate.
The 7.7% increase in interest income, from $10.8 million in 1997 to $11.7
million in 1997, was primarily attributable to the growth in the securities
portfolio, and the increase in the interest income from the loan portfolio was
attributable approximately two-thirds to rate and one-third to volume. The
6.3% increase in interest expense, from $6.2 million in 1997 to $6.6 million
in 1998, resulted primarily from the increase in interest expense attributable
to the increased level of money market deposits, partially offset by a
favorable rate variance on time deposit accounts, and a significant increase
in reverse repurchase agreement borrowings.
On an overall basis, the Bank was able to increase its net interest income
through a combination of favorable rate spreads on its increased volume while
continuing to control the rate component of the cost of funds.
The following table summarizes the Bank's net interest income and net yield on
average interest-earning assets. Non-accruing loans are included in average
loans outstanding during the periods, and daily average amounts were used to
compute average balances.
Table 1 Three Months Ended March 31, 1998
Compared to
Three Months Ended March 31, 1997
<TABLE>
($ thousands) 1998 1997
Average Average Average Average
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets
Loans Receivable $429,892 $ 8,407 7.82% $421,715 $ 7,963 7.55%
Investment
Securities 48,891 855 7.00 39,865 729 7.31
Mortgage-Backed
Securities 99,036 1,651 6.67 95,875 1,736 7.24
Short-Term
Investments 20,729 285 5.50 11,975 196 6.55
Marketable Equities 38,898 482 4.96 18,407 221 4.80
Total Interest-
Earning Assets 637,446 11,680 7.33% 587,837 10,845 7.38%
Non-Interest-
Earning Assets
Cash and Cash
Equivalents 11,176 9,288
Accrued Income
Receivable 3,856 3,874
Premises and
Equipment 3,631 3,208
Other 12,309 9,017
Less: Allowance
for Credit
Losses (5,463) (7,371)
Total Non-Interest-Earning
Assets 25,509 18,016
Total Asset $662,955 $605,853
Interest-Bearing Liabilities
Deposits
Regular Savings
and NOW $ 65,371 $ 246 1.51% $ 57,487 $ 221 1.54%
Super Savings
and Money
Market 108,831 843 3.10 93,808 729 3.11
Time 239,980 3,199 5.33 240,587 3,242 5.39
Total Deposits 414,182 4,288 4.14 391,882 4,192 4.28
Borrowings 156,047 2,265 5.81 135,918 1,970 5.80
Mortgage Escrow
Deposits 3,271 22 2.69 3,282 23 2.80
Total Interest-Bearing
Liabilities 573,500 6,575 4.59% 531,082 6,185 4.66%
Non-Interest-Bearing Liabilities
Non-Interest-
Bearing Deposits 30,416 21,562
Other Liabilities 2,114 2,329
Total Non-Interest-
Bearing
Liabilities 32,530 23,891
Shareholders'
Equity 56,925 50,880
Total Liabilities
and Shareholders'
Equity $662,955 $605,853
Net Interest-Earning
Assets and
Interest Rate
Spread $63,946 2.74% $56,755 2.72%
Net Interest Income
and Net Yield
on Average
Interest-Earning
Assets $5,105 3.20% $4,660 3.17%
</TABLE>
Rate/Volume Analysis
The following table presents the changes in interest and dividend income and the
changes in interest expense attributable to changes in interest rates or
changes in volume of interest-earning assets and interest-bearing liabilities
during the three months ended March 31, 1998 and 1997. Changes which are
attributable to both rate and volume have been allocated proportionately.
Table 2 THREE MONTHS ENDED MARCH 31, 1998
COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
NET
RATE VOLUME CHANGE
(in thousands)
INTEREST INCOME
<S> <C> <C> <C>
Loans Receivable $288 $156 $444
Mortgage-Backed Securities (141) 56 (85)
Short-Term Investments (35) 124 89
Investment Securities (25) 412 387
Total 87 748 835
INTEREST EXPENSE
Deposits
Savings and Other 4 (29) (25)
Super Savings and Money Market 2 (116) (114)
Time 35 8 43
Total Deposits 41 (137) (96)
Borrowings (3) (292) (295)
Mortgage Escrow Deposits 1 - 1
Total 39 (429) (390)
CHANGE IN NET INTEREST INCOME $126 $319 $445
</TABLE>
Provision for Credit Losses
The improvement in asset quality resulted in no need for a provision for credit
losses in either three-month period. (See Financial Condition - Non-Performing
Assets/Asset Quality).
Non-Interest Income
Non-interest income consists of deposit service charges and fees, fees derived
from both servicing and originating loans for others, net realized and
unrealized gains on securities, net gain on sale of loans, fees derived from
the Bank's Trust Department and the credit card program.
Non-interest income for the three months ended March 31, 1997 was $860 thousand
compared to $1.3 million for the comparable period in 1998 resulting in an
increase of 55.2%.
The table below identifies the primary components of Non-interest income,
which are Fees and Gains on sales of Assets.
Table 3 - Non-Interest Income
<TABLE>
Three Months Ended March 31,
($thousands)
1998 1997
<S> <C> <C>
Non-Interest Income
Fee Income:
Loan Servicing Fees $ 103 $116
Other Loan Fees 14 9
Deposit Service Charges 207 201
Credit Card Fees 337 294
Trust Department Fees 149 141
Correspondent Loan Program Fees 154 15
Other 41 59
Total Fees 1,005 835
Net Gains on Securities 211 25
Net Gain on Sale of Loans 119 -
Total Gains on Sales of Assets 330 25
Total Non-Interest Income $1,335 $860
</TABLE>
Non-interest income increased from $860 thousand for the three months ended
March 31, 1997 to $1.3 million, resulting in an increase of 55.2% for the
comparable period in 1998. Total fees for the three months ended March 31, 1997
were $835 thousand compared to $1.0 million for the three months ended March
31, 1998; the increase of $170 thousand, or 20.4%, was due primarily to
increases in correspondent loan program fees and credit card fees.
The other component of Non-interest income is Gains on Sales of Assets. The
Bank continues to derive a significant portion of its non-interest income from
its Trading portfolio investment strategy whereby covered call options are sold
against high quality equities, primarily for yield enhancement. During the
quarter ended March 31, 1998, the Bank sold certain residential loans which it
had previously identified as Held-for-Sale as of December 31, 1997 and
recognized gains of approximately $119 thousand.
Non-Interest Expense
Non-interest expense is comprised of general and administrative expenses
incurred in managing the business of the Bank and costs associated with managing
and selling OREO properties.
Non-interest expense was $3.8 million for the three months ended March 31, 1997,
compared to $4.2 million for the same period in 1998, resulting in an increase
of 10.5%.
The table that follows indicates the elements of Non-interest expense,
including OREO related expense, which is directly related to the level of
non-performing assets.
Table 4 - Non-Interest Expense
<TABLE>
Three Months Ended March 31,
($ thousands)
1998 1997
<S> <C> <C>
General and Administrative Expense
Compensation $1,403 $1,351
Employee Benefits 615 521
Occupancy and Equipment 441 459
Credit Card Processing 297 247
Data Processing 200 213
Regulatory Assessments 13 15
Marketing 167 106
Legal and Professional 341 253
Printing, Postage and Office Supplies 203 188
Insurance 30 30
Amortization of Goodwill 82 81
Other 390 417
Total 4,182 3,881
OREO Related Expense
Net Holding Costs and Expenses 30 84
Net Gain on Sales of OREO (30) (180)
Provision for Estimated Losses - -
Total - (96)
Total Non-Interest Expense $4,182 $3,785
</TABLE>
Overall, Non-interest expense did not increase significantly; however, the
general and administrative expense component increase was comprised of three
major categories: Compensation and benefits, Marketing, and Legal and
professional.
General and Administrative Expense
Of the total increase of $300 thousand in general and administrative expense, a
significant part of the increase was attributable to compensation and benefits
with the cost of the Employee stock ownership program (ESOP) accounting for a
significant portion of the benefits expenses.
OREO Related Expenses
OREO related expenses continued to decline to nominal levels; however, in the
three months ended March 31, 1997, the Bank recorded net gains of $180,000
compared to $30,000 for the comparable period in 1998.
Provision for Income Taxes
The Company's income is subject to Federal and State taxation at a combined rate
approximating 40%. The Bank's effective tax rate for the three months ended
March 31, 1997 was 39.8%, compared to the Company's effective tax rate of 36.3%
for the comparable period in 1998. The decrease was substantially due to the
tax savings from the dividend earnings on the Bank's equity securities
portfolio, a substantial portion of which is exempt from both State and Federal
taxation.
<TABLE>
Three Months Ended March 31,
1998 1997
($ thousands)
Amount % Amount %
<S> <C> <C> <C> <C>
Tax at Statutory Federal Rate $768 34.0% $590 34.0%
State Tax, Net of Federal Benefit 124 5.5% 114 6.6%
Non-Deductible ESOP Expense Provision 49 2.2% 36 2.0%
Dividends Received Deductio n (123) (5.5%) (50) (2.9%)
Other, Net 2 0.1% 1 0.1%
Total $820 36.3% $691 39.8%
</TABLE>
FINANCIAL CONDITION
General
Total assets were $668.7 million as of March 31, 1998 representing a $14.5
million increase from the $654.2 million at December 31, 1997. Total loans, net
of allowance for credit losses, were $418.3 million, a decrease of $7.5
million from the $425.8 million as of December 31, 1997. Total investment
securities were $187.5 million as of March 31, 1998, an increase of $7.0 million
from $180.5 million as of December 31, 1997. Total deposits were $455.9
million, an increase of $11.7 million from the December 31, 1997 level of
$444.2 million. Total other borrowed money was $156.3 million as of March 31,
1998, an increase of $4.6 million from the December 31, 1997
level of $151.7 million. Shareholders' equity was $54.3 million as of March
31, 1998 a decrease of $1.8 million from the December 31, 1997 level of $56.1
million. The Company's tier one leverage capital ratio was 7.8% as of March 31,
1998, compared to 8.2% as of December 31, 1997.
Investment Securities
Total securities amounted to $187.5 million as of March 31, 1998 compared to
$180.5 million at December 31, 1997, representing a $7.0 million increase or
3.9%. The activity in the investment securities portfolio resulted from a
number of Government Agency Bonds being called during the first quarter and the
Bank reinvested the proceeds into fixed-rate mortgage-backed securities.
The Bank's covered call option program is designed for yield enhancement and
to lessen the Bank's exposure to a potentially volatile stock market. In this
program, the Bank purchases shares of qualified common stock and sells a call
option against the investment. As required by SFAS 115, the Bank marks the
common stock and related covered call option to market through current period
earnings.
Inasmuch as the Bank's equity investment privileges have been grandfathered by
the FDIC, it intends to continue to maintain an equity stock portfolio. To
provide direction, the Bank's Board of Directors has established upward limits
and an investment policy which includes guidelines that the Bank's equity
investments have a minimum quality rating of "A" by a widely recognized rating
service; the policy also requires adequate diversification to avoid
concentrations in lines of business and geographic regions.
The following table presents a summary of the investments and other securities
portfolios as of March 31, 1998 and December 31, 1997, fair values and
unrealized gains and losses as of those dates.
Table 5 - Investment & Other Securities
<TABLE>
($ thousands) March 31, 1998
Amortized Unrealized Holding Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Government and Federal
Agency
Obligations $ 40,754 $ 154 $ 15 $ 40,893
Mortgage-Backed Securities 103,836 305 233 103,908
Equity Securities and Other 39,002 1,696 - 40,698
Total Available-for-Sale $183,592 $2,155 $248 $185,499
Trading
Equity Securities $2,055 $44 $81 $2,018
December 31, 1997
Amortized Unrealized Holding Fair
Cost Gains Losses Value
Available-for-Sale
U.S. Government and Federal Agency
Obligations $ 55,122 $ 190 $ 55 $ 55,257
Mortgage-Backed Securities 85,543 461 56 85,948
Equity Securities and Other 36,091 1,429 58 37,462
Total Available-for-Sale $176,756 $2,080 $169 $178,667
Trading
Equity Securities $1,976 $4 $150 $1,830
</TABLE>
Loans
Total loans, before reductions for deferred credits, fees and the allowance
for credit losses, amounted to $427.8 million as of March 31, 1998, representing
a $9.8 million or 2.2% decrease from the December 31, 1997 level of $437.6
million. The overall decrease in the loan portfolio was not significant.
What was significant was the change in mix which was part of a strategy to
increase yield while managing growth.
Table 6 - Loan Portfolio
<TABLE>
($ thousands)
March 31, 1998 December 31, 1997
<S> <C> <C> <C> <C>
Real Estate Loans
One-to-Four Family
Adjustable Rate $269,036 62.89% $278,231 63.59%
One-to-Four Fixed Rate 66,343 15.51% 64,510 14.74%
One-to-Four Held-For-Sale 3,363 0.79% 5,311 1.21%
Multi-Family 2,971 0.69% 5,398 1.24%
Commercial Real Estate 56,457 13.20% 55,124 12.60%
Home Equity Lines-of-Credit 7,707 1.80% 7,632 1.74%
Home Improvement and Second
Mortgage 2,995 0.70% 2,852 0.65%
Land 564 0.13% 640 0.15%
Construction 3,231 0.76% 2,942 0.67%
Total 412,667 96.47% 422,640 96.59%
Commercial Loans 7,854 1.84% 7,587 1.73%
Consumer Loans
Passbook 1,147 0.27% 1,508 0.34%
Automobile Loans 2,213 0.52% 2,332 0.53%
Credit Cards 1,479 0.35% 1,409 0.32%
Other Consumer 2,406 0.55% 2,104 0.49%
Total 7,245 1.69% 7,353 1.68%
Total Loans, Gross 427,766 100.00% 437,580 100.00%
Deferred Fees and Credits (553) (625)
427,213 436,955
Allowance for Credit Losses (5,576) (5,832)
Total Loans, Net 421,637 431,123
One-to-four Family Held-For-Sale (3,363) (5,311)
Loans, Net $418,274 $425,812
</TABLE>
During the first quarter of 1998, the Bank's response to the increased level
of demand for the 30-year residential fixed-rate mortgage was to utilize the
correspondent loan program. Additionally, in conjunction with the management of
the portfolio, the Bank sold or securitized $5.6 million, of which $5.3 million
was identified as loans held-for-sale as of December 31, 1997. At March 31,
1998, the Bank has identified $3.4 million of residential loans held-for-sale.
Non-Performing Assets/Asset Quality
The Bank's level of non-performing assets continued to steadily decline during
the years 1996, 1997 and continued into the first quarter of 1998. Total non-
performing assets as of March 31, 1998 were $5.2 million or 0.78% of total
assets. As of December 31, 1997 non-performing assets were $5.4 million,
representing 0.83% of total assets.
The Bank's Watch List is comprised of loans which have been identified by the
Bank's credit analysis system as exhibiting more than usual risk of
non-performance or loss. The Bank's Watch List was $7.9 million at March 31,
1998, compared to $11.7 million at December 31, 1997.
Of the total non-performing assets, non-performing loans were $5.0 million as
of March 31, 1998 compared to $4.8 million as of December 31, 1997. There
were no troubled debt restructurings included in non-performing loans as of
December 31, 1997 and March 31, 1998.
The allowance for credit losses amounted to $5.6 million as of March 31, 1998
representing coverage of 111.3% compared to $5.8 million as of December 31,
1997, representing coverage of 120.3% of non-performing loans. The credit risk
allowance for the FFB&T acquired loans was $577,000 as of March 31, 1998.
Net charge-offs in the first three months of 1998 were $255,000 or 8 basis
points of the average loan portfolio compared to $10,000 of recoveries for the
three months ended March 31, 1997.
The continued improvement in asset quality resulted in no need for a provision
for credit losses during either period.
Details of the Bank's asset quality are shown in the analysis provided by the
following table.
Asset Quality
<TABLE>
At March 31, At December 31,
($ thousands) 1998 1997 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Non-Performing Assets
Non-Accrual Loans $5,011 $11,910 $4,847 $10,441 $12,598
Restructured Loans - - - - 472
Total Non-Performing Loans 5,011 11,910 4,847 10,441 13,070
Foreclosed Assets 192 631 574 858 4,267
Allowance for Estimated OREO Losses - - - - -
Total OREO 192 631 574 858 4,267
Total Non-Performing Assets $5,203 $12,541 $5,421 $11,299 $17,337
Allowance for Credit Losses
Balance at Beginning of Period $5,832 $7,334 $7,334 $4,170 $4,827
Provision for Credit Losses - - - 4,415 1,005
Allocated to FFB&T Acquired
Loans - - - 1,000 -
Charge-Offs (710) (346) (2,155) (2,488) (1,799)
Recoveries 455 356 653 237 137
Net Charge-Offs (255) 10 (1,502) (2,251) (1,662)
Balance at End of Period $5,577 $7,344 $5,832 $7,334 $4,170
Allowance for Estimated OREO Losses
Balance at Beginning of Period $ - $ - $ - $ - $802
Provision for Estimated OREO
Losses - - - 459 460
Charge-Offs - - - (459)(1,262)
Balance at End of Period $ - $ - $ - $ - $ -
Loans Receivable, gross
End of Period 424,403 432,298 432,269 418,818 360,475
Average 429,892 421,715 435,610 403,207 323,072
Assets, end of Period 668,671 617,387 854,222 589,589 515,267
Ratios
Allowance for Credit Losses to
Total Loans 1.30% 1.70% 1.35% 1.75% 1.16%
Net Charge-Offs to Average
Loans 0.08% 0.00% 0.34% 0.56% 0.53%
Non-Performing Loans to Total
Loans 1.17% 2.76% 1.12% 2.49% 3.63%
Non-Performing Assets to Total
Assets 0.78% 2.03% 0.83% 1.92% 3.36%
Allowance for Credit Losses to
Non-Performing Loans 111.30% 61.66% 120.32% 70.24% 31.91%
</TABLE>
Deposits
Total deposits at March 31, 1998 were $455.9 million compared to $444.2
million at December 31, 1997 an increase of $11.7 million or 2.6%. The Bank
continues to seek deposits with marketing and sales efforts concentrated on its
new and diversified products. The Bank does not solicit, nor does it accept,
brokered deposits.
The following table presents a summary of deposits as of March 31, 1998 and
December 31, 1997.
Table 8 - Deposits
<TABLE>
March 31, 1998 December 31, 1997
($ in thousands)
<S> <C> <C> <C> <C>
Demand Deposits $28,054 6.2% $27,471 6.2%
Savings
Regular Savings 34,058 7.5% 29,455 6.6%
Super Saviangs 45,696 10.0% 47,863 10.8%
NOW 41,045 9.0% 37,287 8.4%
Money Market 67,619 14.8% 55,541 12.5%
Escrow Deposits 3,051 0.7% 4,727 1.1%
Certificates
Certificate Accounts 190,761 41.8% 204,129 45.9%
Money Market Certificates 45,615 10.0% 37,738 8.5%
Total Deposits $455,899 100.0% $444,211 100.0%
</TABLE>
Federal Home Loan Bank of Boston Advances and Other Borrowings
The Bank continues to utilize the FHLB as a source of funds alternative to the
traditional deposit account relationship. As of March 31, 1998 borrowings
totaled $105.9 million compared to $110.9 million as of December 31, 1997.
In addition, the Bank increased the use of the reverse repurchase agreement as a
means to borrow funds. These agreements are essentially collateralized
borrowings, similar to FHLB borrowings, and to the extent that the rates and
terms are more favorable, the Bank utilizes the reverse repurchase agreement
in lieu of an FHLB borrowing. As of March 31, 1998, borrowings outstanding
under reverse repurchase agreements were $45.6 million compared to $40.4
million as of December 31, 1997.
The Company has reflected the guaranty of the ESOP loan as an obligation in
accordance with applicable accounting requirements. This loan was a five-year
adjustable rate loan (convertible to a fixed rate at the Bank's option) with
interest and principal payable monthly. In 1997 the Company refinanced the
loan into a two-year fixed rate loan. The outstanding balance was $243,500 as
of March 31, 1998.
Borrowings from the FHLB, reverse repurchase agreements and the ESOP loan
amounted to $151.8 million as of March 31, 1998 at a weighted average rate of
5.8% and a weighted average maturity of 2.2 years, compared to $151.3 million at
a weighted average rate of 5.8% and a weighted average maturity of 1.4 years.
As a percentage of total assets, these borrowings amounted to 22.7% as of
March 31, 1998 compared to 23.1% as of December 31, 1997.
As a means of financing the repurchases of its stock, the Company arranged for
a line of credit from another bank in the amount of $15.0 million. As of March
31, 1998 there was $3.8 million in the outstanding balance.
Shareholders' Equity
Shareholders' equity at March 31, 1998 decreased to $54.3 million from $56.1
million at December 31, 1997, reflecting tier 1 regulatory leverage capital
ratios of 7.8% and 8.2%, respectively.
As of March 31, 1998, in conjunction with the Company's stock repurchase
program, the Company had acquired 90,500 shares at a cost of $3.8 million.
The following table indicates required and actual levels of capital for the
Bank and the Company as of March 31, 1998 and December 31, 1997.
<TABLE>
Regulatory Capital Actual
Required March 31, 1998 December 31, 1997
<S> <C> <C> <C>
Company
Tier 1 Risk-Based Capital 4.0% 14.7% 15.4%
Total Risk-Based Capital 8.0% 15.9% 16.6%
Tier 1 Leverage Capital 4.0% - 5.0% 7.8% 8.2%
Bank
Tier 1 Risk-Based Capital 4.0% 14.6% 14.3%
Total Risk-Based Capital 8.0% 15.8% 15.5%
Tier 1 Leverage Capital 4.0% - 5.0% 7.7% 7.6%
</TABLE>
Liquidity and Interest Rate Management
Liquidity is the ability of the Bank to meet its cash flow requirements
arising from fluctuations in loans, securities, deposits, and other borrowings.
At March 31, 1998 the Bank's primary liquidity, consisting of cash, cash
equivalents, marketable securities with maturities of one year or less and
loans held for sale was $81.5 million or 12.2% of total assets. In addition,
liquidity is the ability of the Company to meet its cash flow requirements to
pay operating expenses, dividends, and other payments as may be necessary.
The Company's liquidity is provided by dividends from its wholly owned
subsidiary, the Bank. The Bank's ability to pay dividends is restricted by
Connecticut law to the Bank's net profits in the current year, plus retained
net profits from the two most recent fiscal years. The Company may effect
borrowings from time to time to meet specific liquidity needs.
The Bank's primary sources of funds are deposits and other borrowings,
primarily from the FHLB. The Bank monitors its liquidity in accordance with
policy guidelines established by the Asset and Liability Management Policy and
regulatory standards, administered by the Asset and Liability Management
Committee of the Bank.
As of March 31, 1998, the Bank had approved loan commitments outstanding for
one-to four-family loans of $8.2 million. In addition, there was $8.3 million
of unused credit under the home equity line-of-credit facility, $1.0 million
under the overdraft protection credit line facility, and $2.4 million in unused
credit card lines. The unadvanced portion of residential construction loans
amounted to $1.9 million. There were $3.1 million in approved loan commitments
and $2.2 million in approved line-of-credit commitments in the Commercial
Lending Department, $6.1 million in unused commercial lines of credit and
$0.2 million in commercial letters of credit outstanding.
Management believes that the Company's liquidity is currently in a position to
meet normal operating needs. To meet unexpected demands, the Bank maintains a
line of credit with the FHLB. At March 31, 1998, this line of credit was $11.8
million, of which no amount was outstanding.
Management also believes that the capital position of the Company and the Bank
is currently adequate to meet present needs and anticipated growth, and does not
currently plan to raise capital from external sources in the near future.
(See Shareholders' Equity).
Market Price of Common Stock
NSS Bancorp (Norwalk Savings Society prior to October 1, 1997) trades on the
NASDAQ National Market under the symbol "NSSY".
The following table sets forth the high/low price range as reported by NASDAQ
and dividends paid for the periods indicated:
<TABLE>
1998 1997 1996
High Low Div. High Low Div. High Low Div.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First
Quarter $48.50 $36.63 $0.10 $26.25 $22.94 $0.05 $22.00 $18.75 $ -
Second
Quarter $ - $ - $ - $31.00 $23.00 $0.10 $22.25 $17.94 $0.05(a)
Third
Quarter $ - $ - $ - $37.50 $28.25 $0.10 $23.13 $20.88 $0.05
Fourth
Quarter $ - $ - $ - $40.25 $31.75 $0.10 $24.88 $22.75 $0.05
</TABLE>
(a) The Bank began paying dividends in the second quarter of 1996.
At March 31, 1998 NSS Bancorp had approximately 700 shareholders of record.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There has been no material change from December 31, 1997 to March 31, 1998, in
either the qualitative or quantitative market risks, from the disclosures
provided in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
NSS BANCORP, INC. SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
FINANCIAL CONDITION DATA March 31, December 31,
($ thousands) 1998 1997 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total assets $668,671 $617,367 $654,222 $589,589 $515,267
Investment securities 189,535 156,161 180,497 140,101 123,865
Loans receivable 423,850 431,590 432,269 418,818 360,475
Allowance for credit
losses (5,577) (7,334) (5,832) (7,334) (4,170)
Deposits 455,899 421,700 444,211 423,290 402,797
Borrowed funds 156,299 144,377 151,671 114,043 67,123
Shareholders' equity 54,268 49,732 56,138 49,353 43,595
OREO, net 192 631 574 858 4,267
Non-accrual/non-performing
loans 5,011 11,910 4,847 10,441 13,070
Total non-performing assets 5,203 12,541 5,421 11,299 17,337
</TABLE>
<TABLE>
EARNINGS DATA Three Months March31, Years ended December 31,
1998 1997 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net interest income $5,105 $4,660 $19,373 $17,615 $14,617
Provision for credit losses 0 0 0 4,415 2,105
Net gains on sales of
assets and liabilities 330 25 1,459 4,156 798
Other non-interest income 1,005 835 3,787 2,687 1,897
OREO related costs (gain),
net 0 (96) (103) 1,362 1,415
Other non-interest expense 4,182 3,881 15,827 14,104 11,304
Income before income tax
provisions 2,258 1,735 8,895 4,577 2,488
Current tax provision 678 457 1,973 175 10
Deferred tax provision
(benefit) 142 234 1,357 (1,300) (1,200)
Income before ADP program 1,438 1,044 5,565 5,702 3,678
Effect of ADP program - - - - 1,100
Net income (loss) $1,438 $1,044 $5,565 $5,702 $4,778
Income per share: Basic $0.59 $0.43 $2.31 $2.39 $2.04
Income per share:
Assuming Dilution $0.56 $0.42 $2.20 $2.34 $2.03
</TABLE>
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS (CONT.)
PERFORMANCE, CAPITAL AND Three months March 31,Year Ended December 31,
ASSET QUALITY RATIO 1998 1997 1997 1996 1995
<TABLE>
<S> <C> <C> <C> <C> <C>
PERFORMANCE:
Tangible book value per share $22.26 $20.69 $22.44 $19.90 $18.44
at period end
Return on average assets:
Before ADP program 0.87% 0.69% 0.87% 0.97% 0.76%
After ADP program n/a n/a n/a n/a 0.99%
Return on average equity
Before ADP program 10.11% 8.21% 10.54% 12.52% 8.97%
After ADP program n/a n/a n/a n/a 11.65%
Net interest margin 3.20% 3.17% 3.11% 3.12% 3.17%
CAPITAL:
Tier 1 leverage 7.75% 8.03% 8.18% 7.90% 8.43%
Total risk-based 15.90% 15.94% 16.61% 17.00% 17.90%
ASSET QUALITY:
Non-performing assets
to total assets 0.78% 2.03% 0.83% 1.92% 3.36%
Non-performing loans
to total loans 1.17% 2.76% 1.12% 2.50% 3.63%
Allowance for credit
losses to non-performing loans 111.30% 61.66% 120.32% 70.24% 31.91%
Allowance for credit losses to 1.30% 1.70% 1.35% 1.75% 1.16%
loans receivable
</TABLE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
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
1. February 8, 1998....The Company reported on the preliminary results of
litigation brought by a significant shareholder for the purpose of
obtaining access to the Company's shareholder list and other data.
2. February 25, 1998....The Company reported the results of the Company's
request to the Court for clarification or modification on certain of the
issues subject to the litigation reported on Form 8-K on February 8, 1998.
3. March 31, 1998......The Company announced that its Board of Directors had
approved the extension of its stock repurchase program until December 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned duly
authorized.
NSS BANCORP, Inc.
Registrant
Date : May 14, 1998 by: /s/ Robert T. Judson
Robert T. Judson
President & CEO
Date : May 14, 1998 by: /s/ Marcus I. Braverman, CPA
Marcus I. Braverman
Sr. VP, Treasurer & CFO
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's March 31, 1998 unaudited balance sheet, income statement
and cash flow statement, and notes thereto, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 18,622,000
<INT-BEARING-DEPOSITS> 13,778,000
<FED-FUNDS-SOLD> 3,000,000
<TRADING-ASSETS> 2,018,000
<INVESTMENTS-HELD-FOR-SALE> 185,499,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 423,850,000
<ALLOWANCE> 5,577,000
<TOTAL-ASSETS> 668,671,000
<DEPOSITS> 455,899,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,205,000
<LONG-TERM> 156,299,000
0
0
<COMMON> 25,000
<OTHER-SE> 54,243,000
<TOTAL-LIABILITIES-AND-EQUITY> 668,671,000
<INTEREST-LOAN> 8,407,000
<INTEREST-INVEST> 3,273,000
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 11,680,000
<INTEREST-DEPOSIT> 4,310,000
<INTEREST-EXPENSE> 6,575,000
<INTEREST-INCOME-NET> 5,105,000
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 211,000
<EXPENSE-OTHER> 4,182,000
<INCOME-PRETAX> 2,258,000
<INCOME-PRE-EXTRAORDINARY> 2,258,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,438,000
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.56
<YIELD-ACTUAL> 3.20
<LOANS-NON> 5,011,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 7,900,000
<ALLOWANCE-OPEN> 5,832,000
<CHARGE-OFFS> 710,000
<RECOVERIES> 455,000
<ALLOWANCE-CLOSE> 5,577,000
<ALLOWANCE-DOMESTIC> 5,577,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
