<PAGE>
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 June 30, 1996
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 #0-21466
JEFFERSON SAVINGS BANCORP, INC.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1625841
- ------------------------------ ----------------------------
(State or other jurisdiction (I.R.S. Employer ID Number)
of incorporation or organization)
14915 Manchester Road, Ballwin, Missouri 63011
- ---------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (314) 227-3000
-------------
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 registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
- ----------------------------------- ------------------------------------
Common Stock, Par Value $.01 4,181,795 shares
1
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
INDEX to Form 10-Q
<TABLE>
<CAPTION>
PAGE
----
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
- Consolidated Balance Sheets 3
- Consolidated Statements of Operations 4
- Consolidated Statement of Stockholders' Equity 5
- Consolidated Statements of Cash Flows 6
- Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</TABLE>
2
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Cash $ 1,679,158 1,945,276
Interest-bearing demand deposits 11,879,070 18,745,488
Federal funds sold 6,365,000 -
Investment securities available for sale, at
fair value (amortized cost of $86,252,203
and $48,443,789 at June 30, 1996 and
December 31, 1995, respectively) 86,296,384 48,590,166
Mortgage-backed securities available for sale,
net, at fair value (amortized cost of
$165,142,282 and $234,160,389 at June 30,
1996 and December 31, 1995, respectively) 160,469,704 232,882,760
Loans receivable, net 805,374,029 788,085,287
Investment in real estate, net 4,278,128 4,681,972
Stock in Federal Home Loan Banks 15,073,400 16,520,100
Office properties and equipment, net 8,491,299 7,984,488
Excess of cost over fair value of net assets
acquired 14,631,592 14,495,743
Accrued income and other assets 10,855,118 8,997,504
------------- ------------
$1,125,392,882 1,142,928,784
============= ============
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits $ 875,823,187 870,178,701
Borrowed money 150,425,215 174,961,956
Deferred tax liability 122,000 1,161,000
Advance payments by borrowers for taxes
and insurance 7,892,553 2,875,576
Accrued expenses and other liabilities 8,887,288 13,500,813
------------- ------------
Total liabilities 1,043,150,243 1,062,678,046
------------- ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock ($.01 par value): Authorized
5,000,000 shares; none issued - -
Common stock ($.01 par value): Authorized
20,000,000 shares; issued 4,470,049 shares
at June 30, 1996 and December 31, 1995 44,700 44,700
Additional paid-in capital 43,615,648 43,197,276
Retained earnings, subject to certain
restrictions 52,148,799 49,140,260
Unrealized loss on assets available for
sale, net (2,777,394) (666,313)
Unamortized restricted stock awards (451,294) (616,055)
Unearned ESOP shares (5,732,277) (6,115,907)
Treasury stock, at cost: 288,486 shares and
296,486 shares at June 30, 1996 and
December 31, 1995, respectively (4,605,543) (4,733,223)
------------- ------------
Total stockholders' equity 82,242,639 80,250,738
------------- ------------
$1,125,392,882 1,142,928,784
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
JEFFERSON SAVIDGS BANCORP, INC
AND SUBSIDIARIES
Consolidated Statements of Operations
Three and six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended 30,
--------------- -------------
1996 1995 1996 1995
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
Interest and dividend
income:
Loans receivable $15,902,163 12,046,311 31,694,747 22,275,200
Mortgage-backed
securities 3,274,159 3,739,362 6,802,964 7,058,988
Investment securities 527,858 626,627 1,276,863 1,096,509
Interest-bearing demand
deposits
and federal funds sold 192,230 82,875 361,139 127,860
Stock in Federal Home
Loan Banks 259,388 236,568 530,066 454,910
----------- ---------- ---------- ----------
Total interest
and dividend
income 20,155,798 16,731,743 40,665,779 31,013,467
----------- ---------- ---------- ----------
Interest expense:
Savings deposits 10,968,090 8,063,386 22,193,254 14,388,135
Borrowed money 2,094,736 3,669,968 4,346,450 7,323,848
----------- ---------- ---------- ----------
Total interest
expense 13,062,826 11,733,354 26,539,704 21,711,983
----------- ---------- ---------- ----------
Net interest
income 7,092,972 4,998,389 14,126,075 9,301,484
Provision for losses on
loans 165,000 93,760 330,000 183,760
----------- ---------- ---------- ----------
Net interest
income after
provision for
losses
on loans 6,927,972 4,904,629 13,796,075 9,117,724
----------- ---------- ---------- ----------
Noninterest income:
Servicing and other
loan fees 136,557 137,494 379,694 191,351
Fees for other services
to customers 115,713 80,295 243,162 130,034
Gain on sale of
mortgage-backed
securities, net 126,759 - 634,372 -
Gain on sale of loans
receivable, net 71,982 53,215 221,328 61,373
Gain (loss) on real
estate operations,
net 48,252 (25,305) 416,302 177,768
Other 181,181 128,388 392,542 211,918
----------- ---------- ---------- ----------
Total
noninterest
income 680,444 374,087 2,287,400 772,444
----------- ---------- ---------- ----------
Noninterest expense:
General and
administrative:
Compensation and
employee benefits 2,571,284 1,648,405 5,112,975 2,966,905
Occupancy 477,206 409,537 1,010,667 770,962
Advertising 147,784 68,466 270,553 155,522
Federal insurance
premiums 503,742 338,726 1,007,139 626,913
Legal, examination,
and other
professional fees 292,172 167,422 677,773 304,259
Other 716,461 483,644 1,609,567 835,540
----------- ---------- ---------- ----------
Total general
and adminis-
trative 4,708,649 3,116,200 9,688,674 5,660,101
Amortization of excess
cost over fair
value of net assets
acquired 250,043 - 500,085 -
----------- ---------- ---------- ----------
<PAGE>
Total
noninterest
expense 4,958,692 3,116,200 10,188,759 5,660,101
----------- ---------- ---------- ----------
Income before
income taxes 2,649,724 2,162,516 5,894,716 4,230,067
Income tax expense 1,033,000 756,237 2,287,500 1,522,237
----------- ---------- ---------- ----------
Net income $ 1,616,724 1,406,279 3,607,216 2,707,830
=========== ========== ========== ==========
Earnings per share $ .41 .34 .91 .66
=== === === ===
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Six months ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
loss on
assets
Common stock Additional avail-
----------------------- paid-in Retained able for
Shares Dollars capital earnings sale, net
------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1995 4,173,563 $ 44,700 43,197,276 49,140,260 (666,313)
Net income - - - 3,607,216 -
Amortization of restricted
stock awards - - - - -
Amortization of ESOP awards - - 407,758 - -
Change in unrealized loss
on assets available
for sale, net - - - - (2,111,081)
Dividends paid - - - (598,677) -
Dividends on allocated ESOP
shares paid in Company
stock - - 6,294 - -
Stock options exercised 8,000 - (47,680) - -
Tax benefit of nonincentive
stock options exercised - - 52,000 - -
---------- ----------- ---------- ---------- ----------
Balance at June 30, 1996 4,181,563 $ 44,700 43,615,648 52,148,799 (2,777,394)
========== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Unamor-
tized Total
restricted Unearned stock-
stock ESOP Treasury holders'
awards shares stock equity
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31,
1995 (616,055) (6,115,907) (4,733,223) 80,250,738
Net income - - - 3,607,216
Amortization of restricted
stock awards 164,761 - - 164,761
Amortization of ESOP awards - 372,995 - 780,753
Change in unrealized loss
on assets available
for sale, net - - - (2,111,081)
Dividends paid - - - (598,677)
Dividends on allocated ESOP
shares paid in Company
stock - 10,635 - 16,929
Stock options exercised - - 127,680 80,000
Tax benefit of nonincentive
stock options exercised - - - 52,000
--------- ---------- ---------- ----------
Balance at June 30, 1996 (451,294) (5,732,277) (4,605,543) 82,242,639
========= ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,607,216 2,707,830
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization:
Office properties and equipment 399,724 299,324
Discounts and premiums, net (343,580) 169,281
ESOP and restricted stock awards 945,514 496,359
Excess of cost over fair value of net
assets acquired 500,085 -
Increase in accrued interest receivable (66,548) (327,645)
Decrease in accrued interest payable (171,726) (566,218)
Provision for losses on loans 330,000 183,760
Net gain on sales of assets (1,373,041) (8,948)
Increase (decrease) in income taxes payable 1,335,457 (8,363)
Increase (decrease) in deferred taxes (1,039,000) 2,268,578
Stock dividend from Federal Home Loan Banks (65,000) (40,400)
Decrease in payable for check fundings (4,553,574) (6,196,714)
Other, net (2,200,109) (3,744,697)
---------- -----------
Net cash used in operating activities (2,694,582) (4,767,853)
---------- -----------
Cash flows from investing activities:
Principal repayments on:
Loans receivable 140,468,393 44,555,724
Mortgage-backed securities 12,754,358 6,754,062
Proceeds from maturity of investment securities 21,250,000 8,000,000
Proceeds from sale of:
Loans receivable 29,988,053 5,212,553
Mortgage-backed securities 86,352,031 -
Federal Home Loan Bank stock 1,511,700 -
Cash invested in:
Loans receivable (187,952,107) (63,831,522)
Mortgage-backed securities (29,836,277) -
Investment securities (59,000,000) (5,994,413)
Federal Home Loan Bank stock - (223,800)
Proceeds from sale of real estate 1,819,571 200,690
Investment in real estate (121,950) -
Proceeds from sale of office properties and
equipment 106,991 119,872
Purchase of office properties and equipment (965,968) (117,032)
Cash paid for acquisitions - (41,117,029)
Cash and cash equivalents from acquisitions - 20,143,654
---------- -----------
Net cash provided by (used in)
investing activities 16,374,795 (26,297,241)
---------- -----------
Cash flows from financing activities:
Increase in savings deposits, net 5,590,692 47,466,770
Decrease in borrowed money, net (24,536,741) (583,625)
Increase in advance payments by borrowers for
taxes and insurance 5,016,977 3,539,508
Proceeds from stock options exercised 80,000 80,000
Dividends paid (598,677) -
---------- -----------
Net cash provided by (used in)
financing activities (14,447,749) 50,502,653
---------- -----------
Increase (decrease) in cash and
cash equivalents (767,536) 19,437,559
Cash and cash equivalents at beginning of period 20,690,764 8,090,611
---------- -----------
Cash and cash equivalents at end of period $ 19,923,228 27,528,170
========== ===========
Supplemental disclosures of cash flow information:
Interest paid $ 26,711,430 22,285,884
Income taxes paid 1,695,384 1,467,599
Noncash investing activities:
Additions to real estate acquired in settle-
ment of loans or through foreclosure 974,904 77,239
Loans originated to finance the sale of real
estate 60,026 -
Assets acquired, net of cash and cash
equivalents - 319,306,584
Liabilities assumed - 298,333,209
Noncash financing activity - interest credited 16,094,413 11,365,991
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-Q and, therefore, do not
include all information and notes necessary for a complete presentation
of financial position, results of operations, changes in stockholders'
equity, and cash flows in conformity with generally accepted accounting
principles. However, all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the unaudited consolidated financial statements have been
included in the results of operations for the three and six months ended
June 30, 1996 and 1995, respectively.
Operating results for the three and six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
(2) Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Jefferson Savings Bancorp, Inc. (the Company) and its wholly
owned subsidiaries, Jefferson Savings and Loan Association, F.A. (the
Association) and First Federal Savings Bank of North Texas (First Federal
or the Bank). The Association's wholly owned subsidiaries are J.S.
Services, Inc., J.S. Services of Florida, Inc., JS&L Realty, Inc., and
Jefferson Financial Corporation. The Bank's wholly owned subsidiaries are
First Service Corporation, Inc. and North Texas Financial Services, Inc.
All significant intercompany items have been eliminated.
(3) Business Combinations
---------------------
On May 31, 1996, the Company completed its acquisitions of North Texas
Savings and Loan Association, Denton, Texas (North Texas) and First
Federal Savings Bank of Longview, Texas (Longview) in exchange for cash
of $28.3 million and $12.8 million, respectively. North Texas' total
assets were $190.7 million, consisting primarily of loans receivable of
$126.9 million and mortgage-backed securities of $49.5 million; North
Texas' total deposits were $148.2 million. Longview's total assets were
$134.5 million, consisting primarily of loans receivable of $66.0 million
and mortgage-backed securities of $34.0 million; Longview's total
deposits were $120.0 million. On July 13, 1995, the Company completed its
acquisition of Shelby-Panola Savings Association, Carthage Texas (Shelby-
Panola) in exchange for cash of $10.9 million. Shelby-Panola's total
assets were $55.6 million, consisting primarily of investment securities
of $22.9 million, loans receivable of $14.3 million, and mortgage-backed
securities of $12.2 million; Shelby-Panola's total deposits were $44.8
million. As a result of the North Texas acquisition, the Company added
five branches in the suburban Dallas counties of Denton, Collin, Tarrant,
and Wise and, as a result of the Longview acquisition, added five
branches in the Northwest Texas counties of Gregg and Harrison. The
acquisition of Shelby-Panola added one branch in Panola County, Texas.
The acquisitions, which were funded with available cash and borrowings,
were accounted for using the purchase method
(Continued)
7
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
of accounting and, accordingly, the results of operations have been
included in the Company's results of operations from the respective
transaction dates. The excess of cost over fair value of net assets
acquired was approximately $15 million and is being amortized over 15
years. Upon completion of the acquisitions, North Texas, Longview, and
Shelby-Panola were consolidated under a single federal charter and operate
under the common name of First Federal Savings Bank of North Texas.
The following unaudited information presents pro forma results of operations
of the Company for the three and six months ended June 30, 1995, assuming
the acquisitions had taken place on January 1, 1995.
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
1995 1995
---- ----
(In thousands, except per share data)
<S> <C> <C>
Net interest income $6,125 12,432
Net income 1,234 2,878
====== =====
Earnings per share $ .30 .71
=== ===
</TABLE>
(4) Earnings Per Share
------------------
Earnings per share are based upon the weighted average number of common
shares and common stock equivalents, if dilutive, outstanding during the
period. The only common stock equivalents are stock options. The weighted
average number of common stock equivalents is calculated using the
treasury stock method. Common shares held by the Company's Employee Stock
Ownership Plan (ESOP) that have not been committed to be released are
excluded from the computation of weighted average common shares
outstanding during the period.
Earnings per share for the second quarter have been computed based upon net
income for the three months ended June 30, 1996 and 1995, using 3,978,771
and 4,091,449 weighted average common shares and common stock equivalents
outstanding, respectively. Year-to-date earnings per share for 1996 and
1995 have been computed based upon net income for the six months ended
June 30, 1996 and 1995, using 3,970,123 and 4,075,891 weighted average
common shares and common stock equivalents outstanding, respectively.
(5) Recent Regulatory Developments
------------------------------
The deposits of the Association and First Federal are presently insured by
the Savings Association Insurance Fund (SAIF), which together with the
Bank Insurance Fund (BIF), which insures the deposits of commercial
banks, are the two deposit insurance funds administered by the FDIC. Upon
achieving the statutory reserve ratio of 1.25% of insured deposits, the
deposit insurance assessment rate for BIF members was lowered from a
range of .23% to .31% of insured deposits to a range of .04% to .31% and
subsequently lowered to the point that most BIF members currently pay the
statutory minimum assessment of $2,000 per year. As a result, BIF members
(Continued)
8
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
generally will pay lower premiums than the SAIF members whose assessment rates
continue to range from .23% to .31% of insured deposits. The FDIC has indicated
that the SAIF will not be adequately recapitalized until 2002, absent a
substantial increase in premium rates or the imposition of special assessments.
As a result of the disparity, SAIF members could be placed at a significant,
competitive disadvantage to BIF members due to higher costs for deposit
insurance. Proposed legislation under consideration by the United States
Congress provides for a one-time assessment to be imposed on all deposits
assessed at the SAIF rates, as of March 31, 1995, in order to recapitalize the
SAIF. The special assessment rate is anticipated to be .85% to .90% of insured
deposits. Based upon The Company's level of SAIF deposits at March 31, 1995
(including the pro forma effect of the acquisitions of North Texas, Longview and
Shelby-Panola), and assuming a special assessment of .90%, the Company's
assessment would be approximately $8 million on a pre-tax basis. If the
legislation is enacted, the special assessment would significantly increase
noninterest expense and adversely effect the Company's results of operations
during the quarter when it is enacted. Conversely, depending upon the Company's
capital level and supervisory rating, and assuming, although there can be no
assurance, that the insurance premium levels for BIF and SAIF members are again
equalized, deposit insurance premiums could decrease significantly.
9
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion reviews the financial condition and the results of
operations of the Company as of and for the three and six months ended June 30,
1996.
FINANCIAL CONDITION
The Company's total assets decreased $17.5 million, or 1.5%, from $1,142.9
million at December 31, 1995 to $1,125.4 million at June 30, 1996. This
decrease was due principally to a $72.4 million, or 31.1%, decrease in mortgage-
backed securities, partially offset by a $37.7 million, or 77.6% increase in
investment securities and a $17.3 million, or 2.2% increase in loans receivable.
Proceeds from the reduction in mortgage-backed securities were used primarily to
fund loan originations, increase investment securities, and reduce borrowed
money. Loan originations and purchases totaled approximately $184 million and
$4 million, respectively, and principal repayments totaled approximately $140
million during the six months ended June 30, 1996 compared to loan originations
and purchases of approximately $43 million and $21 million, respectively, and
principal repayments of approximately $45 million during the six months ended
June 30, 1995. The increased level of loan originations was the result of the
Company's continued focus on its retail sales culture and the activity
contributed by First Federal which was acquired in three transactions accounted
for as purchases in May and July 1995.
The Company's savings deposits increased $5.6 million, or .6%, during the first
six months of 1996. The increase in savings deposits was used primarily to
reduce borrowed money. Borrowed money (consisting primarily of advances from
the Federal Home Loan Bank) decreased by $24.5 million, or 14.0%, from $175.0
million at December 31, 1995 to $150.4 million at June 30, 1996.
Total stockholders' equity increased by $2.0 million, or 2.5%, to $82.2 million
at June 30, 1996 from $80.3 million at December 31, 1995. The Company's ratio
of stockholders' equity to assets increased to 7.31% at June 30, 1996 from 7.02%
at December 31, 1995. The increase in stockholders' equity reflects the
Company's six-month earnings of $3.6 million and the amortization of certain
stock awards during the period, partially offset by a $2.1 million increase in
unrealized losses on assets available for sale and the payment of $599,000 in
dividends to stockholders. The Company did not engage in any open-market
repurchases of its common stock during the first six months of 1996. The
Company's book value per share at June 30, 1996 was $21.82 compared to $21.49 at
December 31, 1995. Unallocated ESOP shares of 411,843 and 439,830 were excluded
in calculating book value per share at June 30, 1996 and December 31, 1995,
respectively.
On May 31, 1996, the Company announced the signing of a Definitive Agreement and
Plan of Merger providing for the acquisition by the Company of all of the
outstanding common stock of Texas Heritage Savings Association/Banc, Rowlett,
Texas (Texas Heritage) in exchange for a combination of cash and common stock of
the Company, the amount of which will be determined as of the end of the month
immediately preceding the month during which the closing takes place. The
transaction, which will be accounted for as a purchase, is subject to the
approval of regulators and the stockholders of Texas Heritage. Texas Heritage,
with assets of approximately $69 million and deposits of approximately $61
million at June 30,
10
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
1996, operates from its main office in Rowlett, Texas and its three branches
located in Garland, Rockwall, and Bedford, Texas. In addition, on June 25,
1996, the Company announced the signing of a Letter of Intent outlining the
terms of a proposed acquisition by the Company of all of the outstanding common
stock of L & B Financial, Inc., Sulphur Springs, Texas (L & B Financial) in
exchange for a combination of cash and common stock of the Company, the amount
of which will be determined as of the end of the month immediately preceding the
month during which the closing takes place. The transaction, which will be
accounted for as a purchase, is subject to the negotiation of a definitive
agreement and the approval of regulators and the stockholders of L & B
Financial. L & B Financial is the holding company for Loan & Building State
Savings Bank, a Texas savings bank formerly known as Sulphur Springs Loan and
Building Association. Loan & Building State Savings Bank, with assets of
approximately $144 million and deposits of approximately $105 million at June
30, 1996, operates from its main office in Sulphur Springs, Texas and its five
branches located in Mt. Vernon, Mt. Pleasant, Daingerfield, Pittsburg, and
Texarkana, Texas.
RESULTS of OPERATIONS
Net Income
Net income increased $210,000, or 15.0%, from $1.4 million, or $.34 per share,
for the three months ended June 30, 1995 to $1.6 million, or $.41 per share, for
the three months ended June 30, 1996. The increase in net income was primarily
the result of a $2.1 million increase in net interest income, and a $306,000
increase in noninterest income, partially offset by a $1.8 million increase in
noninterest expense and a $277,000 increase in income tax expense. Net income
increased $899,000, or 33.2%, from $2.7 million, or $.66 per share, for the six
months ended June 30, 1995 to $3.6 million, or $.91 per share, for the six
months ended JuneE30, 1996. The increase was the result of a $4.8 million
increase in net interest income, and a $1.5 million increase in noninterest
income, partially offset by a $4.5 million increase in noninterest expense and a
$765,000 increase in income tax expense.
The annualized return on average assets and the annualized return on average
equity were .58% and 7.92%, respectively, for the second quarter of 1996
compared to .58% and 7.26% for the second quarter of 1995. The annualized
return on average assets and the annualized return on average equity were .64%
and 8.87%, respectively, for the first six months of 1996 compared to .59% and
7.16% for the first six months of 1995.
Net Interest Income
Net interest income for the second quarter of 1996 increased $2.1 million, or
41.9%, to $7.1 million compared to $5.0 million for the second quarter of 1995.
The increase in net interest income was primarily the result of an improved
interest rate spread. The average balance of interest-earning assets increased
$147.1 million, or 15.7%, from $938.4 million for the quarter ended June 30,
1995 to $1.1 billion for the quarter ended June 30, 1996. The Company's
interest rate spread increased from 1.77% for the quarter ended June 30, 1995 to
2.32% for the quarter ended June 30, 1996 and the Company's net interest margin
increased from 2.13% to 2.61% during the same periods. The increase in the
average balance of
(Continued)
11
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
interest-earning assets was primarily the result of $369.6 million in interest-
earning assets purchased in the acquisition of First Federal during the quarter
ended June 30, 1995. The improvement in the interest rate spread was primarily
the result of an increase in the yield on loans receivable from 7.44% during the
second quarter of 1995 to 7.98% during the second quarter of 1996 and a decrease
in the average rate paid on savings deposits from 5.25% to 5.02% for the
corresponding periods. The increase in yield was caused by the upward
adjustment of the rates on the Company's existing adjustable-rate loan portfolio
and the addition of the loan portfolios of First Federal. The decrease in the
average rate paid on savings deposits was primarily the result of the
acquisition of First Federal.
Net interest income for the six months ended June 30, 1996 increased $4.8
million, or 51.9%, to $14.1 million compared to $9.3 million for the six months
ended JuneE30, 1995. The increase in net interest income was primarily the
result of significant growth in interest-earning assets and an improved interest
rate spread. The average balance of interest-earning assets increased $188.7
million, or 20.9%, from $902.9 million for the six months ended June 30, 1995 to
$1.1 billion for the six months ended June 30, 1996. The Company's interest
rate spread increased from 1.67% for the six months ended June 30, 1995 to 2.30%
for the six months ended June 30, 1996 and the Company's net interest margin
increased from 2.06% to 2.59% during the same periods. The increase in the
average balance of interest-earning assets was primarily the result of $369.6
million in interest-earning assets purchased in the acquisition of First Federal
during the quarter ended June 30, 1995. The improvement in the interest rate
spread was primarily the result of an increase in the yield on loans receivable
from 7.14% during the first six months of 1995 to 8.01% during the corresponding
period of 1996. This increase in yield was caused by the upward adjustment of
the rates on the Company's existing adjustable-rate loan portfolio and the
addition of the loan portfolios of First Federal.
Provision for Losses on Loans
The provision for losses on loans for the second quarter of 1996 was $165,000
compared to $94,000 for the like period in 1995 and $330,000 for the first six
months of 1996 compared to $184,000 for the like period in 1995. At June 30,
1996, the allowance for losses on loans was $5.4 million, which represented .67%
of total loans compared to $5.1 million, or .65%, of total loans at December 31,
1995. The ratio of nonaccruing loans to total loans was .32% at June 30, 1996
compared to .31% at December 31, 1995. Management considers many factors in
determining the necessary levels of loan loss reserves, including a detailed
analysis of specific loans in the portfolio, known and inherent risk in the
portfolio, estimated value of the underlying collateral, assessment of general
trends in the rest of the real estate market, and current and prospective
economic conditions.
Noninterest Income
Total noninterest income increased $306,000, or 81.9%, from $374,000 for the
quarter ended June 30, 1995 to $680,000 for the quarter ended June 30, 1996.
The increase was primarily due to a $127,000 increase in gain on sale of
mortgage-backed securities, a $74,000 increase in gain on real estate
operations, and a
(Continued)
12
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
$53,000 increase in other income. The increase in gain on sale of mortgage-
backed securities resulted from the sale of approximately $54 million in
mortgage-backed securities classified as available for sale during the quarter
ended June 30, 1996. Proceeds from this sale were reinvested in FNMA notes which
are included in investment securities. No such sales occurred during the like
period in 1995. The increase in the gain on real estate operations was largely
attributable to $51,000 in net rental income recorded on a real estate property
acquired through foreclosure. The increase in other noninterest income balances
is largely attributable to $33,000 in earnings from North Texas Financial
Services, Inc. during the quarter ended June 30, 1996.
Total noninterest income increased $1.5 million, or 196.1%, from $772,000 for
the six months ended June 30, 1995 to $2.3 million for the six months ended June
30, 1996. The increase was primarily due to a $634,000 increase in gain on sale
of mortgage-backed securities, a $238,000 increase in gain on real estate
operations, a $188,000 increase in servicing and other loan fee income, a
$181,000 increase in other noninterest income, a $160,000 increase in gain on
sale of loans receivable, and a $113,000 increase in fees for other services to
customers. The increase in gain on sale of mortgage-backed securities resulted
from the sale of approximately $86 million mortgage-backed securities classified
as available for sale in 1996. Proceeds from this sale were used to add $54.0
million in FNMA notes to the investment portfolio and to reduce borrowed money.
No such sales occurred during the like period in 1995. The increase in the gain
on real estate operations for the six-month period was primarily the result of a
$324,000 gain on the sale of real estate held for investment. The increase in
servicing and other loan fees was primarily the result of loan fees generated by
First Federal. The increase in other noninterest income was due primarily to a
$74,000 profit on the sale of assets owned by the Company's subsidiary, J.S.
Services of Florida, Inc. The increase in gain on sale of loans receivable was
primarily the result of increased loan sales from $5.2 million for the six
months ended June 30, 1995 to $30.0 million for the six months ended June 30,
1996. The gain on sale of loans represents origination and other fees retained
by the Company in connection with the sale of fixed-rate loans originated for
sale to institutional investors generally on an individual loan basis. The
increased sales volume reflects the borrowers' increased demand for fixed-rate
loans during 1996 combined with sales activity from First Federal. The increase
in fees for services to customers was due primarily to NOW account fees
generated by First Federal during the six months ended June 30, 1996.
Noninterest Expense
Noninterest expense increased $1.8 million, or 59.1%, from $3.1 million for the
quarter ended June 30, 1995 to $5.0 million for the quarter ended June 30, 1996.
The increase was primarily attributable to a $923,000 increase in compensation
and employee benefit expense, a $250,000 increase in amortization of excess cost
over fair value of net assets acquired, a $233,000 increase in other noninterest
expense, a $165,000 increase in federal insurance premiums expense, a $125,000
increase in legal, examination, and other professional fees, a $79,000 increase
in advertising expense, and a $68,000 increase in occupancy expense.
Approximately $1.5 million of the increase was attributable to the inclusion of
the results of operations of First Federal which was acquired in three
transactions accounted for as purchases in May and July 1995. Under the
purchase method of accounting, the
(Continued)
13
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
results of operations of each of the acquired companies are only included from
their dates of acquisition. Also contributing to the increase was approximately
$201,000 in additional compensation and employee benefits and approximately
$70,000 in additional legal and professional fees at the Association. The
additional compensation and employee benefits were the result of normal salary
increases and the hiring of additional employees to support the Company's sales
culture. The additional legal and professional fees were the result of legal
expenses associated with the Company's acquisition activities. The annualized
ratio of noninterest expense to average assets increased from 1.29% to 1.77% for
the comparable periods.
Noninterest expense increased $4.5 million, or 80.0%, from $5.7 million for the
six months ended June 30, 1995 to $10.2 million for the six months ended June
30, 1996. The increase was primarily attributable to a $2.1 million increase in
compensation and employee benefit expense, a $774,000 increase in other
noninterest expense, a $500,000 increase in amortization of excess cost over
fair value of net assets acquired, a $380,000 increase in federal insurance
premiums expense, a $374,000 increase in legal, examination, and other
professional fees, a $240,000 increase in occupancy expense, and a $115,000
increase in advertising expense. Approximately $3.8 million of the increase was
attributable to the inclusion of the results of operations of First Federal
which was acquired in three transactions accounted for as purchases in May and
July 1995. Under the purchase method of accounting, the results of operations
of each of the acquired companies are only included from their dates of
acquisition. Also contributing to the increase was approximately $391,000 in
additional compensation and employee benefits and approximately $267,000 in
additional legal and professional fees at the Association. The additional
compensation and employee benefits were the result of normal salary increases
and the hiring of additional employees to support the Company's sales culture.
The additional legal and professional fees were the result of fees paid in
connection with income tax planning and legal expenses associated with the
Company's acquisition activities. Although the annualized ratio of noninterest
expense to average assets increased from 1.23% to 1.85% for the comparable
periods, the Company's ratio continues to be well below that of its peers.
Income Tax Expense
The Company provides for state and federal income tax expense based upon
earnings before income taxes. The effective tax rate for the second quarter of
1996 was 39.0% compared to 35.0% for the like period in 1995. The Company
accounts for income taxes under the provisions of Statement of Financial
Accounting Standards (SFAS) No.109 which requires the asset and liability
method. The objective of the asset and liability method is to establish
deferred tax assets and liabilities for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities at enacted tax rates expected to be in effect when such amounts are
realized or settled.
NONPERFORMING ASSETS
Summarized below are nonperforming assets at June 30, 1996 and December 31,
1995. Nonperforming assets do not include a restructured loan with an
outstanding balance of $3.1 million at June 30, 1996 and December 31, 1995 on
which the
(Continued)
14
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
borrower has been current in meeting the restructured terms since the
date of restructuring. The restructured loan provides for principal
amortization, and the loan has an interest rate and other terms that are at
least equal to market terms. Other restructured loans are included in
nonperforming assets.
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
(dollars in thousands)
<S> <C> <C>
Restructured loans $ 3,606 3,659
------- -----
Nonaccruing loans:
Residential real estate 1,439 1,684
Commercial real estate - 26
Construction 997 707
Commercial 81 15
Consumer 81 42
-------- -----
Total nonaccruing loans 2,598 2,474
------- -----
Foreclosed real estate, net 4,278 3,670
------- -----
Restructured and nonaccruing
loans and foreclosed assets,
net $10,482 9,803
======= =====
Nonperforming assets, net $ 7,385 6,690
======= =====
Nonperforming assets, net as a
percentage of total assets 0.66% 0.59%
===== =====
</TABLE>
Total nonperforming assets increased $695,000 from $6.7 million at December 31,
1995 to $7.4 million at June 30, 1996 primarily as the result of a $290,000
increase in nonaccruing construction loans and a $600,000 increase in real
estate acquired through foreclosure. The increase in nonaccruing construction
loans was due to the addition of two loans secured by single family residences.
The increase in real estate acquired through foreclosure was the result of
foreclosure on two loans secured by single family residences.
Loans are placed on nonaccrual status when either principal or interest is more
than 90 days past due or at such time when contractual amounts due are deemed
uncollectible, whichever is sooner. Any subsequent interest payments received
are recorded as interest income in the period received.
At June 30, 1996, the Company had $3.3 million of impaired loans, which are
represented by loans on nonaccrual status and loans internally classified. At
June 30, 1996, $24,000 of impaired loans had specific reserves of $7,000 and the
remaining impaired loans of $3.2 million had no specific reserves.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has no business other than that of the Association and the
Bank. The Company is dependent on future earnings, dividends from the
Association and the Bank, or borrowings for sources of funds. The Association
and the Bank are subject to certain regulatory limitations with respect to the
payment of dividends to the Company.
(Continued)
15
<PAGE>
JEFFERSON SAVINGS BANCORP, INC
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Association and the Bank meet all existing regulatory capital requirements.
Capital ratios at June 30, 1996, as computed under OTS capital standards, are as
follows:
<TABLE>
<CAPTION>
Regulatory Capital
----------------------------------------------------------
Tangible Core Risk-based
-------- ---- ----------
Percent Percent Percent
of of of
Amount assets Amount assets Amount assets
-------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Association's regulatory
capital $ 45,241 5.96% $45,241 5.96% $49,242 11.63%
Capital requirement 11,378 1.50 22,757 3.00 33,884 8.00
-------- ---- ------- ---- -------- -------
Excess $ 33,863 4.46% $22,484 2.96% $15,358 3.63%
======== ==== ======== ==== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Regulatory Capital
----------------------------------------------------------
Tangible Core Risk-based
-------- ---- ----------
Percent Percent Percent
of of of
Amount assets Amount assets Amount assets
-------- ------- -------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Bank's regulatory capital $ 22,284 6.23% $ 22,284 6.23% $ 23,693 9.20%
Capital requirement 5,369 1.50 10,738 3.00 20,609 8.00
-------- ---- ------- ---- ------- -------
Excess $ 16,915 4.73% $ 11,546 3.23% $ 3,084 1.20%
======== ==== ======= ==== ======= =======
</TABLE>
The Association and the Bank are required by federal regulations to maintain
specified levels of liquid assets, consisting of cash and eligible investments.
The current level of liquidity required by the OTS is 5% of the sum of net
withdrawable deposits and borrowings due within one year. The Association and
the Bank have consistently maintained liquidity in excess of required amounts.
The Association's liquidity ratios were 5.89% and 5.78% at June 30, 1996 and
December 31, 1995, respectively. The Bank's liquidity ratios were 6.64% and
16.61% at June 30, 1996 and December 31, 1995, respectively.
The Company's primary sources of funds are deposits, principal and interest
payments on loans and mortgage-backed securities, proceeds from maturing
investment securities, and cash flows from operating activities. In addition,
the Association and the Bank have substantial borrowing authority with the
Federal Home Loan Banks and the ability to borrow against their investment
portfolio.
The principal uses of funds by the Company include the origination of loans
secured by real estate and the purchase of investment securities and mortgage-
backed securities.
(Continued)
16
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company's primary source of cash for investing and operating activities has
been principal repayments on loans and mortgage-backed securities, proceeds from
the sale of loans and mortgage-backed securities, and proceeds from maturing
investment securities. Cash flows from investing activities provided $16.4
million in funds during the first six months of 1996. Cash flows from investing
activities, which consisted primarily of $153.2 million in principal repayments
on loans and mortgage-backed securities, $116.3 million in sales of loan and
mortgage-backed securities, and $21.2 million in proceeds from maturing
investment securities, provided sufficient funds for the Company's investing
activities of originating loans and purchasing mortgage-backed and investment
securities during the six months ended June 30, 1996. In addition, cash flows
from investing activities and increases in savings deposits during the six
months ended June 30, 1996 were used to reduce borrowed money by $24.5 million.
The Company anticipates that it will have sufficient funds available to meet its
current commitments. At June 30, 1996, the Company had commitments to originate
loans of $15.8 million, to purchase residential adjustable-rate mortgages of
$1.6 million, and to sell loans of $6.0 million. Certificates of deposit which
are scheduled to mature in one year or less at June 30, 1996 totaled $466.8
million. Management believes that a significant portion of such deposits will
remain with the Company. In addition, at June 30, 1996, the Association has an
available line of credit with the FHLB of Des Moines totaling $33.5 million.
Legislation currently being considered by the U.S. Congress would require
savings associations with deposits insured by the SAIF, like the Company's
Jefferson Savings and First Federal of North Texas subsidiaries, to pay a one-
time special assessment in order to increase the reserve level of the SAIF to
the statutorily required 1.25% of insured deposits. It is estimated that the
special assessment would equal .85% to .90% of each SAIF-insured savings
association's deposits as of March 31, 1995. It is anticipated that after the
SAIF is recapitalized through the special assessment, the assessment rates for
SAIF deposit insurance will be reduced from the current range of .23% to .31% of
insured deposits. Because of their continuing obligation to pay FDIC
assessments which fund interest payments on certain federally issued bonds, it
is not anticipated that the assessment rate for SAIF members would be reduced to
the statutory minimum of $2,000 per annum as is now the case for the most highly
rated commercial banks whose deposits are insured by the BIF. The Company
cannot predict whether the special assessment legislation will be adopted,
whether it will be adopted in its current form, or whether the Company's future
SAIF premiums would be reduced as a result. If the proposed legislation is
enacted in its current form and assuming a special assessment of .90%, the
Company's subsidiaries would be required to pay an aggregate special assessment
equal to approximately $8 million on a pre-tax basis. Although the Company
believes that it has sufficient funds available to pay such a special assessment
and would continue to be in compliance with all applicable capital requirements
after payment of the special assessment, the special assessment would
significantly increase noninterest expense and adversely affect results of
operations during the periods in which the expense is reported. In addition,
the Company may consider an infusion of additional capital into the subsidiary
institutions to maintain their status as "well capitalized" institutions for
purposes of federal banking regulations.
(Continued)
17
<PAGE>
JEFFERSON SAVINGS BANCORP, INC
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
IMPACT OF INFLATION AND CHANGING PRICES
The unaudited consolidated financial statements and related data presented
herein have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and results of
operations in the measurements of historical dollars without considering changes
in the relative purchasing power of money over time because of inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of
the Company are monetary in nature. As a result, interest rates have a more
significant impact on the Company's performance than the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services. In the
present interest rate environment, the liquidity, maturity structure, and
quality of the Company's assets and liabilities are important factors in the
maintenance of acceptable performance levels.
IMPACT OF NEW ACCOUNTING STANDARDS
Accounting for Impairment of Long-Lived Assets
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS 121). SFAS 121 requires, among other
things, that long-lived assets and certain identifiable intangibles held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of the provisions of SFAS 121 on January 1, 1996 did
not have a material impact on the Company's financial statements.
Accounting for Mortgage Servicing Rights
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights," (SFAS 122) an
amendment of FASB Statement No. 65. SFAS 122 amends SFAS 65, "Accounting for
Certain Mortgage Banking Activities," to require that a mortgage banking
enterprise recognize, as separate assets, rights to service mortgage loans for
others, however those servicing rights are acquired. A mortgage banking
enterprise that acquires mortgage servicing rights through either the purchase
or origination of mortgage loans and sells or securitizes those loans with
servicing rights retained should allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loans (without the mortgage servicing
rights) based on their relative fair values, if it is practicable to estimate
those fair values. If it is not practicable to estimate the fair values of the
mortgage servicing rights and the mortgage loans (without the mortgage servicing
rights), the entire cost of purchasing or originating the loans should be
allocated to the mortgage loans and no cost should be allocated to mortgage
servicing rights. SFAS 122 also requires that a mortgage enterprise assess its
capitalized mortgage servicing rights for impairment based on the fair value of
those rights. The adoption of SFAS 122 did not have a material effect on the
Company's financial statements.
(Continued)
18
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Accounting for Stock-Based Compensation
During October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans and also applies to transactions in which an entity
issues its equity instruments to acquire goods or services from nonemployees.
SFAS 123 defines a fair value based method of accounting for an employee stock
option or similar equity instruments and encourages all entities to adopt that
method of accounting. However, it also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value based method of
accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25). Pro forma disclosures required for
entities that elect to continue to measure compensation cost using APB 25 must
include the effect of all awards granted in fiscal years that begin after
December 15, 1994. The Company has elected to continue to measure compensation
cost using APB 25, therefore the adoption of SFAS No. 123 did not have any
impact on the Company's financial condition or results of operations.
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities
During June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," (SFAS 125)
which provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers of financial assets that are secured
borrowings. SFAS 125 also requires that a liability can be derecognized if and
only if either (a) the debtor pays the creditor and is relieved of its
obligation for the liability or (b) the debtor is legally released from the
liability either judicially or by the creditor. SFAS 125 is effective for
transactions occurring after December 31, 1996, and is to be applied
prospectively. Earlier or retroactive application is not permitted. The
Savings Bank has not determined the impact of the statement on its financial
position as the Statement was only recently issued.
19
<PAGE>
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
---------------------------------------------------
On April 24, 1996, the Company held its 1996 Annual Meeting of
Stockholders for the purpose of (1) the election of directors, (2) the
ratification of KPMG Peat Marwick LLP as independent auditors, and (3)
voting on a nonbinding proposal by a shareholder recommending the
Company's board of directors immediately take the steps necessary to
actively seek a sale or merger of the Company on terms that will
maximize share value for shareholders.
(1) For election of directors:
For Withheld
--- --------
Frank C. Bick 2,217,054 1,721,637
William W. Canfield 2,217,915 1,720,776
Lloyd D. Doerflinger 2,223,019 1,715,672
========= =========
(2) For the ratification of KPMG Peat Marwick LLP as independent
auditors for the year ending December 31, 1996:
For Against Abstain
--- ------- -------
2,567,673 1,333,389 37,629
========= ========= ======
(3) Shareholder proposal:
For Against Abstain
--- ------- -------
1,900,275 1,614,230 20,477
========= ========= ======
There were no broker nonvotes.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
None.
20
<PAGE>
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.
JEFFERSON SAVINGS BANCORP, INC.
Registrant
Date: August 14, 1996 Paul J. Milano
--------- --------------
Paul J. Milano
Senior Vice President and Chief Financial
Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,679,158
<INT-BEARING-DEPOSITS> 11,879,070
<FED-FUNDS-SOLD> 6,365,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 246,766,088
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 810,788,543
<ALLOWANCE> 5,414,514
<TOTAL-ASSETS> 1,125,392,882
<DEPOSITS> 875,823,187
<SHORT-TERM> 150,425,215
<LIABILITIES-OTHER> 16,901,841
<LONG-TERM> 0
0
0
<COMMON> 44,700
<OTHER-SE> 82,197,939
<TOTAL-LIABILITIES-AND-EQUITY> 1,125,392,882
<INTEREST-LOAN> 31,694,747
<INTEREST-INVEST> 8,079,827
<INTEREST-OTHER> 891,205
<INTEREST-TOTAL> 40,665,779
<INTEREST-DEPOSIT> 22,193,254
<INTEREST-EXPENSE> 26,539,704
<INTEREST-INCOME-NET> 14,126,075
<LOAN-LOSSES> 330,000
<SECURITIES-GAINS> 634,372
<EXPENSE-OTHER> 10,188,759
<INCOME-PRETAX> 5,894,716
<INCOME-PRE-EXTRAORDINARY> 3,607,216
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,607,216
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
<YIELD-ACTUAL> 2.61
<LOANS-NON> 2,598,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 3,606,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,250,540
<CHARGE-OFFS> 16,600
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 5,414,514
<ALLOWANCE-DOMESTIC> 1,932,022
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,482,492
</TABLE>
