<PAGE>
<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 March 31, 1997
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: #0-21466
JEFFERSON SAVINGS BANCORP, INC.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 43-1625841
- ----------------------- -------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
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 April 30, 1997
- -----------------------------------------------------------------
Common Stock, Par Value $.01 4,971,257 shares
<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
INDEX to Form 10-Q
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated Balance Sheets 3
- Consolidated Statements of Income 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 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -----------
<S> <C> <C>
Cash $ 7,252,222 7,359,389
Interest-bearing deposits 10,630,111 11,531,105
Federal funds sold 10,470,000 4,815,000
Investment securities available for sale, at
fair value (amortized cost of $141,840,587
and $84,838,744 at March 31, 1997 and
December 31, 1996, respectively) 141,142,812 85,701,772
Mortgage-backed securities available for sale,
at fair value (amortized cost of $91,883,202 and
$95,982,081 at March 31, 1997 and December 31,
1996, respectively) 90,835,631 95,203,312
Loans receivable, net 970,120,235 885,405,062
Investment in real estate, net 4,349,314 4,460,202
Stock in Federal Home Loan Banks 16,583,300 15,768,700
Office properties and equipment, net 11,171,541 9,667,851
Excess of cost over fair value of net assets acquired 25,333,706 19,746,106
Accrued income and other assets 9,039,836 8,420,576
--------------- -------------
$ 1,296,928,708 1,148,079,075
=============== =============
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits $ 1,077,949,162 947,068,672
Borrowed money 95,821,285 97,682,127
Deferred tax liability 334,500 1,324,000
Advance payments by borrowers for taxes
and insurance 6,096,565 2,884,424
Accrued expenses and other liabilities 10,428,037 9,200,939
--------------- -------------
Total liabilities 1,190,629,549 1,058,160,162
--------------- -------------
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 5,019,566 and
4,470,049 shares at March 31, 1997 and
December 31, 1996, respectively 50,196 44,700
Additional paid-in capital 61,286,117 45,771,841
Retained earnings, subject to certain
restrictions 52,923,511 50,759,048
Unrealized gain (loss) on assets available for
sale, net (1,047,344) 50,259
Unamortized restricted stock awards (299,646) (359,477)
Unearned ESOP shares (5,836,441) (5,345,412)
Treasury stock, at cost: 48,617 shares and
62,703 shares at March 31, 1997 and
December 31, 1996, respectively (777,234) (1,002,046)
--------------- -------------
Total stockholders' equity 106,299,159 89,918,913
--------------- -------------
$ 1,296,928,708 1,148,079,075
=============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
3<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Income
Three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Interest and dividend income:
Loans receivable $ 19,039,180 15,792,584
Mortgage-backed securities 1,551,507 3,528,805
Investment securities 1,631,233 749,005
Interest-bearing deposits and
federal funds sold 221,984 168,909
Stock in Federal Home Loan Banks 267,838 270,678
------------ ----------
Total interest and dividend
income 22,711,742 20,509,981
------------ ----------
Interest expense:
Savings deposits 12,406,690 11,225,164
Borrowed money 1,383,347 2,251,714
------------ ----------
Total interest expense 13,790,037 13,476,878
------------ ----------
Net interest income 8,921,705 7,033,103
Provision for losses on loans 306,000 165,000
------------ ----------
Net interest income after
provision for losses on
loans 8,615,705 6,868,103
------------ ----------
Noninterest income:
Servicing and other loan fees 224,959 243,137
Fees for other services to customers 225,248 127,449
Gain on sales of mortgage-backed
securities, net - 507,613
Gain on sales of loans receivable, net 57,736 149,346
Gain on real estate operations, net 44,144 368,050
Other 131,340 211,361
------------ ----------
Total noninterest income 683,427 1,606,956
------------ ----------
Noninterest expense:
General and administrative:
Compensation and employee benefits 2,716,513 2,541,691
Occupancy 631,405 533,461
Advertising 146,565 122,769
Federal insurance premiums 107,724 503,397
Legal, examination, and other
professional fees 238,066 385,601
Other 862,036 893,106
------------ ----------
Total general and administrative 4,702,309 4,980,025
Amortization of excess cost over fair value
of net assets acquired 354,089 250,042
------------ ----------
Total noninterest expense 5,056,398 5,230,067
------------ ----------
Income before income taxes 4,242,734 3,244,992
Income tax expense 1,622,000 1,254,500
------------ ----------
Net income $ 2,620,734 1,990,492
============ ==========
Earnings per share $ .59 .50
===== ===
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Common Stock Additional gain (loss) on
------------------- paid-in Retained assets available
Shares Dollars capital earnings for sale, net
------ ------- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 4,407,346 $44,700 45,771,841 50,759,048 50,259
Net income - - - 2,620,734 -
Dividends paid ($.10 per share) - - - (456,271) -
Stock issued in dividend
reinvestment and stock
purchase plan 1,567 16 45,094 - -
Amortization of restricted
stock awards - - - - -
Amortization of ESOP shares - - 199,767 - -
Change in unrealized gain
(loss) on assets available for
sale, net - - - - (1,097,603)
Stock issued to acquire
L&B Financial 547,950 5,480 15,271,367 - -
Unearned ESOP shares acquired - - - - -
Stock options exercised 14,086 - (83,952) - -
Tax benefit of non-incentive
stock options exercised - - 82,000 - -
--------- ------- ---------- ---------- ----------
Balance at March 31, 1997 4,970,949 $50,196 61,286,117 52,923,511 (1,047,344)
========= ======= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Unamortized Total
restricted Unearned Treasury Stockholders'
stock awards ESOP shares Stock equity
------------ ----------- ------ -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 (359,477) (5,345,412) (1,002,046) 89,918,913
Net income - - - 2,620,734
Dividends paid ($.10 per share) - - - (456,271)
Stock issued in dividend
reinvestment and stock
purchase plan - - - 45,110
Amortization of restricted
stock awards 59,831 - - 59,831
Amortization of ESOP shares - 181,855 - 381,622
Change in unrealized gain
(loss) on assets available
for sale, net - - - (1,097,603)
Stock issued to acquire
L&B Financial - - - 15,276,847
Unearned ESOP shares acquired - (672,884) - (672,884)
Stock options exercised - - 224,812 140,860
Tax benefit of non-incentive
stock options exercised - - - 82,000
--------- ---------- ----------- -----------
Balance at March 31, 1997 (299,646) (5,836,441) (777,234) 106,299,159
========= ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.<
5<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,620,734 1,990,492
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 580,330 833,353
Provision for losses on loans 306,000 165,000
Net gain on sales of assets (196,108) (1,093,051)
Loans originated for sale (2,747,985) (7,712,475)
Sale of loans originated for sale 4,091,550 7,306,906
Deferred income taxes (732,000) (426,824)
Stock dividend from Federal Home Loan Banks (52,400) (34,400)
Other, net 2,345,011 (4,792,158)
----------- ------------
Net cash provided by (used in) operating activities 6,215,132 (3,763,157)
----------- ------------
Cash flows from investing activities:
Principal repayments on:
Loans receivable 80,501,399 65,290,721
Mortgage-backed securities 4,456,090 5,242,901
Proceeds from maturity of investment securities 4,530,000 17,000,000
Proceeds from sale of:
Loans receivable 1,042,480 11,471,700
Mortgage-backed securities available for sale 44,578,236 32,066,566
Investment securities available for sale 9,795,192 -
Cash invested in:
Loans receivable originated (94,760,295) (74,162,297)
Loans receivable purchased (2,974,300) (1,640,700)
Mortgage-backed securities - (19,851,914)
Investment securities (58,957,815) (5,000,000)
Proceeds from sale of real estate 920,231 1,661,345
Cash paid for acquisitions (15,266,182) -
Cash and cash equivalents from acquisitions 8,296,533 -
Other, net (228,983) (726,143)
----------- ------------
Net cash provided by (used in) investing activities (18,067,414) 31,352,179
----------- ------------
Cash flows from financing activities:
Increase in savings deposits, net 25,972,038 8,903,484
Decrease in borrowed money, net (11,860,842) (34,188,750)
Increase in advance payments by borrowers for
taxes and insurance 2,658,225 2,260,101
Dividends paid (456,271) (299,339)
Other, net 185,971 80,000
----------- ------------
Net cash provided by (used in) financing activities 16,499,121 (23,244,504)
----------- ------------
Increase in cash and cash equivalents 4,646,839 4,344,518
Cash and cash equivalents at beginning of period 23,705,494 20,690,764
----------- ------------
Cash and cash equivalents at end of period $ 28,352,333 25,035,282
=========== ============
Supplemental disclosures of cash flow information:
Interest paid $ 14,176,392 13,460,430
Income taxes paid 119,663 241,384
Noncash investing activities:
Stock issued for acquisitions 15,276,847 -
Additions to real estate acquired in settlement
of loans or through foreclosure 439,025 800,330
Loans originated to finance the sale of real estate - 21,850
Noncash financing activity - interest credited 9,460,385 8,437,166
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
6<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1997
(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 months ended March 31, 1997 and 1996, respectively.
Operating results for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected
for the year ending December 31, 1997.
(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 December 30, 1996, the Company completed its acquisition of
Texas Heritage Savings Association/Banc in Rowlett, Texas ("Texas
Heritage") in exchange for $5.1 million in cash and 223,151
shares of the Company's common stock. Texas Heritage's total
assets were $71.8 million, consisting primarily of loans
receivable of $56.0 million and mortgage-backed and investment
securities of $7.3 million; Texas Heritage's total deposits were
$64.7 million. As a result of the Texas Heritage acquisition,
the Company added four branches in the suburban Dallas counties
of Dallas, Rockwall and Tarrant. The acquisition, which was
funded by common stock, available cash and borrowings, was
accounted for using the purchase method. Under the purchase
method of accounting, the results of operations of Texas Heritage
are included in the Company's results of operations only since
the date of its acquisition. The excess cost over fair value
of net assets acquired was approximately $6.3 million. Upon
completion of the acquisition, Texas Heritage was merged into
First Federal.
The Company's acquisition of L&B Financial, Inc. in Sulphur
Springs, Texas ("L&B Financial") was completed on February 28,
1997. The Company acquired L&B Financial for a combination of
$15.3 million in cash and 547,950 shares of the Company's common
stock. L&B Financial's total assets were $140.8 million,
consisting primarily of loans receivable of $70.4 million and
mortgage-backed and investment securities of $57.3 million; L&B
Financial's total deposits were $104.9 million. As a result of
the L&B Financial acquisition, the Company added six branches in
the northeast Texas counties of Bowie, Camp, Franklin, Hopkins
Morris and Titus. The acquisition was accounted for using the
purchase method. Under the purchase method of accounting, the
results of operations of L&B Financial are included in the
Company's results of operations only since the date of its
acquisition. The excess
7 (Continued)<PAGE>
<PAGE>
of cost over fair value of net assets acquired was $5.9 million.
Upon completion of the acquisition, L&B Financial was merged into
First Federal.
The following unaudited information presents pro forma results of
operations of the Company for the three months ended March 31,
1997, compared with the same period in 1996, assuming the
acquisitions of Texas Heritage and L&B Financial had taken place
on January 1, 1996.
<TABLE>
<CAPTION>
Three months Three months
ended March 31, ended March 31,
1997 1996
------------------ ------------------
(In thousands, except per share data)
<S> <C> <C>
Net interest income $ 9,552 8,730
Net income 2,104 2,248
======= ======
Earnings per share $ .44 .48
======= ======
</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 first quarter have been computed based
upon net income for the three months ended March 31, 1997 and
1996, using 4,436,597 and 3,961,380 weighted average common
shares and common stock equivalents outstanding, respectively.
8<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion reviews the results of operations and
the financial condition of the Company as of and for the three
months ended March 31, 1997.
RESULTS of OPERATIONS
NET INCOME
Net income increased $630,000, or 31.7%, from $1,990,000, or $.50
per share, for the three months ended March 31, 1996 to
$2,621,000, or $.59 per share, for the three months ended March
31, 1997. Annualized return on average equity and annualized
return on average assets for the quarter were 11.07% and 0.88%,
respectively compared to 9.84% and 0.70%, respectively during the
comparable 1996 quarter. Weighted average shares outstanding for
the first quarter of 1997 were 4,436,597 compared to 3,961,380
for the first quarter of 1996.
The significant increases in net income, return on average equity
and return on average assets for the three month period were
primarily the result of an increase in net interest income
partially offset by a decline in noninterest income.
NET INTEREST INCOME
Net interest income for the first quarter of 1997 increased $1.9
million, or 26.9%, to $8.9 million compared to $7.0 million for
the first quarter of 1996. The increase in net interest income
was the result of an improved interest rate spread which
increased from 2.28% for the quarter ended March 31, 1996 to
2.87% for the quarter ended March 31, 1997. The Company's net
interest margin increased from 2.57% to 3.14% during the same
periods. The improvement in the interest rate spread was
primarily due to an increase in the average yield on interest-
earning assets from 7.49% for the first quarter of 1996 to 7.99%
for the first quarter of 1997. This increase was caused by a
shift in a portion of the Company's interest-earning assets from
lower yielding mortgage-backed securities to higher yielding
loans receivable. During 1996 the Company sold a large portion
of its mortgage-backed securities portfolio and used a portion of
the proceeds to fund higher yielding loan originations. Also
contributing to the increase in the interest rate spread was the
upward adjustment of the rates on the Company's existing
adjustable-rate loan portfolio. The average balance of interest-
earning assets increased $41.7 million, or 3.8%, from $1.09
billion for the quarter ended March 31, 1996 to $1.14 billion for
the quarter ended March 31, 1997. The increase in the average
balance of interest-earning assets was primarily the result of
the Texas Heritage acquisition.
Loans originated and purchased totaled approximately $100 million
for the three months ended March 31, 1997 compared to $84 million
for the comparable period in 1996. Principal repayments for the
first quarter of 1997 were approximately $80 million compared to
$65 million during the first quarter of 1996.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans for the first quarter of 1997
was $306,000 compared to $165,000 for the like period in 1996.
The increased provision for losses reflects the increase in
lending volume. Loan charge-offs totaled $7,000 for the first
quarter of 1997 compared to $10,000 for the first quarter of
1996. At March 31, 1997, the allowance for losses on loans was
$8.0 million, which represented .82% of net loans receivable
compared to $6.5 million, or .74% of net loans receivable at
December 31, 1996. The ratio of nonaccruing loans to net loans
receivable was .24% at March 31, 1997 compared to .17% at
9<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
December 31, 1996. 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 real estate
market, and current and prospective economic conditions.
NONINTEREST INCOME
Total noninterest income decreased $924,000, or 57.5%, from $1.6
million for the quarter ended March 31, 1996 to $683,000 for the
quarter ended March 31, 1997. The decrease was primarily the
result of a $508,000 decrease in gain on sale of mortgage-backed
securities, a $324,000 decrease in gain on real estate
operations, a $92,000 decrease in gain on sale of loans, and a
$80,000 decrease in other noninterest income, partially offset by
a $98,000 increase in fees for other services to customers. The
gain on sale of mortgage-backed securities resulted from the
decision to sell approximately $32 million in mortgage-backed
securities classified as available for sale during the quarter
ended March 31, 1996. No such gains occurred during the like
period in 1997. The decrease in the gain on real estate
operations was largely attributable to a $324,000 profit on the
sale of real estate held for investment during the first quarter
of 1996. No such gains occurred during the like period in 1997.
The decrease in gain on sale of loans receivable was the result
of a decline in loan sales from $18.8 million for the three
months ended March 31, 1996 to $5.1 million for the three months
ended March 31, 1997. The gain on sale of loans represents
origination and other fees retained by the Company in connection
with the sale of fixed-rate loans to institutional investors
generally on an individual loan basis. The decrease 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. during the quarter ended March 31, 1996. No
such gains occurred during the like period in 1997. The increase
in fees for services to customers was due primarily to the
acquisitions of Texas Heritage and L&B Financial.
NONINTEREST EXPENSE
Noninterest expense decreased $174,000, or 3.3%, from $5.2
million for the quarter ended March 31, 1996 to $5.1 million for
the quarter ended March 31, 1997. The decrease was due primarily
to a $396,000 decrease in federal insurance premiums, and a
$148,000 decrease in legal, examination and other professional
fees, partially offset by a $175,000 increase in compensation and
employee benefits, a $104,000 increase in amortization of excess
cost over fair value of net assets acquired, and a $98,000
increase in occupancy expense. The decrease in federal insurance
premiums was the result of lower assessment rates following the
1996 legislation to recapitalize the Savings Association
Insurance Fund. The decrease in legal, examination and other
professional fees was primarily the result of fees paid in
connection with income tax planning during the three months ended
March 31, 1996. There were no such fees paid during the like
period in 1997. The increase in compensation and employee
benefits was due primarily to salary increases and the
acquisitions of Texas Heritage and L&B Financial. The increase
in amortization of excess cost over fair value of net assets
acquired is the result of the Texas Heritage and L&B Financial
acquisitions. The increase in occupancy expense is primarily due
to the Texas acquisitions.
Reflecting the decline in noninterest expense and an increase in
average assets, the ratio of noninterest expense to average
assets decreased from 1.85% for the three month period ended
March 31, 1996 to 1.70% for the three month period ended March
31, 1997.
10<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
INCOME TAX EXPENSE
The Company provides for state and federal income tax expense
based upon earnings before income taxes. The effective tax rate
prior to the non deductible amortization of excess cost over fair
value of net assets acquired for the three months ended March 31,
1997 was 35.3% compared to 35.9% for the like period in 1996.
Under the asset and liability method of accounting for income
taxes, the Company establishes 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.
FINANCIAL CONDITION
The Company's total assets increased $148.9 million, or 13.0%,
from $1,148.1 million at December 31, 1996 to $1,296.9 million at
March 31, 1997. This increase was due principally to a $84.7
million increase in net loans receivable, and a $51.1 million
increase in investment and mortgage-backed securities. The
acquisition of L&B Financial contributed $70.4 million to net
loans receivable and $57.3 million to investment and mortgage-
backed securities.
The Company's savings deposits increased $130.9 million, or
13.8%, from $947.1 million at December 31, 1996 to $1,077.9
million at March 31, 1997. The acquisition of L&B Financial
brought in $104.9 million in new deposits.
Total stockholders' equity increased by $16.4 million, or 18.2%,
to $106.3 million at March 31, 1997 from $89.9 million at
December 31, 1996. The Company's ratio of stockholders' equity
to assets increased to 8.19% at March 31, 1997 from 7.83% at
December 31, 1996. The increase in stockholders' equity is
primarily the result of shares issued in the acquisition of L&B
Financial. The Company's book value per share at March 31, 1997
was $23.22 compared to $22.34 at December 31, 1996. Unearned
ESOP shares of 392,356 and 382,538 were excluded in calculating
book value per share at March 31, 1997 and December 31, 1996,
respectively.
11<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
NONPERFORMING ASSETS
Summarized below are nonperforming assets at March 31, 1997 and
December 31, 1996
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -----------
(Dollars in thousands)
<S> <C> <C>
Restructured loans (1) $ 178 1,169
------- -----
Nonaccruing loans:
Residential real estate $ 1,362 1,169
Commercial real estate 417 -
Construction 477 11
Commercial - 74
Consumer 90 232
------- -----
Total nonaccruing loans 2,346 1,486
Applicable allowance for losses (76) (43)
------- -----
Nonaccruing loans, net 2,270 1,443
------- -----
Foreclosed real estate, net 4,349 4,460
------- -----
Nonperforming assets, net $ 6,797 6,082
======= =====
Nonperforming assets, net as a
percentage of total assets 0.52% 0.53%
</TABLE>
(1) Not included in restructured loans is a loan secured by
commercial real estate. Management determined that this loan
should not be considered a nonperforming asset since the borrower
has been current in meeting restructured terms since the date of
restructuring, the restructured loan provides for principal
amortization, and the loan has an interest rate and other
features that are at least equivalent to market terms. The
unpaid balance of this loan was approximately $3,078,000 and
$3,084,000 at March 31, 1997 and December 31, 1996.
Total nonperforming assets increased $715,000 from $6.1 million
at December 31, 1996 to $6.8 million at March 31, 1997 primarily
as the result of a $417,000 increase in nonaccruing commercial
real estate loans and a $466,000 increase in nonaccruing
residential construction loans. The increase in nonaccruing
commercial real estate loans was due primarily to the addition of
a $380,000 loan to develop residential properties.
Loans are placed on nonaccrual status when either principal or
interest is more than 90 days past due or at such time when
management concludes that payment in full is not likely,
whichever is sooner. Any subsequent interest payments received
are recorded as interest income in the period received.
Impaired loans, which are represented by loans on nonaccrual
status and loans where management has determined it is probable
the Company will be unable to collect all amounts due according
to the contractual terms of the loan agreement, were $3.8 million
and $3.2 million at March 31, 1997 and December 31, 1996,
respectively. At March 31, 1997 $534,000 of impaired loans had
specific reserves of $85,000 and the remaining impaired loans of
$3.1 million had no specific reserves. At December 31, 1996
$388,000 of impaired loans had specific reserves of $80,000 and
the remaining impaired loans of $2.8 million had no specific
reserves.
12
<PAGE>
PAGE>
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.
The Association and the Bank meet all existing regulatory capital
requirements. Capital ratios at March 31, 1997, as computed under
OTS capital standards, are as follows:
<TABLE>
<CAPTION>
Association Bank
-----------------------------------------------
Percent of Percent of
Amount Assets (2) Amount Assets (2)
------ ---------- ------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Tangible capital $45,665 6.66% $35,133 5.96%
Tangible capital
requirement $10,287 1.50 8,846 1.50
-------- ---- -------- ----
Excess $ 35,378 5.16% $ 26,287 4.46%
======== ==== ======== ====
Core capital $ 45,665 6.66% $ 35,133 5.96%
Core capital requirement $ 20,574 3.00 17,691 3.00
-------- ---- -------- ----
Excess $ 25,091 3.66% $ 17,442 2.96%
======== ==== ======== ====
Total capital (i.e., core
and supplementary
capital) $ 49,904 11.86% $ 38,785 9.93%
Risk-based capital
requirement 33,660 8.00 31,258 8.00
-------- ---- -------- ----
Excess $ 16,244 3.86% $ 7,527 1.93%
======== ==== ======== =====
</TABLE>
(2) Based upon adjusted total assets for purposes of the
tangible and core capital requirements, and risk-weighted assets
for purposes of the risk-based capital requirement.
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 5.75% and 5.57%
at March 31, 1997 and December 31, 1996, respectively. The
Bank's liquidity ratios were 7.73% and 6.40% at March 31, 1997
and December 31, 1996, 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
operations. 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.
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 investment and
mortgage-backed securities, proceeds from maturing investment
securities, and increases in savings deposits. Cash flows from
financing activities provided $16.5 million in funds during the
first three months of 1997. Cash flows from financing activities
consisted primarily of $26.0 million in increased savings
deposits, offset partially by a reduction in borrowed money of
13
PAGE>
$11.9 million. Cash flows from these financing activities and
investing activities, which consisted primarily of $85.0 million
in principal repayments on loans and mortgage-backed securities,
and $54.4 million in sales of investment and mortgage-backed
securities, were used primarily to fund the Company's investing
activities of originating loans and purchasing investment
securities during the three months ended March 31, 1997.
The Company anticipates that it will have sufficient funds
available to meet its current commitments. At March 31, 1997,
the Company had commitments to originate loans of $39.7 million,
to purchase residential adjustable-rate mortgages of
$1.2 million, and to sell loans of $3.4 million. Certificates of
deposit which are scheduled to mature in one year or less at
March 31, 1997 totaled $573.3 million. Management believes that
a significant portion of such deposits will remain with the
Company. In addition, at March 31, 1997, the Association has an
available line of credit with the FHLB of Des Moines totaling
$46.2 million and the Bank has an available line of credit with
the FHLB of Dallas totaling $14.0 million.
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 Transfers and Servicing of Financial Assets and
Extinquishments of Liabilities
On January 1, 1997, the Company adopted FASB issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinquishment of Liabilities", which provides consistent
standards for distinguishing transfers of financial assets that
are sales from transfers that are secured borrowings. The
statement 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. The Statement provides implementation guidance for
assessing isolation of transferred assets and for accounting for
transfers of partial interests, servicing of financial assets,
securitizations, transfers of sales-type and direct financing
lease receivables, securities lending transactions, repurchase
transactions including "dollar rolls", "wash sales", loan
syndications and participations, risk participation in banker's
acceptances, factoring arrangements, transfers of receivables
with recourse, and extinguishments of liabilities. The adoption
of SFAS No. 125 did not have a material effect on the Company's
financial statements.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings per
Share", which establishes standards for computing and presenting
earnings per share (EPS). SFAS No. 128 simplifies existing
standards for computing EPS and makes them comparable to
international standards. It replaces the presentation of primary
EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and
requires a reconciliation of the components of basic and diluted
EPS. Basic EPS excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock
that then shared in the earnings of the Company. SFAS No. 128 is
effective for financial statements issued for periods ending
after December 31, 1997, including interim periods, and requires
restatement of all prior-period EPS data presented. The adoption
of SFAS No. 128 is not expected to have a material impact on the
Company's financial statements.
14
<PAGE>
<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
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K:
On March 14, 1997, the Registrant filed a Current
Report on Form 8-K reporting the consummation of its acquisition
of L&B Financial, Inc. under Item 2 and its acquisition of Texas
Heritage Savings Association/Banc under Item 5. The following
financial statements of L&B Financial, Inc. were filed as part of
the Form 8-K:
Audited Financial Statements of L&B.
- -----------------------------------
1. Report of Independent Auditors.
2. Consolidated Balance Sheets as of June 30, 1996 and 1995
3. Consolidated Statements of Income for the Years Ended
June 30, 1996, 1995 and 1994.
4. Consolidated Statement of Stockholders' Equity for the
Years Ended June 30, 1996, 1995 and 1994
5. Consolidated Statements of Cash Flows for the Years Ended
June 30, 1996, 1995 and 1994.
6. Notes to Consolidated Financial Statements.
Unaudited Financial Statements of L&B:
- -------------------------------------
1. Consolidated Balance Sheets as of December 31, 1996 and
1995.
2. Consolidated Statements of Income for the Six Months
Ended December 31, 1996 and 1995.
15<PAGE>
<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: May 14, 1997 By: /s/ Paul J. Milano
-----------------------------------
Paul J. Milano
Senior Vice President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted
from consolidated financial statements and notes thereto of
Jefferson Savings Bancorp, Inc. at and for the three months ended
March 31, 1997 and is qualified in its entirety by reference to
such financial statements. Dollar amounts (other than per share
data) is in thousands.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 7,252
<INT-BEARING-DEPOSITS> 10,630
<FED-FUNDS-SOLD> 10,470
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 231,978
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 978,103
<ALLOWANCE> 7,983
<TOTAL-ASSETS> 1,296,929
<DEPOSITS> 1,077,949
<SHORT-TERM> 95,821
<LIABILITIES-OTHER> 16,859
<LONG-TERM> 0
<COMMON> 50
0
0
<OTHER-SE> 106,249
<TOTAL-LIABILITIES-AND-EQUITY> 1,296,929
<INTEREST-LOAN> 19,039
<INTEREST-INVEST> 3,183
<INTEREST-OTHER> 490
<INTEREST-TOTAL> 22,712
<INTEREST-DEPOSIT> 12,407
<INTEREST-EXPENSE> 13,790
<INTEREST-INCOME-NET> 8,922
<LOAN-LOSSES> 306
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,056
<INCOME-PRETAX> 4,243
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,621
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
<YIELD-ACTUAL> 3.14
<LOANS-NON> 2,270
<LOANS-PAST> 0
<LOANS-TROUBLED> 178
<LOANS-PROBLEM> 1,346
<ALLOWANCE-OPEN> 6,529
<CHARGE-OFFS> 7
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 7,983
<ALLOWANCE-DOMESTIC> 7,983
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,874
</TABLE>
