<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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _______
Commission File Number: #0-21466
JEFFERSON SAVINGS BANCORP, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 43-1625841
- ----------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) 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 July 31, 1998
- ---------------------------- ----------------------------
Common Stock, Par Value $.01 10,038,201 shares
1<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 10
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 19
PART II OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 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 21
SIGNATURES 22
2<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Cash $ 6,764,323 9,039,932
Interest-bearing deposits 30,763,698 12,673,066
Federal funds sold 6,940,000 9,870,000
Investment securities available for sale, at
fair value (amortized cost of $203,547,567
and $129,574,313 at June 30, 1998 and
December 31, 1997, respectively) 203,762,163 129,996,500
Mortgage-backed securities available for sale,
at fair value (amortized cost of $21,345,549
and $85,270,031 at June 30, 1998 and
December 31, 1997, respectively) 21,563,028 85,480,293
Loans receivable, net 921,947,380 924,919,606
Investment in real estate, net 4,582,460 4,255,921
Stock in Federal Home Loan Banks 7,913,600 16,741,500
Office properties and equipment, net 11,266,773 11,532,147
Excess cost over fair value of net assets acquired 23,046,800 23,848,993
Accrued income and other assets 10,372,620 9,697,539
-------------- -------------
$1,248,922,845 1,238,055,497
============== =============
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits $1,046,000,850 1,044,881,130
Borrowed money 62,298,271 65,908,257
Deferred tax liability 339,700 471,000
Advance payments by borrowers for taxes
and insurance 8,532,529 3,550,798
Accrued expenses and other liabilities 10,473,780 6,984,474
-------------- -------------
Total liabilities 1,127,645,130 1,121,795,659
-------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock ($.01 par value): Authorized
5,000,000 shares; none issued -- --
Common stock ($.01 par value): Authorized
20,000,000 shares; issued 10,035,998 at
June 30, 1998 and December 31, 1997 100,360 100,360
Additional paid-in capital 64,576,945 62,797,493
Retained earnings, subject to certain
restrictions 61,694,466 58,978,239
Accumulated other comprehensive income 259,175 379,251
Unamortized restricted stock awards (74,242) (120,151)
Unearned ESOP shares (5,228,031) (5,706,665)
Treasury stock, at cost: 6,374 shares and
21,106 shares at June 30, 1998 and
December 31, 1997, respectively (50,958) (168,689)
-------------- -------------
Total stockholders' equity 121,277,715 116,259,838
-------------- -------------
$1,248,922,845 1,238,055,497
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
3<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Income
Three and six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans receivable $17,963,169 20,511,880 36,564,279 39,551,060
Mortgage-backed securities 998,039 1,514,059 2,239,442 3,065,566
Investment securities 2,737,729 2,536,443 5,093,354 4,167,676
Interest-bearing deposits and
federal funds sold 593,838 199,124 913,615 421,108
Stock in Federal Home Loan Banks 172,486 280,898 436,360 548,736
----------- ----------- ----------- -----------
Total interest and dividend
income 22,465,261 25,042,404 45,247,050 47,754,146
----------- ----------- ----------- -----------
Interest expense:
Savings deposits 13,227,945 13,574,988 26,333,963 25,981,678
Borrowed money 927,357 1,370,613 1,857,718 2,753,960
----------- ----------- ----------- -----------
Total interest expense 14,155,302 14,945,601 28,191,681 28,735,638
----------- ----------- ----------- -----------
Net interest income 8,309,959 10,096,803 17,055,369 19,018,508
Provision for losses on loans (1,200,000) 606,000 (1,200,000) 912,000
----------- ----------- ----------- -----------
Net interest income after
provision for losses on loans 9,509,959 9,490,803 18,255,369 18,106,508
----------- ----------- ----------- -----------
Noninterest income:
Servicing and other loan fees 230,087 191,395 494,058 416,354
Fees for other services
to customers 262,340 277,270 496,111 502,518
Gain on sales of mortgage-
backed securities, net 48,166 -- 48,166 --
Gain on sales of loans
receivable, net 452,104 81,730 1,080,710 139,466
Results of real estate
operations, net 128,700 89,262 164,192 133,406
Other 106,892 134,945 257,964 266,285
----------- ----------- ----------- -----------
Total noninterest income 1,228,289 774,602 2,541,201 1,458,029
----------- ----------- ----------- -----------
Noninterest expense:
General and administrative:
Compensation and employee
benefits 3,860,568 3,005,592 7,180,533 5,722,105
Occupancy 810,670 688,943 1,560,144 1,320,348
Advertising 156,695 221,360 262,654 367,925
Federal insurance premiums 239,914 241,382 489,565 349,106
Legal, examination, and other
professional fees 504,378 286,348 825,363 524,414
Other 1,183,169 1,048,794 2,254,569 1,910,830
----------- ----------- ----------- -----------
Total general and administrative 6,755,394 5,492,419 12,572,828 10,194,728
Amortization of excess cost over fair
value of net assets acquired 452,728 450,062 903,644 804,151
----------- ----------- ----------- -----------
Total noninterest expense 7,208,122 5,942,481 13,476,472 10,998,879
----------- ----------- ----------- -----------
Income before income taxes 3,530,126 4,322,924 7,320,098 8,565,658
Income tax expense 1,710,000 1,652,000 3,303,500 3,274,000
----------- ----------- ----------- -----------
Net income $ 1,820,126 2,670,924 4,016,598 5,291,658
=========== =========== =========== ===========
Earnings per share, basic $ .19 .29 .43 .60
=========== =========== =========== ===========
Earnings per share, diluted $ .18 .28 .41 .57
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional other
------------------- paid-in Retained comprehensive
Shares Dollars capital earnings income
------ ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 10,035,998 $100,360 62,797,493 58,978,239 379,251
Net income -- -- -- 4,016,598 --
Dividends paid ($.14 per share) -- -- -- (1,300,371) --
Release of ESOP shares in lieu
of cash dividend on allocated
ESOP shares -- -- 43,304 -- --
Stock issued in dividend
reinvestment and stock
purchase plan -- -- 101,719 -- --
Amortization of restricted
stock awards -- -- -- -- --
Tax benefit of restricted
stock awards vested -- -- 431,000 -- --
Amortization of ESOP shares -- -- 1,227,966 -- --
Other comprehensive income -- -- -- -- (120,076)
Stock options exercised -- -- (24,537) -- --
---------- -------- ---------- ---------- ----------
Balance at June 30, 1998 10,035,998 $100,360 64,576,945 61,694,466 259,176
========== ======== ========== ========== ==========
<CAPTION>
<CAPTION>
Unamortized Treasury stock Total
restricted Unearned -------------- stockholders'
stock awards ESOP shares stock dollars equity
------------ ----------- ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 (120,151) (5,706,665) (21,106) (168,689) 116,259,838
Net income -- -- -- -- 4,016,598
Dividends paid ($.14 per share) -- -- -- -- (1,300,371)
Release of ESOP shares in lieu
of cash dividend on allocated
ESOP shares -- 22,332 -- -- 65,636
Stock issued in dividend
reinvestment and stock
purchase plan -- -- 5,256 42,014 143,733
Amortization of restricted
stock awards 45,909 -- -- -- 45,909
Tax benefit of restricted
stock awards vested -- -- -- -- 431,000
Amortization of ESOP shares -- 456,302 -- -- 1,684,268
Other comprehensive income -- -- -- -- (120,076)
Stock options exercised -- -- 9,476 75,717 51,180
---------- ---------- ---------- -------- -----------
Balance at June 30, 1998 (74,242) (5,228,031) (6,374) (50,958) 121,277,715
========== ========== ========== ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,016,598 5,291,658
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,333,518 1,322,713
Provision for losses on loans (1,200,000) 912,000
Net gain on sales of assets (1,337,726) (424,028)
Loans originated for sale (47,389,331) (10,033,996)
Sale of loans originated for sale 47,179,847 10,710,361
Deferred income taxes (131,300) (265,000)
Stock dividend from Federal Home Loan Banks (96,500) (104,000)
Other, net 3,218,138 (716,315)
------------ ------------
Net cash provided by operating activities 7,593,244 6,693,393
------------ ------------
Cash flows from investing activities:
Principal repayments on:
Loans receivable 226,647,919 190,142,656
Mortgage-backed securities 18,506,458 9,719,549
Proceeds from maturity of investment securities 56,020,000 4,530,000
Proceeds from sale of:
Loans receivable 22,276,757 1,524,996
Mortgage-backed securities available for sale 45,347,468 44,578,236
Investment securities available for sale -- 11,084,317
Proceeds from redemption of Federal Home Loan
Bank stock 8,924,400 --
Cash invested in:
Loans receivable originated (120,417,588) (201,629,350)
Loans receivable purchased (126,002,841) (7,967,850)
Investment securities (129,970,313) (58,957,815)
Proceeds from sale of real estate 3,310,792 2,515,440
Cash paid for acquisitions -- (15,266,182)
Cash and cash equivalents from acquisitions -- 8,296,533
Other, net (672,727) (905,838)
------------ ------------
Net cash provided by (used in)
investing activities 3,970,325 (12,335,308)
------------ ------------
Cash flows from financing activities:
Increase in savings deposits, net 1,055,167 24,084,680
Decrease in borrowed money, net (3,609,986) (20,480,143)
Increase in advance payments by borrowers for
taxes and insurance 4,981,731 5,754,514
Dividends paid (1,300,371) (913,626)
Other, net 194,913 488,219
------------ ------------
Net cash provided by (used in)
financing activities 1,321,454 8,933,644
------------ ------------
Increase in cash and cash equivalents 12,885,023 3,291,729
Cash and cash equivalents at beginning of period 31,582,998 23,705,494
------------ ------------
Cash and cash equivalents at end of period $ 44,468,021 $ 26,997,223
============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 28,265,879 29,192,653
Income taxes paid 3,514,559 2,887,288
Noncash investing activities:
Stock issued for acquisitions -- 15,276,847
Additions to real estate acquired in settlement
of loans or through foreclosure 4,403,383 1,991,448
Noncash financing activity - interest credited 19,459,924 19,521,425
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6 <PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1998
(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, 1998 and 1997, respectively.
Operating results for the three and six months ended June
30, 1998 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1998.
(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 February 28, 1997, the Company completed its acquisition
of L&B Financial, Inc. in Sulphur Springs, Texas (L&B Financial)
in exchange for a combination of $15.3 million in cash and
1,095,900 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
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.
(Continued)
7<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Earnings Per Share
The Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings per
Share on December 31, 1997. SFAS No. 128 replaces the
previously reported primary earnings per share and fully-diluted
earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share
excludes any dilutive effect of stock options. Diluted earnings
per share is very similar to fully-diluted earnings per share.
The Company declared a two-for-one stock split which was
effected through a 100% stock dividend payable on December 17,
1997. All per share data for prior years has been restated to
conform with the requirements of SFAS No. 128 and to give effect
to the stock split.
The following tables reconcile the numerators and
denominators for basic and diluted earnings per share for the
three-month and six-month periods ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended June 30,
1998 1997
----------- -----------
<S> <C> <C>
Numerator:
Net income (basic and diluted
earnings per share) $ 1,820,126 $ 2,670,924
=========== ===========
Denominator:
Average shares outstanding
(basic earnings per share) 9,338,831 9,188,342
Effect of dilutive stock options 532,563 418,174
----------- -----------
Average shares outstanding
after assumed conversions
(diluted earnings per share) 9,871,394 9,606,516
=========== ===========
Six months ended June 30,
1998 1997
----------- -----------
Numerator:
Net income (basic and diluted
earnings per share) $ 4,016,598 $ 5,291,658
=========== ===========
Denominator:
Average shares outstanding
(basic earnings per share) 9,319,902 8,827,788
Effect of dilutive stock options 522,360 414,360
----------- -----------
Average shares outstanding
after assumed conversions
(diluted earnings per share) 9,842,262 9,242,148
=========== ===========
</TABLE>
Only employee stock ownership plan shares that have been
allocated or committed to be released are considered outstanding
for earnings per share calculations.
8<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Comprehensive Income
On January 1, 1998 the Company adopted the provisions of
SFAS No. 130, Reporting Comprehensive Income, which established
standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full
set of general-purpose financial statements. For the
three-month periods ended June 30, 1998 and 1997, unrealized
gains and losses on assets available for sale were the Company's
only other comprehensive income component. Comprehensive income
for the three-month periods ended June 30, 1998 and 1997 is
summarized as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Net income $ 1,820,126 $ 2,670,924
Other comprehensive income (loss):
Realized and unrealized holding gain (loss)
arising during the period, net of tax
benefit of $102,275 and tax expense of
$569,249 in 1998 and 1997, respectively (153,412) 853,873
Less: reclassification adjustment for realized
gain (loss) included in net income, net of tax 28,900 --
----------- -----------
Total other comprehensive income (loss) (182,312) 853,873
----------- -----------
Total comprehensive income $ 1,637,814 $ 3,524,797
=========== ===========
</TABLE>
For the six-month periods ended June 30, 1998 and 1997,
unrealized gains and losses on assets available for sale were
the Company's only other comprehensive income component.
Comprehensive income for the six-month periods ended June 30,
1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Net income $ 4,016,598 $ 5,291,658
Other comprehensive income (loss):
Realized and unrealized holding gain (loss)
arising during the period, net of tax
benefit of $60,784 and $162,487
in 1998 and 1997, respectively (91,176) (243,730)
Less: reclassification adjustment for realized
gain (loss) included in net income, net of tax 28,900 --
----------- -----------
Total other comprehensive income (loss) (120,076) (243,730)
----------- -----------
Total comprehensive income $ 3,896,522 $ 5,047,928
=========== ===========
</TABLE>
9<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
and six months ended June 30, 1998.
RESULTS OF OPERATIONS
NET INCOME
Net income for the second quarter of 1998 was $1.8 million
compared to $2.7 million for the second quarter of 1997. Basic
and diluted earnings per share were $0.19 and $0.18,
respectively for the second quarter of 1998 compared to $0.29
and $0.28, respectively for the comparable period a year ago.
Annualized return on average equity and annualized return on
average assets for the second quarter of 1998 were 6.07% and
0.59%, respectively compared to 9.87% and 0.82%, respectively
for the second quarter of 1997.
Net income for the first six months of 1998 was $4.0 million
compared to $5.3 million for the first six months of 1997.
Basic and diluted earnings per share were $0.43 and $0.41,
respectively for the first six months of 1998 compared to $0.60
and $0.57, respectively for the comparable period a year ago.
Annualized return on average equity and annualized return on
average assets for the first six months of 1998 were 6.77% and
0.65%, respectively compared to 10.29% and 0.84%, respectively
for the first six months of 1997.
The decline in the Company's net income reflects narrowing net
interest margins attributable to refinancing activity in the
lower interest rate environment and a shift in the loan
portfolio into lower margin loans. The decline in net interest
income was partially offset by the recapture of $1.2 million in
loan loss reserves during the second quarter of 1998 which
represents a $675,000 after-tax credit to earnings.
NET INTEREST INCOME
Net interest income for the second quarter of 1998 decreased
$1.8 million, or 17.7%, to $8.3 million compared to $10.1
million for the second quarter of 1997. The decrease in net
interest income was largely attributable to a decline in the
Company's interest rate spread from 2.98% for the quarter ended
June 30, 1997 to 2.46% for the quarter ended June 30, 1998. The
Company's net interest margin also decreased from 3.27% to 2.81%
during the same periods. The decline in the interest rate
spread was primarily due to a decrease in the average yield on
interest-earning assets from 8.10% for the second quarter of
1997 to 7.59% for the second quarter of 1998.
Net interest income for the six months ended June 30, 1998
decreased $2.0 million, or 10.3%, to $17.1 million compared to
$19.0 million for the six months ended June 30, 1997. The
decrease in net interest income was largely attributable to a
decline in the Company's interest rate spread from 2.90% for the
six months ended June 30, 1997 to 2.55% for the six months ended
June 30, 1998. The Company's net interest margin also decreased
from 3.18% to 2.88% during the same periods. The decline in the
interest rate spread was primarily due to a decrease in the
average yield on interest-earning assets from 7.97% for the
first six months of 1997 to 7.65% for the first six months of
1998.
10<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
During the past year, the Company has experienced a shift in a
portion of the loan portfolio from higher yielding land
acquisition and development loans to permanent loans. This
portfolio shift reflects a management decision to de-emphasize
these forms of lending during the last fiscal year. In
addition, the Company's First Federal subsidiary entered into a
supervisory agreement with the Office of Thrift Supervision
(OTS) in September 1997 pursuant to which it agreed to curtail
acquisition, development and construction lending. Effective
May 18 1998, however, the supervisory agreement was terminated.
Management intends to expand the acquisition and development
lending at its Texas subsidiary. In addition, the lower
interest rate environment during 1998 continued to fuel a
refinancing demand for fixed-rate mortgage loans resulting in a
reduction in the Company's loan portfolio, which consists
primarily of adjustable-rate loans. The Company invests in
adjustable-rate loans to limit its exposure to interest rate
risk and its ongoing strategy continues to focus on rebuilding
the adjustable-rate loan portfolio and enhance its interest rate
margin through other areas of lending. In order to be
competitive with fixed-rate loans in a low interest rate
environment, however, adjustable rate loan products must be
priced at a narrower spread over the Company's cost of funds
during the first year after origination resulting in additional
pressure on the Company's net interest margin.
Principal repayments on loans experienced a 12% increase in the
second quarter of 1998, totaling $122.3 million for the second
quarter of 1998 compared to $109.6 million for the second
quarter of 1997. Loans originated and purchased totaled $181.0
million for the second quarter of 1998 compared to $119.1
million for the comparable period in 1997. Proceeds from sales
of fixed-rate loans and gains on sales of loans for the second
quarter of 1998 were $32.0 million and $452,000, respectively,
compared to $7.1 million and $82,000, respectively, for the
second quarter of 1997. For the six-moth period, principal
repayments on loans experienced a 19% increase, totaling $226.6
million for the six months ended June 30, 1998 compared to
$190.1 million for the six months ended June 30, 1997. Loans
originated and purchased totaled $293.8 million for the first
six months of 1998 compared to $219.6 million for the comparable
period in 1997. Proceeds from sales of fixed-rate loans and
gains on sales of loans for the first six months of 1998 were
$69.5 million and $1.1 million, respectively, compared to $12.2
million and $139,000, respectively, for the first six months of
1997.
PROVISION FOR LOSSES ON LOANS
The Company recaptured $1.2 million of loan loss reserves during
the second quarter of 1998 by recording a credit to the
provision for losses on loans. 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. The OTS, after a 1997 examination, had required the
Company's Texas subsidiary, First Federal, to base its loan loss
reserves on certain thrift industry average loss experiences
that were significantly higher than the actual loss experience
of First Federal. As a result of the 1998 OTS examination, the
OTS removed these requirements, and First Federal, like other
financial institutions, can now maintain its allowance for loan
losses at an amount considered adequate to provide for potential
losses in its loan portfolio. At June 30, 1998, the allowance
for losses on loans was $6.7 million, which represented .73% of
net loans receivable compared to $8.2 million, or .88% of net
loans receivable at December 31, 1997. Loan charge-offs totaled
$250,000 for the first six months of 1998 compared to $342,000
for the first six months of 1997. The ratio of nonaccruing loans
to net loans receivable was .34% at June 30, 1998 compared to
.58% at December 31, 1997.
11<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
NONINTEREST INCOME
Total noninterest income increased $454,000, or 58.6%, from
$775,000 for the quarter ended June 30, 1997 to $1.2 million for
the quarter ended June 30, 1998. For the six-month period,
total noninterest income increased $1.1 million, or 74.3%, from
$1.5 million for the six months ended June 30, 1997 to $2.5
million for the six months ended June 30, 1998. The increases in
noninterest income were primarily the result of increases in
gain on sale of loans resulting from the increase in loan sales
activity which reflects a greater demand for fixed-rate loan
products in a low interest-rate environment.
NONINTEREST EXPENSE
Noninterest expense increased $1.3 million, or 21.3%, from $5.9
million for the quarter ended June 30, 1997 to $7.2 million for
the quarter ended June 30, 1998. The increase was due primarily
to a $855,000 increase in compensation and employee benefits, a
$218,000 increase in legal, examination and other professional
fees, a $134,000 increase in other noninterest expense and a
$122,000 increase in occupancy expense partially offset by a
$65,000 decrease in advertising expense. The increase in
compensation and employee benefits was due primarily to
increased expenses associated with the Company's employee stock
ownership plan (ESOP). Employee benefit expense associated with
the Company's ESOP is based on the average market value of the
Company's common stock, which increased approximately 94% during
the second quarter of 1998 compared to the second quarter of
1997. In addition, the Company recorded a $251,000 charge to
earnings during the second quarter of 1998 to provide for a
liability to former employees related to a change in benefits
allocated under the ESOP. Since the inception of the ESOP in
1993, terminated employees who were participants were allocated
ESOP shares for the year of termination only if they were
employed by the Company on the last day of the year. Such
participants should have been allocated shares for the year of
termination if they met certain hours-of-service requirements
during that year. The increase in legal, examination and other
professional fees was due primarily to expenses related to
integrating the Texas acquisitions. The increase in other
noninterest expense was primarily the result of additional
franchise tax expense associated with the recapture of $1.2
million in loan loss reserves during the second quarter of 1998.
The increase in occupancy expense was primarily the result of
additional depreciation expense associated with improvements to
the Company's data processing equipment and loan origination
facilities. The decrease in advertising expense was due
primarily to a lower level of advertising activity at First
Federal.
Noninterest expense increased $2.5 million, or 22.5%, from $11.0
million for the six months ended June 30, 1997 to $13.5 million
for the six months ended June 30, 1998. The increase was due
primarily to a $1.5 million increase in compensation and
employee benefits, a $344,000 increase in other noninterest
expense, a $301,000 increase in legal, examination and other
professional fees, a $240,000 increase in occupancy expense and
$140,000 increase in federal insurance premiums partially offset
by a $105,000 decrease in advertising expense. The increase in
compensation and employee benefits was due primarily to
increased expenses associated with the Company's ESOP as
discussed in the preceding paragraph. The increase in legal,
examination and other professional fees was due primarily to
expenses related to integrating the Texas acquisitions. The
increase in occupancy expense was primarily the result
12<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
of additional depreciation expense associated with improvements
to the Company's data processing equipment and loan origination
facilities. The decrease in advertising expense was due
primarily to a lower level of advertising activity at First
Federal. The increases in other noninterest expense and federal
insurance premiums are generally attributable to the inclusion
of six full months of operating expense in 1998 associated with
the acquisition of L&B Financial, which the Company purchased on
February 28, 1997.
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 six months ended June
30, 1998 was 40.2% compared to 34.9% for the like period in
1997. 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 $10.9 million, or 0.9% to
$1.249 billion at June 30, 1998 from $1.238 billion at December
31, 1997. Although asset growth was almost flat, the Company
experienced a shift in the composition of its assets.
Mortgage-backed securities and stock in Federal Home Loan Banks
decreased $63.9 million and $8.8 million, respectively.
Proceeds from sales of mortgage-backed securities and stock in
Federal Home Loan Banks were reinvested in investment securities
and interest-bearing deposits, which increased $73.8 million and
$18.1 million, respectively. The Company's savings deposits
were $1.046 billion at June 30, 1998 compared to $1.045 billion
at December 31, 1997.
Total stockholders' equity increased by $5.0 million, or 4.3%,
to $121.3 million at June 30, 1998 from $116.3 million at
December 31, 1997. The Company's ratio of stockholders' equity
to assets increased to 9.71% at June 30, 1998 from 9.39% at
December 31, 1997. The Company's book value per share at June
30, 1998 was $12.95 compared to $12.52 at December 31, 1997.
Unearned ESOP shares of 666,908 and 730,508 were excluded in
calculating book value per share at June 30, 1998 and December
31, 1997, respectively.
13<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 June 30, 1998 and
December 31, 1997
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Restructured loans $ 1,017 210
--------- ---------
Nonaccruing loans:
Residential real estate $ 1,383 1,826
Commercial real estate 152 1,214
Construction 1,460 2,294
Consumer 122 72
--------- ---------
Total nonaccruing loans 3,117 5,406
Applicable allowance for losses (18) (152)
--------- ---------
Nonaccruing loans, net 3,099 5,254
--------- ---------
Foreclosed real estate, net 4,582 4,256
--------- ---------
Nonperforming assets, net $ 8,698 9,720
========= =========
Nonperforming assets, net as a
percentage of total assets 0.70% 0.79%
========= =========
</TABLE>
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 $3,046,000 and $3,059,000 at June 30,
1998 and December 31, 1997. At June 30, 1998, the Company had seven
single-family construction and single-family permanent loans totaling $574,000
that were more than 90 days past maturity date with regard to principal
repayment. Interest payments on the loans were less than 90 days past due and
the loans were still accruing interest. Since the interest due on these loans
was less than 90 days past due, the loans are not considered a nonperforming
asset.
Total nonperforming assets decreased $1.0 million from $9.7 million at
December 31, 1997 to $8.7 million at June 30, 1998 primarily as the result of
a $1.1 million decrease in nonaccruing commercial real estate loans and a
$834,000 decrease in nonaccruing single-family residential construction loans.
This activity was partially offset by a $807,000 increase in restructured
loans. The decrease in nonaccruing commercial real estate loans was primarily
due to the foreclosure of a $751,000 loan and the payoff of a loan totaling
$464,000 during the first six months of 1998. The decrease in nonaccruing
single-family residential construction loans was primarily due to the
foreclosure of seven loans totaling $2.1 million and the payoff of two loans
totaling $368,000, partially offset by the addition of four loans totaling
$1.3 million during the first six months of 1998.
14<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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 believes it is probable that they will be unable to collect
principal and interest under the contractual terms of the loans, were $5.2
million and $8.7 million at June 30, 1998 and December 31, 1997, respectively.
At June 30, 1998 $21,000 of impaired loans had specific reserves of $17,000
and the remaining impaired loans of $5.2 million had no specific reserves. At
December 31, 1997 $2.9 million of impaired loans had specific reserves of
$696,000 and the remaining impaired loans of $5.8 million had no specific
reserves. The decrease in impaired loans was primarily due to a $2.2 million
decrease in nonaccrual loans during the first six months of 1998.
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 capital regulations of the OTS, as a result of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA), require thrift
institutions to maintain tangible capital equal to 1.5% of total adjusted
assets, a minimum 3% leverage (core capital) ratio, and an 8% risk-based
capital ratio. The risk-based capital requirement is calculated based on the
credit risk presented by both on-balance-sheet assets and off-balance-sheet
commitments and obligations. Assets are assigned a credit-risk weighting
based upon their relative risk ranging from 0% for assets backed by the full
faith and credit of the United States or that pose no credit risk to the
institution to 100% for assets such as delinquent or repossessed assets. As
of June 30, 1998, both Jefferson Savings and First Federal met all OTS capital
requirements.
Jefferson Savings and First Federal are also subject to the regulatory
framework for prompt corrective action. To be categorized as well
capitalized, an institution must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table below. For
purposes of this regulation, Tier I capital has the same definition as core
capital. As of June 30, 1998, both Jefferson Savings and First Federal were
considered well capitalized.
15<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Following are the actual and required capital amounts and ratios as of June
30, 1998:
<TABLE>
<CAPTION>
Prompt Corrective
action provisions -
Actual Requirements Well capitalized
----------------- ------------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Tangible capital:(1)
Jefferson Savings $54,024,274 8.01% $10,120,073 1.50% NA
First Federal 41,318,631 7.47% 8,297,438 1.50% NA
Core capital:(1)
Jefferson Savings 54,024,274 8.01% 20,240,147 3.00% $33,733,578 5.00%
First Federal 41,318,631 7.47% 16,594,876 3.00% 27,658,126 5.00%
Risk-based capital:(2)
Jefferson Savings 56,606,960 14.99% 30,209,190 8.00% 37,761,488 10.00%
First Federal 45,075,912 12.71% 28,376,491 8.00% 35,470,614 10.00%
Tier I capital:(2)
Jefferson Savings 54,024,274 14.31% NA 22,656,893 6.00%
First Federal 41,318,631 11.65% NA 21,282,368 6.00%
(1) To adjusted total assets
(2) To risk-weighted assets
</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 4% 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 20.21%
and 19.54% at June 30, 1998 and December 31, 1997, respectively.
The Bank's liquidity ratios were 29.02% and 23.42% at June 30,
1998 and December 31, 1997, 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.
16
<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Cash flows from investing activities provided $4.0 million in
funds during the first six months of 1998. Cash flows from
these investing activities, which consisted primarily of $245.2
million in principal repayments on loans and mortgage-backed
securities, $67.6 million in sales of loans and mortgage-backed
securities, and $56.0 million in proceeds from maturity of
investment securities were used primarily to fund the Company's
investing activities of originating loans and purchasing
investment securities during the six months ended June 30, 1998
and to increase liquidity.
The Company anticipates that it will have sufficient funds
available to meet its current commitments. At June 30, 1998,
the Company had commitments to originate loans of $26.7 million,
to purchase residential adjustable-rate mortgages of $32.6
million, and to sell fixed-rate loans of $8.6 million.
Certificates of deposit, which are scheduled to mature in one
year or less at June 30, 1998, totaled $542.1 million.
Management believes that a significant portion of such deposits
will remain with the Company. In addition, at June 30, 1998,
the Association has an available line of credit with the FHLB of
Des Moines totaling $25.0 million and the Bank has an available
line of credit with the FHLB of Dallas totaling $16.0 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
Disclosures about Segments of an Enterprise and Related
Information.
In June 1997, the FASB issued SFAS 131 which establishes
standards for the way that public enterprises report information
about operating segments in annual financial statements and
requires that those enterprises report selected information
about operating segments in interim reports issued to
stockholders. SFAS 131 is effective for financial statements
for periods beginning after December 15, 1997. Since SFAS 131
is a disclosure requirement only there will be no effect on the
Company's financial position or results of operations.
YEAR 2000 COMPLIANCE
As the year 2000 approaches, an important business issue has
emerged regarding how existing application software programs and
operating systems can accommodate this date value. For many
years, software applications routinely conserved magnetic
storage space by using only two digits to record calendar years;
for example, the year 1999 is stored as "99". On January 1,
2000, the calendars in many software applications will change
from '99" to "00". Many of these software applications, in
their
17<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
current form, will produce erroneous results or will fail to run
at all since their logic cannot deal with this transition.
The Company's mainframe computer hardware and systems software
are Year 2000 compliant. The Company primarily utilizes
third-party vendor application software for all computer
applications. The third-party vendors for the Company's banking
applications are in the process of modifying, upgrading or
replacing their computer applications to insure Year 2000
compliance. In addition, the Company has instituted a Year 2000
compliance program whereby the Company is reviewing the Year
2000 compliance issues that may be faced by its other
third-party vendors. Under such program, the Company will
examine the need for modifications or replacement of all
non-Year 2000 compliant pieces of software. The Company does
not currently expect that the cost of its Year 2000 compliance
program will be material to its financial condition and believes
that it will satisfy such compliance program by the end of 1998
without material disruption of its operations. In the event
that the Company's significant suppliers do not successfully and
timely achieve Year 2000 compliance, the Company's business or
operations could be adversely affected.
18<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Quantitative and Qualitative Disclosures
About Market Risk
The Registrant does not believe that its exposure to market risk
materially changed from the levels reported in its Annual Report
on Form 10-K. The Registrant's principal market risk continues
to consist of its exposure to changes in interest rates. Since
the end of the last fiscal year, declining long-term interest
rates have resulted in the prepayment or conversion to fixed
rates of certain adjustable-rate residential mortgages. In
order to maintain its rate sensitivity position, the Registrant
has sold the resulting fixed-rate loans on the secondary market
and invested the proceeds from these sales and from prepayments
in additional adjustable-rate mortgages or in other
rate-sensitive investment and mortgage backed securities. The
decline in interest rates has benefitted the net portfolio value
of its assets, which are measured, by the present value of the
expected cash flows from its assets, liabilities and off balance
sheet contracts. The Registrant continues to monitor changes in
the interest rate environment and adjust its asset/liability mix
as necessary.
19<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On June 4, 1998, the Company held its Annual Meeting of
Stockholders at which the following matters were voted on:
Proposal I - Election of Directors
---------------------
Nominee For Withheld
David V. McCay 8,590,631 91,955
Forrest W. Miller, Jr. 8,483,835 198,751
There were no abstentions or broker nonvotes.
The terms of office of Directors Frank C. Bick, William C.
Canfield, Lloyd D. Doerflinger and Edward G. Throop, continued
after the Annual Meeting.
Proposal II - Ratification of Appointment of Auditors
---------------------------------------
For the ratification of KPMG Peat Marwick LLP as
independent auditors for the year ending December 31, 1998:
For Against Abstain
8,623,081 35,381 24,124
In addition, there were no broker nonvotes.
Item 5. Other Information
-----------------
None.
20<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 10.12 Sixth Amendment to Employment
Agreement, dated May 20, 1998, between Jefferson Savings
Bancorp, Inc., Jefferson Savings and Loan Association and David
V. McCay.
Exhibit 10.13 First Amendment to Jefferson Savings
and Loan Association Supplemental Retirement Agreement, dated
May 20, 1998, by and between Jefferson Savings and Loan
Association and David V. McCay.
Exhibit 10.14 Amendment No. 2 to Jefferson Savings
Bancorp, Inc. 1993 Stock Option and Incentive Plan, dated May
20, 1998.
Exhibit 10.15 Trust Agreement for Jefferson Savings
and Loan Association Supplemental Retirement Agreement, dated
May 20, 1998, by and between Jefferson Savings and Loan
Association and Mercantile Bank, N.A.
Exhibit 27.1 Financial Data Schedule.
Exhibit 27.2 Restated Financial Data Schedule.
(b) Reports on Form 8-K:
On June 1, 1998, the Company filed a Current Report on Form
8-K reporting under Item 5 that it intended to recapture $1.2
million of loan loss reserves by recording a credit to the
provision for loan losses during the second quarter of 1998 as
the result of an exam recently completed by the OTS and that
also as a result of the exam, the OTS terminated the Supervisory
Agreement, dated September 25, 1997, between the OTS and First
Federal. No financial statements were filed as part of this
report.
21<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: August 14, 1998 By: /s/ Paul J. Milano
-----------------------------
Paul J. Milano
Senior Vice President and
Chief Financial Officer
(Duly Authorized
Representative and
Principal Financial Officer)
<PAGE>
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AGREEMENT entered into this 20th day of May, 1998 by
and between Jefferson Savings and Loan Association (the
"Association"), Jefferson Savings Bancorp, Inc. (the
"Corporation"), and David V. McCay (the "Employee").
WHEREAS, the Corporation, the Association and the Employee
have previously entered into an employment agreement, dated
November 9, 1993 (the "Employment Agreement"), which provides
for certain benefits to be paid to the Employee if he is
terminated in connection with a change in control of the
Corporation or the Association; and
WHEREAS, the parties desire to amend the provisions of the
Employment Agreement relating to the benefits paid to the
Employee in the event of such a change in control.
NOW, THEREFORE, it is agreed that, effective May 20, 1998,
the Employment Agreement will be amended as follows:
I.
Paragraph (a) of Section 11 of the Employment Agreement is
hereby deleted in its entirety and the following is substituted
in lieu thereof:
"11. Change in Control.
-----------------
(a) Notwithstanding any provision herein to the
contrary, if the Employee's employment under this Agreement
is terminated by the Corporation or the Association,
without the Employee's prior written consent and for a
reason other than Just Cause, in connection with or within
twelve (12) months after any change in control of the
Association or the Corporation, the Employee shall be paid
an amount equal to the product of 2.99 times his "base
amount" as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder. Said sum shall be paid
in one lump sum within ten (10) days of such termination.
The term "change in control" shall mean:
(i) the acquisition, other than from the Association
or the Corporation, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of either the then outstanding
shares of Common Stock of the Association or the
Corporation or the combined voting power of the then
outstanding voting securities of the Association or
the Corporation entitled to vote generally in the
election of directors, but excluding, for this
purpose, any such acquisition by the Association or
the Corporation or any subsidiaries in which the
Association or the Corporation own, directly or
indirectly, a proprietary interest of more than 50%
(the "Subsidiaries"), or any employee benefit plan (or
related trust) of the Association or the Corporation
or their Subsidiaries;<PAGE>
<PAGE>
(ii) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent
Board") of the Association or the Corporation cease
for any reason to constitute at least a majority of
the Board of Directors, provided that any individual
becoming a director subsequent to the date hereof
whose election, or nomination for election by the
Association's or the Corporation's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office
is in connection with an actual or threatened election
contest relating to the election of the directors of
the Association or the Corporation (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act); or
(iii) approval by the stockholders of the Association
or the Corporation of a reorganization, merger or
consolidation of the Association or the Corporation,
in each case, with respect to which all or
substantially all of the individuals and entities who
were the respective beneficial owners of the Common
Stock and voting securities of the Association or the
Corporation immediately prior to such reorganization,
merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 65% of,
respectively, the then outstanding shares of Common
Stock and the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, as the case
may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Association or the
Corporation or of the sale or other disposition of all
or substantially all of the assets of the Association
or the Corporation.
(iv) the acquisition and exercise of a controlling
influence over the management or policies of the
Association or the Corporation by any person or by
persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934."
II.
The following new paragraph (d) is hereby added to Section
11 of the Employment Agreement:
"(d) No later than the earlier of (i) sixty (60) days
following delivery of the notice of employment termination
by the Employee or the Association or the Corporation
pursuant to the terms of this Agreement, or (ii) ten (10)
days prior to the due date of the Employee's federal income
tax return (without extension), the Association and the
Corporation at their expense shall obtain and deliver to
the Employee an opinion from their legal counsel (which
2<PAGE>
<PAGE>
opinion shall be supported by an opinion of the
Association's or the Corporation's accountant and shall be
acceptable to the Employee and his attorneys and
accountants) setting out whether, and to what extent,
amounts or benefits payable to the Employee, pursuant to
the Agreement or otherwise, are subject to any excise tax
or similar tax pursuant to Sections 280G and 4999 of the
Code, or any successor or other comparable federal, state
or local tax laws. If any amounts or benefits payable to
the Employee, pursuant to this Agreement or otherwise, are
determined as provided above to be subject to any such
excise or similar tax, the Association and the Corporation
shall immediately pay to the Employee such additional sum
as is necessary (after taking into account all federal,
state and local income taxes payable by the Employee as a
result of the receipt of such additional sum) (the "gross
up payment") to place the Employee in the same after-tax
position he would have been in had no such excise or
similar purpose tax been paid or incurred. In the
event of a subsequent controversy (including audit,
administrative appeal or litigation) with the Internal
Revenue Service (the "IRS"), or any state or local
authority with respect to any excise or similar tax
pursuant to Sections 280G and 4999 of the Code, or any
successor or other comparable federal, state or local tax
laws, the Association and the Corporation shall promptly
reimburse the Employee for any legal and accounting fees
incurred by the Employee with respect to such controversy,
and shall promptly pay to the Employee an additional
gross-up payment as described above if additional excise or
similar taxes pursuant to Section 280G and 4999 of the
Code, or any successor or other comparable federal, state
or local tax laws are subsequently determined to be due and
payable, which additional gross-up payment shall include
reimbursement for any interest expense and penalties
payable to any taxing authority which is attributable to
any increased excise or similar taxes pursuant to Sections
280G and 4999 of the Code and related legal or accounting
fees. If the Employee is subject to an audit by the IRS or
any state or local authority, the Employee shall give
prompt notice thereof to the Corporation and the
Association. In such an event, the Corporation or
the Association shall provide legal representation at
audit, administrative appeal and in litigation on the
Employee's behalf with respect to any such action with an
attorney reasonably acceptable to the Employee; provided,
however, the Employee's counsel shall be kept advised of
all proceedings and shall be permitted to participate
therein and the Employee shall be entitled to reimbursement
as provided above with respect to the fees and expenses of
his counsel. Notwithstanding the foregoing, no settlement
shall be agreed to or otherwise permitted with respect to
any such audit without the prior written consent of the
Employee."
3<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first herein above written:
ATTEST: JEFFERSON SAVINGS AND LOAN
ASSOCIATION
/s/ By:/s/ Frank C. Bick
- ---------------------- -----------------------
Secretary Director
ATTEST: JEFFERSON SAVINGS BANCORP, INC.
/s/ By:/s/ Frank C. Bick
- ---------------------- -----------------------
Secretary Director
WITNESS:
/s/ By: /s/ David V. McCay
- ---------------------- -----------------------
Secretary Employee
4
<PAGE>
FIRST AMENDMENT TO JEFFERSON SAVINGS AND LOAN ASSOCIATION
---------------------------------------------------------
SUPPLEMENTAL RETIREMENT AGREEMENT
---------------------------------
THIS AGREEMENT entered into this 20th day of May, 1998 by
and between Jefferson Savings and Loan Association (the
"Association") and David V. McCay (the "Executive").
WHEREAS, the Association and the Executive have previously
entered into a supplemental retirement agreement, dated November
9, 1993 (the "Supplemental Retirement Agreement"), which
provides for certain benefits to be paid to the Executive if he
is terminated in connection with a change in control of
Jefferson Savings Bancorp, Inc. or the Association; and
WHEREAS, the parties desire to amend the provisions of the
Supplemental Retirement Agreement relating to the benefits paid
to the Employee in the event of such a change in control.
NOW, THEREFORE, it is agreed that, effective May 20, 1998,
the Supplemental Retirement Agreement will be amended as
follows:
I.
ARTICLE V is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"ARTICLE V
Source of Benefits
Benefits shall constitute an unfunded, unsecured
promise by the Association to provide such payments in the
future. The Association shall establish an irrevocable
trust (the "Trust") to fund its obligation under this
Agreement, the assets of which, to the extent provided in
the Trust, shall remain subject to the general creditors of
the Association in the event of its insolvency.
Contributions to the Trust shall be made at the discretion
of the Association; provided, however, that,
notwithstanding the foregoing, contemporaneous with the
consummation or discovery by the Association of a Change in
Control, the Association shall contribute to the Trust an
amount of cash equal to the present value of the
Executive's Benefits under ARTICLE II and ARTICLE IX and
each year thereafter the Association shall contribute to
the Trust such additional amount of cash actuarially
determined by an actuary reasonably satisfactory to the
Executive to be necessary to fund the Benefits payable
to the Executive (or his Beneficiaries) under ARTICLE II
and ARTICLE IX. The present value shall be determined by
an actuary reasonably satisfactory to the Executive using
the 1984 Unisex Pension Mortality Table (set forward one
year) and an interest rate equal to 120% of the interest
rate used by the Pension Benefit Guaranty Corporation for
purposes of determining the present value on plan
termination on January 1. Except as described in the
Trust, no person shall, by virtue of this Agreement, have
any interest in any assets of the Association, including
assets of the Trust (other than as an unsecured creditor of
the Association)."<PAGE>
<PAGE>
II.
ARTICLE IX is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"ARTICLE IX
Involuntary Termination of Employment;
Termination of Employment upon a Change in Control
Or Termination for Just Cause
-----------------------------
The provisions of this Article shall supersede any
provisions of this Agreement to the contrary.
In the event that (i) the Executive's employment with
the Association shall be terminated by an action of the Board
of Directors of the Association (or by another person or
group granted the authority by the Board of Directors or
otherwise to take such action) for other than Just Cause, or
(ii) there occurs a Change in Control, then, in either such
case, the Executive's Vested Percentage shall automatically
increase to 100% for purposes of calculating his Benefits
under this Plan, and the Benefits shall be due and payable
to the Executive in the manner described in ARTICLE II herein.
In the event of the Executive's termination of
employment for Just Cause, no Benefits shall be payable
hereunder, and the Association shall have no further
obligations hereunder, unless and to the extent that the
Association determines, in its sole and absolute discretion, to
the contrary."
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first herein above written:
ATTEST: JEFFERSON SAVINGS AND LOAN
ASSOCIATION
/s/ By: /s/ Frank C. Bick
- ---------------------- -----------------------
Its: Director
WITNESS: EXECUTIVE:
/s/ By: /s/ David V. McCay
- ---------------------- -----------------------
<PAGE>
AMENDMENT NO. 2
TO
JEFFERSON SAVINGS BANCORP, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
WHEREAS, Jefferson Savings Bancorp, Inc., a corporation
organized under the laws of the State of Missouri (hereinafter
called "the Corporation"), maintains the Jefferson Savings
Bancorp, Inc. Stock Option and Incentive Plan (hereinafter
called "Plan"); and
WHEREAS, the Corporation desires to amend said Plan
effective as of May 20, 1998;
NOW, THEREFORE, the Corporation does hereby amend the Plan
effective as of May 20, 1998, so that it will read as follows:
I.
Section 14 of the Plan is hereby deleted in its entirety
and the following is substituted in lieu thereof:
"14. NON-TRANSFERABILITY OF AWARDS
Awards may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent and
distribution, or (in the case of Non-ISOs), pursuant to the
terms of a "qualified domestic relations order" (within the
meaning of Section 414(p) of the Code and the regulations
and rulings thereunder); provided, however, that the
Committee may grant Non-ISOs that are transferable, without
payment of consideration, to (i) revocable trusts for the
benefit of immediate family members which qualify as
grantor trusts for Federal income tax purposes, (ii) to
immediate family members, and (iii) to partnerships whose
only partners are immediate family members. The transferee
of a transferable Non-ISO is subject to all conditions
applicable to the transferable Non-ISO prior to its
transfer."
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Amendment No.2 to be executed by its duly authorized officer
this 20th day of May, 1998.
JEFFERSON SAVINGS BANCORP, INC.
By: /s/ David V. McCay
--------------------------
President
<PAGE>
TRUST AGREEMENT
FOR
JEFFERSON SAVINGS AND LOAN ASSOCIATION
SUPPLEMENTAL RETIREMENT AGREEMENT
This Trust Agreement made this 20th day of May, 1998, by
and between Jefferson Savings and Loan Association (the
"Association") and Mercantile Bank N.A. (the "Trustee");
WHEREAS, the Association has adopted the Jefferson Savings
and Loan Association Supplemental Retirement Agreement (the
"Supplemental Retirement Agreement"), effective November 9,
1993, providing for deferred compensation to David V. McCay (the
"Executive").
WHEREAS, the Association has incurred or expects to incur
liability under the terms of the Supplemental Retirement
Agreement;
WHEREAS, the Association wishes to establish a trust
(hereinafter called the "Trust") and, in the event of a Change
in Control (as defined in the Supplemental Retirement
Agreement), to contribute to the Trust assets that shall be held
therein, subject to the claims of the Association's creditors in
the event of the Association's Insolvency (as herein defined)
until paid to the Executive or his beneficiaries in such manner
and at such times as specified in the Supplemental Retirement
Agreement;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Supplemental Retirement Agreement as an
unfunded arrangement maintained for the purpose of providing
deferred compensation for the Executive, a key management
employee, for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended;
WHEREAS, in the event of a Change in Control, it is the
intention of the Association to make contributions to the Trust
to provide itself with a source of funds to assist it in the
meeting of its liabilities under the Supplemental Retirement
Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed
of as follows:
Section 1. Establishment of Trust.
(a) The Association hereby deposits with the Trustee in
trust One Hundred Dollars ($100.00), which shall become the
principal of the Trust to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of
which the Association is the grantor, within the meaning of
subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue
<PAGE>
<PAGE>
Code of 1986, as amended (the "Code"), and shall be construed
accordingly.
(d) The principal of the Trust, and any earnings
thereon, shall be held separate and apart from other funds of
the Association and shall be used exclusively for the uses and
purposes of the Executive and general creditors as herein set
forth. The Executive and his beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Supplemental
Retirement Agreement and this Trust Agreement shall be mere
unsecured contractual rights of the Executive and his
beneficiaries against the Association. Any assets held by the
Trust will be subject to the claims of the Association's general
creditors under federal and state law in the event of its
Insolvency.
(e) The Association, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash or
other property in trust with Trustee to augment the principal to
be held, administered and disposed of by Trustee as provided in
this Trust Agreement. Neither the Trustee nor the Executive or
his beneficiaries shall have any right to compel such additional
deposits.
(f) Upon a Change in Control or upon Executive's
termination of employment for other than Just Cause, as defined
in the Supplemental Retirement Agreement, the Association shall,
as soon as possible, but in no event longer than ten (10) days
following such Change in Control or termination make an
irrevocable contribution to the Trust in an amount of cash equal
to the present value of the Executive's benefits under the terms
of the Supplemental Retirement Agreement as of the date on which
the Change in Control or termination occurred. Each calendar
year thereafter, the Association shall contribute such
additional amount actuarially determined to be necessary to fund
the benefits payable to the Executive or his beneficiaries under
the Supplemental Retirement Agreement.
Section 2. Payments to the Executive and His
Beneficiaries.
(a) The Association shall deliver to the Trustee a
schedule (the "Payment Schedule") that indicates the amounts
payable in respect of the Executive (and his beneficiaries),
that provides a formula or other instructions acceptable to the
Trustee for determining the amount so payable, the form in which
such amount is to be paid (as provided for or available under
the Supplemental Retirement Agreement), and the time of
commencement for payment of such amounts. Except as otherwise
provided herein, the Trustee shall make payments to the
Executive and his beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting
and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits
pursuant to the terms of the Supplemental Retirement Agreement
and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported,
withheld and paid by the Association.
(b) The entitlement of the Executive or his
beneficiaries to benefits under the Supplemental Retirement
Agreement shall be determined by the Association or such party
as it shall designate under the Supplemental Retirement
Agreement, and any claim for such benefits shall be
2<PAGE>
<PAGE>
considered and reviewed under the procedures set out in the
Supplemental Retirement Agreement.
(c) The Association may make payment of benefits
directly to the Executive or his beneficiaries as they become
due under the terms of the Supplemental Retirement Agreement.
The Association shall notify the Trustee of its decision to make
payment of benefits directly prior to the time amounts are
payable to the Executive or his beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the
terms of the Supplemental Retirement Agreement, the Association
shall make the balance of each such payment as it falls due.
The Trustee shall notify the Association when principal and
earnings are not sufficient.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Association Is Insolvent.
(a) The Trustee shall cease payment of benefits to the
Executive or his beneficiaries if the Association is Insolvent.
The Association shall be considered "Insolvent" for purposes of
this Trust Agreement if (i) the Association is unable to pay its
debts as they become due, or (ii) the Association is subject to
a receivership proceeding or other similar proceeding under
applicable federal or state law.
(b) At all times during the continuance of this Trust,
as provided in Section 1(d) hereof, the principal and income of
the Trust shall be subject to claims of general creditors of the
Association under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of the Association shall have the duty to inform
the Trustee in writing of the Association's Insolvency.
If a person claiming to be a creditor of the Association
alleges in writing to the Trustee that the Association has
become Insolvent, the Trustee shall determine whether the
Association is Insolvent and, pending such determination,
the Trustee shall discontinue payment of benefits to the
Executive or his beneficiaries.
(2) Unless the Trustee has actual knowledge of the
Association's Insolvency or has received notice from the
Association or a person claiming to be a creditor alleging
that the Association is Insolvent, the Trustee shall have
no duty to inquire whether the Association is Insolvent.
The Trustee may in all events rely on such evidence
concerning the Association's solvency as may be furnished
to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the
Association's solvency.
(3) If at any time the Trustee has determined that
the Association is Insolvent, the Trustee shall
discontinue payments to the Executive or his beneficiaries
and shall hold the assets of the Trust for the benefit of
the Association's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of
the Executive or his beneficiaries to pursue their right
as general creditors of the Association with respect to
benefits due under the Supplemental Retirement Agreement or
otherwise.
3<PAGE>
<PAGE>
(4) The Trustee shall resume the payment of
benefits to the Executive or his beneficiaries in
accordance with Section 2 of this Trust Agreement only
after the Trustee has determined that the Association is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the
Trustee discontinues the payment of benefits from the Trust
pursuant to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to the
Executive or his beneficiaries under the terms of the
Supplemental Retirement Agreement for the period of such
discontinuance, less the aggregate amount of any payments made
to the Executive or his beneficiaries by the Association in lieu
of the payments provided for hereunder during any such period of
discontinuance.
Section 4. Payments to Association.
Except as provided in Section 3 hereof, the Association
shall have no right or power to direct the Trustee to return to
the Association or to divert to others any of the Trust assets
before all payments of benefits have been made to the Executive
and his beneficiaries pursuant to the terms of the Supplemental
Retirement Agreement.
Section 5. Investment Authority.
The Trustee may invest only in one or a combination of the
following: (i) United States government securities, money
market instruments, savings accounts, certificates of deposit,
or other similar accounts which would have no loss of principal;
(ii) bonds, notes, debentures, mortgages, contracts or other
evidence of indebtedness issued by either: (a) the United
States government, including its agencies and instrumentalities,
or (b) corporations, provided that the debt instrument issued by
the corporation is rated at least "AA" or its equivalent by at
least two nationally recognized credit quality rating agencies
(including, by way of example and not of limitation, Moody's
Investors Service and Standard & Poor's) and maturing not later
than five years from the date of purchase; provided, however,
that in no event may the Trustee purchase "derivative
securities," provided further, however, that, for purposes of
this Trust Agreement, the term "derivative securities" shall not
include mortgage pass-through certificates issued by the
Government National Mortgage Association ("GNMA"), the Federal
National Mortgage Association ("FNMA"), or the Federal Home Loan
Mortgage Association ("FHLMC").
Section 6. Disposition of Income.
During the term of this Trust Agreement, all income
received by the Trust, net of expenses and taxes, shall be
accumulated and reinvested.
4<PAGE>
<PAGE>
Section 7. Accounting by Trustee
The Trustee shall keep accurate and detailed records of
all investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between the
Association and the Trustee. Within sixty (60) days following
the close of each calendar year and within sixty (60) days after
the removal or resignation of the Trustee, the Trustee shall
deliver to the Association a written account of its
administration of the Trust during such year or during the
period from the close of the past preceding year to the date of
such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investment
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be.
Section 8. Responsibility of Trustee.
(a) The Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by the
Association which is contemplated by, and in conformity with,
the terms of the Supplemental Retirement Agreement or this Trust
Agreement and is given in writing by the Association. In the
event of a dispute between the Association and any other party,
the Trustee may apply to a court of competent jurisdiction to
resolve the dispute.
(b) If the Trustee undertakes or defends any litigation
arising in connection with this Trust Agreement, the Association
agrees to indemnify the Trustee against the Trustee's costs,
expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If the Association does not
pay such costs, expenses and liabilities in a reasonably timely
manner, the Trustee may obtain payments from the Trust property.
(c) The Trustee may consult with legal counsel (who may
also be counsel for the Association generally) with respect to
any of its duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(e) The Trustee shall have, without exclusion, all
powers conferred on trustees by applicable law, unless expressly
provided otherwise herein; provided, however, that if an
insurance policy is held as an asset of the Trust, the Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
5<PAGE>
<PAGE>
(f) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust
Agreement or the Trust created hereby the objective of carrying
on a business and dividing the gains therefrom, within the
meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
Section 9. Compensation and Expenses of Trustee.
The Association shall pay all administrative and Trustee's
fees and expenses. If not so paid, the fees and expenses shall
be paid from the Trust property.
Section 10. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice
to the Association, which shall be effective thirty (30) days
after receipt of such notice unless the Association and the
Trustee agree otherwise.
(b) The Trustee may be removed by the Association on
thirty (30) days' notice or upon shorter notice accepted by the
Trustee; provided, however, that any Trustee appointed by the
Executive pursuant to Section 10(c) or 10(d) may be removed only
by the Executive.
(c) Upon the occurrence of an event described in Section
1(f), the Executive, in his sole discretion, may remove the
Trustee and replace it with an independent bank trust department
or another independent party that has been granted corporate
trustee powers under applicable state law, which entity shall
thereafter serve as Trustee hereunder.
(d) If the Trustee appointed by the Executive pursuant
to Section 10(c) resigns within two (2) years after such
appointment, the Executive shall select a successor Trustee in
accordance with the provisions of Section 10(c) hereof prior to
the effective date of the Trustee's resignation or removal.
(e) Upon resignation or removal of the Trustee and
appointment of a successor Trustee, all assets shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within thirty (30) days after
receipt of notice of resignation, removal or transfer, unless
the Association and the Executive mutually agree to extend the
time limit.
(f) If the Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraph (a) or
(b) of this Section 10. If no such appointment has been made,
the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed
as administrative expenses of the Trust.
6<PAGE>
<PAGE>
Section 11. Appointment of Successor.
If the Trustee resigns or is removed in accordance with
Section 10, the Association or the Executive, whichever shall
have the right under Section 10 to appoint a trustee under the
circumstances, may appoint any independent third party, such as
a bank trust department or other party that has been granted
corporate trustee powers under applicable state law, as a
successor to replace the Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by
the new Trustee, who shall have all of the rights and powers of
the former Trustee, including ownership rights in the Trust
assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the Association or the
successor Trustee to evidence the transfer.
Section 12. Amendment or Termination.
(a) This Trust Agreement may be amended by a written
instrument executed by the Trustee and the Association.
Notwithstanding the foregoing, no such amendment shall conflict
with the terms of the Supplemental Retirement Agreement or shall
make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on
which the Executive and his beneficiaries are no longer entitled
to benefits pursuant to the terms of the Supplemental Retirement
Agreement. Upon termination of the Trust any assets remaining
in the Trust shall be returned to the Association.
(c) Upon written approval of the Executive or
beneficiaries entitled to payment of benefits pursuant to the
terms of the Supplemental Retirement Agreement, the Association
may terminate this Trust prior to the time all benefit payments
under the Supplemental Retirement Agreement have been made. All
assets in the Trust at termination shall be returned to the
Association.
(d) Sections 1(c), 1(e), 1(f), 2, 3, 4, 5, 10(b), 10(c),
10(d), 11(a), 11(b), 12(a), 12(b) and 12(d) of this Trust
Agreement may not be amended by the Association for two (2)
years following a Change in Control, as defined in the
Supplemental Retirement Agreement.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provision hereof.
(b) Benefits payable to the Executive and his
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
7<PAGE>
<PAGE>
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of the state of Missouri.
(d) This Trust Agreement shall be binding upon the
Association and its successors and upon the Trustee and its
successors.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be May
20, 1998.
JEFFERSON SAVINGS AND LOAN ASSOCIATION
By: /s/ Frank C. Bick
------------------------
MERCANTILE BANK N.A.
By: /s/ Linda Lockwood
-------------------------
8
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted
from consolidated financial statements and notes thereto to
Jefferson Savings Bancorp, Inc. at and for the six months ended
June 30, 1998 and is qualified in its entirety by reference to
such financial statements.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,764,323
<INT-BEARING-DEPOSITS> 30,763,698
<FED-FUNDS-SOLD> 6,940,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 225,325,191
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 928,683,398
<ALLOWANCE> 6,736,018
<TOTAL-ASSETS> 1,248,922,845
<DEPOSITS> 1,046,000,850
<SHORT-TERM> 62,298,271
<LIABILITIES-OTHER> 19,346,009
<LONG-TERM> 0
0
0
<COMMON> 100,360
<OTHER-SE> 121,177,355
<TOTAL-LIABILITIES-AND-EQUITY> 1,248,922,845
<INTEREST-LOAN> 36,564,279
<INTEREST-INVEST> 7,332,796
<INTEREST-OTHER> 1,349,975
<INTEREST-TOTAL> 45,247,050
<INTEREST-DEPOSIT> 26,333,963
<INTEREST-EXPENSE> 28,191,681
<INTEREST-INCOME-NET> 17,055,369
<LOAN-LOSSES> (1,200,000)
<SECURITIES-GAINS> 48,166
<EXPENSE-OTHER> 13,476,472
<INCOME-PRETAX> 7,320,098
<INCOME-PRE-EXTRAORDINARY> 4,016,598
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,016,598
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.41
<YIELD-ACTUAL> 2.88
<LOANS-NON> 3,099,198
<LOANS-PAST> 588,000
<LOANS-TROUBLED> 1,016,821
<LOANS-PROBLEM> 2,013,956
<ALLOWANCE-OPEN> 8,182,268
<CHARGE-OFFS> 250,489
<RECOVERIES> 4,239
<ALLOWANCE-CLOSE> 6,736,018
<ALLOWANCE-DOMESTIC> 3,357,775
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,378,243
</TABLE>
<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 June 30, 1997 and is qualified in its entirety by
reference to such financial statements. Dollar amounts (other
than per share data) are in thousands.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,779
<INT-BEARING-DEPOSITS> 14,453
<FED-FUNDS-SOLD> 3,765
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 236,774
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 979,289
<ALLOWANCE> 8,255
<TOTAL-ASSETS> 1,292,021
<DEPOSITS> 1,076,094
<SHORT-TERM> 87,202
<LIABILITIES-OTHER> 18,419
<LONG-TERM> 0
0
0
<COMMON> 50
<OTHER-SE> 110,256
<TOTAL-LIABILITIES-AND-EQUITY> 1,292,021
<INTEREST-LOAN> 39,551
<INTEREST-INVEST> 7,233
<INTEREST-OTHER> 970
<INTEREST-TOTAL> 47,754
<INTEREST-DEPOSIT> 25,982
<INTEREST-EXPENSE> 28,735
<INTEREST-INCOME-NET> 19,019
<LOAN-LOSSES> 912
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 10,999
<INCOME-PRETAX> 8,566
<INCOME-PRE-EXTRAORDINARY> 8,566
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,292
<EPS-PRIMARY> 0.60 <F1>
<EPS-DILUTED> 0.57 <F1>
<YIELD-ACTUAL> 3.18
<LOANS-NON> 1,609
<LOANS-PAST> 0
<LOANS-TROUBLED> 176
<LOANS-PROBLEM> 3,207
<ALLOWANCE-OPEN> 6,529
<CHARGE-OFFS> 342
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 8,255
<ALLOWANCE-DOMESTIC> 6,963
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,292
<FN>
<F1> Restated for adoption of SFAS No. 128 and two-for-one
stock split.
</FN>
</TABLE>
