<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, 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 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, 1998
- -----------------------------------------------------------------
Common Stock, Par Value $.01 10,022,030 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 9
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of
Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
2<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ -----------
<S> <C> <C>
Cash $ 7,288,700 9,039,932
Interest-bearing deposits 21,856,456 12,673,066
Federal funds sold 19,650,000 9,870,000
Investment securities available for sale, at
fair value (amortized cost of $154,059,266
and $129,574,313 at March 31, 1998 and
December 31, 1997, respectively) 154,353,395 129,996,4500
Mortgage-backed securities available for sale,
at fair value (amortized cost of $77,100,472
and $85,270,031 at March 31, 1998 and
December 31, 1997, respectively) 77,542,832 85,480,293
Loans receivable, net 893,341,469 924,919,606
Investment in real estate, net 6,284,614 4,255,921
Stock in Federal Home Loan Banks 16,794,800 16,741,500
Office properties and equipment, net 11,622,224 11,532,147
Excess of cost over fair value of net assets acquired 23,499,528 23,848,993
Accrued income and other assets 9,630,323 9,697,539
-------------- -------------
$1,241,864,341 1,238,055,497
============== =============
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits $1,043,880,605 1,044,881,130
Borrowed money 62,903,301 65,908,257
Deferred tax liability 512,800 471,000
Advance payments by borrowers for taxes
and insurance 5,862,646 3,550,798
Accrued expenses and other liabilities 9,934,802 6,984,474
-------------- -------------
Total liabilities 1,123,094,154 1,121,795,659
-------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock ($.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
March 31, 1998 and December 31, 1997 100,360 100,360
Additional paid-in capital 63,372,561 62,797,493
Retained earnings, subject to certain
restrictions 60,524,774 58,978,239
Accumulated other comprehensive income 441,487 379,251
Unamortized restricted stock awards (60,320) (120,151)
Unearned ESOP shares (5,478,514) (5,706,665)
Treasury stock, at cost: 16,284 shares and
21,106 shares at March 31, 1998 and
December 31, 1997, respectively (130,161) (168,689)
-------------- -------------
Total stockholders' equity 118,770,187 116,259,838
-------------- -------------
$1,241,864,341 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 months ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Interest and dividend income:
Loans receivable $18,601,110 19,039,180
Mortgage-backed securities 1,241,403 1,551,507
Investment securities 2,355,625 1,631,233
Interest-bearing deposits and
federal funds sold 319,777 221,984
Stock in Federal Home Loan Banks 263,874 267,838
---------- ----------
Total interest and dividend
income 22,781,789 22,711,742
---------- ----------
Interest expense:
Savings deposits 13,106,018 12,406,690
Borrowed money 930,361 1,383,347
---------- ----------
Total interest expense 14,036,379 13,790,037
---------- ----------
Net interest income 8,745,410 8,921,705
Provision for losses on loans - 306,000
---------- ----------
Net interest income after
provision for losses on loans 8,745,410 8,615,705
---------- ----------
Noninterest income:
Servicing and other loan fees 263,971 224,959
Fees for other services to customers 233,771 225,248
Gain on sale of loans receivable, net 628,606 57,736
Results of real estate operations, net 35,492 44,144
Other 151,072 131,340
---------- ----------
Total noninterest income 1,312,912 683,427
---------- ----------
Noninterest expense:
General and administrative:
Compensation and employee benefits 3,319,965 2,716,513
Occupancy 749,474 631,405
Advertising 105,959 146,565
Federal insurance premiums 249,651 107,724
Legal, examination, and other
professional fees 320,985 238,066
Other 1,071,400 862,036
---------- ----------
Total general and administrative 5,817,434 4,702,309
Amortization of excess cost over fair
value of net assets acquired 450,916 354,089
---------- ----------
Total noninterest expense 6,268,350 5,056,398
---------- ----------
Income before income taxes 3,789,972 4,242,734
Income tax expense 1,593,500 1,622,000
---------- ----------
Net income $2,196,472 2,620,734
========== ==========
Earnings per share, basic $.24 .31
==== ====
Earnings per share, diluted $.22 .30
==== ====
</TABLE>
See accompanying notes to consolidated financial statements.
4<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Three months ended March 31, 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 $100,360 62,797,493 58,978,239 379,251
Net income - - - 2,196,472 -
Dividends paid ($.07 per share) - - - (649,937) -
Stock issued in dividend
reinvestment and stock
purchase plan - - 62,696 - -
Amortization of restricted
stock awards - - - - -
Amortization of ESOP shares - - 516,558 - -
Other comprehensive income - - - - 62,236
Stock options exercised - - (4,186) - -
---------- -------- ---------- ---------- ----------
Balance at March 31, 1998 10,035,998 $100,360 63,372,561 60,524,774 441,487
========== ======== ========== ========== ==========
<CAPTION>
Unamortized Treasury stock Total
restricted Unearned -------------- stockholders'
stock awards ESOP shares stock dollars equity
------------ ----------- ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 (120,151) (5,706,665) (21,106) (168,689) 116,259,838
Net income - - - - 2,196,472
Dividends paid ($.07 per share) - - - - (649,937)
Stock issued in dividend
reinvestment and stock
purchase plan - - 3,422 27,342 90,038
Amortization of restricted
stock awards 59,831 - - - 59,831
Amortization of ESOP shares - 228,151 - - 744,709
Other comprehensive income - - - - 62,236
Stock options exercised - - 1,400 11,186 7,000
-------- ---------- -------- ------- -----------
Balance at March 31, 1998 (60,320) (5,478,514) (16,284) (130,161) 118,770,187
======== ========== ======== ======== ===========
</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, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,196,472 2,620,734
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,585,035 580,330
Provision for losses on loans - 306,000
Net gain on sales of assets (682,271) (196,108)
Loans originated for sale (26,462,663) (2,747,985)
Sale of loans originated for sale 21,516,463 4,091,550
Deferred income taxes 41,800 (732,000)
Stock dividend from Federal Home Loan Banks (53,300) (52,400)
Other, net 2,888,617 2,345,011
------------ ------------
Net cash provided by operating activities 1,030,153 6,215,132
------------ ------------
Cash flows from investing activities:
Principal repayments on:
Loans receivable 104,371,632 80,501,399
Mortgage-backed securities 8,112,051 4,456,090
Proceeds from maturity of investment securities 45,520,000 4,530,000
Proceeds from sale of:
Loans receivable 15,961,546 1,042,480
Mortgage-backed securities available for sale - 44,578,236
Investment securities available for sale - 9,795,192
Cash invested in:
Loans receivable originated (49,138,048) (94,760,295)
Loans receivable purchased (37,198,247) (2,974,300)
Investment securities (69,993,750) (58,957,815)
Proceeds from sale of real estate 1,403,968 920,231
Cash paid for acquisitions - (15,266,182)
Cash and cash equivalents from acquisitions - 8,296,533
Other, net (578,339) (228,983)
------------ ------------
Net cash provided by (used in) investing
activities 18,460,813 (18,067,414)
------------ ------------
Cash flows from financing activities:
Increase (decrease) in savings deposits, net (1,032,801) 25,972,038
Decrease in borrowed money, net (3,004,956) (11,860,842)
Increase in advance payments by borrowers for
taxes and insurance 2,311,848 2,658,225
Dividends paid (649,937) (456,271)
Other, net 97,038 185,971
------------ ------------
Net cash provided by (used in) financing
activities (2,278,808) 16,499,121
------------ ------------
Increase in cash and cash equivalents 17,212,158 4,646,839
Cash and cash equivalents at beginning of period 31,582,998 23,705,494
------------ ------------
Cash and cash equivalents at end of period $ 48,795,156 28,352,333
============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 14,059,759 14,176,392
Income taxes paid 6,459 119,663
Noncash investing activities:
Stock issued for acquisitions - 15,276,847
Additions to real estate acquired in settlement
of loans or through foreclosure 3,422,964 439,025
Noncash financing activity - interest credited 9,648,131 9,460,385
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 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 months ended March 31, 1998 and 1997,
respectively.
Operating results for the three months ended March 31, 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.
(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.
(Continued)
7<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 table reconciles the numerators and denominators
for basic and diluted earnings per share for the three-month
periods ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Numerator:
Net income (basic and diluted earnings per share) $2,196,472 $2,620,734
========== ==========
Denominator:
Average shares outstanding (basic earnings per share) 9,300,761 8,463,228
Effect of dilutive stock options 508,360 409,966
---------- ----------
Average shares outstanding after assumed
conversions (diluted earnings per share) 9,809,121 8,873,194
========== ==========
</TABLE>
Only employee stock ownership plan shares that have been
allocated or committed to be released are considered outstanding
for earnings per share calculations.
(5) Comprehensive Income
--------------------
On January 1, 1998 the Company adopted the provisions of
Statement of Financial Accounting Standard No. 130, Reporting
Comprehensive Income (SFAS 130), 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
March 31, 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 March 31, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net income $2,196,472 $ 2,620,734
Other comprehensive income (loss):
Realized and unrealized holding gain (loss)
arising during the period, net of tax
expense of $41,802 and tax benefit of
$732,002 in 1998 and 1997, respectively 62,236 (1,097,603)
Less: reclassification adjustment for realized
gain (loss) included in net income - -
---------- -----------
Total other comprehensive income (loss) 62,236 (1,097,603)
---------- -----------
Total comprehensive income $2,258,708 $ 1,523,131
========== ===========
</TABLE>
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, 1998.
RESULTS of OPERATIONS
NET INCOME
Net income for the first quarter of 1998 was $2.2 million
compared to $2.6 million for the first quarter of 1997. Basic
and diluted earnings per share were $0.24 and $0.22,
respectively for the first quarter of 1998 compared to $0.31 and
$0.30, respectively for the comparable period a year ago.
Annualized return on average equity and annualized return
on average assets for the first quarter of 1998 were 7.48% and
0.71%, respectively compared to 11.07% and 0.88%, respectively
for the first quarter of 1997.
Earnings decreased mainly as the result of a $1.2 million, or
24.0%, increase in noninterest expense, which outpaced the
growth in noninterest income, while net interest income after
provision for loan losses remained flat.
NET INTEREST INCOME
Net interest income for the first quarter of 1998 decreased
$176,000, or 2.0%, to $8.7 million compared to $8.9 million for
the first quarter of 1997. The decrease in net interest income
was largely attributable to a decline in the Company's interest
rate spread from 2.87% for the quarter ended March 31, 1997 to
2.66% for the quarter ended March 31, 1998. The Company's net
interest margin also decreased from 3.14% to 2.96% 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 7.99% for the first quarter of 1997
to 7.71% for the first quarter of 1998 which outpaced the
decrease in the Company's cost of money from 5.12% for the first
quarter of 1997 to 5.05% for the first quarter of 1998. The
decrease in the cost of money was generally caused by the
decline in market interest rates between the respective periods
and the repayment of a portion of the Company's borrowed money
with lower costing savings deposits assumed in connection with
the acquisition of L&B Financial. The decrease in the average
yield on interest-earning assets was primarily caused by a shift
in a portion of the Company's loan portfolio from higher
yielding construction loans to permanent loans. In addition,
the lower interest rate environment during the first quarter of
1998 sparked a refinancing demand for fixed-rate mortgage loans
resulting in a $31.6 million, or 3.4%, reduction in the
Company's loan portfolio. The Company invests primarily in
adjustable-rate loans to limit its exposure to interest rate
risk. When adjustable rate loan products are competing with
fixed-rate loans in a low interest rate environment, narrower
spreads over the Company's cost of money are typically realized
in the first year after origination. Principal repayments on
loans experienced a 30% increase in the first quarter of
1998, totaling $104.4 million for the first quarter of 1998
compared to $80.5 million for the first quarter of 1997. Loans
originated and purchased totaled $112.8 million for the first
three months of 1998 compared to $100.5 million for the
comparable period in 1997. Proceeds from sales of loans for the
first quarter of 1998 were $37.5 million compared to $5.1
million for the first quarter of 1997. The average balance of
interest-earning assets increased $44.7 million, or 3.9%,
from $1.14 billion for the quarter ended March 31, 1997 to $1.18
billion for the quarter ended March 31, 1998. The increase in
the average balance of interest-earning assets was primarily the
result of the L&B Financial acquisition.
9<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
PROVISION FOR LOSSES ON LOANS
Reflecting the decline in the balance of the Company's loan
portfolio and a shift in a portion of the loan portfolio from
higher risk construction loans to permanent loans, the Company
recorded no provision for losses on loans for the first quarter
of 1998 compared to $306,000 for the first quarter of 1997. At
March 31, 1998, the allowance for losses on loans was $8.0
million, which represented .89% of net loans receivable compared
to $8.2 million, or .88% of net loans receivable at December 31,
1997. Loan charge-offs totaled $209,000 for the first quarter
of 1998 compared to $7,000 for the first quarter of 1997. The
ratio of nonaccruing loans to net loans receivable was .20% at
March 31, 1998 compared to .58% at December 31, 1997.
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 increased $629,000, or 92.1%, from
$683,000 for the quarter ended March 31, 1997 to $1.3 million
for the quarter ended March 31, 1998. The increase was
primarily the result of a $571,000 increase in gain on sale of
loans and a $39,000 increase in servicing and other loan fees.
The increase in gain on sale of loans receivable was the result
of the increase in loan sales activity reflecting a greater
demand for fixed-rate loan products in a low interest-rate
environment. 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 increase in servicing and other
loan fees was due primarily to the acquisition of L&B Financial.
NONINTEREST EXPENSE
Noninterest expense increased $1.2 million, or 24.0%, from $5.1
million for the quarter ended March 31, 1997 to $6.3 million for
the quarter ended March 31, 1998. The increase was due
primarily to a $603,000 increase in compensation and employee
benefits, a $209,000 increase in other noninterest expense, a
$142,000 increase in federal insurance premiums, a $118,000
increase in occupancy expense and a $97,000 increase in
amortization of excess cost over fair value of net assets
acquired. The increase in compensation and employee benefits
was due primarily to increased expenses associated with the
Company's employee stock ownership plan ("ESOP") and the
acquisition of L&B Financial. 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 75% during the first quarter of 1998 compared to
the first quarter of 1997. The increases in other noninterest
expense, federal insurance premiums, occupancy expense and
amortization of excess cost over fair value of net assets
acquired are generally attributable to the inclusion of three
full months of operating expense in the first quarter
of 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
10<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
of excess cost over fair value of net assets acquired for the
three months ended March 31, 1998 was 37.6% compared to 35.3%
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 were $1.242 billion at March 31, 1998
compared to $1.238 billion at December 31, 1997. Although asset
growth was almost flat, the Company experienced a shift in the
composition of its assets. Loans receivable and mortgage-backed
securities decreased $31.6 million and $7.9 million,
respectively. Proceeds from sales and repayments of loans
receivable that were not used to fund loan originations were
reinvested in interest-bearing deposits, federal funds
sold and investment securities resulting in a combined increase
in these items of $43.3 million. The Company's savings deposits
were $1.044 billion at March 31, 1998 compared to $1.045 billion
at December 31, 1997.
Total stockholders' equity increased by $2.5 million, or 2.2%,
to $118.8 million at March 31, 1998 from $116.3 million at
December 3, 1997. The Company's ratio of stockholders' equity
to assets increased to 9.56% at March 31, 1998 from 9.39% at
December 31, 1997. The Company's book value per share at March
31, 1998 was $12.74 compared to $12.52 at December 31, 1997.
Unearned ESOP shares of 699,866 and 730,484 were excluded in
calculating book value per share at March 31, 1998 and
December 31, 1997, respectively.
NONPERFORMING ASSETS
Summarized below are nonperforming assets at March 31, 1998 and
December 31, 1997
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
(dollars in thousands)
<S> <C> <C>
Restructured loans $ 326 210
------- -----
Nonaccruing loans:
Residential real estate $ 1,338 1,826
Commercial real estate 166 1,214
Construction 176 2,294
Commercial - -
Consumer 96 72
------- -----
Total nonaccruing loans 1,776 5,406
Applicable allowance for losses (18) (152)
------- -----
Nonaccruing loans, net 1,758 5,254
------- -----
Foreclosed real estate, net 6,285 4,256
------- -----
Nonperforming assets, net $ 8,369 9,720
======= =====
Nonperforming assets, net as a
percentage of total assets 0.67% 0.79%
==== ====
</TABLE>
11 <PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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 $3,053,000 and
$3,059,000 at March 31, 1998 and December 31, 1997. At March
31, 1998, the Company had three single-family construction and
development loans totaling $856,000 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 $1.4 million from $9.7
million at December 31, 1997 to $8.4 million at March 31, 1998
primarily as the result of a $2.1 million decrease in
nonaccruing single-family residential construction loans, a $1.0
million decrease in nonaccruing commercial real estate loans,
and a $488,000 decrease in nonaccruing residential real estate
loans. This activity was partially offset by a $981,000
increase in foreclosed single-family residential construction
loans and a $609,000 increase in foreclosed commercial real
estate loans. The decrease in nonaccruing single-family
residential construction loans was primarily due to the
foreclosure of four loans totaling $1.9 million and the payoff
of two loans totaling $368,000 during the first quarter of 1998.
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 quarter of
1998. The increase in foreclosed real estate was primarily due
to the foreclosure of the nonaccrual loans as indicated above.
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 $4.3 million and $8.7
million at March 31, 1998 and December 31, 1997, respectively.
At March 31, 1998 $2.2 million of impaired loans had specific
reserves of $555,000 and the remaining impaired loans of $2.1
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.
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
12<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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 March 31, 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 March 31, 1998, both Jefferson Savings and First
Federal were considered well capitalized.
Following are the actual and required capital amounts and ratios
as of March 31, 1998:
<TABLE>
<CAPTION>
Requirements under
prompt corrective action provisions
-----------------------------------------
Actual Requirements Well capitalized Adequately capitalized
----------------- ------------------- ---------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tangible capital:(1)
Jefferson Savings $53,272,671 7.91% $10,101,892 1.50% NA NA
First Federal 39,314,320 7.21% 8,179,607 1.50% NA NA
Core capital:(1)
Jefferson Savings 53,272,671 7.91% 20,203,784 3.00% $33,672,973 5.00% $26,938,378 4.00%
First Federal 39,314,320 7.21% 16,359,214 3.00% 27,265,357 5.00% 21,812,286 4.00%
Risk-based capital:(2)
Jefferson Savings 55,166,049 14.95% 29,529,453 8.00% 36,911,816 10.00% 29,529,453 8.00%
First Federal 43,175,992 12.81% 26,957,406 8.00% 33,696,758 10.00% 26,957,406 8.00%
Tier I capital:(2)
Jefferson Savings 53,272,671 14.43% NA 22,147,090 6.00% 14,764,726 4.00%
First Federal 39,314,320 11.67% NA 20,218,055 6.00% 13,478,703 4.00%
<FN>
(1) To adjusted total assets
(2) To risk-weighted assets
</FN>
</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 21.73%
and 19.54% at March 31, 1998 and December 31, 1997,
respectively. The Bank's liquidity ratios were 29.01% and
23.42% at March 31, 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.
13<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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.
Cash flows from investing activities provided $18.5 million in
funds during the first three months of 1998. Cash flows from
these investing activities, which consisted primarily of $112.5
million in principal repayments on loans and mortgage-backed
securities, $45.5 million in proceeds from maturity of
investment securities, and $16.0 million in sales of loans, were
used primarily to fund the Company's investing activities of
originating loans and purchasing investment securities
during the three months ended March 31, 1998 and to increase
liquidity.
The Company anticipates that it will have sufficient funds
available to meet its current commitments. At March 31, 1998,
the Company had commitments to originate loans of $28.5 million,
to purchase residential adjustable-rate mortgages of $2.5
million, and to sell fixed-rate loans of $17.8 million.
Certificates of deposit which are scheduled to mature
in one year or less at March 31, 1998 totaled $537.3 million.
Management believes that a significant portion of such deposits
will remain with the Company. In addition, at March 31, 1998,
the Association has an available line of credit with the FHLB of
Des Moines totaling $50.0 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.
14<PAGE>
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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.
15<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
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 27.1 Financial Data Schedule.
Exhibit 27.2 Restated Financial Data Schedule
(b) Reports on Form 8-K:
During the quarter ended March 31, 1998, the
Registrant did not file any current reports on
Form 8-K.
16<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, 1998 By: /s/ Paul J. Milano
-----------------------------
Paul J. Milano
Senior Vice President and
Chief Financial Officer
(Duly Authorized
Representative and
Principal 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, 1998 and is qualified in its entirety by reference to
such financial statements. Dollar amounts (other than per share
amounts) are in thousands.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,289
<INT-BEARING-DEPOSITS> 21,856
<FED-FUNDS-SOLD> 19,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 231,896
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 901,316
<ALLOWANCE> 7,975
<TOTAL-ASSETS> 1,241,864
<DEPOSITS> 1,043,881
<SHORT-TERM> 62,903
<LIABILITIES-OTHER> 16,310
<LONG-TERM> 0
0
0
<COMMON> 100
<OTHER-SE> 118,670
<TOTAL-LIABILITIES-AND-EQUITY> 1,241,864
<INTEREST-LOAN> 18,601
<INTEREST-INVEST> 3,597
<INTEREST-OTHER> 584
<INTEREST-TOTAL> 22,782
<INTEREST-DEPOSIT> 13,106
<INTEREST-EXPENSE> 14,036
<INTEREST-INCOME-NET> 8,745
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,268
<INCOME-PRETAX> 3,790
<INCOME-PRE-EXTRAORDINARY> 2,196
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,196
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 2.96
<LOANS-NON> 1,758
<LOANS-PAST> 856
<LOANS-TROUBLED> 326
<LOANS-PROBLEM> 2,479
<ALLOWANCE-OPEN> 8,182
<CHARGE-OFFS> 209
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 7,975
<ALLOWANCE-DOMESTIC> 5,142
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,833
</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
March 31, 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> 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> 0.31 <F1>
<EPS-DILUTED> 0.30 <F1>
<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
<FN>
<F1> Restated for adoption of SFAS No. 128 and two-for-one
stock split.
</FN>
</TABLE>
