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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 13, 1997
(Date of earliest event reported)
ST. FRANCIS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File No. 0-21298
WISCONSIN 39-1747461
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
13400 BISHOPS LANE, SUITE 350
BROOKFIELD, WISCONSIN 53005-6203
(Address of principal executive offices) (Zip Code)
(414) 486-8700
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 13, 1997, St. Francis Capital Corporation issued a press
release announcing that it would restate its previously reported results of
operations for the twelve months ended September 30, 1997 and for the three
months ended September 30 and June 30, 1997, respectively. The press release
indicated that the restatement of results of operations, which would reduce the
Registrant's twelve month earnings by $3.4 million pre-tax or $2.0 million
after-tax, was the result of certain declines in fair value on four of its
private issue mortgage-backed securities. A copy of the press release is
attached as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
99 Press Release dated November 13, 1997.
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 hereunto duly authorized.
ST. FRANCIS CAPITAL CORPORATION
Date: November 20, 1997 By: /s/ Jon D. Sorenson
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Jon D. Sorenson
Chief Financial Officer and Treasurer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99 Press release dated November 13, 1997 describing reasons for restating
results of operations for the twelve months ended September 30, 1997
and the three months ended September 30 and June 30, 1997,
respectively.
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FOR FURTHER INFORMATION CONTACT: SUBJECT:
Jon D. Sorenson St. Francis Capital Corporation To
Chief Financial Officer Restate Year-End Results
(414) 486-8700
Release Time: 1:00 p.m. central on November 13, 1997
Brookfield, WI - November 13, 1997....... St. Francis Capital Corporation
(NASDAQ: STFR) today announced that it plans to restate its previously reported
results of operations for the twelve months ended September 30, 1997 as a
result of certain declines in fair value judged to be other than temporary on
four of its private issue mortgage-backed securities. The restatement will
reduce the Company's twelve month earnings by $3.4 million pre-tax or $2.0
million after-tax. Earnings per share for the twelve months ended September
30, 1997 will be $2.20 compared to the previously reported $2.57. The Company
intends to file an amended Form 10-Q for the three months ended June 30, 1997
reflecting the effects of the restatement on that quarter, and the remainder of
the effects of the restatement will be reflected in the Company's financial
results for the three months ended September 30, 1997.
As a result of updated default, severity and delinquency data on certain
of its private issue mortgage-backed securities published and received
subsequent to the October 31, 1997 press release of the Company's three and
twelve month results, and the resulting discovery of an error in the Company's
impairment analysis of these issues for the third and fourth quarter of fiscal
1997, the Company now believes that four of its private issue mortgage-backed
securities, two of which are currently rated "A" and the other two which are
currently rated "BBB", were impaired at September 30, 1997. Therefore, in
accordance with generally accepted accounting principles, these securities were
written down to fair value and any impairment loss must flow through the
Company's income statement. Prior to the restatement, the Company's cost basis
in these securities was $12.5 million. The impairment loss will result in a
new cost basis of $9.1 million from these four issues. "We are currently
implementing additional measures designed to insure that potential impairment
situations in our securities portfolio will be uncovered and monitored at
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an earlier stage of development," stated Thomas R. Perz, President and CEO of
the Company. "With the increasing sophistication of analysis techniques, as
well as more detailed information relating to the specific portfolios behind
many of the mortgage-backed securities pools becoming increasingly available,
we will continue to strive to ascertain impairment issues early on."
The four issues under impairment are private issue mortgage-backed
securities backed by single-family loans relating to properties located
primarily in California. The underlying loans have experienced significant
delinquencies and foreclosures and the Company learned that recoveries on these
loans were less than previously realized and that the various subordinate and
cash positions within the mortgage-backed structures may no longer protect the
Company's position in the securities. The Company has written down the
securities to fair value which is a level where the remaining cash flows should
provide a return at a market rate of interest income on the remaining cost
basis. In November, the largest of the issues, which was carried at $8.8
million, was sold at the adjusted carrying value.
As stated in the earlier press release, the Board of Directors of the
Company has authorized the repurchase of up to 10% of the Company's outstanding
stock, or approximately 523,000 shares, in open market transactions. The
Company intends to commence the consideration for repurchases under this
program on November 18, 1997. Mr. Thomas R. Perz, President and Chief
Executive Officer of the Company, stated, "We continue to believe that the
repurchase of shares can enhance shareholder value by increasing earnings per
share of the remaining shares."
St. Francis Capital Corporation, with $1.7 billion in assets is the
holding company for St. Francis Bank, F.S.B. The Company operates 23 offices
in Milwaukee, Waukesha, Ozaukee, Washington, Walworth and Kenosha counties.
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ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARY
Financial Highlights (Dollars in thousands, except per share data)
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<TABLE>
<CAPTION>
Twelve months ended
September 30,
1997 1996
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<S> <C> <C>
OPERATING DATA:
Interest Income:
Loans $57,601 $47,512
Mortgage-backed and related securities 43,266 39,163
Other 7,279 5,422
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Total interest income 108,146 92,097
Interest Expense:
Deposits 47,442 37,610
Advances and other borrowings 21,921 18,803
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Total interest expense 69,363 56,413
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Net interest income before provision for loan losses 38,783 35,684
Provision for loan losses 1,280 1,300
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Net interest income 37,503 34,384
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Other Operating Income:
Loan servicing and related fees 1,813 1,258
Depository fees and service charges 2,159 1,451
Gain on sale of securities, net 1,289 3,311
Impairment loss on mortgage-backed securities (3,400) -
Gain on sales of mortgage loans held for sale 1,562 1,057
Trading securities gains and committment fees, net 726 109
Gain (loss) on foreclosed properties (22) 865
Income from affordable housing 3,363 1,899
Other income 1,172 664
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Total other operating income 8,662 10,614
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General and Administrative Expenses:
Compensation and employee benefits 15,564 13,242
Office building expenses 2,551 2,106
Furniture and equipment expenses 2,466 1,874
Federal deposit insurance premiums 742 5,641
Data Processing 1,574 1,317
Advertising/Promotion 1,351 1,470
Affordable housing expenses 3,901 2,156
Goodwill amortization 834 445
Other general and administrative expenses 3,920 3,371
------------------------
Total general and administrative expenses 32,903 31,622
========================
Income before income tax expense 13,262 13,376
Income tax expense 1,544 2,911
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Net income $11,718 $10,465
========================
Earnings per share $2.20 $1.82
Return on average equity 9.17% 7.81%
Return on average assets 0.77% 0.82%
Net interest margin 2.73% 2.97%
Net interest spread 2.45% 2.56%
Other operating income to average assets 0.57% 0.83%
G&A expenses to average assets 2.16% 2.47%
Efficiency ratio (excludes special FDIC assessment) 66.40% 63.90%
Effective tax rate 11.64% 21.76%
</TABLE>
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ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARY
Financial Highlights (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
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September 30, September 30,
1997 1996
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<S> <C> <C>
FINANCIAL CONDITION:
Cash and cash equivalents $42,858 $22,459
Trading account securities 0 0
Mortgage-backed and related securities
available for sale 620,716 519,766
Other assets available for sale 80,877 80,583
Debt and equity securities 3,833 6,215
Mortgage-backed and related securities 66,849 68,392
Loans receivable, net 712,875 610,699
Federal Home Loan Bank stock 20,843 19,063
Real estate held for investment 51,476 36,865
Foreclosed properties 416 80
Goodwill 14,821 5,834
Other assets 45,085 34,160
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Total Assets $1,660,649 $1,404,116
===========================
Deposits $1,087,136 $877,684
Advances and other borrowings 420,228 375,034
Other liabilities 24,755 26,219
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Total Liabilities 1,532,119 1,278,937
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Shareholders'equity 128,530 125,179
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Total Liabilities and Shareholders' Equity $1,660,649 $1,404,116
===========================
Shareholders' equity to total assets 7.74% 8.92%
Book value per share $24.54 $23.12
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ASSET QUALITY INFORMATION: September 30, September 30,
1997 1996
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Non-performing loans $2,995 $3,890
Foreclosed properties 416 80
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Non-performing assets $3,411 $3,970
===========================
Allowance for loan losses $6,202 $5,217
Non-performing loans to gross loans 0.38% 0.58%
Non-performing assets to total assets 0.21% 0.28%
Allowance for loan losses to gross loans 0.79% 0.78%
Allowance for loan losses to non-performing 207.08% 134.11%
loans
</TABLE>
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