1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 10-QSB
-------------------------
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending December 31, 2000
--------------------------
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 0-25814
--------------------------------
N S & L Bancorp, Inc.
---------------------
(Exact name of registrant as specified in its charter)
Missouri 43-1709446
- --------------------------------------- ---------------------
(State or other jurisdiction of I.R.S. (I.R.S. Employer
Employer Incorporation or organization) Identification No.)
P.O. Box 369, Neosho, MO 64850
- --------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(417) 451-0429
- -------------------------------
(Registrant's telephone number)
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 twelve 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
--- ----
AS OF FEBRUARY 5, 2001, THERE WERE 661,684 SHARES OF THE REGISTRANT'S COMMON
STOCK, $.01 PAR VALUE PER SHARE, OUTSTANDING.
2
N S & L BANCORP, INC. AND SUBSIDIARY
FORM 10-QSB
DECEMBER 31, 2000
INDEX PAGE
- ----- ----
PART I-FINANCIAL INFORMATION
- ----------------------------
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) 1-2
CONSOLIDATED STATEMENTS OF INCOME (unaudited) 3-4
CONSOLIDATED STATEMENTS OF COMPRESHENSIVE INCOME (unaudited) 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 6-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 8-10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11-14
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS 15
ITEM 2. CHANGES IN SECURITIES 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES
HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES
3
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
------------------------------------------------------------------
(Unaudited)
DECEMBER 31, SEPTEMBER 30,
2000 2000
------------- --------------
(Dollars in thousands)
ASSETS
------
Cash and cash equivalents, including
interest-bearing accounts of $1,728 at
December 31, 2000 and $2,437 at September 30, 2000 $ 2,238 $ 2,982
Certificates of deposit 80 80
Investment securities available-for-sale, 185 173
Investment securities held-to-maturity
(estimated market value of $19,614 at December 31, 2000
and $19,243 at September 30, 2000) 19,659 19,639
Investment in Federal Home Loan Bank stock, at cost 657 657
Mortgage-backed securities held-to-maturity
(estimated market value of $2,865 at December 31, 2000
and $2,924 at September 30, 2000) 2,802 2,907
Loans held for sale 1,252 386
Loans receivable, net (reserves for loan losses of $64
at December 31, 2000 and $63 at September 30, 2000) 43,537 44,091
Income taxes recoverable-current -- --
Accrued interest receivable 622 560
Property and equipment, less accumulated
depreciation 1,062 1,063
Intangible assets 74 75
Other assets 306 196
---------- ----------
Total assets $ 72,474 $ 72,809
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Customers deposits $ 49,247 $ 48,257
Advances from FHLB 12,082 13,117
Advances from borrowers for taxes and insurance 116 379
Income taxes payable - current 13 81
Deferred income taxes 360 290
Other Liabilities 536 561
---------- ----------
Total liabilities 62,354 62,685
---------- ----------
Commitments and contingencies -- --
See accompanying notes to Consolidated Financial Statements.
4
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
------------------------------------------------------------------
(Unaudited)
December 31, September 30,
2000 2000
--------------- ------------
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)
- ------------------------------------------------
Preferred stock, $.01 par value; 2,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value; 8,000,000 shares
authorized, 1,012,441 issued and 661,882 outstanding
at December 31, 2000 and 664,946
outstanding at September 30, 2000 10 10
Paid-in capital 10,373 10,389
Retained earnings - substantially restricted 5,054 5,051
Treasury Stock - at cost; 350,559 shares at December 31,
2000 and 347,495 at September 30, 2000 (4,991) (4,960)
Unearned compensation (342) (375)
Accumulated other comprehensive income 16 9
----------- -----------
Total stockholders' equity 10,120 10,124
----------- -----------
Total liabilities and stockholders' equity $ 72,474 $ 72,809
=========== ===========
See accompanying notes to Consolidated Financial Statements.
2
5
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
------------------------------------------------------------------
(Unaudited)
QUARTER ENDED DECEMBER 31,
2000 1999
------------ --------------
(Dollars in thousands)
Interest Income:
Loan receivable $ 882 $ 768
Investment securities 321 329
Mortgage-backed and
related securities 54 43
Other interest-earning assets 15 28
---------- ---------
Total interest income 1,272 1,168
========== =========
Interest Expense:
Customer deposits 584 529
Borrowed funds 207 105
---------- ---------
Total interest expense 791 634
---------- ---------
Net interest income 481 534
Provision for loan losses 1 12
Net interest income after
provision for loan losses 480 522
Noninterest Income:
Gain on sale of loans 17 10
Banking service charges
and fees 59 57
Loan late charges 3 2
Mortgage banking fees 23 18
Other 3 4
---------- ---------
Total non interest income 105 91
Non interest Expense:
Compensation and
employee benefits 262 254
Occupancy and equipment 46 47
Deposit insurance premium 2 7
Data processing 32 32
See accompanying notes to Consolidated Financial Statements.
3
6
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
------------------------------------------------------------------
(Unaudited)
QUARTER ENDED DECEMBER 31,
2000 1999
---------- -----------
(Dollars in thousands)
Printing , postage, stationery
and supplies 17 21
Professional fees 14 13
Advertising 9 13
Other 58 56
-------- ---------
Total noninterest expense 440 443
-------- ---------
Income before taxes 145 170
Income Taxes 37 51
-------- ---------
Net income $ 108 $ 119
======== =========
Basic earnings per share $ .17 $ .17
======== =========
Diluted earnings per share $ .17 $ .17
======== =========
Dividend per share $ .16 $ .16
======== =========
See accompanying notes to Consolidated Financial Statements.
4
7
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
------------------------------------------------------------------
(Unaudited)
Quarter ended December 31,
2000 1999
--------- ----------
(Dollars in thousands)
Net income $ 108 $ 119
Unrealized gains (losses)
on securities:
Gains (losses) arising during
period, net of tax 7 (8)
Reclassification
adjustment, net of tax -- --
-------- --------
Other comprehensive
income (loss) 7 (8)
-------- --------
Comprehensive income $ 115 $ 111
======== ========
See accompanying notes to Consolidated Financial Statements.
5
8
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------
QUARTERS ENDED DECEMBER 31, 2000 AND 1999
(Unaudited)
2000 1999
------------ ----------
(Dollars in thousands)
Cash flows from operating activities:
Net income $ 108 $ 119
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21 21
Amortization 1 1
Premiums and discounts on mortgage-backed
securities and investment securities (20) (18)
Origination of loans held for sale (2,015) (652)
Proceeds from sale of loans held for sale 1,166 741
Loss on loans, net of recoveries 1 12
Release of ESOP shares (2) 22
Vesting of MRDP shares 19 20
Gain on sale of loans (17) (10)
Net change in operating accounts:
Accrued interest receivable (62) (46)
Other assets (110) (14)
Other liabilities (24) (82)
Income taxes payable - deferred 65 (3)
Income taxes payable - current (68) 112
---------- ---------
Net cash from (used in) operating activities (937) 223
---------- ---------
Cash flows from investing activities:
Purchase of investment securities held-to-maturity -- (5)
Proceeds from maturity of investment securities
held-to-maturity -- 500
Net change in certificates of deposit -- --
Net change in loan receivable 553 (893)
Proceeds from principal payments and maturities
of mortgage-backed securities held-to-maturity 105 321
Purchase of mortgage-backed securities held-to-maturity -- --
Purchases of property and equipment (20) (8)
---------- ---------
Net cash from (used in) investing activities $ 638 $ (85)
See accompanying notes to Consolidated Financial Statements.
6
9
N S & L BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------
QUARTER ENDED DECEMBER 31, 2000 AND 1999
(Unaudited)
2000 1999
---------- ----------
(Dollars in thousands)
Cash flows from financing activities:
Net change in demand deposits, savings
accounts, and certificates of deposit $ 990 $ (1,263)
Net decrease in mortgage escrow funds (263) (245)
Cash advances from FHLB -- 3,000
Repayment of cash advances from FHLB (1,035) (234)
Purchase of treasury stock (31) (225)
Cash dividends paid (106) (119)
---------- -----------
Net cash from (used in)financing activities (445) 914
---------- -----------
Net increase (decrease) in cash and
cash equivalents (744) 1,052
Cash and cash equivalents -
beginning of period 2,982 2,317
---------- -----------
Cash and cash equivalents -
end of period $ 2,238 $ 3,369
========= ===========
See accompanying notes to Consolidated Financial Statements.
7
10
N S & L BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - Basis of Presentation
- ------------------------------
The consolidated interim financial statements as of December 31, 2000 included
in this report have been prepared by the Registrant without audit. In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation are reflected in the December 31,
2000 interim financial statements. The results of operations for the period
ended December 31, 2000 and 1999 are not necessarily indicative of the operating
results for the full year. The September 30, 2000 Consolidated Statement of
Financial Condition presented with the interim financial statements was audited
and received an unqualified opinion.
NOTE B - Earnings per Share
- ---------------------------
The following information shows the amounts used in computing earnings per share
and the effect on income and the weighted average number of shares of dilutive
potential common stock.
FOR THE THREE MONTHS ENDED DECEMBER 31,
2000 1999
---- ----
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
Basic EPS:
Income available to
Common Stockholders $108,000 624,049 $.17 $119,000 684,245 $.17
Effect of dilutive securities:
Stock options -- -- -- --
-------- ------- -------- -------
Diluted EPS:
Income available to common
stockholders plus stock
options $108,000 624,049 $.17 $119,000 684,245 $.17
======== ======= ==== ======== ======= ====
NOTE C - Employee Stock Ownership Plan
- --------------------------------------
The Association established an internally - leveraged ESOP for the exclusive
benefit of participating employees ( all salaried employees who have completed
at least 1000 hours of service in a twelve-month period and have attained the
age of 21). The loan is secured by the shares purchased and will be repaid by
the contributions to the ESOP and any other earnings on ESOP assets. The
Association presently expects to contribute approximately $106,762 including
interest annually to the ESOP. Contributions will be applied to repay interest
on the loan first, then the remainder will be applied to principal. The loan is
expected to be repaid in approximately five years. As of December 31, 2000, the
loan had an outstanding balance of $393,819 and an interest rate of 9%.
8
11
N S & L BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Shares purchased with the loan proceeds are held in a suspense account for
allocation among participants as the loan is repaid. Contributions to the ESOP
and shares released from the suspense account are allocated among participants
in proportion to their compensation relative to total compensation of all active
participants. Benefits generally become 25% vested after each year of credited
service beyond one year. Vesting is accelerated upon retirement, death or
disability or separation of service. Since the Association's annual
contributions are discretionary, benefits payable under the ESOP cannot be
estimated.
The Association accounts for its ESOP in accordance with Statement of Position
93-6, Employers Accounting for Employee Stock Ownership Plans. Accordingly, the
debt of the ESOP is eliminated in consolidation and the shares pledged as
collateral are reported as a part of unearned ESOP shares in the consolidated
balance sheets. Contributions to the ESOP shall be sufficient to pay principal
and interest currently due under the loan agreement. As shares are committed to
be released from collateral, the Company reports compensation expense equal to
the average market price of the shares for the respective period, and the shares
become outstanding for earnings per share computations. Dividends on allocated
ESOP shares are recorded as a reduction of retained earnings: dividends on
unallocated ESOP shares are recorded as a reduction of debt and accrued
interest. ESOP compensation expense was $15,531 and $22,310 for the three months
ended December 31, 2000 and 1999 respectively.
A summary of ESOP shares at December 31, 2000 is as follows:
Shares allocated 43,674
Shares committed for release 2,054
Unreleased shares 36,491
------
Total 82,219
======
Fair value of unreleased shares $369,471
NOTE D - Management Recognition and Development Plan and Stock Option Plan
- --------------------------------------------------------------------------
The 1995 Management Recognition and Development Plan ("MRDP") was approved by
the stockholders on January 17, 1996. The MRDP is administered by the Board of
Directors of the Company. Collectively, the Board issued 41,109 shares of the
Company's common stock, of which currently there are 37,638 shares awarded to
employees at a cost of $410,620. The MRDP shares are vesting and being expensed
over a five-year period, which began on January 17, 1996. The value of the
common stock contributed to the MRDP is amortized to compensation expense as
the shares vest. MRDP expense was $20,206 and $20,206 for the three months
ended December 31, 2000 and 1999 respectively.
9
12
N S & L BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Also adopted on January 17, 1996 was a Stock Option plan whereby 102,774 shares
of the Company's common stock have been reserved to be awarded to certain
officers employees and directors. The Stock Option Plan is administered by a
committee of the Board of Directors. All options expire no later than ten years
from the date of grant. At February 5, 2001, 1,000 shares had been exercised.
NOTE E - Stock Repurchase Program
- ---------------------------------
At February 5, 2001, The Company has repurchased 350,757 shares of the
Corporation's outstanding stock at a cost of $5,024,388.
NOTE F - New Accounting Pronouncements
- --------------------------------------
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which established accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the Statement of Financial Position and measure those
instruments at fair value. This Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. The adoption of this standard did
not have a material impact on the Company.
10
13
N S & L BANCORP, INC. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and analysis included herein covers those material changes
in liquidity and capital resources that have occurred since September 30, 2000,
as well as certain changes in results of operations during the three periods
ended December 31, 2000 and 1999.
The following should be read in conjunction with the Company's Form 10-KSB
for the year ended September 30, 2000, which contains the latest audited
financial statements and notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations as of September
30, 2000, and for the year then ended. Therefore, only material changes in
financial condition and results of operations are discussed herein.
This report contains certain "forward-looking statements" concerning the
future operations of NS&L Bancorp, Inc. We have used forward-looking statements
to describe future plans and strategies, including our expectations of our
future financial results. Management's ability to predict results or the effect
of future plans or strategies is inherently uncertain. Factors which could
affect actual results include interest rate trends, the general economic climate
in our market area and the country as a whole, our loan delinquency rates, and
changes in federal and state regulation. These factors should be considered in
evaluation of the forward-looking statements contained in this report and undue
reliance should not be placed on such statements.
CHANGES IN FINANCIAL CONDITION
- ------------------------------
Total assets decreased $335,000 from September 30, 2000. Cash and cash
equivalents decreased $744,000 and mortgage-backed securities decreased
$105,000 during the three months ended December 31, 2000. These decreases were
partially offset by an increase in loans of $312,000, other assets of $110,000
and accrued interest receivable of $62,000. Customer deposits increased $990,000
primarily due to some special rate offerings, while advances from Federal Home
Loan Bank of Des Moines decreased $1.0 million as deposits were used to repay
FHLB advances. Loans for 1 to 4 family dwellings comprised the majority of the
increase in loans.
Nonperforming assets were $171,000 or .24% of total assets at December 31,
2000, compared to $49,000, or .07% of total assets at September 30, 2000. There
were no nonaccrual loans at December 31, 2000 and $3,000 at September 30, 2000.
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2000 TO THE THREE MONTHS ENDED
- --------------------------------------------------------------------------------
DECEMBER 31, 1999
- -----------------
NET INCOME. Net income was $108,000 for the quarter ended December 31,
2000 compared to $119,000 for the quarter ended December 31, 1999. Net interest
income after provision for loan losses was $480,000 for the quarter compared to
$522,000 for the same quarter last year. Noninterest income increased $14,000
and noninterest expense decreased $3,000. Income tax expense decreased $14,000.
NET INTEREST INCOME. Net interest income of $481,000 for the quarter ended
December 31, 2000 decreased from $534,000 for the quarter ended December 31,
1999. Interest income increased $104,000 while interest expense increased
$157,000.
11
14
N S & L BANCORP, INC. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
INTEREST INCOME. Interest income increased by $104,000, or 8.9%, to $1.3 million
for the quarter ended December 31, 2000 from $1.2 million for the quarter ended
December 31, 1999. Interest income from loans receivable increased $114,000 to
$882,000 for the quarter ended December 31, 2000 from $768,000 for the quarter
ended December 31, 1999. The increase was primarily attributable to the increase
in the average balance of loans outstanding and to a lesser extent to interest
rate increases on existing adjustable rate loans. Interest income from
investment securities decreased by $8,000 to $321,000 for the quarter ended
December 31, 2000 from $329,000 for the quarter ended December 31, 1999. This
decrease was due to an increase in investment in municipal securities that have
a lower stated rate but have more favorable tax consequences. Interest income
from mortgage-backed securities increased by $11,000 to $54,000 for the quarter
ended December 31, 2000 from $43,000 for the quarter ended December 31, 1999.
Interest income from other interest-earning assets decreased by $13,000 to
$15,000 for the quarter ended December 31, 2000 from $28,000 for the quarter
ended December 31, 1999. This decrease was due to a decrease in the interest
paid on smaller average balances of cash invested at Federal Home Loan Bank of
Des Moines as cash was used to fund loans and purchase securities and interest
rates decreased between the two periods.
INTEREST EXPENSE. Interest expense of $791,000 for the quarter ended
December 31, 2000 increased $157,000, or 24.8%, from $634,000 for the quarter
ended December 31, 1999. The increase is primarily attributable to an increase
in the average balances of borrowed funds and to a lesser extent, to some
special rate offerings and an overall increase in rates on customer deposits.
PROVISION FOR LOAN LOSSES. Loan loss provision decreased by $11,000 for
the quarter ending December 31, 2000 compared to the quarter ending December 31,
1999 and actual loan losses net of recoveries were zero for the both quarters.
NONINTEREST INCOME. Noninterest income of $105,000 for the quarter ended
December 31, 2000 increased $14,000 from $91,000 for the quarter ended December
31, 1999. This increase was due to an increase in mortgage banking fees of
$5,000, an increase of $2,000 in banking service charges and fees and an
increase on the gain on the sale of loans of $7,000 for the quarter ending
December 31, 2000 compared to the quarter ending December 31, 1999.
NONINTEREST EXPENSE. Noninterest expense decreased $3,000, or .7%, to
$440,000 for the quarter ended December 31, 2000 from $443,000 for the quarter
ended December 31, 1999. This decrease was due to a decrease of $5,000 in
deposit insurance premiums, $4,000 decrease in printing, postage and supplies
and a $4,000 decrease in advertising expenses. These decreases were partially
offset by an increase of $8,000 in compensation and employee benefits as a
result of annual salary increases effective October 1, 2000 and additional
personnel needed in the normal operations of business and a $2,000 increase
in other expenses.
NET INTEREST MARGIN. Net interest margin was 2.74% for the three months
ended December 31, 2000 compared to 3.14% for the three months ended December
31, 1999. Income from earning assets increased by $104,000, or 8.9%, between
the two quarters and interest expense
12
15
N S & L BANCORP, INC. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
increased by $157,000, or 24.8%. The average earning asset base increased by
$2.1 million, or 3.0%. The average interest-bearing liability base increased by
$2.3 million, or 4.1%.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of funds are deposits, proceeds from
principal and interest payments on loans, mortgage-backed securities, investment
securities, net operating income and cash advances from Federal Home Loan Bank
of Des Moines when appropriate. While maturities and scheduled amortization of
loans and mortgage-backed securities are a somewhat predictable source of funds,
deposit flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions and competition.
The Association must maintain an adequate level of liquidity to ensure
availability of sufficient funds to support loan growth and deposit withdrawals,
satisfy financial commitments and to take advantage of investment opportunities.
During the fiscal year 2000 and 1999, the Association used cash advances from
Federal Home Loan Bank of Des Moines as part of its investment strategy. At
December 31, 2000, the Association had FHLB advances of $12.1 million that were
used to offset fixed rate mortgage loans and provide liquidity and had approved
loan commitments totaling $1.5 million and undisbursed loans in process of
$455,000.
Liquid funds necessary for normal daily operations of the Association are
maintained in a working checking account and a daily time account with the
Federal Home Loan Bank of Des Moines. It is the Association's current policy to
maintain adequate collected balances in those deposit accounts to meet daily
operating expense, customer withdrawals, and fund loan demand. Funds received
from daily operating activities are deposited, on a daily basis, in the checking
account and transferred, when appropriate, to the daily time account to enhance
income.
Normal daily operating expenses are not expected to significantly change.
Noninterest expense as a percentage of average assets at 2.4% is expected to
remain basically constant. Interest expense is expected to gradually increase as
the average balance of cash advances and customer accounts have increased. The
cash advance expenses are being offset as the funds have been invested at rates
higher than the expense incurred by them. Loan interest income is expected to
continue to increase as the average balance of loans increases. Although
customer deposits have increased in the past three months as a result of some
special rate offerings, deposits are expected to remain stable in the future as
competition increases as new financial institutions enter the market area.
At December 31, 2000, certificates of deposit amounted to $33.0 million,
or 67% of the Association's total deposits, including $28.9 million of fixed
rate certificates scheduled to mature within twelve months. Historically, the
Association has been able to retain a significant amount of its deposits as they
mature. Management believes it has adequate resources to fund all loan
commitments from savings deposits, loan payments, maturities of investment
securities and advances from Federal Home Loan Bank of Des Moines.
13
16
N S & L BANCORP, INC. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The Office of Thrift Supervision requires a thrift institution to maintain
an average daily balance of liquid assets (cash and eligible investments) equal
to at least 4% of the average daily balance of its net withdrawable deposits and
short-term borrowings. The Association's liquidity ratio was 38.59% at December
31, 2000. Neosho Savings and Loan consistently maintains liquidity levels in
excess of regulatory requirements, and believes this is an appropriate strategy
for proper asset and liability management.
The Office of Thrift Supervision requires institutions such as the
Association to meet certain tangible, core, and risk-based capital requirements.
Tangible capital generally consists of stockholders' equity minus certain
intangible assets. Core capital generally consists of stockholders' equity. The
risk-based capital requirements presently address risk related to both recorded
assets and off-balance sheet commitments and obligations. The following table
summarizes the Association's capital ratios at December 31, 2000.
Percent of Adjusted
Amount Total Assets
------------------------------
(Unaudited)
(Dollars in thousands)
Tangible capital $ 9,029 12.57%
Minimum tangible capital requirement 1,077 1.50
-------- -----
Excess $ 7,952 11.07%
======== =====
Core capital $ 9,029 12.57%
Minimum core capital requirement 2,873 4.00
-------- -----
Excess $ 6,156 8.57%
======== =====
Risk-based capital $ 9,093 27.54%
Minimum risk-based capital requirement 2,641 8.00
-------- -----
Excess $ 6,452 19.54%
======== =====
14
17
N S & L BANCORP, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
ITEM 1, LEGAL PROCEEDINGS
Neither the Registrant nor the Association is a party to any material legal
proceedings at this time. From time to time the Association is involved in
various claims and legal actions arising in the ordinary course of business.
ITEM 2, CHANGES IN SECURITIES
Not applicable.
ITEM 3, DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4, SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5, OTHER INFORMATION
None.
ITEM 6, EXHIBITS AND REPORT ON FORM 8-K
A. Exhibits
None.
B. Forms 8-K
None.
15
18
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.
N S & L Bancorp, Inc.
Date February 5, 2001 By: /s/ C. R. 'Rick' Butler
----------------- --------------------------------------
C. R. 'Rick' Butler
President
CEO
By: /s/ Carol Guest
--------------------------------------
Carol Guest
Treasurer