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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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: 0-24618
JEFFERSON BANCORP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Louisiana 72-1264411
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1011 4th Street
Gretna, Louisiana 70053
----------------------------------
(Address of principal executive offices)
(504) 368-1011
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Registrant's telephone number,
including area code
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 requirement for the past 90 days. YES X NO
---- ----
Shares outstanding as of June 30, 1996: 2,195,635
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INDEX
Part I. Financial Information Page
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Item 1. Financial Statements
Consolidated Statements of Financial 1
Condition at June 30, 1996 (Unaudited)
and December 31, 1995
Consolidated Statements of Income 2
(Unaudited) for the Three Months and Six Months
Ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows 3
(Unaudited) for the Six Months
Ended June 30, 1996 and 1995
Notes to Consolidated Financial 4
Statements
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations
Part II. Other Information
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Item 1. Legal Proceedings 23
Item 2. Changes in Securities 23
Item 3. Defaults upon Senior Securities 23
Item 4. Submission of Matters to a Vote of 23
Security Holders
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
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PART I - ITEM 1. FINANCIAL STATEMENTS
JEFFERSON BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
1996 1995
---- ----
(In Thousands)
(Unaudited)
ASSETS
Cash on hand and in banks $ 2,194 2,192
Interest-bearing deposits 5,855 5,293
-------- --------
Cash and cash equivalents 8,049 7,485
Other interest-bearing deposits 100 400
Investment securities (market value of
$71,028 at June 30, 1996 and $82,678
at December 31, 1995) 70,964 81,996
Mortgage-backed securities (market value
of $114,648 at June 30, 1996 and
$107,347 at December 31, 1995) 116,207 106,352
Loans receivable, net 62,766 62,306
Loans held for sale --- 87
Real estate owned, net 7 ---
Office properties and equipment, net 2,400 2,491
Federal Home Loan Bank stock, at cost 1,631 1,318
Accrued interest receivable 2,304 2,359
Prepaid assets 237 389
Other assets 929 687
-------- --------
Total assets $ 265,594 265,870
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 227,495 229,065
Advance payments by borrowers
for taxes and insurance 616 716
Federal income taxes:
Current 327 232
Deferred 258 308
Accrued interest payable 99 95
Other liabilities 739 640
-------- --------
Total liabilities 229,534 231,056
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
10,000,000 shares authorized;
2,195,635 shares issued and outstanding 22 22
Paid in capital in excess of par 18,679 18,552
Unearned compensation (1,513) (1,651)
Retained earnings, substantially restricted 18,872 17,891
-------- --------
Total stockholders' equity 36,060 34,814
-------- --------
Total liabilities and stockholders' equity $ 265,594 265,870
======== ========
See Accompanying Notes
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JEFFERSON BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- ---------
1996 1995 1996 1995
---- ---- ---- ----
(In Thousands, Except Per Share Data)
(Unaudited)
INTEREST INCOME:
Loans receivable $ 1,263 1,299 2,542 2,611
Mortgage-backed securities 1,809 1,423 3,537 2,746
Interest-bearing deposits 94 119 192 260
Investment securities and dividends
on stock of Federal Home Loan Bank 1,180 1,533 2,442 2,956
------ ----- ----- -----
Total interest income 4,346 4,374 8,713 8,573
------ ------ ----- -----
INTEREST EXPENSE:
Deposits 2,195 2,162 4,383 4,166
------ ------ ----- -----
Total interest expense 2,195 2,162 4,383 4,166
------ ------ ----- -----
Net interest income 2,151 2,212 4,330 4,407
Provision for (recovery of) loan losses (4) 39 (22) 99
------- ------ ------- -----
Net interest income after provision
for (recovery of) loan losses 2,155 2,173 4,352 4,308
------ ------ ----- -----
NONINTEREST INCOME:
Service charges on deposit accounts 226 220 448 456
Gain on sale of REO 11 1 12 2
Late charges on loan accounts 15 11 27 23
Other 31 43 61 82
------- ------ ----- -----
Total noninterest income 283 275 548 563
------- ------ ----- -----
NONINTEREST EXPENSE:
Compensation and benefits 826 764 1,657 1,552
Occupancy 59 58 116 112
SAIF deposit insurance premiums 131 132 264 264
Provision for (recovery of) real estate losses (2) (1) 1 (2)
Depreciation and amortization 55 61 110 125
NOW checking expense 61 63 118 119
Other 399 368 757 738
------ ------ ----- -----
Total noninterest expense 1,529 1,445 3,023 2,908
------- ------ ----- -----
Income before income tax expense 909 1,003 1,877 1,963
------ ------ ----- -----
Income tax expense (benefit):
Current 277 304 635 687
Deferred (17) (92) (50) (177)
------- ------ ----- -----
Total income tax expense 260 212 585 510
------- ------ ----- -----
Net income $ 649 791 1,292 1,453
====== ====== ===== =====
Earnings per share $ 0.31 0.38 0.62 0.71
====== ======= ===== ====
See Accompanying Notes
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JEFFERSON BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
--------
1996 1995
---- ----
(In Thousands)
OPERATIONS: (Unaudited)
Net income $ 1,292 1,453
Depreciation and amortization 110 125
Amortization of premiums and discounts, net 137 (178)
Benefit for deferred income taxes (50) (177)
Gain on sale of real estate owned (REO) (12) (2)
Employee Stock Ownership and Management
Recognition Plans 284 207
Mortgage loans originated for sale (500) (143)
Proceeds from sale of mortgage loans originated for sale 587 143
FHLB Stock dividends (43) (41)
Provision (recovery) for loan and REO losses (21) 97
(Increase) decrease in accrued interest receivable 55 (367)
Decrease in other assets and liabilities, net 108 283
----- -----
Net cash provided by operations 1,947 1,400
----- -----
INVESTING ACTIVITIES:
Mortgage loan originations, net of loans
originated for sale (6,585) (1,037)
Principal repayments of loans receivable 6,096 2,192
Purchases of mortgage-backed securities (20,438) (18,850)
Principal repayments of mortgage-backed securities 10,537 5,374
(Increase) decrease in other interest-bearing deposits 300 (100)
Decrease in investment securities,net 10,924 9,351
Proceeds from the sale of REO 72 ---
Purchase of office properties and equipment (19) (47)
Purchase of FHLB stock (270) (91)
Proceeds from sale of FHLB stock -- 19
------- ------
Net cash provided by (used in) investing activities 617 (3,189)
------- --------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits (1,570) 2,441
Dividends paid on common stock (330) (303)
Increase (decrease) in advances from borrowers for
taxes and insurance (100) 38
------- -------
Net cash provided by (used in) financing activities (2,000) 2,176
------- -------
Increase in cash and cash equivalents 564 387
Cash and cash equivalents at beginning of year 7,485 9,128
------ ------
Cash and cash equivalents at June 30 $ 8,049 9,515
====== ======
SUPPLEMENTAL DISCLOSURE:
Cash paid during the period for:
Interest on deposits and other borrowed money $ 4,378 4,151
====== ======
Income taxes $ 668 809
====== ======
Transfers from loans to real estate acquired
through foreclosure $ 67 ---
====== ======
Loans on sale of real estate owned $ --- 18
====== ======
See Accompanying Notes
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Jefferson Bancorp, Inc. (the "Company") was organized on March 31, 1994
at the direction of the Board of Directors of Jefferson Federal Savings Bank
(the "Bank") for the purpose of holding all of the capital stock of the Bank
and in order to facilitate the reorganization from the mutual holding company
structure to the stock holding company structure. Prior to such
reorganization, the Bank had 809,500 shares of common stock outstanding, of
which 607,500 shares were held by Jefferson Federal Mutual Holding Company (the
"Mutual Holding Company").
Jefferson Federal Savings Bank was organized on January 1, 1993 as a
subsidiary of the Mutual Holding Company. Prior to that date, Jefferson
Savings and Loan, a Louisiana-chartered savings and loan association, had
operated since 1954 in the market area now served by the Bank.
The reorganization from the mutual holding company structure to the
stock holding company structure (the "Reorganization") became effective August
18, 1994. At this time, the Bank became a wholly-owned subsidiary of the
Company. In the public offering consummated immediately following the
Reorganization, the Company sold 1,611,553 shares of Common Stock (including
Employee Stock Ownership Plan ("ESOP") shares of 112,808) and issued exchange
shares totaling 535,736, resulting in total outstanding shares at the time of
the consummation of the offering of 2,147,289. The Reorganization and stock
offering are referred to herein as the "Conversion."
The stockholders of the Company approved the 1994 Management Recognition
Plan and Trust ("MRP") at the annual meeting held on April 19, 1995. The
Office of Thrift Supervision ("OTS"), by a letter dated May 31, 1995, advised
the Company that it had no objections to the terms of this plan in the form
approved by the Company's stockholders. The Board of Directors of the Company
considered the expense of purchasing outstanding shares of its Common Stock to
the MRP. The Board of Directors voted to authorize the issuance of 48,346
shares of authorized but unissued shares of its Common Stock to the MRP. These
shares were issued to the MRP during September, 1995, resulting in shares
outstanding of 2,195,635.
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, Jefferson Federal Savings Bank
(collectively, Jefferson). All significant intercompany balances have been
eliminated in consolidation.
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The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations 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 financial statements have been included. The
results of operations for the three and six month periods ended June 30, 1996
are not necessarily indicative of the results which may be expected for the
entire fiscal year.
2. Earnings per Share
Earnings per share have been calculated based on the weighted average
number of shares of common stock outstanding, including common stock
equivalents, during the period. The weighted average number of shares
outstanding during the three months and six months ended June 30, 1996 was
2,106,709 and 2,099,564 and during the three months and six months ended June
30, 1995 was 2,046,813 and 2,042,460, respectively. For earnings per share
computations, ESOP shares that have been committed to be released are
considered outstanding.
3. Reclassifications
Certain amounts for the three months and six months ended June 30, 1995
have been reclassified.
4. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent liabilities at the date of the consolidated financial
statements and the reported amounts of interest income and expense and
noninterest income and expense during the reporting period. Actual results
could differ from those estimates.
5. Recent Developments
On May 24, 1996, Jefferson Bancorp, Inc. and its wholly-owned
subsidiary, Jefferson Federal Savings Bank, entered into an Agreement and Plan
of Merger and Reorganization ("Agreement") by and among ISB Financial
Corporation ("ISBF"), Iberia Savings Bank ("ISB"), a Louisiana-chartered
savings bank and wholly-owned subsidiary of ISBF, the Company and the Bank,
which provides for
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ISBF's acquisition of all of the issued and outstanding common stock, par value
$.01 per share, of the Company (the "Jefferson Common Stock"). Under the terms
of the Agreement and in accordance with a Plan of Merger by and between ISB
Acquisition Corp., a to-be-formed Louisiana corporation ("Interim") which will
be a wholly-owned subsidiary of ISBF, and the Company, Interim shall be merged
with and into the Company (the "Merger") and the Company shall be the surviving
corporation. Simultaneously with or as soon as practicable after the Merger,
the Company, as the surviving corporation of the Merger, shall be liquidated
into ISBF in accordance with an Agreement and Plan of Merger and Liquidation.
Upon consummation of the Merger, it is contemplated that the Bank will continue
to operate as a separate banking subsidiary of ISBF under the name "Jefferson
Savings Bank." It is further contemplated that the Company and Jefferson
Savings Bank will take all necessary steps in order that, immediately prior to
the Merger, Jefferson Savings Bank will convert from a federally-chartered
savings bank to a Louisiana-chartered savings bank.
Pursuant to the Agreement, upon the effective date of the Merger
("Effective Date"), each share of Jefferson Common Stock, other than those as
to which the Company's stockholders properly perfect their dissenters' rights
under Louisiana law and shares held by ISBF or ISB other than in a fiduciary
capacity, will be converted into the right to receive from ISBF $23.00 in cash
(the "Merger Consideration"). In addition, pursuant to the Agreement, at or
immediately prior to the Effective Date, each outstanding option to purchase
Jefferson Common Stock (other than pursuant to the Stock Option Agreement by
and between the Company and ISBF dated March 29, 1996) issued by the Company
("Jefferson Option") shall be cancelled, and each holder of any such Jefferson
Option, whether or not then vested or exercisable, shall be entitled to receive
from ISBF at the Effective Date for each Jefferson Option an amount determined
by multiplying (i) the excess of the Merger Consideration over the applicable
exercise price per share of the stock option by (ii) the number of shares of
Jefferson Common Stock subject to such Jefferson Option, subject to the
execution by any such holder of instruments of cancellation as ISBF may
reasonably deem appropriate.
Consummation of the Merger is subject to the prior receipt of all
necessary regulatory or governmental approvals and consents, the necessary
approval of stockholders of the Company at a special meeting to be called, and
certain closing conditions.
The above summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Agreement, which was included as
an exhibit to a current report on Form 8-K filed by the Company on June 3,
1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company is a unitary savings and loan holding company that conducts
substantially all of its business through its wholly owned subsidiary,
Jefferson Federal Savings Bank (collectively, Jefferson). The Company has no
significant assets other than the shares of the Bank's common stock and
investments in United States Government and federal agency obligations
purchased with the 40% of the net proceeds of the Conversion retained by the
Company. Currently, the Company neither owns nor leases any property, but
instead uses the premises, equipment and furniture of the Bank. At the present
time, the Company does not intend to employ any persons other than officers who
are also officers of the Bank, and the Company will utilize the support staff
of the Bank from time to time. The Board of Directors of the Company also
serve as directors of the Bank.
The Bank is primarily engaged in attracting deposits from the general
public and using those and other available sources of funds to originate loans
secured by single-family residences located in the New Orleans metropolitan
area. The Bank also originates loans for the construction of single-family
residences, loans secured by equity in single-family residences, consumer
loans, loans secured by savings accounts, and loans which are secured by
existing multi-family residential and nonresidential real estate. To
complement its loan portfolio, the Bank also has a significant amount of
investments in mortgage-backed securities and United States Government and
federal agency obligations.
The profitability of Jefferson depends primarily on its net interest
income, which is the difference between interest and dividend income on
interest-earning assets, principally mortgage-backed securities, investment
securities and loans, and interest expense on interest-bearing deposits.
Jefferson's net income also is dependent, to a lesser extent, on the level of
its other income (including loan fees and service charges) and its general,
administrative and other expenses, such as employee compensation and benefits,
occupancy expense, deposit insurance premiums, and miscellaneous other
expenses, as well as federal income tax expense.
Asset and Liability Management
The ability to maximize net interest income is largely dependent upon
the achievement of a positive interest rate spread that can be sustained during
fluctuations in prevailing interest rates. Interest rate sensitivity is a
measure of the difference
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between amounts of interest-earning assets and interest-bearing liabilities
which either reprice or mature within a given period of time. The difference,
or the interest rate repricing "gap," provides an indication of the extent to
which an institution's interest rate spread will be affected by changes in
interest rates. A gap is considered positive when the amount of interest-rate
sensitive assets exceeds the amount of interest-rate sensitive liabilities, and
is considered negative when the amount of interest-rate sensitive liabilities
exceeds the amount of interest-rate sensitive assets. Generally, during a
period of rising interest rates, a negative gap within shorter maturities would
adversely affect net interest income, while a positive gap within shorter
maturities would result in an increase in net interest income, and during a
period of falling interest rates, a negative gap within shorter maturities
would result in an increase in net interest income while a positive gap within
shorter maturities would have the opposite effect.
Jefferson's asset and liability management objectives are to (1) improve
the rate sensitivity of its interest-earning assets and (2) increase the ratio
of interest-sensitive assets to interest-sensitive liabilities with like
maturities. Various methods are used to achieve these objectives, including
selling most newly originated, fixed-rate mortgages with terms greater than 15
years, purchasing mortgage-backed securities with adjustable interest rates or
short-term (seven years or less) balloons, and maintaining a high percentage of
assets in relatively short-term, liquid investments. The investments have
staggered maturities with planned cash flows to better enable Jefferson to
react to changes in economic conditions and interest rates.
Management also presently monitors and evaluates the interest rate
sensitivity of the Bank's net portfolio value (the estimated present value of
assets minus the present value of liabilities plus the net present value of
off-balance sheet contracts) on a quarterly basis (using the Office of Thrift
Supervision's Interest Rate Risk Report), in order to ensure that interest rate
risk is maintained within limits established by the Board of Directors. Based
on the most recent report received from the OTS, the Bank's interest rate risk
is within the guidelines established by the Board of Directors.
Changes in Financial Condition
At June 30, 1996, Jefferson's total assets, deposits and stockholders'
equity amounted to $265.6 million, $227.5 million and $36.1 million, as
compared to $265.9 million, $229.1 million and $34.8 million at December 31,
1995. Total assets have remained relatively stable in recent periods,
decreasing by $0.3 million or 0.1% during the first six months of 1996. Loans
receivable,
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investment securities and mortgage-backed securities have remained relatively
stable during the first half of 1996; however, the shift from investment
securities to mortgage-backed securities, which began during the second quarter
of 1995, continued during this period. Investment securities decreased to
$71.0 million at June 30, 1996, a decline of $11.0 million or 13.5% from $82.0
million at December 31, 1995. Mortgage-backed securities increased by $9.9
million or 9.3% during the same period. Investment securities consist
primarily of short-term U.S. government and federal agency securities.
Mortgage-backed securities consist primarily of adjustable rate and short-term
(seven years or less) balloon mortgage-backed securities which are insured or
guaranteed by the FHLMC, the GNMA or the FNMA. At June 30, 1996, approximately
87.5% of the Bank's mortgage-backed securities consisted of pools of
adjustable-rate mortgages or mortgages with five to seven-year balloon payments
which serve to reduce the interest rate risk associated with changes in
interest rates. Interest-bearing deposits, consisting primarily of accounts at
the Federal Home Loan Bank of Dallas, increased by $0.6 million or 10.6%, due
primarily to the timing difference between maturities and new purchases of
either mortgage-backed securities or investment securities (depending on
current market conditions). Investing in adjustable-rate and short-term
fixed-rate investments provides Jefferson with the flexibility to react to
future economic events and rate changes.
There were no loans held for sale at June 30, 1996 as compared to
$87,000 at December 31, 1995. Real estate owned, net, amounted to $7,000 at
June 30, 1996. There was no real estate owned at December 31, 1995. Real
estate owned consisted of one non-residential property at June 30, 1996.
Total deposits have also been relatively stable in recent periods,
decreasing by $1.6 million or 0.7% to $227.5 million at June 30, 1996 from
$229.1 million at December 31, 1995. The Bank attempts to control the flow of
deposits by pricing its accounts to remain generally competitive with other
financial institutions in its market area, but does not necessarily seek to
match the highest rates paid by competing institutions.
Total stockholders' equity was $36.1 million at June 30, 1996, an
increase of $1.3 million from December 31, 1995. The increase was due to net
income of $1.3 million, principal payments and the recognition of shares earned
for the ESOP and MRP of $284,000, less dividends of $330,000 paid to the
Company's stockholders. The Company declared two quarterly dividends of $0.075
per share, or a total of $0.15 per share, in the first six months of 1996.
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Comparison of Results of Operations for the Three Months Ended June 30, 1996
and 1995
Jefferson reported net income of $649,000 or $0.31 per share during the
three months ended June 30, 1996 as compared to $791,000 or $0.38 per share
during the same period in the prior year. The decrease in net income during
this period of $142,000 or 18.0% was primarily due to a decrease in net
interest income of $61,000 or 2.8%, and increases in total noninterest expense
and total income tax expense of 5.8% and 22.6 %, respectively. This was
partially offset by a decrease in provision for loan losses of $43,000 or
110.3% during the second quarter of 1996 as compared to the respective prior
period. Jefferson's net interest income is determined by its average interest
rate spread (i.e., the difference between the average yields earned on its
interest-earning assets and the average rates paid on its interest-bearing
liabilities) and the relative amounts of interest-earning assets and
interest-bearing liabilities. Jefferson's average interest rate spread
decreased in the quarter ended June 30, 1996 to 2.84% from 3.04% in the
comparable 1995 period.
The lower interest rate spread in the second quarter of 1996 as compared
to the comparable 1995 period was due to the average rate on deposits
increasing while the average yield on total interest-earning assets declined.
The average yield on total interest-earning assets decreased by 16 basis points
to 6.70% in the second quarter of 1996 from 6.86% in the second quarter of
1995, while the average rate on deposits increased by 4 basis points during the
same period. The average yield on loans receivable, mortgage-backed
securities, and other interest-bearing deposits decreased during this period by
26 basis points, 41 basis points and 37 basis points, respectively. The
average yield on investment securities increased slightly by 6 basis points
during this period, reflecting the short term nature of such assets and the
volatility of market interest rates. The average rate paid on deposits
increased from 3.82% for the quarter ended June 30, 1995 to 3.86% for the
quarter ended June 30, 1996.
Interest income on loans decreased by $36,000 or 2.8% in the second
quarter of 1996 from the comparable prior period. The decrease in interest
income on loans was primarily due to the 26 basis point decrease in the average
yield on loans, which was partially offset by a $204,000 or 0.3% increase in
the average balance of the loan portfolio during the same period. The Bank is
currently retaining most newly originated fixed-rate, residential mortgages
with terms less than or equal to 15 years, and selling most newly originated
fixed-rate, residential mortgages with terms greater than 15 years. A total of
$383,000 of new loans were sold during the quarter ended June 30, 1996, as
compared to $143,000 during the comparable 1995 period.
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Interest income on mortgage-backed securities increased by $386,000 or
27.1% during the three months ended June 30, 1996 from the comparable 1995
period. This increase was primarily due to a $29.4 million or 35.2% increase
in the average balance of the mortgage-backed securities portfolio from the
quarter ended June 30, 1995 to the quarter ended June 30, 1996, which was
partially offset by the 41 basis point decrease in the average yield during the
same period. At June 30, 1996, 13.1% of the Bank's mortgage-backed securities
had adjustable interest rates and an additional 74.4% had balloon payments due
within seven years.
Interest income on investment securities decreased by $353,000 or 23.0%
in the second quarter of 1996 over the respective prior period. This decrease
was primarily due to a $23.9 million or 23.8% decrease in the average balance
(as Jefferson shifted a portion of such funds into mortgage-backed securities),
which was partially offset by the increase in the average yield to 6.18% for
the quarter ended June 30, 1996 from 6.12% for the respective prior period.
Investment securities totalled $71.0 million at June 30, 1996 as compared to
$82.0 million at December 31, 1995.
Interest income on interest-bearing deposits, which consists primarily
of accounts at the Federal Home Loan Bank, decreased by $25,000 or 21.0% in the
second quarter of 1996 from the comparable prior period. The decrease was
primarily due to a $1.5 million or 13.9% decline in the average balance during
this period, as well as the 37 basis point decline in the yield earned on
interest-bearing deposits from 4.50% for the second quarter of 1995 to 4.13%
for the second quarter of 1996.
Total interest income decreased by $28,000 or 0.6% during the three
months ended June 30, 1996, as compared to the same period in the prior year.
This increase reflected a decrease in the average yield earned on total
interest-earning assets from 6.86% for the quarter ended June 30, 1995 to 6.70%
for the quarter ended June 30, 1996.
Interest expense on deposits increased by $33,000 or 1.5% in the second
quarter of 1996 from the comparable prior period. This increase was due to an
increase in the average rate paid during the same period to 3.86% from 3.82%.
The increase in the average rate paid primarily occurred in certificate of
deposit accounts.
The recovery of loan losses was $4,000 in the quarter ended June 30,
1996 as compared to a provision for loan losses of $39,000 in the quarter ended
June 30, 1995. The recovery during the second quarter of 1996 reflected
management's evaluation of the underlying credit risk of the loan portfolio and
the level of allowance for loan losses. The provision in the second quarter of
1995 was the result of management's review of its loan portfolio and its
conservative allowance methodology. The allowance for loan losses amounted to
$669,000 at June 30, 1996, or 1.07% of the net loan
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portfolio.
Total noninterest income increased by $8,000 or 2.9% during the three
months ended June 30, 1996 as compared to the same period in the prior year,
due to increases in service charges on deposit accounts, gain on sale of REO,
and late charges on loan accounts, which were primarily offset by a decrease in
other noninterest income.
Service charges on deposit accounts increased by $6,000 or 2.7% in the
second quarter of 1996 from the comparable prior period. The service charges
primarily consist of checking account fees, minimum balance charges and
overdraft fees. This balance fluctuates depending on transaction volume.
Gain on sale of real estate owned increased by $10,000 or 1000.0% in the
second quarter of 1996 as compared to the prior 1995 period, due to the sale of
a piece of single-family residential property that was foreclosed on during the
first six months of 1996. Net real estate owned was $7,000 at June 30, 1996.
There was no real estate owned at December 31,1995.
Other noninterest income, which consists primarily of fees recognized
upon the sale of loans, as well as income from the sale of consigned items,
annuity commissions and miscellaneous income, decreased by $12,000 or 27.9% in
the second quarter of 1996 from the comparable 1995 quarter. This decrease is
partially due to decreases in service fee income and commissions earned on the
sale of annuities due to a decline in the volume of annuities sold.
Total noninterest expense increased by $84,000 or 5.8% in the second
quarter of 1996 from the comparable 1995 period, primarily due to increases in
compensation and benefits expense and other noninterest expense, which were
partially offset by decreases in most other categories of noninterest expense.
Compensation and benefits expense increased by $62,000 or 8.1% in the
quarter ended June 30, 1996 from the comparable 1995 period, primarily due to a
$59,000 increase in compensation expense recognized for the ESOP and MRP, as
well as increases in salary expense due to normal salary adjustments.
Occupancy expense, which consists primarily of rent expense, utilities
and building security expenses, increased by $1,000 or 1.7% during the second
quarter of 1996 as compared to the second quarter of 1995.
Savings Association Insurance Fund ("SAIF") deposit insurance premiums
decreased by $1,000 or 0.8% in the second quarter of 1996 over the comparable
prior period, primarily due to a decrease in the average assessment base. The
premium assessment rate for both semi-annual periods commencing January 1, 1995
and 1996 was $0.23
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per $100 of deposits.
The recovery for real estate losses amounted to $2,000 for the second
quarter of 1996, as compared to $1,000 for the second quarter of 1995.
Depreciation and amortization expense decreased by $6,000 or 9.8% during
the second quarter of 1996 from the comparable prior period. This decrease was
primarily due to a decrease in the balance of office properties and equipment,
as a result of reduced expenditures and fully depreciated assets.
NOW checking expense decreased by $2,000 or 3.2% in the second quarter
of 1996 compared to the second quarter of 1995. These expenses fluctuate
depending on transaction volume.
Other noninterest expense, which primarily consists of professional
fees, advertising expenses, data processing fees, office supplies, insurance
costs and general regulatory assessments and operational expenses, increased by
$31,000 or 8.4% in the second quarter of 1996 over the comparable prior period
primarily due to increases in legal fees, office supply expenses and stock
related expenses (i.e., Nasdaq and transfer agent expenses), which were
partially offset by decreases in advertising expense and other miscellaneous
expense accounts.
Total income tax expense amounted to $260,000 during the three months
ended June 30, 1996, as compared to $212,000 during the three months ended June
30, 1995. This $48,000 or 22.6% increase in income tax expense in the second
quarter of 1996 over the respective prior period was primarily due to a
reduction in the deferred tax benefit due to an increase in book-to-tax timing
differences, which was offset by a decrease in pre-tax income of $94,000 or
9.4%. Jefferson's effective tax rate amounted to 28.6% and 21.1% during the
three months ended June 30, 1996 and 1995, respectively.
Comparison of Results of Operations for the Six Months Ended June 30,
1996 and 1995
Jefferson reported net income of $1.3 million or $0.62 per share during
the six months ended June 30, 1996 as compared to $1.5 million or $0.71 per
share during the same period in the prior year. The decrease in net income
during this period of $0.2 million or 11.1% was primarily due to decreases in
net interest income and total noninterest income and an increase in total
noninterest expense and total income tax expense of $77,000, $15,000, $115,000
and $75,000, respectively. These were partially offset by a decrease in
provision for loan losses of $121,000.
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Jefferson's average interest rate spread decreased in the six months
ended June 30, 1996 to 2.88% from 3.04% in the respective prior period. The
lower interest rate spread in the first half of 1996 as compared to the
comparable 1995 period was due to the average rate on deposits increasing by
more basis points than the average yield on total interest-earning assets. The
average yield on total interest-earning assets increased by 2 basis points to
6.74% during the first half of 1996 from 6.72% during the first half of 1995,
while the average rate on deposits increased by 17 basis points during the same
period. The average yield on loans receivable, mortgage-backed securities, and
interest-bearing deposits decreased during this period by 31 basis points, 15
basis points and 71 basis points, respectively. The average yield on
investment securities increased by 36 basis points during the same period,
reflecting the short-term nature of such assets and the volatility of market
interest rates. The average rate paid on deposits increased by 17 basis points
to 3.85% for the six months ended June 30, 1996 from 3.68% for the respective
prior period.
Interest income on loans decreased by $69,000 or 2.6% in the first half
of 1996 from the comparable prior period. The decrease in interest income on
loans was primarily due to the 31 basis point decline in the average yield,
which was partially offset by a $0.6 million or 1.0% increase in the average
balance of the loan portfolio during this same period. The Bank is currently
retaining most newly originated fixed-rate, residential mortgages with terms
less than or equal to 15 years, and selling most newly originated fixed-rate,
residential mortgages with terms greater than 15 years. A total of $587,000 of
new loans were sold during the six months ended June 30, 1995, as compared to
$143,000 during the comparable 1995 period.
Interest income on mortgage-backed securities increased by $791,000 or
28.8% during the six months ended June 30, 1996 from the comparable 1995
period. This increase was primarily due to a $26.6 million or 31.9% increase
in the average balance, which was partially offset by the 15 basis point
decline in the average yield during the first half of 1996 to 6.43% from 6.58%
in the comparable 1995 period.
Interest income on investment securities decreased by $514,000 or 17.4%
in the first half of 1996 over the respective prior period. This decrease was
due to a $22.3 million or 22.2% decrease in the average balance, which was
partially offset by the 36 basis point increase in the average yield for the
six months ended June 30, 1996 from the respective prior period.
Interest income on interest-bearing deposits decreased by $68,000 or
26.2% in the first half of 1996 from the comparable prior period. The decrease
was due to the 71 basis point decline in the average yield as well as a $1.5
million or 13.9% decrease in
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17
the average balance during the same period.
Total interest income increased by $140,000 or 1.6% during the six
months ended June 30, 1996, as compared to the same period in the prior year.
This increase reflected a $3.5 million or 1.4% increase in the average balance
of total interest-earning assets, as well as an increase in the yield earned on
interest-earning assets to 6.74% for the six months ended June 30, 1996 from
6.72% for the respective prior period.
Interest expense on deposits increased by $217,000 or 5.2% in the first
half of 1996 from the comparable prior period. This increase was due to the 17
basis point increase in the average rate paid during the same period, coupled
with a $0.9 million or 0.4% increase in the average balance of deposits in the
first half of 1996, as compared to the respective prior period.
The recovery of loan losses was $22,000 in the six months ended June 30,
1996 as compared to a provision for loan losses of $99,000 in the six months
ended June 30, 1995. The recovery during the first half of 1996 reflected
management's evaluation of the underlying credit risk of the loan portfolio and
the level of allowance for loan losses. The provision in 1995 was the result
of management's review of its loan portfolio and its conservative allowance
methodology.
Total noninterest income decreased by $15,000 or 2.7% during the six
months ended June 30, 1996 as compared to the same period in the prior year,
due primarily to decreases in service charges on deposit accounts and other
noninterest income, offset by increases in gain on sale of real estate owned
and late charges on loan accounts.
Service charges on deposit accounts decreased by $8,000 or 1.8% in the
first half of 1996 from the comparable prior period. The service charges
primarily consist of checking account fees, minimum balance charges and
overdraft fees. This balance fluctuates depending on transaction volume.
Gain on sale of real estate owned and late charges on loan accounts
increased by $10,000 and $4,000 during the first half of 1996 as compared to
the first half of 1995.
Other noninterest income, which consists primarily of fees recognized
upon the sale of loans, as well as income from the sale of consigned items ,
annuity commissions and miscellaneous income, decreased by $21,000 or 25.6% in
the first half of 1996 from the comparable 1995 period. This decrease is
partially due to decreases in service fee income and commissions earned on the
sale of annuities, due to a decline in the volume of annuities sold.
Total noninterest expense increased by $115,000 or 4.0% in the
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first six months of 1996 from the comparable 1995 period, primarily due to
increases in compensation and benefits expense and other noninterest expense,
which were partially offset by a decrease in depreciation and amortization
expense.
Compensation and benefits expense increased by $105,000 or 6.8% in the
six months ended June 30, 1996 from the comparable 1995 period, primarily due
to a $77,000 increase in compensation expense recognized for the ESOP and MRP,
as well as increases in salary expense due to normal salary adjustments.
Occupancy expense, which consists primarily of rent expense, utilities
and building security expenses, increased by $4,000 or 3.6% during the first
half of 1996 as compared to the first half of 1995.
SAIF deposit insurance premiums remained unchanged during the six months
ended June 30, 1996 over the comparable prior period.
The provision for real estate losses amounted to $1,000 for the first
half of 1996, as compared to a recovery of real estate owned losses of $2,000
for the first half of 1995.
Depreciation and amortization expense decreased by $15,000 or 12.0%
during the first six months of 1996 from the comparable prior period, primarily
due to decreases in office properties and equipment during the first half of
1996 as compared to the respective prior period, as a result of reduced
expenditures and fully depreciated assets.
NOW checking expense decreased by $1,000 or 0.8% in the first half of
1996 compared to the first half of 1995. These expenses fluctuate depending on
transaction volume.
Other noninterest expense, which primarily consists of professional
fees, advertising expenses, data processing fees, office supplies, insurance
costs and general regulatory assessments and operational expenses, increased by
$19,000 or 2.6% in the first half of 1996 over the comparable prior period
primarily due to an increase in legal fees, which were partially offset by
decreases in advertising and miscellaneous other expenses.
Total income tax expense amounted to $585,000 during the six months
ended June 30, 1996, as compared to $510,000 during the six months ended June
30, 1995. This $75,000 or 14.7% increase in income tax expense in the first
half of 1996 over the respective prior period was primarily due to a reduction
in the deferred tax benefit due to an increase in book to tax timing
differences, which was partially offset by a decrease in pre-tax income of
$86,000 or 4.4%. The effective tax rate was 31.2% for the six months ended June
30, 1996, as compared to 26.0% for the six months ended June 30, 1995.
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Liquidity and Capital Resources
The Bank is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of United States
Government, federal agency and other investments having maturities of five
years or less. Current OTS regulations require that a savings bank maintain
liquid assets of not less than 5% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less, of
which short-term liquid assets must consist of not less than 1%. Monetary
penalties may be imposed for failure to meet applicable liquidity requirements.
At June 30, 1996, the Bank's liquidity, as measured for regulatory purposes,
was 70.1% or $145.3 million in excess of the minimum OTS requirement.
Cash was generated by Jefferson's operating activities during each of
the six month periods ending June 30, 1996 and 1995, primarily as a result of
net income in each period. The adjustments to reconcile net income to net cash
provided by operations during the periods presented consisted primarily of
mortgage loans originated for sale, loans sold, amortization of the premiums
and discounts on investments, depreciation and amortization expense, provision
for loan losses and increases or decreases in various receivable and payable
accounts. The primary investing activities of Jefferson are the origination of
loans and the purchase of investment and mortgage-backed securities, which are
primarily funded with the proceeds from repayments and prepayments on existing
loans and mortgage-backed securities and the maturity of investment securities.
Cash was generated during the six months ended June 30, 1996 primarily because
of principal repayments of loans and mortgage-backed securities as well as a
decrease in investment securities. Cash was used in Jefferson's investing
activities during the six month period ended June 30, 1995, primarily the
result of the significant purchases of mortgage-backed securities during that
period. The primary financing activity consists of deposits, which decreased
during the six month period ended June 30, 1996, after increasing during the
six month period ended June 30, 1995.
At June 30, 1996, the Bank had outstanding commitments to originate $1.9
million of single-family residential loans and $22,000 of consumer loans. The
Bank believes that it has adequate resources to fund all of its commitments and
that it can adjust the rate on certificates of deposit to retain deposits to
the extent desired. If the Bank requires funds beyond its internal funding
capabilities, advances from the FHLB of Dallas are available as an additional
source of funds.
The Bank is required to maintain specified amounts of capital
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pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA") and regulations promulgated by the OTS thereunder. The capital
standards generally require the maintenance of regulatory capital sufficient to
meet a tangible capital requirement, a core capital requirement and a
risk-based capital requirement.
At June 30, 1996, the Bank's regulatory capital continued to exceed all
applicable current requirements. The Bank had the following capital levels and
requirements at June 30, 1996:
June 30, 1996
-------------------------------
Percentage
Amount in of Adjusted
000s Assets
------------ ----------------
Tangible capital - actual $ 29,062 11.25%
Tangible capital - required 3,876 1.50%
------- ------
Excess $ 25,186 9.75%
======= ======
Core capital - actual $ 29,062 11.25%
Core capital - required 7,752 3.00%
------- ------
Excess $ 21,310 8.25%
======= ======
Risk-based capital - actual (1) $ 29,726 41.50%
Risk-based capital - required 5,730 8.00%
------- ------
Excess $ 23,996 33.50%
======= ======
(1) Does not reflect the interest-rate risk component to the risk-based
capital requirement, the effective date of which has been postponed.
Impact of Inflation and Changing Prices
The consolidated financial statements and related financial data
presented herein have been prepared in accordance with generally accepted
accounting principles ("GAAP"), which requires the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in relative purchasing power over time due to inflation.
Unlike most industrial companies, virtually all of Jefferson's assets and
liabilities are monetary in nature. As a result, interest rates generally have
a more significant impact on a financial
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institution's performance than does the effect of inflation.
Recent Accounting Developments
In December 1994, the AICPA issued Statement of Position ("SOP") 94-6,
"Disclosure of Certain Significant Risks and Uncertainties," which addresses
risks and uncertainties that could significantly affect the amounts reported in
the financial statements in the near term or near-term functioning of the
reporting entity. The risks and uncertainties the SOP addresses results from
the nature of the entity's operations, from the necessary use of estimates in
the preparation of the entity's financial statements and from significant
concentrations in certain aspects of the entity's operations. Near term is
defined as a period of time not to exceed one year from the date of the
financial statements. Management has implemented the SOP in the consolidated
financial statement disclosures.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed Of." This statement establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used for long-lived assets and certain identifiable intangibles to be disposed
of. This statement requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Measurement of an impairment loss for
long-lived assets and identifiable intangibles that an entity expects to hold
and use should be based on the fair value of the asset. This statement does
not apply to financial instruments, long-term customer relationships of a
financial institution (for example, core deposit intangibles and credit
cardholder intangibles), mortgage and other servicing rights, deferred policy
acquisition costs, or deferred tax assets. This statement was effective for
financial statements for fiscal years beginning after December 15, 1995. The
adoption of SFAS No. 121 has not had any significant impact on the consolidated
financial statements.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights." This statement requires that (1) mortgage banking
enterprises recognize as separate assets rights to service mortgage loans for
others, however those servicing rights are acquired, and (2) a mortgage
banking enterprise assess its capitalized mortgage servicing rights for
impairment based on the fair value of those rights and requires a mortgage
banking enterprise to stratify its mortgage servicing rights that are
capitalized after the adoption of this Statement. Impairment should be
recognized through a valuation allowance for each
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impaired stratum. SFAS 122 applies prospectively in fiscal years beginning
after December 15, 1995, to transactions in which a mortgage banking enterprise
sells or securitizes mortgage loans with servicing rights retained and to
impairment evaluations of all amounts capitalized as mortgage servicing rights,
including those purchased before the adoption of this Statement. The Bank
performs minimal mortgage banking activities (and has sold its newly originated
long-term mortgage loans with servicing rights released), and considers the
impact of this statement to be minimal.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation", which was effective for transactions entered into
after December 15, 1995. This statement establishes financial accounting and
reporting standards for stock-based employee compensation plans. This
statement defines a fair value based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt that
method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees". Under the fair
value based method, compensation cost is measured at the grant date based on
the value of the award and is recognized over the service period, which is
usually the vesting period. Under the intrinsic value based method,
compensation cost is the excess, if any, of the quoted market price of the
stock at grant date or other measurement date over the amount an employee must
pay to acquire the stock. Jefferson will continue to measure compensation cost
using the method of accounting prescribed by APB Opinion No. 25.
Jefferson granted stock options to certain of its directors, officers
and key employees during 1993, 1995 and 1996 under stock option plans at a
price not less than the fair market value at the date of the grant. Options
vest immediately on the date of grant and continue to be exercisable until ten
years from the date of grant. However, at least six months must elapse from
the date of grant of the option to the date of disposition of either the option
(other than upon exercise or conversion) or the underlying Common Stock.
Certain non-employee directors of Jefferson were granted compensatory stock
options on April 19, 1996. Options were granted to purchase a total of 6,000
shares of stock at an exercise price of $22.00 per share, which was the quoted
market price of the stock on that date. Under APB Opinion No. 25, since the
quoted market price of the stock on the date of grant and the exercise price
are the same, no compensation cost would be recognized.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities." This
statement provides accounting and reporting standards for transfers and
servicing of financial assets and
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extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are secured
borrowings. Under the financial-components approach, after a transfer of
financial assets, an entity recognizes all financial and servicing assets it
controls and liabilities it has incurred and derecognizes financial assets it
no longer controls and liabilities that have been extinguished. The
financial-components approach focuses on the assets and liabilities that exist
after the transfer. Many of these assets and liabilities are components of
financial assets that existed prior to the transfer. If a transfer does not
meet the criteria for a sale, the transfer is accounted for as a secured
borrowing with pledge of collateral. SFAS No. 125 is effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996, and is to be applied prospectively. Management
anticipates that the effect of the adoption of SFAS No. 125 will not have any
significant impact on the consolidated financial statements.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation through the SAIF. Legislation was passed by the U.S. House of
Representatives and Senate providing for a recapitalization of the SAIF. This
legislation was part of the Balanced Budget Act of 1995, which was vetoed by
the President for reasons unrelated to the recapitalization of the SAIF. The
legislation provided that all SAIF member institutions would pay a one-time
assessment to recapitalize the SAIF. It is currently anticipated that the
amount of the special assessment required to recapitalize the SAIF would be
approximately 80 to 85 basis points of the SAIF-assessable deposits at March
31, 1995.
Members of the Bank Insurance Fund ("BIF") that are in the lowest risk
category currently pay zero basis points (subject to a $2,000 minimum) for
deposit insurance premiums. Members of the SAIF that are in the lowest risk
category currently pay 23 basis points for deposit insurance premiums, placing
SAIF member institutions in a competitively disadvantaged situation.
In addition, the legislation also provided for the merger of the BIF and
SAIF on January 1, 1998, with such merger being conditioned upon the prior
elimination of the thrift charter. Such a requirement to eliminate the thrift
charter and require thrifts to convert to a bank charter could cause savings
institutions to lose the favorable tax treatment for their bad debt reserves
that they currently enjoy under the Internal Revenue Code.
While the outcome of the proposed legislation cannot be predicted with
certainty, it is likely that some kind of legislative or regulatory action will
be undertaken that will impact the Bank's insured deposits. Based on March 31,
1995 deposits, a one-time special assessment of 85 basis points would
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result in the Bank paying approximately $1.9 million, gross of related tax
benefits, if any. In addition, the enactment of such legislation may have the
effect of immediately reducing the capital of SAIF-member institutions by the
amount of the special assessment. Nevertheless, management does not believe
that this one-time charge to the Bank, if incurred, will have a material
adverse effect on Jefferson's consolidated financial condition.
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PART II - OTHER INFORMATION
- ------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
The Registrant is involved only in routine legal proceedings
occurring in the ordinary course of business which in the aggregate
are believed by management to be immaterial to the consolidated
financial condition and results of operations of Jefferson.
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
The annual meeting of Jefferson Bancorp, Inc. was held on April 17,
1996 at its office located at 1011 Fourth Street, Gretna, LA. At
that meeting the following matters were submitted to a vote of the
stockholders:
TOTAL SHARES OUTSTANDING TOTAL VOTED
------------------------ -----------
2,195,635 1,883,012
1. To elect the following directors for a term of three years or
until their successors are elected and qualified:
---Dr. G. Robert Murphy, Jr.
The number of shares voted were:
FOR WITHHELD
--- --------
1,882,164 848
---William P. Klotz, Sr.
The number of shares voted were:
FOR WITHHELD
--- --------
1,882,464 548
Members of the Board of Directors Continuing in Office:
Directors whose terms expire in 1997:
---Ada B. Knight
---George A. Relle
Directors whose terms expire in 1998:
---Karen L. Knight
---John L. Hantel
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2. To ratify the appointment of KPMG Peat Marwick LLP as
Jefferson's independent auditors for the fiscal year ending
December 31, 1996:
FOR AGAINST ABSTAIN
--- ------- -------
1,881,113 1,236 663
ITEM 5. OTHER INFORMATION - Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit No. Description
----------- -------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
On April 3, 1996, the Company filed a current report on Form 8-K
with the SEC regarding the letter of intent signed with ISB
Financial Corporation and the joint press release issued on March
29, 1996. The Form 8-K was filed pursuant to "Item 5. Other
Events," and no financial statements were required to be filed.
On April 23, 1996, the Company filed a current report on Form 8-K
with the SEC regarding the press release issued on April 17, 1996.
The Form 8-K was filed pursuant to "Item 5. Other Events," and no
financial statements were required to be filed.
On June 3, 1996, the Company filed a current report on Form 8-K
with the SEC regarding the Agreement and Plan of Merger and
Reorganization signed with ISB Financial Corporation and the joint
press release issued on May 24, 1996. The Form 8-K was filed
pursuant to "Item 5. Other Events," and no financial statements
were required to be filed.
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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 BANCORP, INC.
August 6, 1996 BY: /s/ Karen L. Knight
- -------------------------- -----------------------------
Date Karen L. Knight
President and Chief Executive
Officer
August 6, 1996 BY: /s/ Amy S. Piazza
- -------------------------- -----------------------------
Date Amy S. Piazza
Assistant Vice President
(principal accounting officer)
25