1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
Commission File Number 0-21298
ST. FRANCIS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1747461
---------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13400 BISHOPS LANE, STE. 350
BROOKFIELD, WISCONSIN 53005-6203
---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(414) 744-8600
----------------------------------------
(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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes x No
--- ---
(2) Yes x No
--- ---
The number of shares outstanding of the issuer's common stock, $.01 par
value per share, was 5,351,193 at April 30, 1997.
Page 1 of 30 pages
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ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Consolidated Statements of Financial Condition .............. 3
Consolidated Statements of Income ........................... 4
Consolidated Statements of Shareholders' Equity ............. 5
Consolidated Statements of Cash Flows ....................... 6
Notes to Consolidated Financial Statements .................. 8
ITEM 2. Management's Discussion and Analysis .......................... 16
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk .... N/A
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings .............................................. 28
ITEM 2. Changes In Securities .......................................... 28
ITEM 3. Defaults Upon Senior Securities ................................ 28
ITEM 4. Submission of Matters to a Vote of Security Holders ............ 28
ITEM 5. Other Information .............................................. 28
ITEM 6. Exhibits and Reports on Form 8-K ............................... 29
SIGNATURES ............................................................. 30
2
3
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
March 31, September 30,
1997 1996
------------- -------------
(In thousands)
ASSETS
Cash and due from banks.................................................. $ 34,319 $ 17,604
Federal funds sold and overnight deposits................................ 46,474 4,855
------------- -------------
Cash and cash equivalents................................................ 80,793 22,459
------------- -------------
Trading account securities, at market.................................... - -
Assets available for sale, at market:
Debt and equity securities............................................. 63,832 60,001
Mortgage-backed and related securities................................. 552,999 519,766
Mortgage loans held for sale, at lower of cost or market................. 17,077 20,582
Securities held to maturity:
Debt and equity securities (market values of $4,768 and $6,331,
respectively).......................................................... 4,673 6,215
Mortgage-backed and related securities (market values of $65,412
and $65,316, respectively)............................................. 67,753 68,392
Loans receivable, net.................................................... 675,867 610,699
Federal Home Loan Bank stock, at cost.................................... 20,554 19,063
Accrued interest receivable.............................................. 8,426 8,067
Foreclosed properties.................................................... 122 80
Real estate held for investment.......................................... 41,357 36,865
Premises and equipment, net.............................................. 21,406 16,432
Other assets............................................................. 24,110 15,495
------------- -------------
Total assets............................................................. $1,578,969 $1,404,116
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits................................................................. $1,018,677 $ 877,684
Short term borrowings.................................................... 34,509 18,509
Long term borrowings..................................................... 383,568 356,525
Advances from borrowers for taxes and insurance.......................... 3,468 11,092
Accrued interest payable and other liabilities........................... 10,895 15,127
------------- -------------
Total liabilities........................................................ 1,451,117 1,278,937
------------- -------------
Commitments and contingencies............................................ - -
Shareholders' equity:
Preferred stock $.01 par value: Authorized, 6,000,000 shares;
None issued............................................................ - -
Common stock $.01 par value: Authorized 12,000,000 shares;
Issued, 7,289,620 shares;
Outstanding, 5,386,193 and 5,475,509 shares, respectively.............. 73 73
Additional paid-in-capital............................................... 72,740 72,243
Unrealized loss on securities available for sale, net of tax............. (2,017) (1,765)
Unearned ESOP compensation............................................... (3,271) (3,488)
Treasury stock at cost (1,903,427 and 1,814,111 shares, respectively).... (37,984) (35,529)
Retained earnings, substantially restricted.............................. 98,311 93,645
------------- -------------
Total shareholders' equity............................................... 127,852 125,179
------------- -------------
Total liabilities and shareholders' equity............................... $1,578,969 $1,404,116
============= =============
See accompanying Notes to Consolidated Financial Statements
3
4
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
Six Months Ended Three Months Ended
March 31, March 31,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Loans...................................................................... $26,902 $22,840 $13,637 $11,523
Mortgage-backed and related securities..................................... 20,148 19,035 10,247 10,028
Debt and equity securities................................................. 2,013 1,567 1,004 744
Federal funds sold and overnight deposits.................................. 644 564 385 283
Federal Home Loan Bank stock............................................... 695 618 365 321
Trading account securities................................................. 123 3 53 -
-------- -------- -------- --------
Total interest and dividend income.......................................... 50,525 44,627 25,691 22,899
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits................................................................... 21,749 17,777 10,990 9,376
Advances and other borrowings.............................................. 10,447 9,309 5,322 4,523
-------- -------- -------- --------
Total interest expense...................................................... 32,196 27,086 16,312 13,899
-------- -------- -------- --------
Net interest income before provision for loan losses........................ 18,329 17,541 9,379 9,000
Provision for loan losses................................................... 372 144 111 78
-------- -------- -------- --------
Net interest income......................................................... 17,957 17,397 9,268 8,922
-------- -------- -------- --------
OTHER OPERATING INCOME (EXPENSE), NET:
Loan servicing and loan related fees....................................... 969 623 511 223
Depository fees and service charges........................................ 846 685 443 330
Trading securities gains and commitment fees, net.......................... 507 109 122 (19)
Gain on debt and equity and mortgage-backed
and related securities, net............................................... 627 3,277 151 1,678
Gain on sales of mortgage loans held for sale, net......................... 370 658 143 437
Insurance and annuity commissions.......................................... 218 165 137 102
Gain (loss) on foreclosed properties....................................... (7) 872 7 740
Income from affordable housing............................................. 1,490 919 940 486
Other income............................................................... 287 320 196 192
-------- -------- -------- --------
Total other operating income, net........................................... 5,307 7,628 2,650 4,169
-------- -------- -------- --------
GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and employee benefits......................................... 7,319 6,353 3,693 3,349
Office building, including depreciation.................................... 1,181 1,005 638 526
Furniture and equipment, including depreciation............................ 1,105 853 578 453
Federal deposit insurance premiums......................................... 463 689 132 358
Real estate held for investment............................................ 1,831 1,080 1,210 580
Other general and administrative expenses.................................. 3,850 3,109 2,036 1,726
-------- -------- -------- --------
Total general and administrative expenses................................... 15,749 13,089 8,287 6,992
-------- -------- -------- --------
Income before income tax expense............................................ 7,515 11,936 3,631 6,099
Income tax expense.......................................................... 1,382 3,585 655 1,823
-------- -------- -------- --------
Net income.................................................................. $6,133 $8,351 $2,976 $4,276
======== ======== ======== ========
Earnings per share.......................................................... $1.15 $1.41 $0.56 $0.73
======== ======== ======== ========
See accompanying Notes to Consolidated Financial Statements
4
5
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
Unrealized
Shares of Losses on
Common Additional Securities Unearned Unearned
Stock Common Paid-In Available ESOP Restricted Treasury Retained
Outstanding Stock Capital For Sale Compensation Stock Stock Earnings Total
---------------------------------------------------------------------------------------------------------
(In thousands, except shares of common stock outstanding)
Six months ended
March 31, 1996
- - -----------------------
Balance at September
30, 1995............... 6,078,799 $ 73 $71,819 $ 2,332 $ (3,996) $ (701) $(20,142) $85,843 $135,228
Net income............. - - - - - - - 8,351 8,351
Cash dividend -
$0.20 per share........ - - - - - - - (1,123) (1,123)
Purchase of
treasury stock......... (222,100) - - - - - (5,494) - (5,494)
Exercise of
stock options.......... - - - - - - - (418) (418)
Amortization of
unearned compensation.. - - 262 - 316 467 - - 1,045
Unrealized loss on
securities available
for sale, net of tax... - - - (2,427) - - - - (2,427)
--------- ----- -------- --------- --------- ------ --------- ------- ---------
Balance at
March 31, 1996......... 5,856,699 $ 73 $72,081 $ (95) $ (3,680) $(234) $(25,636) $92,653 $135,162
========= ===== ======== ========= ========= ====== ========= ======= =========
Six months ended
March 31, 1997
- - -----------------------
Balance at September
30, 1996............... 5,475,509 $ 73 $72,243 $ (1,765) $ (3,488) $ - $ (35,529) $93,645 $125,179
Net income............. - - - - - - - 6,133 6,133
Cash dividend -
$0.24 per share........ - - - - - - - (1,167) (1,167)
Purchase of
treasury stock......... (119,430) - - - - - (3,056) - (3,056)
Exercise of
stock options.......... 30,114 - - - - - 601 (300) 301
Amortization of
unearned compensation.. - - 497 - 217 - - - 714
Unrealized loss on
securities available
for sale, net of tax.. - - - (252) - - - - (252)
--------- ----- -------- --------- --------- ------ --------- ------- ---------
Balance at
March 31, 1997......... 5,386,193 $ 73 $72,740 $ (2,017) $ (3,271) $ - $(37,984) $98,311 $127,852
========= ===== ======== ========= ========= ====== ========= ======= =========
See accompanying Notes to Consolidated Financial Statements
5
6
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flow
Six Months Ended
March 31,
--------------------------
1997 1996
-------- --------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................................ $ 6,133 $ 8,351
Adjustments to reconcile net income to net cash used in
operating activities:
Provision for loan losses............................................... 372 144
Depreciation, accretion and amortization................................ 1,592 625
Deferred income taxes................................................... 2,311 (595)
Gain on debt and equity, mortgage-backed and related
securities and trading account securities, net.......................... (1,134) (3,386)
Gains on the sales of mortgage loans held for sale, net................. (370) (658)
Stock-based compensation expense........................................ 714 1,045
(Increase) decrease in loans held for sale.............................. (3,505) 3,798
Decrease in trading account securities, net............................. - 3,000
Other, net.............................................................. 4,909 9,543
---------- ----------
Total adjustments......................................................... 4,889 13,516
---------- ----------
Net cash provided by operating activities................................. $ 11,022 $ 21,867
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of debt and equity securities.................. $ 2,001 $ 25,527
Purchases of debt and equity securities................................. (459) (18,535)
Purchases of mortgage-backed and related securities..................... - (1,000)
Principal repayments on mortgage-backed and related securities.......... 639 5,310
Purchases of mortgage-backed securities available for sale.............. (131,067) (215,109)
Proceeds from sales of mortgage-backed securities available
for sale.............................................................. 57,482 106,195
Principal repayments on mortgage-backed securities available
for sale.............................................................. 40,352 31,591
Purchase of debt and equity securities available for sale............... (27,121) (22,424)
Proceeds from sales of debt and equity securities available for sale.... 18,845 18,969
Principal repayments on debt and equity securities available for sale... 12,091 -
Net cash used for acquisitions.......................................... (7,118) -
Purchases of Federal Home Loan Bank stock............................... (1,491) (264)
Redemption of Federal Home Loan Bank stock.............................. - 436
Purchase of loans....................................................... (7,678) (29,086)
(Increase) decrease in loans, net of loans held for sale................ 5,069 (6,830)
Increase in real estate held for investment............................. (4,492) (3,547)
Purchases of premises and equipment, net................................ (5,935) (2,703)
---------- ----------
Net cash used in investing activities..................................... $ (48,882) $(111,470)
---------- ----------
See accompanying Notes to Consolidated Financial Statements
6
7
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flow, cont.
Six Months Ended
March 31,
----------------------------
1997 1996
---------- ----------
(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits.................................................... $ 73,191 $ 118,050
Proceeds from advances and other borrowings................................. 72,688 10,869
Repayments on advances and other borrowings................................. (38,139) (14,533)
Decrease in advances from borrowers for taxes and insurance................. (7,624) (7,216)
Dividends paid.............................................................. (1,167) (1,123)
Stock option transactions................................................... 301 418
Purchase of treasury stock.................................................. (3,056) (5,494)
----------- -----------
Net cash provided by financing activities..................................... 96,194 100,971
----------- -----------
Increase in cash and cash equivalents......................................... 58,334 11,368
Cash and cash equivalents:
Beginning of period......................................................... 22,459 20,780
----------- -----------
End of period............................................................... $ 80,793 $ 32,148
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................................. $ 32,262 $ 27,078
Income taxes.............................................................. 15 3,089
Supplemental schedule of noncash investing and financing activities:
The following summarizes significant noncash investing
and financing activities:
Mortgage loans secured as mortgage-backed securities...................... $ 31,945 -
Reclassification of assets held to maturity to assets available for sale.. - $ 117,300
Transfer of mortgage loans to mortgage loans held for sale................ 15,964 10,295
Acquisitions:
Assets acquired......................................................... 93,044 -
Cash paid for purchase of stock......................................... (25,283) -
Cash acquired........................................................... 18,165 -
----------- -----------
Net cash used for acquisitions.......................................... $ (7,118) $ -
=========== ===========
See accompanying Notes to Consolidated Financial Statements
7
8
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(1) Principles of Consolidation
The consolidated financial statements include the accounts and balances of
St. Francis Capital Corporation (the "Company"), St. Francis Bank, F.S.B.
(the "Bank"), Bank Wisconsin and the Bank's and Bank Wisconsin's
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(2) Basis of Presentation
The accompanying interim consolidated financial statements are unaudited
and do not include information or footnotes necessary for a complete
presentation of financial condition, results of operations or cash flows
in accordance with generally accepted accounting principles. However, in
the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
statements have been included. Operating results for the three-month and
six-month periods ended March 31, 1997 are not necessarily indicative of
the results which may be expected for the entire year ending September 30,
1997. The September 30, 1996 Consolidated Statement of Financial
Condition presented with the interim financial statements was audited and
the auditors' report thereon was unqualified.
Certain previously reported balances have been reclassified to conform
with the 1997 presentation.
(3) Commitments and Contingencies
The Company is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest
rates. These financial instruments include commitments to extend credit
and involve, to varying degrees, elements of credit and interest rate risk
in excess of the amounts recognized in the consolidated financial
statements. The contract amounts of these instruments reflect the extent
of involvement the Company has in particular classes of financial
instruments.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for the commitments to extend
credit is represented by the contractual notional amount of those
instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for instruments that
are reflected in the consolidated financial statements.
8
9
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Financial instruments whose contract amounts represent credit risk are as
follows:
Contractual or Notional Amount(s)
March 31, September 30,
1997 1996
---------- ----------
(In thousands)
Commitments to extend credit
Fixed-rate loans......................................... $ 8,004 $ 18,487
Variable-rate loans...................................... 13,349 18,722
Guarantees under IRB issue................................ 11,220 4,200
Interest rate swap agreements............................. 70,000 55,000
Commitments to:
Purchase mortgage-backed securities..................... 8,000 12,800
Sell mortgage-backed securities......................... 6,150 1,100
Unused and open-ended lines of credit:
Consumer................................................ 120,405 107,052
Commercial.............................................. 24,220 14,935
Open option contracts written:
Short-put options....................................... 7,000 4,000
Short-call options...................................... 17,000 4,000
Commitments to fund equity investments.................... 8,578 13,796
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates of 45 days or less or
other termination clauses and may require a fee. Fixed rate loan
commitments as of March 31, 1997 have interest rates ranging from 7.50% to
8.50%. Because some commitments expire without being drawn upon, the
total commitment amounts do not necessarily represent cash requirements.
The Company evaluates the creditworthiness of each customer on a
case-by-case basis. The amount of collateral obtained if deemed necessary
by the Company upon extension of credit is based on management's credit
evaluation of the counterparty. The Company generally extends credit on a
secured basis. Collateral obtained consists primarily of one- to
four-family residences and other residential and commercial real estate.
The Company has entered into agreements whereby, for an initial and annual
fee, it will guarantee payment for an industrial revenue bond issue
("IRB"). The IRB was issued by a municipality to finance real estate
owned by a third party. Potential losses on the guarantees are the
notional amount of the guarantees less the value of the real estate
collateral. At March 31, 1997, appraised values of the real estate
collateral exceed the amount of the guarantees.
Interest rate swap agreements generally involve the exchange of fixed and
variable rate interest rate payments without the exchange of the
underlying notional amount on which the interest rate payments are
calculated. The fixed pay-floating receive agreements were entered into
as hedges of the interest rates on the Federal Home Loan Bank (the "FHLB")
advances used to fund fixed rate securities purchases. The fixed
receive-floating pay agreement was entered into as a hedge of the interest
rate on fixed rate brokered certificates used to fund floating rate
securities purchases. Interest receivable or payable on interest rate
swaps is recognized using the accrual method. The agreements at March 31,
1997 consist of the following:
9
10
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
Notional
Amount Maturity Fixed Variable
(000s) Type Date Rate Rate
---------------------------------------------------------------
$ 10,000 Fixed Pay-Floating Receive 1998 5.04% 5.64%
10,000 Fixed Pay-Floating Receive 1998 4.93% 5.56%
15,000 Fixed Pay-Floating Receive 1998 5.25% 5.56%
10,000 Fixed Pay-Floating Receive 1998 5.23% 5.56%
10,000 Fixed Pay-Floating Receive 1998 5.43% 5.56%
15,000 Fixed Receive-Floating Pay 2007 5.60% 7.15%
The fair value of interest rate swaps, which is based on the present value
of the swap using dealer quotes, represent the estimated amount the
Company would receive or pay to terminate the agreements taking into
account current interest rates and market volatility. The interest rate
swaps are off-balance sheet items; therefore, at March 31, 1997, the gross
unrealized gains and losses of $533,000 and $189,000, respectively, equals
the fair value of the interest rate swaps of $344,000.
Commitments to purchase and sell mortgage-backed securities are contracts
which represent notional amounts to purchase and sell mortgage-backed
securities at a future date and specified price. Such commitments
generally have fixed settlement dates.
The unused and open consumer lines of credit are conditional commitments
issued by the Company for extensions of credit such as home equity, auto,
credit card, or other similar consumer type financing. Furthermore, the
unused and open commercial lines of credit are also conditional
commitments issued by the Company for extensions of credit such as working
capital, agricultural production, equipment or other similar commercial
type financing. The credit risk involved in extending lines of credit is
essentially the same as that involved in extending loan facilities to
customers. Collateral held for these commitments may include, but may not
be limited to, real estate, investment securities, equipment, accounts
receivable, inventory, and Company deposits.
The open option contracts written represent the notional amounts to buy
(short-put options) or sell (short-call options) mortgage-backed
securities at a future date and specified price. The Company receives a
premium/fee for option contracts written which gives the purchaser the
right, but not the obligation to buy or sell mortgage-backed securities
within a specified time period for a contracted price. The Company has
been primarily utilizing these items to manage the interest rate and
market value risk relating to mortgage-backed securities that result from
the MBS loan swap program and mortgage loan pipeline.
The commitments to fund equity investments represent amounts St. Francis
Equity Properties ("SFEP"), a subsidiary of the Bank, is committed to
invest in low-income housing projects, which would qualify for tax credits
under Section 42 of the Internal Revenue Code (the "Code"). The Code
provides a per state volume cap on the amounts of low-income housing tax
credits ("LIHTCs") that may be taken with respect to low-income housing
projects in each state. In order to claim a LIHTC, a credit allocation
must be received from the appropriate state or local housing development
authority. SFEP is currently a limited partner in 24 projects. At March
31, 1997, SFEP's equity investments in such projects totaled $16.1
million. SFEP has committed to additional equity investments totaling
$8.6 million in five projects it currently has an investment in and in one
additional future project within the state of Wisconsin. Additionally, the
Bank has provided financing or committed to provide financing to 24 of
these projects. At March 31, 1997, the Bank had loans outstanding to such
projects of $23.2 million. The primary benefit to the Company on these
projects is in the form of tax credits.
10
11
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
(4) Securities
The Company's securities available for sale and held to maturity at March
31, 1997 were as follows:
SECURITIES AVAILABLE FOR SALE
----------------------------------------------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Market
Value Gains Losses Value
--------- ---------- ---------- ---------
(In thousands)
DEBT AND EQUITY SECURITIES:
U. S. Treasury obligations and
obligations of U.S. Government
Agencies............................ $ 29,144 $ 70 $ 208 $ 29,006
State and municipal obligations...... 1,430 - 66 1,364
Corporate notes and bonds............ 7,546 26 14 7,558
Asset-backed securities.............. 19,431 - 119 19,312
Marketable equity securities......... 6,592 - - 6,592
-------- ------ ------ ---------
TOTAL DEBT AND EQUITY SECURITIES..... $ 64,143 $ 96 $ 407 $ 63,832
======== ====== ====== =========
MORTGAGE-BACKED & RELATED SECURITIES:
Participation certificates:
FHLMC............................... $ 4,279 $ 15 $ 25 $ 4,269
FNMA................................ 137 2 - 139
GNMA................................ 4,078 313 - 4,391
Private issue....................... 242,897 881 3,325 240,453
REMICs:
FHLMC............................... 104,775 472 376 104,871
FNMA................................ 41,956 494 114 42,336
GNMA................................ 5,044 1 - 5,045
Private issue....................... 151,129 895 2,235 149,789
Adjustable rate mortgage mutual fund. 1,648 - - 1,648
CMO residual......................... 58 - - 58
-------- ------ ------ ---------
TOTAL MORTGAGE-BACKED AND RELATED
SECURITIES.......................... $556,001 $3,073 $6,075 $ 552,999
======== ====== ====== =========
SECURITIES HELD TO MATURITY
----------------------------------------------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Market
Value Gains Losses Value
--------- ---------- ---------- ---------
(In thousands)
DEBT AND EQUITY SECURITIES:
U. S. Treasury obligations and
obligations of U.S. Government
Agencies............................ $ 3,031 $ 60 $ - $ 3,091
State and municipal obligations...... 1,642 35 - 1,677
-------- ------ ------ ---------
TOTAL DEBT AND EQUITY SECURITIES..... $ 4,673 $ 95 $ - $ 4,768
======== ====== ====== =========
MORTGAGE-BACKED & RELATED SECURITIES:
REMICs:
FHLMC............................... $ 2,366 $ 39 $ - $ 2,405
FNMA................................ 2,523 15 23 2,515
Private issue....................... 62,864 - 2,372 60,492
-------- ------ ------ ---------
TOTAL MORTGAGE-BACKED AND RELATED
SECURITIES.......................... $ 67,753 $ 54 $2,395 $ 65,412
======== ====== ====== =========
11
12
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
During the six months ended March 31, 1997 and 1996, gross proceeds from
the sale of securities available for sale totaled approximately $76.3
million and $125.3 million, respectively. The gross realized gains on
such sales totaled approximately $661,000 and $3.3 million for the six
months ended March 31, 1997 and March 31, 1996, respectively. The gross
realized losses on such sales totaled approximately $34,000 and $24,000
for the six months ended March 31, 1997 and March 31, 1996, respectively.
During the three months ended March 31, 1997 and 1996, gross proceeds from
the sale of securities available for sale totaled approximately $12.1
million and $62.1 million, respectively. The gross realized gains on such
sales totaled approximately $152,000 and $2.0 million for the three months
ended March 31, 1997 and March 31, 1996, respectively. The gross realized
losses on such sales totaled approximately $1,000 and $15,000 for the
three months ended March 31, 1997 and March 31, 1996, respectively.
(5) Loans
Loans receivable are summarized as follows:
March 31, September 30,
(In thousands) 1997 1996
- - ----------------------------------------------------------------------------------
First mortgage - one- to four-family.................... $262,617 $270,614
First mortgage - residential construction............... 33,241 32,249
First mortgage - multi-family........................... 107,047 103,262
Commercial real estate.................................. 63,778 46,391
Home equity............................................. 101,101 90,579
Commercial and agriculture.............................. 52,745 25,177
Consumer secured by real estate......................... 67,233 66,346
Interim financing and consumer loans.................... 29,072 21,890
Education............................................... 10,550 12,142
-------- --------
Total gross loans..................................... 727,384 668,650
-------- --------
Less:
Loans in process...................................... 25,394 29,631
Unearned insurance premiums........................... 629 647
Deferred loan and guarantee fees...................... 1,318 851
Purchased loan discount............................... 977 1,023
Allowance for loan losses............................. 6,122 5,217
-------- --------
Total deductions...................................... 34,440 37,369
-------- --------
Total loans receivable.................................. 692,944 631,281
Less: First mortgage loans held for sale............... 17,077 20,582
-------- --------
Loans receivable, net................................... $675,867 $610,699
======== ========
12
13
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
(6) Allowance For Loan Losses
Activity in the allowance for loan losses is summarized as follows:
Six months ended Three months ended
March 31, March 31,
------------------- --------------------
1997 1996 1997 1996
------ ------ ------ ------
Beginning Balance........ $ 5,217 $ 4,076 $ 5,060 $ 4,132
Charge-offs:
Real estate - mortgage.. - - - -
Commercial real estate.. - - - -
Commercial loans........ - - - -
Home equity loans....... - - - -
Consumer................ (1,219) (22) (746) (10)
-------- -------- -------- --------
(1,219) (22) (746) (10)
-------- -------- -------- --------
Recoveries:
Real estate - mortgage.. - - - -
Commercial real estate.. - - - -
Commercial loans........ - - - -
Home equity loans....... - 2 - -
Consumer................ 74 4 19 4
-------- -------- -------- --------
74 6 19 4
-------- -------- -------- --------
Net charge-offs.......... (1,145) (16) (727) (6)
-------- -------- -------- --------
Acquired bank's allowance 1,678 - 1,678 -
Provision................ 372 144 111 78
-------- -------- -------- --------
Ending balance........... $ 6,122 $ 4,204 $ 6,122 $ 4,204
======== ======== ======== ========
(7) Earnings Per Share
Earnings per share of common stock for the three-month and six-month
periods ended March 31, 1997, have been determined by dividing net income
for the period by the weighted average number of shares of common stock
and common stock equivalents outstanding during the period. Book value
per share of common stock at March 31, 1997 and September 30, 1996 have
been determined by dividing total shareholders' equity by the number of
shares of common stock and common stock equivalents considered outstanding
at the respective dates. Stock options are regarded as common stock
equivalents and are, therefore, considered in per share calculations.
Common stock equivalents are computed using the treasury stock method.
Common shares outstanding have been reduced by the ESOP shares that have
not been committed to be released.
13
14
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
The computation of earnings per common share is as follows:
Six months ended Three months ended
March 31, March 31,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Net income for the period................ $6,133,000 $8,351,000 $2,976,000 $4,276,000
========== ========== ========== ==========
Common shares issued..................... 7,289,620 7,289,620 7,289,620 7,289,620
Net Treasury shares...................... 1,906,013 1,278,389 1,921,795 1,341,041
Unallocated ESOP shares.................. 332,245 374,221 326,160 367,927
---------- ---------- ---------- ----------
Weighted average common shares
outstanding during the period........... 5,051,362 5,637,010 5,041,665 5,580,652
Common stock equivalents based on the
treasury stock method................... 288,707 289,834 293,368 297,910
---------- ---------- ---------- ----------
Total weighted average common shares and
equivalents outstanding................. 5,340,069 5,926,844 5,335,033 5,878,562
========== ========== ========== ==========
Earnings per share....................... $1.15 $1.41 $0.56 $0.73
The computation of book value per common share is as follows:
March 31, September 30,
1997 1996
-------------- --------------
Common shares outstanding at the end
of the period...................................................... 5,060,033 5,127,092
Incremental shares relating to dilutive stock
options outstanding at the end of the period....................... 292,588 286,766
-------------- --------------
5,352,621 5,413,858
============== ==============
Total shareholders' equity at the end of the period.................. $ 127,852,000 $ 125,179,000
Book value per common share.......................................... $ 23.89 $ 23.12
(8) Acquisitions
In February 1997, the Company completed the acquisition of Kilbourn State
Bank for $25.3 million cash. Under the terms of the agreement, the
Company acquired all of the outstanding shares of Kilbourn State Bank,
with Kilbourn subsequently merging into Bank Wisconsin, the Company's
commercial banking subsidiary. The acquisition was accounted for as a
purchase. The related accounts and results of operations are included in
the Company's consolidated financial statements from the date of
acquisition.
14
15
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements, continued
The acquisition of Kilbourn State Bank added $93.0 million to assets,
including additions of $62.6 million to net loans and $67.8 million to
deposits.
The excess of cost over the fair value of tangible assets acquired is
accounted for as goodwill and will be amortized over varying periods of
fifteen to twenty five years using the straight-line method. Goodwill of
this acquisition, net of accumulated amortization, totaled $9.1 million at
March 31, 1997.
(9) Changes in Accounting Policy
In February 1997, Financial Accounting Standards Board (FASB) issued SFAS
128, "Earnings per Share," which is effective for financial statements
issued for periods ending after December 15, 1997. This statement
simplifies the standards for computing earnings per share previously found
in APB No. 15. It replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic
EPS and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. Earlier application of
this statement is not permitted. The Corporation has determined that the
impact of adoption will not have a material effect on the consolidated
statements of the Corporation.
15
16
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD-LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q or future filings by the
Company with the Securities and Exchange Commission, in quarterly reports or
press releases or other public or shareholder communications, or in oral
statements made with the approval of an authorized executive officer, various
words or phrases are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include words and phrases such as "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"project," or similar expressions and various other statements indicated herein
with an asterisk after such statements. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made, and to advise readers that various factors could
affect the Company's financial performance and could cause actual results for
future periods to differ materially from those anticipated or projected. Such
factors include, but are not limited to: (i) general market rates, (ii) general
economic conditions, (iii) legislative/regulatory changes, (iv) monetary and
fiscal policies of the U.S. Treasury and Federal Reserve, (v) changes in the
quality or composition of the Company's loan and investment portfolios, (vi)
demand for loan products, (vii) deposit flows, (viii) competition, (ix) demand
for financial services in the Company's markets, and (x) changes in accounting
principles, policies or guidelines.
The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such statements.
FINANCIAL CONDITION
The Company's total assets increased $174.9 million or 12.5% to $1.579 billion
at March 31, 1997 from $1.404 billion at September 30, 1996. Loans receivable,
including loans held for sale, increased $61.7 million. Mortgage-backed and
related securities, including mortgage-backed and related securities available
for sale, increased $32.6 million. Funding the increase in assets was an
increase in deposits of $141.0 million. At March 31, 1997, the Company's
financial condition reflects the financial condition of Kilbourn State Bank
since the acquisition was consummated on February 28, 1997. The acquisition of
Kilbourn State Bank added $93.0 million to total assets, including additions of
$62.6 million to net loans and $67.8 million to deposits. The Company's ratio
of shareholders' equity to total assets was 8.10% at March 31, 1997, compared
to 8.92% at September 30, 1996. The Company's book value per share was $23.89
at March 31, 1997, compared to $23.12 at September 30, 1996.
Loans receivable, including mortgage loans held for sale, increased $61.7
million to $692.9 million at March 31, 1997 from $631.3 million at September 30,
1996, primarily due to $62.6 million of loans included in the Kilbourn
acquisition. The Company currently sells substantially all fixed rate mortgage
loans and retains adjustable-rate loans for its portfolio. Additionally, the
Company has increased its emphasis on consumer and interim financing products,
which are primarily retained in the Company's loan portfolio. The loan
originations were funded primarily by the increase in deposits and are
consistent with the Company's efforts to build earning assets. For the six
months ended March 31, 1997, the Company originated approximately $156.0 million
in loans, as compared to $140.8 million for the same period in the prior year.
Of the $156.0 million in loans originated, $12.5 million were in commercial
loans, $64.5 million were in consumer and interim financing loans and $79.0
million were in first mortgage loans.
16
17
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
Mortgage-backed and related securities, including mortgage-backed and related
securities available for sale, increased $32.6 million to $620.8 million at
March 31, 1997 from $588.2 million at September 30, 1996. The increase was the
result of the Company purchasing adjustable rate mortgage-backed securities and
short- and medium-term REMIC securities. At March 31, 1997, private-issue
mortgage-backed securities, CMO's and REMIC's totaled $456.9 million.
Private-issue MBS's represent a significant portion of the Company's portfolio
due to the Company's view of the benefit of higher interest rates generally
available on private issue MBS's versus the additional credit risk associated
with such securities in comparison with agency MBS's. The Company has been an
active purchaser of adjustable rate mortgage-backed securities as well as
short-term mortgage-related securities because of the lower level of interest
rate risk and low credit risk in relation to the interest earned on such
securities. However, repayments and sales of existing securities have
partially offset the increases.
Deposits increased $141.0 million to $1.02 billion at March 31, 1997 from
$877.7 million at September 30, 1996. The increase in deposits was primarily
due to an increase of $67.8 million from the Kilbourn State Bank acquisition
and an increase of $63.8 million in money market demand account deposits. The
Company has continued to offer new deposit products in an effort to attract new
deposits and maintain current relationships with customers. Significant new
deposit products offered which have contributed to the increase include
certificates of deposit and a money market demand account with an interest rate
tied to a nationally recognized money market index. At March 31, 1997, the
Company had approximately $128.6 million in brokered certificates of deposit
compared with $138.6 million at September 30, 1996. The brokered deposits are
generally of terms from three months to two years in maturity with interest
rates that approximate the Company's retail certificate rates. Although the
Company has experienced growth in its deposit liabilities during the six months
ended March 31, 1997, there can be no assurance that this trend will continue
in the future, nor can there be any assurance the Company will retain the
deposits it now has.* The level of deposit flows during any given period is
heavily influenced by factors such as the general level of interest rates as
well as alternative yields that investors may obtain on competing instruments,
such as money market mutual funds.
Advances and other borrowings increased by $43.0 million to $418.1 million at
March 31, 1997 from $375.0 million at September 30, 1996. The Company
primarily uses borrowed funds to fund purchases of mortgage-backed and related
securities. At March 31, 1997, the Company had a borrowing capacity available
of $147.0 million from the FHLB, however, additional securities may have to be
pledged as collateral.
At March 31, 1997, the Company had $70.0 million in interest rate swaps
outstanding compared with $55.0 million at September 30, 1996. The swaps are
designed to offset the changing interest payments of some of the Company's
borrowings and brokered certificates. Fixed pay-floating receive swaps totaled
$55.0 million at March 31, 1997 and were entered into to hedge interest rates
on borrowings from the FHLB used to fund purchases of fixed rate securities.
Fixed pay-floating receive swaps will provide for a lower interest expense (or
interest income) in a rising rate environment while adding to interest expense
in a falling rate environment. Floating receive-fixed pay swaps totaled $15.0
million at March 31, 1997 and were entered into to hedge interest rates on
brokered deposits used to fund the purchase of floating rate securities.
Floating receive-fixed pay swaps will provide for a lower interest expense (or
interest income) in a falling rate environment while adding to interest expense
in a rising rate environment. During the six months ended March 31, 1997, the
Company recorded a net reduction of interest expense of $127,000 as a result of
the Company's interest rate swap agreements.
RESULTS OF OPERATIONS
NET INCOME. Net income for the six months ended March 31, 1997 was $6.1 million
compared to $8.4 million for the six months ended March 31, 1996. Net income
for the three months ended March 31, 1997 was $3.0 million compared to $4.3
million for the three months ended March 31, 1996. The decrease for the six
month period was
17
18
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
the result of a decrease in other operating income, which consisted primarily of
a $2.6 million decrease in gains on the sale of mortgage-backed and related
securities, coupled with a $2.7 million increase in general and administrative
expenses, partially offset by a $2.2 million decrease in income tax expense. The
decrease for the three month period was the result of a decrease in other
operating income, which consisted primarily of a $1.5 million decrease in gains
on the sale of mortgage-backed and related securities, coupled with a $1.3
million increase in general and administrative expenses, partially offset by a
$1.2 million decrease in income tax expense. The following table shows the
return on average assets and return on average equity ratios for each period:
Six months ended Three months ended
March 31, March 31,
-------------------------------------
1997 1996 1997 1996
------ ------ ------ ------
Return on average assets... 0.85% 1.36% 0.83% 1.36%
Return on average equity... 9.73% 12.09% 9.46% 12.49%
NET INTEREST INCOME. Net interest income before provision for loans losses
increased $788,000 or 4.5% and $379,000 or 4.2% for the six and three months
ended March 31, 1997, respectively, compared to the same periods in the prior
year. The net interest margin was 2.73% and 3.04% for the six months ended
March 31, 1997 and 1996, respectively, and 2.79% and 3.05% for the three months
ended March 31, 1997 and 1996, respectively. The decline in the net interest
margin in both periods is due to decreasing interest rate spreads that the
Company has been experiencing in its asset and liability base and a changing
asset mix which includes a higher level of non-interest earning assets. The
Company increased its investment in affordable housing units to $41.4 million
at March 31, 1997 compared with $27.8 million at March 31, 1996. This
investment strategy provides returns primarily through income tax credits but
is not an interest earning asset and thus has the effect of decreasing the
Company's net interest margin.
Total interest income increased $5.9 million or 13.2% to $50.5 million for the
six months ended March 31, 1997, compared to $44.6 million for the six months
ended March 31, 1996, and increased $2.8 million or 12.2% to $25.7 million for
the three months ended March 31, 1997, compared to $22.9 million for the three
months ended March 31, 1996. The increase in interest income was primarily the
result of increases in interest on loans and securities. The increase in
interest on loans was due to an increase in the average balance of loans to
$645.8 million from $529.3 million for the six months ended March 31, 1997 and
1996, respectively, partially offset by decreases in the average yield on loans
to 8.35% from 8.63% for the same period in the prior year. The increase in net
interest income on loans for the three months ended March 31, 1997 compared
with the three months ended March 31, 1996 was the result of an increase in the
average balance of loans to $654.9 million from $534.6 million, partially
offset by decreases in the average yield on loans to 8.45% from 8.67% for the
same period in the prior year. The decrease in the average yield is primarily
due to the Company now selling substantially all new originations of initially
higher yielding long-term, fixed-rate single-family mortgage loans in the
secondary market and retaining new originations of initially lower yielding
adjustable-rate single family mortgage loans. The increase in the average
balance of loans is due primarily to the Company's recent efforts to emphasize
commercial, consumer and home equity lending in addition to the Kilbourn State
Bank acquisition. The increase in interest income on mortgage-backed and
related securities was due to an increase in the average balance of such
securities to $584.1 million from $535.2 million for the six months ended March
31, 1997 and 1996, respectively, partially offset by decreases in the average
yield on such securities to 6.92% from 7.11% for the same periods. The
increase in net interest income on mortgage-backed and related securities for
the three months ended March 31, 1997 compared with the three months ended
March 31, 1996 was primarily the result of an increase in the average balance
of securities to $588.2 million from $563.1 million, partially offset by
decreases in the average yield on such securities
18
19
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
to 7.07% from 7.16% for the same periods. The Company has been active during
the past year repositioning its available for sale mortgage-backed and related
securities portfolio by selling significant amounts of securities and replacing
them with securities with more favorable maturity positions and characteristics
which reflect the Company's overall asset/liability management strategies.
Total interest expense increased $5.1 million or 18.9% to $32.2 million for the
six months ended March 31, 1997, compared to $27.1 million for the six months
ended March 31, 1996. For the three months ended March 31, 1997, total
interest expense increased $2.4 million, or 17.4%, to $16.3 million compared to
$13.9 million for the three months ended March 31, 1996. The increase in
interest expense was the result of increases in the average balances of
deposits and advances and other borrowings as well as a slight increase in the
cost of deposits. The average balances of deposits were $874.0 million and
$889.2 million for the six and three months ended March 31, 1997, respectively,
as compared to $714.5 million and $755.2 million for the same periods in the
prior year. The increases in the balances of deposits are due to the Company's
offering of additional deposit products, the use of brokers to sell
certificates of deposit and the Kilbourn State Bank acquisition. The average
cost of deposits increased slightly to 4.99% and 5.01% for the six and three
months ended March 31, 1997, respectively, from 4.98% and 4.99% for the same
periods in the prior year. Deposit rates paid by the Company reflected the
general increase in market rates of interest as a result of the increased
competition with other financial products offered in the marketplace. The
average balance of advances and other borrowings were $383.3 million and $396.0
million for the six and three months ended March 31, 1997, respectively, as
compared to $334.5 million and $333.1 million for the same periods in the prior
year. The average cost of advances and other borrowings decreased to 5.46% and
5.45% for the six and three months ended March 31, 1997, respectively, from
5.56% and 5.46% for the same periods in the prior year. The borrowings are
primarily adjustable-rate FHLB advances which have repriced to reflect the
slight decrease in rate levels associated with the respective borrowing rate
indexes from the same period in the prior year.
The following table sets forth information regarding: (1) average assets and
liabilities, (2) average yield on assets and average cost on liabilities, (3)
net interest margin, (4) net interest rate spread, and (5) the ratio of earning
assets to interest-bearing liabilities for the six- and three-month periods
ended March 31, 1997 and 1996, respectively.
19
20
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis, continued
SIX MONTHS ENDED MARCH 31,
-----------------------------------------------------------------
1997 1996
-----------------------------------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
-----------------------------------------------------------------
(Dollars in thousands)
ASSETS
Federal funds sold and overnight deposits...... $ 24,601 $ 644 5.25 % $ 20,633 $ 564 5.47 %
Trading account securities..................... 3,530 123 6.99 82 3 7.32
Debt and equity securities..................... 69,013 2,013 5.85 52,152 1,567 6.01
Mortgage-backed and related securities......... 584,071 20,148 6.92 535,240 19,035 7.11
Loans:
First mortgage................................ 416,981 16,755 8.06 343,145 13,935 8.12
Home equity................................... 95,525 4,450 9.34 80,155 3,964 9.89
Consumer...................................... 100,442 4,429 8.84 88,464 4,133 9.34
Commercial and agricultural................... 32,827 1,268 7.75 17,581 808 9.19
---------------------- ----------------------
Total loans.................................. 645,775 26,902 8.35 529,345 22,840 8.63
Federal Home Loan Bank stock................... 19,658 695 7.09 17,554 618 7.04
---------------------- ----------------------
Total earning assets......................... 1,346,648 50,525 7.52 1,155,006 44,627 7.73
------- -------
Valuation allowances........................... (7,222) (1,188)
Cash and due from banks........................ 18,403 13,829
Other assets................................... 80,899 62,796
---------- ----------
Total assets.................................. $1,438,728 $1,230,443
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW accounts.................................. $ 45,541 365 1.61 $ 41,318 315 1.52
Money market demand accounts.................. 196,617 4,535 4.63 131,690 3,095 4.70
Passbook...................................... 80,253 1,135 2.84 86,360 1,227 2.84
Certificates of deposit....................... 551,621 15,714 5.71 455,154 13,140 5.77
---------------------- ----------------------
Total interest-bearing deposits................ 874,032 21,749 4.99 714,522 17,777 4.98
Advances and other borrowings.................. 383,254 10,433 5.46 334,509 9,292 5.56
Advances from borrowers for taxes and insurance 5,304 14 0.53 5,383 17 0.63
---------------------- ----------------------
Total interest-bearing liabilities........... 1,262,590 32,196 5.11 1,054,414 27,086 5.14
Non interest-bearing deposits.................. 35,575 25,627
Other liabilities.............................. 14,171 12,273
Shareholders' equity........................... 126,392 138,129
---------- ----------
Total liabilities and shareholders' equity..... $1,438,728 $1,230,443
========== ==========
Net interest income............................ $18,329 $17,541
======= =======
Net yield on interest-earning assets........... 2.73 3.04
Interest rate spread........................... 2.41 2.59
Ratio of earning assets to interest-bearing
liabilities.................................. 106.66 109.54
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------
1997 1996
------------------------------------------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------------------------------------------------------------------------
ASSETS
Federal funds sold and overnight deposits...... $ 28,743 $ 385 5.43 % $ 21,470 $ 283 5.30 %
Trading account securities..................... 2,691 53 7.99 - - -
Debt and equity securities..................... 69,613 1,004 5.85 49,405 744 6.06
Mortgage-backed and related securities......... 588,201 10,247 7.07 563,106 10,028 7.16
Loans:
First mortgage................................ 416,581 8,407 8.18 341,644 6,932 8.16
Home equity................................... 97,974 2,321 9.61 79,783 1,931 9.73
Consumer...................................... 99,945 2,242 9.10 93,770 2.227 9.55
Commercial and agricultural................... 40,380 667 6.70 19,381 433 8.99
----------------------- ------------------------
Total loans.................................. 654,880 13,637 8.45 534,578 11,523 8.67
Federal Home Loan Bank stock................... 20,057 365 7.38 17,631 321 7.32
----------------------- ------------------------
Total earning assets......................... 1,364,185 25,691 7.64 1,186,190 22,899 7.76
------- -------
Valuation allowances........................... (7,522) (1,463)
Cash and due from banks........................ 20,368 14,111
Other assets................................... 83,614 61,703
---------- ----------
Total assets.................................. $1,460,645 $1,260,541
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits: $ 47,583 209 1.78 $ 41,163 155 1.51
NOW accounts.................................. 206,044 2,361 4.65 139,591 1,607 4.63
Money market demand accounts.................. 83,469 582 2.83 83,400 588 2.84
Passbook...................................... 552,107 7,838 5.76 491,095 7,026 5.75
----------------------- ------------------------
Certificates of deposit....................... 889,203 10,990 5.01 755,249 9,376 4.99
Total interest-bearing deposits................ 395,968 5,320 5.45 333,082 4,520 5.46
Advances and other borrowings.................. 2,130 2 0.38 2,276 3 0.53
----------------------- ------------------------
Advances from borrowers for taxes and insurance 1,287,301 16,312 5.14 1,090,607 13,899 5.13
Total interest-bearing liabilities........... 35,422 23,763
Non interest-bearing deposits.................. 10,281 8,444
Other liabilities.............................. 127,641 137,727
---------- ----------
Shareholders' equity........................... $1,460,645 $1,260,541
========== ==========
Total liabilities and shareholders' equity..... $ 9,379 $ 9,000
======= =======
Net interest income............................ 2.79 3.05
Net yield on interest-earning assets........... 2.50 2.64
Interest rate spread...........................
Ratio of earning assets to interest-bearing
liabilities.................................. 105.97 108.76
20
21
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis, continued
PROVISION FOR LOAN LOSSES. The following table summarizes the allowance for
loan losses for each period:
Six months ended Three months ended
March 31, March 31,
-------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(Dollars in thousands)
Beginning balance...................... $5,217 $4,076 $5,060 $4,132
Provision for loan losses.............. 372 144 111 78
Recoveries............................. 74 6 19 4
Charge-offs............................ (1,219) (22) (746) (10)
Acquired bank's allowance.............. 1,678 - 1,678 -
---------- ---------- ---------- ----------
Ending balance......................... $6,122 $4,204 $6,122 $4,204
========== ========== ========== ==========
Ratio of allowance for loan losses to
gross loans receivable at the end
of the period......................... 0.84% 0.74% 0.84% 0.74%
Ratio of allowance for loan losses to
total non-performing loans at the
end of the period..................... 156.77% 1053.63% 156.77% 1053.63%
Ratio of net charge-offs to average
gross loans (annualized).............. 0.36% 0.00% 0.45% 0.00%
Management believes that the allowance for loan losses is adequate to provide
for potential losses as of March 31, 1997, based upon its current evaluation of
loan delinquencies, non-performing loans, charge-off trends, economic
conditions and other factors. The increase in the provision for loan losses in
the current quarter reflects the continued growth in the Company's loan
portfolio and also reflects the Company's increased mix of higher yielding,
higher risk loans. Repossessed autos sold during the six and three months
ended March 31, 1997 resulted in charge-offs of $1.1 million and $0.7 million,
respectively. It is anticipated that as more loans default and repossessed
autos are sold, additional charge-offs will be incurred.* The Company believes
that the allowance for loan losses is adequate to provide for potential
anticipated losses based upon current known conditions.
OTHER OPERATING INCOME. Other operating income decreased by $2.3 million and
$1.5 million for the six and three months ended March 31, 1997, compared to the
same periods in the prior year. The following table shows the percentage of
other operating income to average assets for each period:
Six months ended Three months ended
March 31, March 31,
------------------------ ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
(Dollars in thousands)
Other operating income................... $5,307 $7,628 $2,650 $4,169
Percent of average assets (annualized)... 0.74% 1.24% 0.74% 1.33%
The decreases were due primarily to decreases in gains on investments and
mortgage-backed and related securities, partially offset by an increase in
gains on trading account activity and income from the Company's affordable
housing subsidiary. Gains on investments and mortgage-backed and related
securities decreased $2.6 million to
21
22
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
$627,000, and $1.5 million to $151,000, for the six and three months
ended March 31, 1997, respectively, compared to gains of $3.3 million and $1.7
million for the same periods in the prior year. However, the Company does not
consider gains on the sales of securities as a predictable source of earnings
as such sales are primarily based on the Company's ongoing review of the
individual securities within the Company's available for sale portfolio whereby
securities may be sold and replaced with ones that offer a better combination
of interest income, interest rate risk or credit risk than the security sold.
Gain/(loss) on foreclosed properties decreased to a loss of $7,000 and a gain
of $7,000 for the six and three months ended March 31, 1997, respectively,
compared to gains of $872,000 and $740,000 for the same periods in the prior
year. For the six and three months ended March 31, 1996, the gains were the
result of the sale of one foreclosed property which had a carrying value of
$5.8 million. The gain on sale of this property was $684,000. Gains from the
trading account were $507,000 and $122,000 for the six and three months ended
March 31, 1997, respectively, compared to a gain of $109,000 and a loss of
$19,000 for the same periods in the prior year. The increase in trading gains
was the result of the sale of mortgage-backed securities which the Company had
exchanged for its own mortgage loans ("loan swaps"). This method of selling
the Company's salable mortgage production is required, under accounting rules,
to be accounted for as a "trading" activity, and as such, the resulting
realized and unrealized gains or losses are classified as trading income. The
level of trading gains may fluctuate due to the volume of originations of
single-family mortgage loans which in turn can fluctuate due to changes in
interest rates. Sales of loans for cash as opposed to loan swaps are recorded
as sales of mortgage loans in the income statement. The operations of the
Company's affordable housing subsidiary had increases in income (which
represents primarily rental income) of $571,000 and $454,000 for the six and
three months ended March 31, 1997, as compared to the same periods in the
previous year. The Company currently has nineteen properties fully in
operation compared to twelve in the prior year.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by $2.7 million or 20.3% and $1.3 million or 18.5% for the six and
three months ended March 31, 1997, compared to the same periods in the prior
year. The following table shows the percentage of general and administrative
expenses to average assets for each period:
Six months ended Three months ended
March 31, March 31,
------------------------- ------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(Dollars in thousands)
General and administrative expenses...... $15,749 $13,089 $8,287 $6,992
Percent of average assets (annualized)... 2.20% 2.13% 2.30% 2.23%
The increases were due primarily to increased levels of compensation and other
costs associated with the Kilbourn State Bank acquisition, the opening of three
new branches and a centralized call center, and other increased activity
connected with the Company's higher level of earning assets. The affordable
housing subsidiary showed increases in operating expenses of $751,000 and
$630,000 for the six and three months ended March 31, 1997, as compared to the
same periods in the prior year. The Company currently has nineteen properties
fully in operation compared to twelve in the prior year.
INCOME TAX EXPENSE. Income tax expense decreased to $1.4 million and $655,000
for the six and three months ended March 31, 1997 from $3.6 million and $1.8
million for the six and three months ended March 31, 1996. The effective tax
rate for the six and three months ended March 31, 1997 was 18.39% and 18.04%,
respectively compared with 30.04% and 29.89% for the six and three months ended
March 31, 1996. The decrease in effective rates reflects the effect of the tax
credits earned by the Company's affordable housing subsidiary. Income tax
credits increased to $1.4 million and $719,000, for the six and three months
ended March 31, 1997, compared to $756,000 and $397,000 for the same periods in
the prior year.
22
23
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
ASSET QUALITY
Total non-performing assets were $4.0 million or 0.26% of total assets at March
31, 1997, unchanged from the $4.0 million or 0.28% of total assets at September
30, 1996. Non-performing assets include loans which have been placed on
nonaccrual status and property upon which a judgment of foreclosure has been
entered but prior to the foreclosure sale, as well as property acquired as a
result of foreclosure.
Non-performing assets as of March 31, 1997 included $3.1 million of purchased
auto loans which are past due or in default. These auto loans were purchased
in 1995 and 1996 under a warehouse financing arrangement the Company had with
the originator of the sub-prime automobile loans. The intent of the financing
was to warehouse the loans until the originator could originate sufficient
quantities to securitize the loans and sell to institutional investors. At
that time, the loans would be sold back to the originator. The loans were
serviced by an independent third party servicer and the loans had various
levels of insurance and in addition were guaranteed as to principal and
interest payments by the originator of the loans. The maximum amount that the
Company had outstanding at any point in time was a balance of $14.6 million
during February, 1996. The Company has not funded any loans since that time
and as of March 31, 1997, the balance of the sub-prime auto loans was $3.1
million compared to $7.7 million at September 30, 1996. During the six months
ended March 31, 1997, $2.7 million of loans were sold back to the originator
for face value plus a gain of $50,000 which was treated as a recovery. Actions
have been taken to repossess the collateral on the delinquent loans and to
enforce the guarantee of the originator of these loans; however, it is
anticipated that some portion of these loans will ultimately result in a
charge-off due to the possible inability of the originator to perform under its
guaranty.* In addition, the level of insurance collected on policies paying
for credit losses on the loans has been lower than anticipated. The Company is
still pursuing repossession and disposition of the autos and enforcement of the
guarantee of the originator. Repossessed autos sold during the six and three
months ended March 31, 1997 resulted in charge-offs of $1.1 million and
$719,000. It is anticipated that as more loans default and the repossessed
autos are sold, additional charge-offs will be incurred.* The Company believes
that the allowance for loan losses is adequate to provide for potential
anticipated losses based upon current known conditions.
Non-performing assets are summarized as follows:
March 31, September 30,
1997 1996
--------- -------------
(Dollars in thousands)
Non-performing loans................... $ 3,905 $ 3,890
Foreclosed properties.................. 122 80
-------- --------
Non-performing assets.................. $ 4,027 $ 3,970
======== ========
Non-performing loans to gross loans.... 0.54% 0.58%
Non-performing assets to gross assets.. 0.26% 0.28%
There are no material loans about which management is aware that there exists
serious doubts as to the ability of the borrower to comply with the loan terms,
except as disclosed above.
Impaired loans totaled $3.1 million at March 31, 1997 compared to $3.6 million
at September 30, 1996. These loans had associated impairment reserves of
$1.2 million and $1.1 million at March 31, 1997 and September 30, 1996,
respectively. The average balance of impaired loans was $3.5 million and $1.4
million at March 31, 1997 and September 30, 1996, respectively. No interest
income was recorded in either reporting period.
23
24
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
ASSET/LIABILITY MANAGEMENT
Asset and liability management is an ongoing process of managing asset and
liability maturities to control the interest rate risk of the Company.
Management controls this risk through pricing of assets and liabilities and
maintaining specific levels of maturities. In recent periods, management's
strategy has been to (1) sell substantially all new originations of long-term,
fixed-rate, single-family mortgage loans in the secondary market, (2) invest in
various adjustable-rate and short-term mortgage-backed and related securities,
(3) invest in adjustable-rate, single-family mortgage loans, and (4) increase
its investments in consumer and commercial loans with generally shorter
interest rate characteristics. Although management believes that its
asset/liability management strategies have reduced the potential effects of
changes in interest rates on its operations, increases in interest rates may
adversely affect the Company's results of operations because interest-bearing
liabilities will reprice more quickly than interest-earning assets.
At March 31, 1997, the Company's estimated cumulative one-year gap between
assets and liabilities was a negative 9.23% of total assets. A negative gap
occurs when a greater dollar amount of interest-bearing liabilities are
repricing or maturing than interest earning assets. The Company's three-year
cumulative gap as of March 31, 1997 was a negative 6.25% of total assets. With
a negative gap position, during periods of rising interest rates it is expected
that the cost of the Company's interest-bearing liabilities will rise more
quickly than the yield on its interest-earning assets, which will have a
negative effect on its net interest income.* Although the opposite effect on
net interest income would occur in periods of falling interest rates, the
Company could experience substantial prepayments of its fixed-rate mortgage
loans and mortgage-backed and related securities in periods of falling interest
rates, which would result in the reinvestment of such proceeds at market rates
which are lower than current rates.*
24
25
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
The following table summarizes the Company's gap position as of March 31,
1997.
More than More than
Within Four to One Year Three
Three Twelve to Three Years to Over Five
Months Months Years Five Years Years Total
------------------------------------------------------------------------------
(Dollars in thousands)
INTEREST-EARNING ASSETS: (1)
Loans: (2)
Fixed........................................ $ 21,300 $ 31,768 $ 47,948 $ 24,451 $ 52,428 $ 177,895
Variable..................................... 43,918 88,845 109,602 45,308 10,710 298,383
Consumer loans (2)............................. 97,799 41,914 18,090 21,826 19,960 199,589
Mortgage-backed and related securities......... 1,194 4,708 14,616 26,328 20,907 67,753
Assets available for sale:
Mortgage loans............................... 17,077 - - - - 17,077
Fixed rate mortgage related.................. 5,550 17,409 31,623 19,797 15,412 89,791
Variable rate mortgage related............... 305,820 156,557 - - - 462,377
Other........................................ 14,994 12,631 33,643 2,971 424 64,663
Trading account securities..................... 0 - - - - 0
Investment securities and other assets......... 80,793 2,003 - - 6,561 89,357
------------------------------------------------------------------------------
Total........................................ $ 588,445 $355,835 $255,522 $140,681 $126,402 $1,466,885
------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES:
Deposits: (3)
NOW accounts................................. $ 5,307 $ 15,921 $ 21,798 $ 8,652 $ 5,694 $ 57,372
Passbook savings accounts.................... 4,388 13,162 26,657 18,364 40,666 103,237
Money market deposit accounts................ 50,204 150,610 16,716 4,179 1,393 223,102
Certificates of deposit...................... 280,790 206,594 73,393 29,448 - 590,225
Borrowings..................................... 403,008 9 15,000 60 - 418,077
Impact of interest rate swap (4)............... (40,000) - 55,000 - (15,000) -
------------------------------------------------------------------------------
Total........................................ $ 703,697 $386,296 $208,564 $ 60,703 $ 32,753 $1,392,013
==============================================================================
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities....... $(115,252) $(30,461) $ 46,958 $ 79,978 $ 92,621 $ 74,872
==============================================================================
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities............................ (115,252) (145,713) (98,755) (18,777) 73,844
===============================================================
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of total
assets......................................... -7.30% -9.23% -6.25% -1.19% 4.68%
===============================================================
(1) Adjustable and floating rate assets are included in the period in which
interest rates are next scheduled to adjust rather than in the period in
which they are due, and fixed rate assets are included in the periods in
which they are scheduled to be repaid based on scheduled amortization, in
each case adjusted to take into account estimated prepayments utilizing
the Company's historical prepayment statistics, modified for forecasted
statistics using the Public Securities Association model of prepayments.*
For fixed rate mortgage loans and mortgage-backed and related securities,
annual prepayment rates ranging from 8% to 30%, based on the loan coupon
rate, were used.
(2) Balances have been reduced for undisbursed loan proceeds, unearned
insurance premiums, deferred loan fees, purchased loan discounts and
allowances for loan losses, which aggregated $34.4 million at March 31,
1997.
(3) Although the Company's negotiable order of withdrawal ("NOW") accounts,
passbook savings accounts and money market deposit accounts generally are
subject to immediate withdrawal, management considers a certain portion of
such accounts to be core deposits having significantly longer effective
maturities based on the Company's retention of such deposits in changing
interest rate environments. NOW accounts, passbook savings accounts and
money market deposit accounts are assumed to be withdrawn at annual rates
of 37%, 17% and 88%, respectively, of the declining balance of such
accounts during the period shown. The withdrawal rates used are higher
than the Company's historical rates but are considered by management to be
more indicative of expected withdrawal rates in a rising interest rate
environment. If all the Company's NOW accounts, passbook savings accounts
and money market deposit accounts had been assumed to be repricing within
one year, the one-year cumulative deficiency of interest-earning assets to
interest-bearing liabilities would have been $289.8 million or 19.97% of
total assets.
(4) Adjustable and floating rate borrowings are included in the period in
which their interest rates are next scheduled to adjust rather than in the
period in which they are due.
25
26
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
Assumptions regarding the withdrawal and prepayment are based on historical
experience, and management believes such assumptions reasonable, although the
actual withdrawal and repayment of assets and liabilities may vary
substantially.* Certain shortcomings are inherent in the method of analysis
presented in the gap table. For example, although certain assets and
liabilities may have similar maturities to repricing, they may react in
different degrees to changes in market interest rates.* Also, the interest
rates on other types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates.* Additionally, certain assets, such as
adjustable-rate loans and mortgage-backed and related securities, have features
which restrict changes in interest rates on a short-term basis and over the
life of the asset. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels could deviate significantly from those
assumed in calculating the data in the table.*
LIQUIDITY AND CAPITAL RESOURCES
The Company's most liquid assets are cash and cash equivalents, which include
investments in highly-liquid, short-term investments. The level of these
assets is dependent on the Company's operating, financing and investing
activities during any given period. Cash and cash equivalents totaled $80.8
million and $22.5 million as of March 31, 1997 and September 30, 1996,
respectively.
The Company's primary sources of funds are deposits, including brokered
certificates, borrowings from the FHLB and proceeds from principal and interest
payments on loans and mortgage-backed and related securities. Although
maturities and scheduled amortization of loans are predictable sources of
funds, deposit flows, prepayments on mortgage loans and mortgage-backed and
related securities are influenced significantly by general interest rates,
economic conditions and competition. Additionally, the Bank is limited by the
FHLB to borrowing up to 35% of its assets. At March 31, 1997, the Company had
a borrowing capacity available of $147.0 million from the FHLB, however,
additional securities may have to be pledged as collateral.
Under federal and state laws and regulations, the Company and its wholly-owned
subsidiaries are required to meet certain tangible, core and risk-based capital
requirements. Tangible capital generally consists of shareholders' equity
minus certain intangible assets. Core capital generally consists of tangible
capital plus qualifying intangible assets. The risk-based capital requirements
presently address credit risk related to both recorded and off-balance sheet
commitments and obligations.
Bank Wisconsin is required to follow FDIC capital adequacy guidelines which
prescribe minimum levels of capital and require that institutions meet certain
risk-based and leverage capital requirements. Under the FDIC capital
regulations, Bank Wisconsin is required to meet the following capital
standards: (i) "Tier 1 capital" in an amount not less than 3% of total assets;
(ii) "Tier 1 capital" in an amount not less than 4% of risk-weighted assets;
and (iii) "total capital" in an amount not less than 8% of risk-weighted
assets.
The following table summarizes Bank Wisconsin's capital ratios at the dates
indicated:
March 31, 1997 September 30, 1996
---------------- --------------------
Capital Capital
---------------- --------------------
Capital Standard Amount Percent Amount Percent
- - ----------------------------- ------ ------- -------- ---------
(Dollars in thousands)
Tier 1 capital/average assets 25,700 13.35% 8,789 9.12%
Tier 1 capital/risk-based 25,700 17.01% 8,789 12.38%
Total capital/risk-based 27,595 18.26% 9,478 13.35%
26
27
ST. FRANCIS CAPITAL CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis, continued
The changes in the capital amounts from September 30, 1996 to March 31, 1997
are primarily due to the aforementioned Kilbourn State Bank acquisition.
The Bank is required to follow OTS capital regulations which require savings
institutions to meet three capital standards: (i) "tangible capital" in an
amount not less than 1.5% of adjusted total assets; (ii) "core capital" in an
amount not less than 3% of adjusted total assets; and (iii) "risk-based
capital" of at least 8% of risk-weighted assets. Savings institutions must
meet all of the standards in order to comply with the capital requirements.
The following table summarizes the Bank's capital ratios at the dates
indicated:
March 31, 1997 September 30, 1996
---------------- -------------------
Capital Capital
---------------- -------------------
Capital Standard Amount Percent Amount Percent
- - ------------------ ------- ------- -------- --------
(Dollars in thousands)
Tangible capital 91,904 6.72% 89,092 6.86%
Core capital 91,904 6.72% 89,092 6.86%
Risk-based capital 94,799 12.75% 92,764 13.12%
As evidenced by the foregoing, the capital of each of the Company's financial
institution subsidiaries exceeded all capital requirements as mandated by the
requirements of the FDIC and OTS.
27
28
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Registrant nor the Bank is involved in any pending legal
proceedings involving amounts in the aggregate which management
believes are material to the financial condition and results of
operations of the Registrant and the Bank.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on January 22, 1997. Only
shareholders of record at the close of business on December 1, 1996
(the "Voting Record Date") were entitled to vote at the annual meeting.
On the Voting Record Date, there were 5,371,064 shares of Common Stock
outstanding, and 4,842,344 shares present at the meeting by the holders
thereof in person or by proxy, which constituted a quorum. The
following is a summary of the matters voted upon at the meeting.
NUMBER OF VOTES
-------------------------------------------
BROKER
FOR WITHHELD ABSTENTIONS NON-VOTES
--------- -------- ----------- ---------
NOMINEES FOR DIRECTOR FOR
THREE-YEAR TERM EXPIRING IN
2000
Jeffrey A. Reigle 4,767,483 74,861 - -
John C. Schlosser 4,782,256 60,088 - -
Edmund O. Templeton 4,781,507 60,837 - -
APPROVAL OF THE ST. FRANCIS
CAPITAL CORPORATION 1997
STOCK OPTION PLAN 4,228,016 450,703 82,126 81,499
RATIFICATION OF APPOINTMENT OF
KPMG PEAT MARWICK LLP AS
AUDITORS 4,749,228 55,865 37,251 -
ITEM 5. OTHER INFORMATION
On April 30, 1997, the Company announced the declaration of a dividend
of $0.12 per share on the Company's common stock for the quarter ended
March 31, 1997. The dividend is payable on May 22, 1997 to
shareholders of record as of May 9, 1997. This will be the seventh
cash dividend payment since the Company became a publicly-held company
in June 1993.
28
29
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.24 St. Francis Capital Corporation 1997 Stock Option Plan
11.1 Statement Regarding Computation of Earnings Per Share (See
Footnote 7 in "Notes to Unaudited Consolidated Financial
Statements")
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report was filed.
29
30
SIGNATURE
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.
ST. FRANCIS CAPITAL CORPORATION
Dated: May 15, 1997 By: /s/ Thomas R. Perz
- - --------------------- -----------------------------------------
Thomas R. Perz
President and Chief Executive Officer
Dated: May 15, 1997 By: /s/ Jon D. Sorenson
- - --------------------- -----------------------------------------
Jon D. Sorenson
Chief Financial Officer
30