SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 2003
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 0-24033
NASB Financial, Inc.
(Exact name of registrant as specified in its charter)
Missouri 43-1805201
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12498 South 71 Highway, Grandview, Missouri 64030
(Address of principal executive offices) (Zip Code)
(816) 765-2200
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
The number of shares of Common Stock of the Registrant outstanding as of
May 12, 2003, was 8,439,942.
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands)
March 31, September 30,
2003 2002
(Unaudited)
---------- -----------
ASSETS
Cash and cash equivalents $ 54,016 4,168
Securities available for sale 6,505 14,635
Stock in Federal Home Loan Bank, at cost 19,230 15,173
Mortgage-backed securities:
Available for sale 6,687 2,684
Held to maturity (market value of $1,310
and $1,544 at March 31, 2003, and
September 30, 2002, respectively) 1,243 1,483
Loans receivable:
Held for sale 89,669 73,591
Held for investment, net 908,001 845,149
Allowance for loan losses (7,216 (5,865)
Accrued interest receivable 4,870 4,795
Real estate owned, net 3,346 4,938
Premises and equipment, net 6,949 6,523
Investment in LLC 2,264 200
Mortgage servicing rights, net 1,689 2,957
Deferred tax asset 3,153 2,537
Other assets 12,163 5,254
---------- ----------
$ 1,112,569 978,222
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Checks outstanding in excess of
bank balances $ -- 7,764
Customer deposit accounts 657,000 549,437
Advances from Federal Home Loan Bank 324,349 295,192
Escrows 5,216 7,404
Income taxes payable 1,599 2,230
Accrued expenses and other liabilities 6,838 6,749
---------- ----------
Total liabilities 995,002 868,776
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock of $0.15 par value:
20,000,000 authorized; 9,822,112 issued
at March 31, 2003, and 9,802,112 issued
at September 30, 2002 1,473 1,470
Serial preferred stock of $1.00 par
value: 7,500,000 shares authorized;
none issued or outstanding -- --
Additional paid-in capital 15,958 15,862
Retained earnings 116,602 108,367
Treasury stock, at cost; 1,382,170 shares
at March 31, 2003 and 1,381,770 shares
at September 30, 2002 (16,726) (16.716)
Accumulated other comprehensive income 260 463
---------- ----------
Total stockholders' equity 117,567 109,446
---------- ----------
$ 1,112,569 978,222
========== ==========
See accompanying notes to consolidated financial statements.
1
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three months ended Six months ended
March 31, March 31,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Interest on loans $ 17,711 17,580 35,440 36,303
Interest on mortgage-backed securities 134 114 222 291
Interest and dividends on securities 258 201 528 471
Other interest income 87 73 114 246
--------- --------- --------- ---------
Total interest income 18,190 17,968 36,304 37,311
--------- --------- --------- ---------
Interest on customer deposit accounts 3,708 4,972 7,271 11,166
Interest on advances from FHLB and
other borrowings 2,664 3,371 5,464 7,380
--------- --------- --------- ---------
Total interest expense 6,372 8,343 12,735 18,546
--------- --------- --------- ---------
Net interest income 11,818 9,625 23,569 18,765
Provision for loan losses 42 150 60 491
--------- --------- --------- ---------
Net interest income after provision
for loan losses 11,776 9,475 23,509 18,274
--------- --------- --------- ---------
Other income (expense):
Loan servicing fees (257) (390) (1,015) (77)
Impairment (loss) recovery on mortgage
servicing rights 95 86 341 (190)
Impairment loss on mortgage-backed securities -- -- -- (170)
Customer service fees and charges 1,174 1,016 2,520 2,116
Provision for losses on real estate owned (784) -- (1,984) (67)
Gain on sale of investments 193 -- 181 --
Gain on sale of loans held for sale 3,136 1,552 5,873 5,292
Other 535 (2) 500 418
--------- --------- --------- ---------
Total other income 4,092 2,262 6,416 7,322
--------- --------- --------- ---------
General and administrative expenses:
Compensation and fringe benefits 3,086 2,590 5,599 5,041
Commission-based mortgage banking compensation 1,013 748 2,377 1,981
Premises and equipment 661 611 1,220 1,139
Advertising and business promotion 235 150 495 274
Federal deposit insurance premiums 26 27 52 57
Other 1,288 958 2,408 2,074
--------- --------- --------- ---------
Total general and administrative expenses 6,309 5,084 12,151 10,566
--------- --------- --------- ---------
Income before income tax expense 9,559 6,653 17,774 15,030
Income tax expense 3,680 2,627 6,840 5,843
--------- --------- --------- ---------
Net income $ 5,879 4,026 10,934 9,187
========= ========= ========= =========
Basic earnings per share $ 0.70 0.48 1.30 1.09
========= ========= ========= =========
Diluted earnings per share $ 0.70 0.48 1.29 1.08
========= ========= ========= =========
Weighted average shares outstanding 8,438,653 8,412,887 8,433,041 8,460,142
See accompanying notes to consolidated financial statements.
2
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Unaudited)
(In thousands, except share data)
Accumulated
Additional other Total
Common paid-in Retained Treasury comprehensive stockholders'
stock capital earnings stock income equity
-----------------------------------------------------------------------
(Dollars in thousands)
Balance at October 1, 2002 $ 1,470 15,862 108,367 (16,716) 463 109,446
Comprehensive income:
Net income -- -- 10,934 -- -- 10,934
Other comprehensive loss,
net of tax:
Unrealized loss on securities -- -- -- -- (203) (203)
available for sale ---------
Total comprehensive income -- -- -- -- -- 10,731
Cash dividends paid -- -- (2,699) -- -- (2,699)
Stock options exercised 3 96 -- -- -- 99
Purchase of common stock for
treasury -- -- -- (10) -- (10)
----------------------------------------------------------------------
Balance at March 31, 2003 $ 1,473 15,958 116,602 (16,726) 260 117,567
======================================================================
See accompanying notes to consolidated financial statements.
3
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
(In thousands, except share data)
Six months ended
March 31,
----------------------
2003 2002
----------------------
Cash flows from operating activities:
Net income $ 10,934 9,187
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 380 420
Amortization and accretion, net 540 (1,085)
Impairment (recovery) loss on mortgage servicing rights (341) 190
Impairment loss on mortgage-backed securities -- 170
Net fair value of loan related commitments (103) --
Gain on sale of loans receivable held for sale (5,873) (5,292)
Gain on sale of securities available for sale (181) --
Provision for loan losses 60 491
Provision for losses on real estate owned 1,984 67
Origination and purchase of loans held for sale (331,318) (245,828)
Sale of loans receivable held for sale 426,091 334,798
Changes in:
Accrued interest receivable 271 368
Accrued expenses and other liabilities and
income taxes payable (332) (4,739)
----------------------
Net cash provided by operating activities 102,112 88,747
Cash flows from investing activities:
Principal repayments of mortgage-backed securities:
Held to maturity 254 2,343
Available for sale 1,213 539
Principal repayments of mortgage loans held
for investment and held for sale 266,396 242,281
Principal repayments of other loans receivable 22,009 18,900
Maturity of investment securities available for sale 3,514 20,478
Loan origination - mortgage loans held for investment (381,438) (274,969)
Loan origination - other loans receivable (14,356) (10,376)
Purchase of mortgage loans held for investment (1,942) (12,771)
Purchase of other loans receivable -- (5,173)
Purchase of investment securities available for sale -- (20,000)
Purchase of FHLB stock (1,735) (1,497)
Purchase from sale of securities available for sale 6,040 --
Proceeds for sale of real estate owned 4,321 3,791
Purchases of premises and equipment, net of sales 149 (319)
Investment in LLC (2,064) --
Net cash acquired in merger 16,664 --
Other (2,062) (1,267)
----------------------
Net cash used in investing activities (83,037) (38,040)
4
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(In thousands, except share data)
Six months ended
March 31,
----------------------
2003 2002
----------------------
Cash flows from financing activities:
Net increase (decrease) in customer deposit accounts 24,968 (18,394)
Proceeds from advances from FHLB 145,000 55,000
Repayment on advances from FHLB (126,144) (75,138)
Cash dividends paid (2,699) (2,325)
Stock options exercised 99 187
Repurchase of common stock -- (1,862)
Decrease in checks outstanding in excess of
bank balances (7,764) --
Net decrease in escrows (2,687) (3,059)
----------------------
Net cash provided by (used in) financing activities 30,773 (45,591)
----------------------
Net increase in cash and cash equivalents 49,848 5,116
Cash and cash equivalents at beginning of the period 4,168 16,043
----------------------
Cash and cash equivalents at end of period $ 54,016 21,159
======================
Supplemental disclosure of cash flow information:
Cash paid for income taxes (net of refunds) $ 7,174 9,578
Cash paid for interest 12,751 18,780
Supplemental schedule of non-cash investing and financing
activities:
Conversion of loans receivable to real estate owned $ 2,714 2,204
Conversion of real estate owned to loans receivable 187 57
Capitalization of mortgage servicing rights 79 44
In connection with the merger, the Company acquired assets of $109.9 million,
assumed liabilities of $94.3 million, and received net cash of $16.7 million.
See accompanying notes to consolidated financial statements.
5
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements are
prepared in accordance with instructions to Form 10-Q and do not include
all of the information and footnotes required by accounting principles
generally accepted in the United States of America ("GAAP") for
complete financial statements. All adjustments are of a normal and
recurring nature and, in the opinion of management, the statements
include all adjustments considered necessary for fair presentation.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K to the Securities and Exchange Commission.
Operating results for the six months ended March 31, 2003, are not
necessarily indicative of the results that may be expected for the
fiscal year ended September 30, 2003. The consolidated balance sheet of
the Company as of September 30, 2002, has been derived from the audited
balance sheet of the Company as of that date.
In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenues
and expenses for the period. Material estimates that are particularly
susceptible to significant change in the near-term relate to the
determination of the allowances for losses on loans, real estate owned,
and valuation of mortgage servicing rights. Management believes that
these allowances are adequate, future additions to the allowances may be
necessary based on changes in economic conditions.
The Company's critical accounting policies involving the more
significant judgements and assumptions used in the preparation of the
consolidated financial statements as of March 31, 2003, have remained
unchanged from September 30, 2002. These policies are provision for
loan losses and mortgage servicing rights. Disclosure of these critical
accounting policies is incorporated by reference under Item 8
"Financial Statements and Supplementary Data" in the Company's Annual
Report on Form 10-K for the Company's year ended September 30, 2002.
The FASB recently issued SFAS No. 142, "Goodwill and Other
Intangible Assets," No. 143, "Accounting for Asset Retirement
Obligations," No.144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statements No. 13, and Technical
Corrections," No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," and No. 147, "Acquisitions of Certain Financial
Institutions." These Statements are effective on various dates
throughout the Company's 2003 fiscal year. Implementation of these
Statements is not expected to have a material effect on the Company's
consolidated financial statements.
Certain quarterly amounts for previous periods have been
reclassified to conform to the current quarter's presentation.
(2) SECURITIES AVAILABLE FOR SALE
The following table presents a summary of securities available for
sale. Dollar amounts are expressed in thousands.
March 31, 2003
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
Debt securities $ 6,034 399 -- 6,433
Municipal securities 72 -- -- 72
-------------------------------------------
Total $ 6,106 399 -- 6,505
===========================================
6
(3) MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
The following table presents a summary of mortgage-backed securities
available for sale. Dollar amounts are expressed in thousands.
March 31, 2003
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
Pass-through certificates
guaranteed by GNMA
- fixed rate $ 1,095 36 -- 1,131
FHLMC participation
certificates
- fixed rate 4,522 -- 21 4,501
Other asset backed
securities 1,010 -- -- 1,010
Mortgage-backed derivatives
(including CMO residuals
and interest-only
securities) 37 8 -- 45
-------------------------------------------
Total $ 6,664 44 21 6,687
===========================================
(4) MORTGAGE-BACKED SECURITIES HELD TO MATURITY
The following table presents a summary of mortgage-backed
securities held to maturity. Dollar amounts are expressed in thousands.
March 31, 2003
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
FHLMC participation
certificates:
Balloon maturity and
adjustable rate $ 719 48 -- 767
FNMA pass-through
certificates:
Fixed rate 104 -- -- 104
Balloon maturity and
adjustable rate 162 3 -- 165
Pass-through certificates
guaranteed by GNMA
- fixed rate 221 16 -- 237
Collateralized mortgage
obligation bonds 37 -- -- 37
-------------------------------------------
Total $ 1,243 67 -- 1,310
===========================================
(5) LOANS RECEIVABLE
Loans receivable are as follows:
March 31,
2003
---------------------
(Dollars in thousands)
LOANS HELD FOR INVESTMENT:
Mortgage loans:
Permanent loans on:
Residential properties $ 244,799
Business properties 428,161
Partially guaranteed by VA or
insured by FHA 17,205
Construction and development 258,091
----------
Total mortgage loans 948,256
Commercial loans 24,997
Installment loans to individuals 34,274
----------
Total loans held for investment 1,007,527
Less:
Undisbursed loan funds (94,222)
Unearned discounts and fees and costs
on loans, net (5,304)
----------
Net loans held for investment $ 908,001
==========
7
March 31,
2003
---------------------
(Dollars in thousands)
LOANS HELD FOR SALE:
Mortgage loans:
Permanent loans on:
Residential properties $ 110,144
Less:
Undisbursed loan funds (20,690)
Unearned discounts and fees and costs
on loans, net 215
----------
Net loans held for sale $ 89,669
==========
Included in the loans receivable balances at March 31, 2003, are
participating interests in mortgage loans and wholly owned mortgage
loans serviced by other institutions in the approximate amount of
$759,000. Loans and participations serviced for others amounted to
approximately $356.4 million at March 31, 2003.
(6) REAL ESTATE OWNED
Real estate owned and other repossessed property consisted of the
following:
March 31,
2003
---------------------
(Dollars in thousands)
Real estate acquired through (or deed
in lieu of) foreclosure $ 6,286
Less: allowance for losses (2,940)
----------
Total $ 3,346
==========
Real estate owned is carried at fair value as of the date of
foreclosure minus any estimated disposal costs (the "new basis"), and is
subsequently carried at the lower of the new basis or fair value less
selling costs on the current measurement date.
(7) MORTGAGE SERVICING RIGHTS
The following provides information about the Bank's mortgage
servicing rights for the period ended March 31, 2003. Dollar amounts
are expressed in thousands.
Balance at October 1, 2002 $ 2,957
Additions:
Originated mortgage servicing rights 79
Acquired in merger 122
Impairment recovery 341
Reductions:
Amortization 1,810
Sale of mortgage servicing rights --
Impairment loss --
--------
Balance at March 31, 2003 $ 1,689
========
8
(8) RECONCILIATION OF BASIC EARNINGS PER SHARE TO DILUTED EARNINGS PER
SHARE
The following table presents a reconciliation of basic earnings per
share to diluted earnings per share for the periods indicated.
Three months ended Six months ended
---------------------- ----------------------
3/31/03 3/31/02 3/31/03 3/31/02
---------------------- ----------------------
Net income (in thousands) $ 5,879 4,026 10,934 9,187
Basic weighted average shares outstanding 8,438,653 8,412,887 8,433,041 8,460,142
Effect of stock options 13,817 27,824 14,602 32,943
---------------------- ----------------------
Dilutive potential common shares 8,452,470 8,440,711 8,447,643 8,493,085
Net income per share:
Basic $ 0.70 0.48 1.30 1.09
Diluted 0.70 0.48 1.29 1.08
The dilutive securities included for each period presented above
consist entirely of stock options granted to employees as incentive
stock options under Section 442A of the Internal Revenue Code as
amended.
(9) SEGMENT INFORMATION
In accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," the Company has identified two
principal operating segments for purposes of financial reporting:
Banking and Mortgage Banking. These segments were determined based on
the Company's internal financial accounting and reporting processes and
are consistent with the information that is used to make operating
decisions and to assess the Company's performance by the Company's key
decision makers.
The Mortgage Banking segment originates mortgage loans for sale to
investors and for the portfolio of the Banking segment. The Banking
segment provides a full range of banking services through the Bank's
branch network, exclusive of mortgage loan originations. A portion of
the income presented in the Mortgage Banking segment is derived from
sales of loans to the Banking segment based on a transfer pricing
methodology that is designed to approximate economic reality. The Other
and Eliminations segment includes financial information from the parent
company plus inter-segment eliminations.
The following table presents financial information from the
Company's operating segments for the periods indicated. Dollar amounts
are expressed in thousands.
Three months ended Mortgage Other and
March 31, 2003 Banking Banking Eliminations Consolidated
------------------------------------------------------------------------
Net interest income $ 11,827 -- (9) 11,818
Provision for loan losses 42 -- -- 42
Other income 3,911 4,582 (4,401) 4,092
General and administrative
expenses 3,628 3,626 (945) 6,309
Income tax expense (benefit) 4,646 368 (1,334) 3,680
-------------------------------------------
Net income $ 7,422 588 (2,131) 5,879
===========================================
Three months ended Mortgage Other and
March 31, 2002 Banking Banking Eliminations Consolidated
------------------------------------------------------------------------
Net interest income $ 9,556 -- 69 9,625
Provision for loan losses 150 -- -- 150
Other income 2,200 2,590 (2,528) 2,262
General and administrative
expenses 2,835 2,684 (435) 5,084
Income tax expense (benefit) 3,238 (54) (557) 2,627
-------------------------------------------
Net income $ 5,533 (40) (1,467) 4,026
===========================================
9
Six months ended Mortgage Other and
March 31, 2003 Banking Banking Eliminations Consolidated
------------------------------------------------------------------------
Net interest income $23,600 -- (31) 23,569
Provision for loan losses 60 -- -- 60
Other income 5,990 9,909 (9,483) 6,416
General and administrative
expenses 6,699 7,345 (1,893) 12,151
Income tax expense 8,790 987 (2,937) 6,840
-------------------------------------------
Net income $14,041 1,577 (4,684) 10,934
===========================================
Six months ended Mortgage Other and
March 31, 2002 Banking Banking Eliminations Consolidated
------------------------------------------------------------------------
Net interest income $18,627 -- 138 18,765
Provision for loan losses 491 -- -- 491
Other income 5,758 7,132 (5,568) 7,322
General and administrative
expenses 5,842 6,014 (1,290) 10,566
Income tax expense 6,950 430 (1,537) 5,843
-------------------------------------------
Net income $11,102 688 (2,603) 9,187
===========================================
(10) MERGER
On December 19, 2002, the merger transaction with CBES Bancorp, Inc
("CBES") was completed. Pursuant to a definitive agreement dated
September 5, 2002, CBES was merged with and into a wholly owned
subsidiary of NASB Financial, Inc. formed solely to facilitate the
transaction. The agreement provided that upon the effective date of the
merger, each shareholder of CBES would receive $17.50 in cash for each
share of CBES common stock owned by such shareholder. The aggregate
purchase price was $15.6 million. The following table summarizes the
fair values of the assets acquired and the liabilities assumed at the
date of acquisition. Dollar amounts are expressed in thousands.
Cash and cash equivalents $ 32,251
Investments and mortgage backed securities 9,171
Loans receivable 58,624
Premises and equipment 955
Core deposits 1,499
Goodwill 1,846
Other assets 5,577
-----------
Total assets acquired 109,923
-----------
Customer deposit accounts 82,750
Advances from Federal Home Loan Bank 10,358
Other liabilities 1,228
-----------
Total liabilities assumed 94,336
-----------
Net assets acquired $ 15,587
===========
The only significant identifiable intangible asset acquired was the
core deposit base, which has a useful life of approximately 15 years and
will be amortized using the straight-line method. The $1.8 million of
goodwill was assigned entirely to the banking segment of the business.
10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
GENERAL
The principal business of the Company is to provide banking
services through the Bank. Specifically, the Bank obtains savings and
checking deposits from the public, then uses those funds to originate
and purchase real estate loans and other loans. The Bank also purchases
mortgage-backed securities ("MBS") and other investment securities
from time to time as conditions warrant. In addition to customer
deposits, the Bank obtains funds from the sale of loans held-for-sale,
the sale of securities available-for-sale, repayments of existing
mortgage assets, and advances from the Federal Home Loan Bank
("FHLB"). The Bank's primary sources of income are interest on loans,
MBS, and investment securities plus customer service fees and income
from mortgage banking activities. Expenses consist primarily of
interest payments on customer deposits and other borrowings and general
and administrative costs.
The Bank is regulated by the Office of Thrift Supervision ("OTS")
and the Federal Deposit Insurance Corporation ("FDIC"), and is subject
to periodic examination by both entities. The Bank is also subject to
the regulations of the Board of Governors of the Federal Reserve System
("FRB"), which establishes rules regarding reserves that must be
maintained against customer deposits.
FINANCIAL CONDITION
ASSETS
The Company's total assets as of March 31, 2003, were $1,112.6
million, an increase of $134.3 million from September 30, 2002, the
prior fiscal year end. $109.9 million of this increase was due to the
merger with CBES Bancorp, Inc.
As the Bank originates mortgage loans each month, management
evaluates the existing market conditions to determine which loans will
be held in the Bank's portfolio and which loans will be sold in the
secondary market. Loans sold in the secondary market can be sold with
servicing released or converted into MBS and sold with the loan
servicing retained by the Bank. At the time of each loan commitment, a
decision is made to either hold the loan for investment, hold it for
sale with servicing retained, or hold it for sale with servicing
released. Management monitors market conditions to decide whether loans
should be held in portfolio or sold and if sold, which method of sale is
appropriate. During the six months ended March 31, 2003, the Bank
originated and purchased $331.3 million in mortgage loans held for sale,
$383.4 million in mortgage loans held for investment, and $14.4 million
in other loans. This total of $729.1 million in loans originated
compares to $549.1 million in loans originated during the six months
ended March 31, 2002.
Included in the $89.7 million in loans held for sale as of March
31, 2003, are $21.5 million in mortgage loans held for sale with
servicing released. All loans held for sale are carried at the lower of
cost or fair value.
The Bank classifies problem assets as "substandard," "doubtful"
or "loss." Substandard assets have one or more defined weaknesses,
and it is possible that the Bank will sustain some loss unless the
deficiencies are corrected. Doubtful assets have the same defects as
substandard assets plus other weaknesses that make collection or full
liquidation improbable. Assets classified as loss are considered
uncollectible and of such little value that a specific loss allowance is
warranted.
The following table summarizes the Bank's classified assets as
reported to the OTS, plus any classified assets of the holding company.
Dollar amounts are expressed in thousands.
3/31/03 9/30/02 3/31/02
-------------------------------------
Asset Classification:
Substandard $ 16,428 14,822 17,164
Doubtful -- -- --
Loss 3,872 1,395 2,080
-------------------------------------
20,300 16,217 19,244
Allowance for losses (10,499) (6,854) (7,378)
-------------------------------------
$ 9,801 9,363 11,866
=====================================
11
The following table summarizes non-performing assets, troubled debt
restructurings, and real estate acquired through foreclosure or in-
substance foreclosure. Dollar amounts are expressed in thousands.
3/31/03 9/30/02 3/31/02
----------------------------------------
Total Assets $ 1,112,569 978,222 930,643
========================================
Non-accrual loans $ 6,275 6,361 7,553
Troubled debt
restructurings 5,737 3,337 3,477
Net real estate and
other assets acquired
through foreclosure 3,346 4,938 6,335
----------------------------------------
Total $ 15,358 14,636 17,365
========================================
Percent of total assets 1.38% 1.50% 1.87%
========================================
Management records a provision for loan losses in amounts
sufficient to cover current net charge-offs and an estimate of probable
losses based on an analysis of risks that management believes to be
inherent in the loan portfolio. The Allowance for Loan and Lease Losses
("ALLL") recognizes the inherent risks associated with lending
activities but, unlike specific allowances, have not been allocated to
particular problem assets but to a homogenous pool of loans. Management
believes that the specific loss allowances and ALLL are adequate. While
management uses available information to determine these allowances,
future allowances may be necessary because of changes in economic
conditions. Also, regulatory agencies (OTS and FDIC) review the Bank's
allowance for losses as part of their examinations, and they may require
the Bank to recognize additional loss provisions based on the
information available at the time of their examinations.
The following table sets forth the activity in the allowance for
loan losses for the six months ending March 31, 2003, and 2002. Dollar
amounts are expressed in thousands.
2003 2002
-------------------------
Balance at beginning of year $ 5,865 5,835
Provision for loan losses 60 491
Acquired in merger 1,309 --
Recoveries 32 33
Charge-offs (50) (132)
-------------------------
Balance at March 31 $ 7,216 6,227
=========================
LIABILITIES AND EQUITY
Customer deposit accounts increased $107.6 million during the six
months ended March 31, 2003. The weighted average rate on customer
deposits as of March 31, 2003, was 2.47%, a decrease from 3.45% as of
March 31, 2002.
Advances from the FHLB were $324.3 million as of March 31, 2003, an
increase of $29.2 million from September 30, 2002. During the six-month
period, the Bank borrowed $145.0 million of new advances, acquired $10.4
million in the merger, and repaid $126.1 million. Management uses FHLB
advances at various times as an alternate funding source to provide
operating liquidity and to fund the origination and purchase of mortgage
loans.
Escrows were $5.2 million as of March 31, 2003, a decrease of $2.2
million from September 30, 2002. This decrease is due to amounts paid
for borrowers' taxes during the fourth calendar quarter of 2002.
Total stockholders' equity as of March 31, 2003, was $117.6 million
(10.6% of total assets). This compares to $109.4 million (11.2% of
total assets) at September 30, 2002. On a per share basis,
stockholders' equity was $13.93 on March 31, 2003, compared to $13.00 on
September 30, 2002.
12
The Company paid cash dividends on its common stock of $0.15 on
November 22, 2002, and $0.17 on February 28, 2003. Subsequent to the
quarter ended March 31, 2003, the Company announced a cash dividend of
$0.17 per share to be paid on May 23, 2003, to stockholders of record as
of May 2, 2003.
Total stockholders' equity as of March 31, 2003, includes an
unrealized gain of $260,000, net of deferred income taxes, on available
for sale securities. This amount is reflected in the line item
"Accumulated other comprehensive income."
RATIOS
The following table illustrates the Company's return on assets
(annualized net income divided by average total assets); return on
equity (annualized net income divided by average total equity); equity-
to-assets ratio (ending total equity divided by ending total assets);
and dividend payout ratio (dividends paid divided by net income).
Six months ended
------------------------
3/31/03 3/31/02
------------------------
Return on assets 2.09% 1.93%
Return on equity 19.27% 18.72%
Equity-to-assets ratio 10.57% 10.83%
Dividend payout ratio 24.68% 25.31%
RESULTS OF OPERATIONS - Comparison of three months and six months ended
March 31, 2003 and 2002.
For the three months ended March 31, 2003, the Company had net
income of $5,879,000 or $0.70 per share. This compares to net income of
$4,026,000 or $0.48 per share for the quarter ended March 31, 2002.
For the six months ended March 31, 2003, the Company had net income
of $10,934,000 or $1.30 per share. This compares to net income of
$9,187,000 or $1.09 per share for the six months ended March 31, 2002.
NET INTEREST MARGIN
The Company's net interest margin is comprised of the difference
("spread") between interest income on loans, MBS and investments and
the interest cost of customer deposits and other borrowings. Management
monitors net interest spreads and, although constrained by certain
market, economic, and competition factors, it establishes loan rates and
customer deposit rates that maximize net interest margin.
The following table presents the total dollar amounts of interest
income and expense on the indicated amounts of average interest-earning
assets or interest-costing liabilities for the six months ended March
31, 2003 and 2002. Average yields reflect reductions due to non-accrual
loans. Once a loan becomes 90 days delinquent, any interest that has
accrued up to that time is reserved and no further interest income is
recognized unless the loan is paid current. Average balances and
weighted average yields for the periods include all accrual and non-
accrual loans. The table also presents the interest-earning assets and
yields for each respective period. Dollar amounts are expressed in
thousands.
13
Six months ended 3/31/03 As of
--------------------------- 3/31/03
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $ 954,764 35,440 7.42% 6.92%
Mortgage-backed securities 6,976 222 6.36% 6.51%
Securities 27,540 528 3.83% 3.77%
Bank deposits 23,019 114 0.99% 0.82%
--------------------------------------
Total earning assets 1,012,299 36,304 7.17% 6.56%
---------------------------
Non-earning assets 31,924
----------
Total $1,044,223
==========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 194,433 1,081 1.11% 1.08%
Customer certificates of
deposit 394,315 6,190 3.14% 3.12%
FHLB Advances 322,776 5,464 3.39% 3.09%
Other borrowings -- -- -- --
--------------------------------------
Total costing liabilities 911,524 12,735 2.79% 2.68%
---------------------------
Non-costing liabilities 21,622
Stockholders' equity 111,077
----------
Total $1,044,223
==========
Net earning balance $ 100,775
==========
Earning yield less costing rate 4.38% 3.88%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $1,012,299 23,569 4.66%
============================
Six months ended 3/31/02 As of
--------------------------- 3/31/02
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $ 879,928 36,303 8.25% 7.75%
Mortgage-backed securities 7,761 291 7.50% 7.20%
Securities 22,637 471 4.16% 4.30%
Bank deposits 24,178 246 2.03% 1.31%
-------------------------------------
Total earning assets 934,504 37,311 7.99% 7.54%
---------------------------
Non-earning assets 31,744
---------
Total $ 966,248
=========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 164,081 1,235 1.51% 1.61%
Customer certificates of
deposit 413,881 9,931 4.80% 4.27%
FHLB Advances 279,259 7,380 5.29% 4.97%
Other borrowings -- -- -- --
-------------------------------------
Total costing liabilities 857,221 18,546 4.33% 3.92%
---------------------------
Non-costing liabilities 10,931
Stockholders' equity 98,096
---------
Total $ 966,248
=========
Net earning balance $ 77,283
=========
Earning yield less costing rate 3.66% 3.62%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $ 934,504 18,765 4.02%
==========================
The following table provides information regarding changes in
interest income and interest expense. For each category of interest-
earning asset and interest-costing liability, information is provided on
changes attributable to (1) changes in volume (change in volume
multiplied by the old rate), (2) changes in rates (change in rate
multiplied by the old volume), and (3) changes in rate and volume
(change in rate multiplied by the change in volume). Average balances,
yields and rates used in the preparation of this analysis come from the
preceding table. Dollar amounts are expressed in thousands.
Six months ended March 31, 2003, compared to
six months ended March 31, 2002
-----------------------------------------------
Yield/
Yield Volume Volume Total
-----------------------------------------------
Components of interest income:
Loans $ (3,652) 3,087 (298) (863)
Mortgage-backed securities (44) (29) 4 (69)
Securities (37) 102 (8) 57
Bank deposits (126) (12) 6 (132)
-----------------------------------------------
Net change in interest income (3,859) 3,148 (296) (1,007)
-----------------------------------------------
Components of interest expense:
Customer deposit accounts (4,017) 208 (86) (3,895)
FHLB Advances (2,653) 1,151 (414) (1,916)
-----------------------------------------------
Net change in interest expense (6,670) 1,359 (500) (5,810)
-----------------------------------------------
Increase in net interest
margin $ 2,811 1,789 204 4,804
===============================================
14
Net interest margin before loan loss provision for the three months
ended March 31, 2003, increased $2.2 million from the same period in the
prior year. Specifically, total interest expense decreased $2.0 million
due to a decrease in the interest rate cost of those liabilities of
1.5%. Additionally, total interest income increased $222,000 from the
same period in the prior year. This increase resulted from a $77.8
million increase in the average balance of interest-earning assets,
largely offset by an 82 basis point decrease in the average rate earned
on interest-earning assets.
PROVISION FOR LOAN LOSSES
The Company's provision for loan losses was $42,000 during the
quarter ended March 31, 2003, and was $60,000 for the six months ended
March 31, 2003. Management performs an ongoing analysis of individual
loans and of homogenous pools of loans to assess for any impairment. On
a consolidated basis, loan loss reserve was 51.7% of total classified
assets at March 31, 2003, 42.3% at September 30, 2002, and 38.3% at
March 31, 2002.
As stated above, management believes that the provisions for loan
losses is adequate. The provision can fluctuate based on changes in
economic conditions or changes in the information available to
management. Also, regulatory agencies review the Company's allowances
for losses as a part of their examination process and they may require
changes in loss provision amounts based on information available at the
time of their examination.
OTHER INCOME
Other income for the three months ended March 31, 2003, increased
$1.8 million from the same period in the prior year. Specifically, gain
on sale of loans held for sale increased $1.6 million due to an
increased mortgage banking volume. Additionally, other income increased
$537,000, primarily due to the effect of recording the net fair value of
certain loan-related commitments in accordance with FASB Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities."
Provision for losses on real estate owned increased $784,000 due to a
reserve recorded on a hotel property in the Southeast area of Kansas
City, Missouri. The provision for loss associated with this property,
which was foreclosed in September 2001, reduces it's carrying value to
$1.6 million. This provision was recorded after management's efforts to
sell the property at auction during March 2003 were unsuccessful. The
property was sold subsequent to March 31, 2003.
Other income for the six months ended March 31, 2003, decreased
$906,000 from the same period in the prior year. Provision for losses on
real estate owned increased $1.9 million due to the aforementioned hotel
property. Net loan servicing fees decreased $938,000 due to an increase
in the amortization of capitalized servicing. This resulted from
increases in actual prepayments and estimated future prepayments of the
underlying mortgage loans during the quarter. These decreases in other
income were partially offset by an increase in impairment recovery on
mortgage servicing rights of $531,000. Income from loan servicing fees
are net of amortization of mortgage servicing rights. Such amortization
is greatly affected by the level of actual prepayments and estimated
future prepayments on the underlying mortgage loans. Management
performs an ongoing analysis of mortgage servicing rights to determine
to what extent, if any, they may be impaired. Changes in the trend of
mortgage interest rates can occur quickly and may have a significant
impact on future mortgage prepayments and amortization of mortgage
servicing rights. Gain on sale of loans held for sale increased
$581,000 due to an increase in mortgage banking volume. Customer
service fees and charges increased $404,000, primarily due to an
increase in appraisal and other miscellaneous fees related to the
increase in loan origination volume.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative expenses for the quarter ended
March 31, 2003, increased $1.2 million from the same period in the
previous year. Specifically, compensation increased $761,000 due the
increase in loan origination volume and the merger with CBES. Other
expenses increased $330,000 due to an increase in data processing and
other expenses attributable to the increased loan origination volume and
the merger with CBES.
Total general and administrative expenses for the six months ended
March 31, 2003, increased $1.6 million from the same period in the prior
year. Specifically, compensation increased $954,000 due the increase in
loan origination volume and the merger with CBES. Advertising increased
$221,000, and other expenses increased $334,000 due to an increase in
data processing and other expenses attributable to the increased loan
origination volume and the merger with CBES.
15
REGULATION
The Bank is a member of the FHLB System and its customers' deposits
are insured by the Savings Association Insurance Fund ("SAIF") of the
FDIC. The Bank is subject to regulation by the OTS as its chartering
authority. Since passage of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA" or the "Act"), the
FDIC also has regulatory control over the Bank. The transactions of
SAIF-insured institutions are limited by statute and regulations that
may require prior supervisory approval in certain instances.
Institutions also must file reports with regulatory agencies regarding
their activities and their financial condition. The OTS and FDIC make
periodic examinations of the Bank to test compliance with the various
regulatory requirements. The OTS can require an institution to re-value
its assets based on appraisals and to establish specific valuation
allowances. This supervision and regulation is intended primarily for
the protection of depositors. Also, savings institutions are subject to
certain reserve requirements under Federal Reserve Board regulations.
INSURANCE OF ACCOUNTS
The SAIF insures the Bank's customer deposit accounts to a maximum
of $100,000 for each insured member. Deposit insurance premiums are
determined using a Risk-Related Premium Schedule ("RRPS"), a matrix
which places each insured institution into one of three capital groups
and one of three supervisory groups. Currently, deposit insurance
premiums range from 0 to 27 basis points of the institution's total
deposit accounts, depending on the institution's risk classification.
The Bank is currently considered "well capitalized", which is the most
favorable capital group and supervisory subgroup. SAIF-insured
institutions are also assessed a premium to service the interest on
Financing Corporation ("FICO") debt.
REGULATORY CAPITAL REQUIREMENTS
At March 31, 2003, the Bank exceeds all capital requirements
prescribed by the OTS. To calculate these requirements, a thrift must
deduct any investments in and loans to subsidiaries that are engaged in
activities not permissible for a national bank. As of March 31, 2003,
the Bank did not have any investments in or loans to subsidiaries
engaged in activities not permissible for national banks.
The following tables summarize the relationship between the Bank's
capital and regulatory requirements. Dollar amounts are expressed in
thousands.
At March 31, 2003 Amount
----------------------------------------------------------------
GAAP capital (Bank only) $ 109,620
Adjustment for regulatory capital:
Intangible assets (3,320)
Disallowed portion of servicing assets
and deferred tax assets (3,337)
Reverse the effect of SFAS No. 115 (260)
---------
Tangible capital 102,703
Qualifying intangible assets --
---------
Tier 1 capital (core capital) 102,703
Qualifying general valuation allowance 5,670
---------
Risk-based capital $ 108,373
=========
As of March 31, 2003
-------------------------------------------------------------------
Minimum required for Minimum required to be
Actual Capital Adequacy "Well Capitalized"
------------------- ---------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------------- ---------------------- -----------------------
Total capital to risk-weighted assets $ 108,373 12.3% 70,654 >=8% 88,317 >=10%
Core capital to adjusted tangible assets 102,703 9.3% 44,084 >=4% 55,076 >=5%
Tangible capital to tangible assets 102,703 9.3% 16,523 >=1.5% -- --
Tier 1 capital to risk-weighted assets 102,703 11.6% -- -- 52,990 >=6%
16
LOANS TO ONE BORROWER
Institutions are prohibited from lending to any one borrower in
excess of 15% of the Bank's unimpaired capital plus unimpaired surplus,
or 25% of unimpaired capital plus unimpaired surplus if the loan is
secured by certain readily marketable collateral. Renewals that exceed
the loans-to-one-borrower limit are permitted if the original borrower
remains liable and no additional funds are disbursed. As of March 31,
2003, the Bank had no loans that exceeded the loans to one borrower
limit.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity measures the ability to meet deposit withdrawals and
lending commitments. The Bank generates liquidity primarily from the
sale and repayment of loans, retention or newly acquired retail
deposits, and advances from FHLB of Des Moines' credit facility.
Management continues to use FHLB advances as a primary source of short-
term funding. At March 31, 2003, there was $94.7 million available to
the Bank in the form of FHLB advances. The Bank has established
relationships with various brokers, and, as a secondary source of
liquidity, the Bank may purchase brokered deposit accounts. Although
the Bank does not have any brokered deposits at March 31, 2003, it could
purchase up to $200.6 million and remain "well capitalized" as defined
by the OTS.
Fluctuations in the level of interest rates typically impact
prepayments on mortgage loans and MBS. During periods of falling
interest rates, these prepayments increase and a greater demand exists
for new loans. The Bank's customer deposits are partially impacted by
area competition. Management believes that the Bank will retain most of
its maturing time deposits in the foreseeable future. However, any
material funding needs that may arise in the future can be reasonably
satisfied through the use of additional FHLB advances and/or brokered
deposits. Management is not aware of any other current market or
economic conditions that could materially impact the Bank's future
ability to meet obligations as they come due.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a complete discussion of the Company's asset and liability
management policies, as well as the potential impact of interest rate
changes upon the market value of the Company's portfolio, see the
"Asset/Liability Management" section of the Company's Annual Report
for the year ended September 30, 2002.
Management recognizes that there are certain market risk factors
present in the structure of the Bank's financial assets and liabilities.
Since the Bank does not have material amounts of derivative securities,
equity securities, or foreign currency positions, interest rate risk
("IRR") is the primary market risk that is inherent in the Bank's
portfolio. On a quarterly basis, the Bank monitors the estimate of
changes that would potentially occur to its net portfolio value
("NPV") of assets, liabilities, and off-balance sheet items assuming a
sudden change in market interest rates. Management presents a NPV
analysis to the Board of Directors each quarter and NPV policy limits
are reviewed and approved. There have been no material changes in the
market risk information provided in the Annual Report for the year ended
September 30, 2002.
Item 4. Controls and Procedures
An evaluation of the Company's disclosure controls and procedures
was carried out under the supervision and with the participation of the
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO")
within the 90-day period preceding the filing date of this quarterly
report. Based on that evaluation, the CEO and CFO have concluded that
the Company's disclosure controls and procedures are effective in
ensuring that the information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is (i)
accumulated and communicated to management in a timely manner, and (ii)
recorded, processed, summarized, and reported within the time periods
specified by the SEC. Since the date of this evaluation, there have not
been any significant changes in the Company's internal controls or in
other factors that could significantly affect those controls.
17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
During the quarter ended June 30, 2002, a class of plaintiffs filed
a lawsuit against the Bank and eleven other financial institution
defendants in the Circuit Court of St. Louis County, Missouri. The suit
alleged that all the defendants, including the Bank, who had charged
fees to their customers for the preparation of mortgage documents had
engaged in the practice of law without a license. The Bank was
dismissed as a defendant early in this case on the basis that, as a
federally chartered institution, federal law preempts state law with
regard to the action. This case continues with regard to other
defendants and, although the North American was named in the plaintiff's
amended petitions, the Bank was dismissed each time on the basis of
federal preemption. Management believes that the Bank will also prevail
in any subsequent appeal.
There were no other material proceedings pending other than
ordinary and routine litigation incidental to the business of the
Company.
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 stockholder's meeting was held on January 28, 2003. The
following persons were elected to NASB Financial Inc.'s Board of
Directors for three year terms:
Frederick V. Arbanas
W. Russell Welsh
The firm of BKD, LLP was ratified for appointment as independent
auditors for the fiscal year ended September 30, 2003.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
Exhibit 99.1 - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
Exhibit 99.2 - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
(b) Reports of Form 8-K
A report on Form 8-K/A was filed on January 10, 2003, which amended
a report on Form 8-K filed on December 23, 2002, under Item 2, by
stating that no financial statements or pro forma financial information
regarding the merger transaction with CBES Bancorp, Inc. would be
provided due to the fact that the transaction did not result in the
addition of a "significant subsidiary" or "significant business
combination" under 17 CFR 210.1-02(w).
A report on Form 8-K/A was filed on January 10, 2003, which amended
a report on Form 8-K filed on December 23, 2002, under Item 4, by
stating there were no disagreements with Deloitte & Touche, LLP from the
Company's fiscal year end of September 30, 2002, through the subsequent
interim period to December 20, 2002. (On December 20, 2002, the Board
of Directors and the Audit Committee of the Company appointed the firm
of BKD, LLP and dismissed Deloitte & Touche, LLP as the Company's
independent auditors for its fiscal year ended September 30, 2003).
18
S I G N A T U R E S
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.
NASB Financial, Inc.
(Registrant)
May 15, 2003 By: /s/David H. Hancock
David H. Hancock
Chairman and
Chief Executive Officer
May 15, 2003 By: /s/Rhonda Nyhus
Rhonda Nyhus
Vice President and
Treasurer
19
I, David Hancock, Chairman and Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NASB Financial,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statement were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidate subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
20
I, Rhonda Nyhus, Vice President and Treasurer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NASB Financial,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statement were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidate subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
21
19