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 June 30, 2004
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
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
The number of shares of Common Stock of the Registrant outstanding as of
August 11, 2004, was 8,460,442.
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands)
June 30, September 30,
2004 2003
(Unaudited)
---------- -----------
ASSETS
Cash and cash equivalents $ 17,009 24,321
Securities available for sale 244 5,564
Stock in Federal Home Loan Bank, at cost 17,105 15,606
Mortgage-backed securities:
Available for sale, at market value 179,584 4,664
Held to maturity (market value of $691
and $987 at June 30, 2004, and
September 30, 2003, respectively) 656 932
Loans receivable:
Held for sale 233,676 168,292
Held for investment, net 862,149 861,400
Allowance for loan losses (8,029) (7,986)
Accrued interest receivable 5,594 4,707
Foreclosed asset held for sale, net 3,740 4,561
Premises and equipment, net 8,424 7,631
Investment in LLC 6,546 2,272
Mortgage servicing rights, net 997 1,191
Deferred income tax asset 5,925 4,477
Other assets 12,217 9,727
---------- ----------
$ 1,345,837 1,107,359
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Customer deposit accounts $ 648,409 654,688
Brokered deposit accounts 60,085 --
Advances from Federal Home Loan Bank 319,589 308,088
Repurchase agreements 172,200 --
Escrows 6,047 8,300
Income taxes payable 1,923 4,462
Accrued expenses and other liabilities 4,062 4,387
---------- ----------
Total liabilities 1,212,315 979,925
---------- ----------
Stockholders' equity:
Common stock of $0.15 par value:
20,000,000 authorized; 9,854,612 issued
at June 30, 2004, and 9,840,112 issued
at September 30, 2003 1,478 1,476
Serial preferred stock of $1.00 par
value: 7,500,000 shares authorized;
none issued or outstanding -- --
Additional paid-in capital 16,234 16,116
Retained earnings 135,050 126,769
Treasury stock, at cost; 1,396,670 shares
at June 30, 2004 and September 30, 2003 (17,077) (17,077)
Accumulated other comprehensive
income (loss) (2,163) 150
---------- ----------
Total stockholders' equity 133,522 127,434
---------- ----------
$ 1,345,837 1,107,359
========== ==========
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 Nine months ended
June 30, June 30,
---------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Interest on loans $ 16,511 17,863 49,510 53,303
Interest on mortgage-backed securities 1,791 127 4,162 349
Interest and dividends on securities 74 219 370 747
Other interest income 28 48 75 161
--------- --------- --------- ---------
Total interest income 18,404 18,257 54,117 54,560
--------- --------- --------- ---------
Interest on customer and brokered
deposit accounts 3,192 3,715 9,557 10,987
Interest on advances from FHLB 1,348 2,113 3,788 7,577
Interest on repurchase agreements 567 -- 1,189 --
--------- --------- --------- ---------
Total interest expense 5,107 5,828 14,534 18,564
--------- --------- --------- ---------
Net interest income 13,297 12,429 39,583 35,996
Provision for loan losses 265 206 265 266
--------- --------- --------- ---------
Net interest income after provision
for loan losses 13,032 12,223 39,318 35,730
--------- --------- --------- ---------
Other income (expense):
Loan servicing fees, net 341 (329) 380 (1,344)
Impairment recovery (loss) on mortgage
servicing rights (80) 78 (38) 420
Customer service fees and charges 1,921 1,274 4,891 3,794
Recovery (provision for losses) on real
estate owned 134 -- 134 (1,984)
Gain on sale of securities available for sale -- 68 726 249
Gain on sale of loans held for sale 4,189 2,909 8,738 8,782
Other (401) 1,074 1,344 1,576
--------- --------- --------- ---------
Total other income 6,104 5,074 16,175 11,493
--------- --------- --------- ---------
General and administrative expenses:
Compensation and fringe benefits 4,212 2,956 12,020 8,555
Commission-based mortgage banking compensation 1,942 1,211 4,557 3,589
Premises and equipment 787 617 2,227 1,837
Advertising and business promotion 898 205 1,917 700
Federal deposit insurance premiums 25 26 76 78
Other 1,810 1,240 4,834 3,647
--------- --------- --------- ---------
Total general and administrative expenses 9,674 6,255 25,631 18,406
--------- --------- --------- ---------
Income before income tax expense 9,462 11,042 29,862 28,817
Income tax expense 3,450 4,251 11,011 11,092
--------- --------- --------- ---------
Net income $ 6,012 6,791 18,851 17,725
========= ========= ========= =========
Basic earnings per share $ 0.71 0.81 2.23 2.10
========= ========= ========= =========
Diluted earnings per share $ 0.71 0.80 2.23 2.10
========= ========= ========= =========
Weighted average shares outstanding 8,457,942 8,435,535 8,455,230 8,433,872
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 (loss) equity
-----------------------------------------------------------------------
(Dollars in thousands)
Balance at October 1, 2003 $ 1,476 16,116 126,769 (17,077) 150 127,434
Comprehensive income:
Net income -- -- 18,851 -- -- 18,851
Other comprehensive income (loss),
net of tax:
Unrealized loss on securities -- -- -- -- (2,313) (2,313)
available for sale ---------
Total comprehensive income -- -- -- -- -- 16,538
Cash dividends paid -- -- (10,570) -- -- (10,570)
Stock options exercised 2 118 -- -- -- 120
Purchase of common stock for
treasury -- -- -- -- -- --
----------------------------------------------------------------------
Balance at June 30, 2004 $ 1,478 16,234 135,050 (17,077) (2,163) 133,522
======================================================================
See accompanying notes to consolidated financial statements.
3
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
(In thousands, except share data)
Nine months ended
June 30,
----------------------
2004 2003
----------------------
Cash flows from operating activities:
Net income $ 18,851 17,725
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 747 566
Amortization and accretion, net (381) 468
Impairment loss (recovery) on mortgage servicing rights 38 (420)
Net fair value of loan related commitments 251 (826)
Gain on sale of loans receivable held for sale (8,738) (8,782)
Gain on sale of securities available for sale (726) (249)
Provision for loan losses 265 266
Provision for loss (recovery) on real estate owned (134) 1,984
Origination and purchase of loans held for sale (696,726) (515,696)
Sale of loans receivable held for sale 662,915 613,417
Changes in:
Accrued interest receivable (887) 512
Accrued expenses and other liabilities and
income taxes payable (1,784) (41)
----------------------
Net cash provided by (used in) operating activities (26,309) 108,924
Cash flows from investing activities:
Principal repayments of mortgage-backed securities:
Held to maturity 276 417
Available for sale 13,624 2,080
Principal repayments of mortgage loans 348,848 313,979
Principal repayments of other loans receivable 13,645 35,370
Maturity of investment securities available for sale 3 3,514
Loan origination - mortgage loans held for investment (379,496) (482,495)
Loan origination - other loans receivable (5,478) (24,076)
Purchase of mortgage loans held for investment (4,569) (2,293)
Purchase of mortgage-backed securities
available for sale (193,043) --
Purchase of FHLB stock (1,499) (1,735)
Proceeds from sale of securities available for sale 5,369 7,132
Proceeds for sale of real estate owned 5,650 5,676
Purchases of premises and equipment, net of sales (1,540) 58
Investment in LLC (4,274) (2,064)
Net cash acquired in merger -- 16,664
Other (3,898) (1,831)
----------------------
Net cash used in investing activities (206,382) (129,604)
4
NASB FINANCIAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(In thousands, except share data)
Nine months ended
June 30,
----------------------
2004 2003
----------------------
Cash flows from financing activities:
Net increase (decrease) in customer and
brokered deposit accounts 54,211 28,794
Proceeds from advances from FHLB 361,900 309,000
Repayment on advances from FHLB (350,229) (289,218)
Proceeds from repurchase agreements 194,380 --
Repayment on repurchase agreements (22,180) --
Cash dividends paid (10,570) (4,133)
Stock options exercised 120 135
Repurchase of common stock -- (352)
Change in checks outstanding in excess of
bank balances -- (7,764)
Change in escrows (2,253) (1,866)
----------------------
Net cash provided by financing activities 225,379 34,596
----------------------
Net increase (decrease) in cash and cash equivalents (7,312) 13,916
Cash and cash equivalents at beginning of the period 24,321 4,168
----------------------
Cash and cash equivalents at end of period $ 17,009 18,084
======================
Supplemental disclosure of cash flow information:
Cash paid for income taxes (net of refunds) $ 13,550 11,256
Cash paid for interest 14,066 18,585
Supplemental schedule of non-cash investing and financing
activities:
Conversion of loans receivable to real estate owned $ 3,298 4,315
Conversion of real estate owned to loans receivable -- 1,451
Capitalization of mortgage servicing rights 2 99
In connection with the acquisition of CBES Bancorp, Inc. on December 19, 2002,
the Company acquired assets of $109.9 million, assumed liabilities of $94.3 million,
received cash of $32.2 million, and paid cash of $15.6 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 nine months ended June 30, 2004, are not
necessarily indicative of the results that may be expected for the
fiscal year ending September 30, 2004. The consolidated balance sheet
of the Company as of September 30, 2003, 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, however, 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 June 30, 2004, have remained
unchanged from September 30, 2003. These policies relate to 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, 2003.
Certain quarterly amounts for previous periods have been
reclassified to conform to the current quarter's presentation.
(2) 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 Nine months ended
---------------------- ----------------------
6/30/04 6/30/03 6/30/04 6/30/03
---------------------- ----------------------
Net income (in thousands) $ 6,012 6,791 18,851 17,725
Basic weighted average shares outstanding 8,457,942 8,435,535 8,455,230 8,433,872
Effect of stock options 583 11,600 1,180 13,541
---------------------- ----------------------
Dilutive potential common shares 8,458,525 8,447,135 8,456,410 8,447,413
Net income per share:
Basic $ 0.71 0.81 2.23 2.10
Diluted 0.71 0.80 2.23 2.10
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.
6
(3) SECURITIES AVAILABLE FOR SALE
The following table presents a summary of securities available for
sale. Dollar amounts are expressed in thousands.
June 30, 2004
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
Equity securities $ 180 -- -- 180
Municipal securities 64 -- -- 64
-------------------------------------------
Total $ 244 -- -- 244
===========================================
(4) 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.
June 30, 2004
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
Pass-through certificates
guaranteed by GNMA
- fixed rate $ 593 1 -- 594
Pass-through certificates
guaranteed by FNMA
- adjustable rate 28,587 -- 571 28,016
FHLMC participation
certificates
- fixed rate 2,144 -- 82 2,062
- adjustable rate 151,777 -- 2,865 148,912
-------------------------------------------
Total $ 183,101 1 3,518 179,584
===========================================
(5) 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.
June 30, 2004
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
-------------------------------------------
FHLMC participation
certificates:
Balloon maturity and
adjustable rate $ 332 26 -- 358
FNMA pass-through
certificates:
Fixed rate 88 -- -- 88
Balloon maturity and
adjustable rate 119 1 -- 120
Pass-through certificates
guaranteed by GNMA
- fixed rate 93 8 -- 101
Collateralized mortgage
obligation bonds 24 -- -- 24
-------------------------------------------
Total $ 656 35 -- 691
===========================================
7
(6) LOANS RECEIVABLE
Loans receivable are as follows:
June 30,
2004
---------------------
(Dollars in thousands)
LOANS HELD FOR INVESTMENT:
Mortgage loans:
Permanent loans on:
Residential properties $ 174,148
Business properties 434,298
Partially guaranteed by VA or
insured by FHA 15,001
Construction and development 338,375
----------
Total mortgage loans 961,822
Commercial loans 29,798
Installment loans to individuals 22,059
----------
Total loans held for investment 1,013,679
Less:
Undisbursed loan funds (145,977)
Unearned discounts and fees and costs
on loans, net (5,553)
----------
Net loans held for investment $ 862,149
==========
June 30,
2004
---------------------
(Dollars in thousands)
LOANS HELD FOR SALE:
Mortgage loans:
Permanent loans on:
Residential properties $ 276,214
Less:
Undisbursed loan funds (42,804)
Unearned discounts and fees and costs
on loans, net 266
----------
Net loans held for sale $ 233,676
==========
Included in the loans receivable balances at June 30, 2004, are
participating interests in mortgage loans and wholly owned mortgage
loans serviced by other institutions in the approximate amount of
$381,000. Loans and participations serviced for others amounted to
approximately $129.7 million at June 30, 2004.
(7) FORECLOSED ASSETS HELD FOR SALE
Real estate owned and other repossessed property consisted of the
following:
June 30,
2004
---------------------
(Dollars in thousands)
Real estate acquired through (or deed
in lieu of) foreclosure $ 4,838
Less: allowance for losses (1,098)
----------
Total $ 3,740
==========
Foreclosed assets held for sale are initially recorded at fair
value as of the date of foreclosure minus any estimated selling costs
(the "new basis"), and are subsequently carried at the lower of the
new basis or fair value less selling costs on the current measurement
date
8
(8) MORTGAGE SERVICING RIGHTS
The following provides information about the Bank's mortgage
servicing rights for the period ended June 30, 2004. Dollar amounts are
expressed in thousands.
Balance at October 1, 2003 $ 1,191
Additions:
Originated mortgage servicing rights 2
Reductions:
Amortization (158)
Impairment loss (38)
--------
Balance at June 30, 2004 $ 997
========
(9) REPURCHASE AGREEMENTS
During the nine-month period ended June 30, 2004, the Bank sold
various adjustable-rate mortgage-backed securities under agreements to
repurchase. The outstanding balance of such repurchase agreements was
$172.2 million at June 30, 2004. These agreements have a weighted
average rate of 1.29% and a weighted average maturity of 121 days.
(10) SEGMENT INFORMATION
In accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," the Company has identified three
principal operating segments for purposes of financial reporting:
Banking, Local Mortgage Banking, and National 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 National Mortgage Banking segment originates mortgage loans for
sale to investors. The Local 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.
Local National
Three months ended Mortgage Mortgage Other and
June 30, 2004 Banking Banking Banking Eliminations Consolidated
---------------------------------------------------------------------------------------
Net interest income $ 13,276 -- -- 21 13,297
Provision for loan losses 265 -- -- -- 265
Other income 1,862 3,927 2,164 (1,849) 6,104
General and administrative
expenses 4,026 3,746 2,413 (511) 9,674
Income tax expense (benefit) 3,959 66 (91) (484) 3,450
-----------------------------------------------------------
Net income $ 6,888 115 (158) (833) 6,012
===========================================================
Local National
Three months ended Mortgage Mortgage Other and
June 30, 2003 Banking Banking Banking Eliminations Consolidated
---------------------------------------------------------------------------------------
Net interest income $ 12,429 -- -- -- 12,429
Provision for loan losses 206 -- -- -- 206
Other income 3,769 5,597 -- (4,292) 5,074
General and administrative
expenses 3,344 4,158 -- (1,247) 6,255
Income tax expense (benefit) 4,869 554 -- (1,172) 4,251
-----------------------------------------------------------
Net income $ 7,779 885 -- (1,873) 6,791
===========================================================
9
Local National
Nine months ended Mortgage Mortgage Other and
June 30, 2004 Banking Banking Banking Eliminations Consolidated
------------------------------------------------------------------------------------
Net interest income $39,562 -- -- 21 39,583
Provision for loan losses 265 -- -- -- 265
Other income 6,886 9,294 4,831 (4,836) 16,175
General and administrative
expenses 11,323 10,078 5,617 (1,387) 25,631
Income tax expense 12,724 (286) (287) (1,140) 11,011
--------------------------------------------------------
Net income $22,136 (498) (499) (2,288) 18,851
========================================================
Local National
Nine months ended Mortgage Mortgage Other and
June 30, 2003 Banking Banking Banking Eliminations Consolidated
------------------------------------------------------------------------------------
Net interest income $36,028 -- -- (32) 35,996
Provision for loan losses 266 -- -- -- 266
Other income 9,759 15,507 -- (13,773) 11,493
General and administrative
expenses 10,043 11,503 -- (3,140) 18,406
Income tax expense 13,659 1,541 -- (4,108) 11,092
--------------------------------------------------------
Net income $21,819 2,463 -- (6,557) 17,725
========================================================
(11) 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 June 30, 2004, were $1,345.8
million, an increase of $238.5 million from September 30, 2003, the
prior fiscal year end. $193.0 million of this increase was due to the
purchase of mortgage-backed securities which were financed primarily
with repurchase agreements.
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 nine months ended June 30, 2004, the Bank
originated and purchased $696.7 million in mortgage loans held for sale,
$384.1 million in mortgage loans held for investment, and $5.5 million
in other loans. This total of $1,086.3 million in loans originated
compares to $1,024.6 million in loans originated during the nine months
ended June 30, 2003.
Included in the $233.7 million in loans held for sale as of June
30, 2004, are $77.2 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.
6/30/04 9/30/03 6/30/03
-------------------------------------
Asset Classification:
Substandard $ 17,627 15,932 15,146
Doubtful -- -- --
Loss 1,567 2,325 2,093
-------------------------------------
19,194 18,257 17,239
Allowance for losses (9,127) (9,348) (8,994)
-------------------------------------
$ 10,067 8,909 8,245
=====================================
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.
6/30/04 9/30/03 6/30/03
----------------------------------------
Total Assets $ 1,345,837 1,107,359 1,122,791
========================================
Non-accrual loans $ 12,698 6,924 6,858
Troubled debt
restructurings 2,883 3,565 5,344
Net real estate and
other assets acquired
through foreclosure 3,740 4,561 2,098
----------------------------------------
Total $ 19,321 15,050 14,300
========================================
Percent of total assets 1.44% 1.36% 1.27%
========================================
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 nine months ending June 30, 2004, and 2003. Dollar
amounts are expressed in thousands.
2004 2003
-------------------------
Balance at beginning of year $ 7,986 5,865
Provision for loan losses 265 266
Acquired in merger -- 1,309
Recoveries 91 377
Charge-offs (313) (82)
-------------------------
Balance at June 30 $ 8,029 7,735
=========================
LIABILITIES AND EQUITY
Customer and brokered deposit accounts increased $53.8 million
during the nine months ended June 30, 2004. This increase was due
primarily to the purchase of $60.1 million in brokered deposit accounts
during the quarter ended June 30, 2004. The weighted average rate on
customer and brokered deposits as of June 30, 2004, was 1.90%, a
decrease from 2.27% as of June 30, 2003.
Advances from the FHLB were $319.6 million as of June 30, 2004, an
increase of $11.5 million from September 30, 2003. During the nine-
month period, the Bank borrowed $361.9 million of new advances and
repaid $350.2 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.
During the nine months ended June 30, 2004, the Bank financed the
purchase of mortgage-backed securities primarily with repurchase
agreements. A total of $194.4 million of mortgage-backed securities
were sold under agreements to repurchase, and repurchase agreements of
$22.2 million were repaid.
12
Escrows were $6.0 million as of June 30, 2004, a decrease of $2.3
million from September 30, 2003. This decrease is due to amounts paid
for borrowers' taxes during the fourth calendar quarter of 2003.
Total stockholders' equity as of June 30, 2004, was $133.5 million
(9.9% of total assets). This compares to $127.4 million (11.5% of total
assets) at September 30, 2003. On a per share basis, stockholders'
equity was $15.79 on June 30, 2004, compared to $15.09 on September 30,
2003.
The Company paid cash dividends on its common stock of $0.85 on
November 28, 2003, and $0.20 on February 27, 2004, and May 28, 2004.
Subsequent to the quarter ended June 30, 2004, the Company announced a
cash dividend of $0.20 per share to be paid on August 27, 2004, to
stockholders of record as of August 6, 2004.
Total stockholders' equity as of June 30, 2004, includes an
unrealized loss of $2.2 million, 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).
Nine months ended
------------------------
6/30/04 6/30/03
------------------------
Return on assets 2.05% 2.25%
Return on equity 19.26% 20.37%
Equity-to-assets ratio 9.92% 10.91%
Dividend payout ratio 56.07% 23.32%
RESULTS OF OPERATIONS - Comparison of three months and nine months ended
June 30, 2004 and 2003.
For the three months ended June 30, 2004, the Company had net
income of $6,012,000 or $0.71 per share. This compares to net income of
$6,791,000 or $0.81 per share for the quarter ended June 30, 2003.
For the nine months ended June 30, 2004, the Company had net income
of $18,851,000 or $2.23 per share. This compares to net income of
$17,725,000 or $2.10 per share for the nine months ended June 30, 2003.
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 nine months ended June
30, 2004 and 2003. 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
Nine months ended 6/30/04 As of
--------------------------- 6/30/04
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $1,043,557 49,510 6.33% 5.87%
Mortgage-backed securities 141,572 4,162 3.92% 3.85%
Securities 19,602 370 2.52% 1.79%
Bank deposits 17,086 75 0.59% 0.80%
--------------------------------------
Total earning assets 1,221,817 54,117 5.91% 5.46%
---------------------------
Non-earning assets 49,599
----------
Total $1,271,416
==========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 209,176 1,110 0.71% 0.68%
Customer and brokered
certificates of deposit 460,607 8,447 2.45% 2.50%
FHLB Advances 339,659 3,788 1.49% 1.71%
Repurchase agreements 126,222 1,189 1.26% 1.29%
--------------------------------------
Total costing liabilities 1,135,664 14,534 1.71% 1.80%
---------------------------
Non-costing liabilities 6,374
Stockholders' equity 129,378
----------
Total $1,271,416
==========
Net earning balance $ 86,153
==========
Earning yield less costing rate 4.20% 3.66%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $1,221,817 39,583 4.32%
============================
Nine months ended 6/30/03 As of
--------------------------- 6/30/03
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $ 975,358 53,303 7.29% 6.51%
Mortgage-backed securities 7,245 349 6.42% 5.23%
Securities 26,588 747 3.75% 3.45%
Bank deposits 20,195 161 1.06% 0.77%
--------------------------------------
Total earning assets 1,029,386 54,560 7.07% 6.36%
---------------------------
Non-earning assets 32,019
----------
Total $1,061,405
==========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 198,118 1,608 1.08% 0.69%
Customer certificates of
deposit 411,128 9,379 3.04% 3.00%
FHLB Advances 320,022 7,577 3.16% 2.37%
Repurchase agreements -- -- -- --
--------------------------------------
Total costing liabilities 929,268 18,564 2.66% 2.30%
---------------------------
Non-costing liabilities 18,214
Stockholders' equity 113,923
----------
Total $1,061,405
==========
Net earning balance $ 100,118
==========
Earning yield less costing rate 4.41% 4.06%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $1,029,386 35,996 4.66%
============================
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 rates (change in rate
multiplied by the old volume), and (2) changes in volume (change in
volume multiplied by the old rate), 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.
Nine months ended June 30, 2004, compared to
nine months ended June 30, 2003
-----------------------------------------------
Yield/
Yield Volume Volume Total
-----------------------------------------------
Components of interest income:
Loans $ (7,023) 3,729 (499) (3,793)
Mortgage-backed securities (136) 6,468 (2,519) 3,813
Securities (245) (196) 64 (377)
Bank deposits (71) (25) 10 (86)
-----------------------------------------------
Net change in interest income (7,475) 9,976 (2,944) (443)
-----------------------------------------------
Components of interest expense:
Customer and brokered
deposit accounts (2,285) 1,090 (235) (1,430)
FHLB Advances (4,008) 465 (246) (3,789)
Repurchase agreements -- -- 1,189 1,189
-----------------------------------------------
Net change in interest expense (6,293) 1,555 708 (4,030)
-----------------------------------------------
Increase in net interest
margin $ (1,182) 8,421 (3,652) 3,587
===============================================
14
Net interest margin before loan loss provision for the three months
ended June 30, 2004, increased $868,000 from the same period in the
prior year. This resulted from a decrease in total interest expense due
primarily to a decrease in the interest rate paid on interest-costing
liabilities.
Net interest margin before loan loss provision for the nine months
ended June 30, 2004, increased $3.6 million from the same period in the
prior year. Specifically, total interest expense decreased $4.0 million
due to a 95 basis point decrease in the interest rate paid on interest-
costing liabilities. Total interest income decreased $443,000 from the
same period in the prior year. This decrease resulted from a 116 basis
point decrease in the average rate earned on interest-earning assets,
largely offset by a $192.4 million increase in the average balance of
interest-earning assets.
PROVISION FOR LOAN LOSSES
The Company recorded a provision for loan losses of $265,000 during
the quarter ended June 30, 2004, due to an increase in commercial real
estate loans classified as "substandard." 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 47.6% of total classified assets at June 30, 2004, 51.2% at
September 30, 2003, and 52.2% at June 30, 2003.
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 June 30, 2004, increased
$1.0 million from the same period in the prior year. Gain on sale of
loans held for sale increased $1.3 million due to an increase in
mortgage banking volume. Loan servicing fees increased $670,000 due
primarily to a decrease in the amortization of capitalized servicing.
This resulted from decreases in actual prepayments and estimated future
prepayments of the underlying mortgage loans during the quarter.
Customer service fees and charges increased $647,000 due primarily to
fee income earned by the Company's national mortgage banking operation.
These increases were offset by a decrease in other income of $1.5
million due primarily 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."
Other income for the nine months ended June 30, 2004, increased
$4.7 million from the same period in the prior year. Provision for
losses on real estate owned decreased $2.1 million due primarily to a
reserve recorded in the prior year on a hotel property in the Southeast
area of Kansas City, Missouri. This property was sold in April 2003.
Loan servicing fees increased $1.7 million due to a decrease in the
amortization of capitalized servicing. This resulted from decreases in
actual prepayments and estimated future prepayments of the underlying
mortgage loans during the nine-month period. Customer service fees and
charges increased $1.1 million due primarily to fee income earned by the
Company's national mortgage banking operation. Gain on sale of
securities available for sale increased $477,000 due to the sale of
corporate debt securities and the sale of an asset-backed security which
the Company had previously deemed impaired. Other income decreased
$232,000 due primarily 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,"
which was largely offset by an increase in mortgage loan prepayment
penalties and a decrease in expenses on foreclosed assets held for sale.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative expenses for the three months
ended June 30, 2004, increased $3.4 million from the same period in the
prior year. Specifically, compensation, fringe benefits, and
commission-based mortgage banking compensation increased $2.0 million
due primarily to the addition of the national mortgage banking
operation. Advertising increased $693,000, and other expenses increased
$570,000 due primarily due to an increase in data processing and other
charges related to the addition of the national mortgage banking
operation.
15
Total general and administrative expenses for the nine months ended
June 30, 2004, increased $7.2 million from the same period in the prior
year. Specifically, compensation, fringe benefits, and commission-based
mortgage banking compensation increased $4.4 million due primarily to
the addition of the national mortgage banking operation. The number of
full time equivalent employees increased from 325 at June 30, 2003, to
421 at June 30, 2004. Advertising increased $1.2 million, and other
expenses increased $1.2 million due primarily to an increase in data
processing and other charges related to the addition of the national
mortgage banking operation.
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 June 30, 2004, 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 June 30, 2004,
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 June 30, 2004 Amount
----------------------------------------------------------------
GAAP capital (Bank only) $ 124,176
Adjustment for regulatory capital:
Intangible assets (3,196)
Disallowed portion of servicing assets
and deferred tax assets (5,994)
Reverse the effect of SFAS No. 115 2,163
---------
Tangible capital 117,149
Qualifying intangible assets --
---------
Tier 1 capital (core capital) 117,149
Qualifying general valuation allowance 6,462
---------
Risk-based capital $ 123,611
=========
16
As of June 30, 2004
-------------------------------------------------------------------
Minimum required for Minimum required to be
Actual Capital Adequacy "Well Capitalized"
------------------- ---------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------------- ---------------------- -----------------------
Total capital to risk-weighted assets $ 123,611 12.7% 78,040 >=8% 97,550 >=10%
Core capital to adjusted tangible assets 117,149 8.8% 53,295 >=4% 66,618 >=5%
Tangible capital to tangible assets 117,149 8.8% 19,986 >=1.5% -- --
Tier 1 capital to risk-weighted assets 117,149 12.0% -- -- 58,530 >=6%
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. Additionally,
certain exceptions are permitted with prior approval from the OTS which
limit institutions from lending to any one borrower in excess of the
lesser of 30% of the Bank's unimpaired capital or $30 million. As of
June 30, 2004, the Bank has obtained one such exception to the loans to
one borrower limit from the OTS.
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 June 30, 2004, there was $110.3 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 purchases brokered deposit accounts. At June 30,
2004, the Bank has $60.1 million in brokered deposits, and it could
purchase up to $200.5 million in additional brokered deposits 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, 2003.
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, 2003.
17
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.
18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no 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
None.
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 was filed on April 27, 2004, which announced a
quarterly cash dividend of $0.20 per payable on May 28, 2004 to
shareholder's of record as of May 7, 2004.
A report on Form 8-K was filed on May 12, 2004, which announced
financial results for the quarter ended March 31, 2004.
19
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)
August 13, 2004 By: /s/David H. Hancock
David H. Hancock
Chairman and
Chief Executive Officer
August 13, 2004 By: /s/Rhonda Nyhus
Rhonda Nyhus
Vice President and
Treasurer
20
I, David Hancock, Chairman and Chief Executive Officer, certify that:
1. I have reviewed this report on Form 10-Q of NASB Financial, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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
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, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
c) disclosed in this report any changes in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls which are reasonably likely to
adversely affect the registrant's ability to record, process,
summarize and report financial information; 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 over financial reporting.
21
Date: August 13, 2004
I, Rhonda Nyhus, Vice President and Treasurer, certify that:
1. I have reviewed this report on Form 10-Q of NASB Financial, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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
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, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
c) disclosed in this report any changes in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls which are reasonably likely to
adversely affect the registrant's ability to record, process,
summarize and report financial information; 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 over financial reporting.
22
Date: August 13, 2004