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, 2008
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 a large accelerated
filer, an accelerated filer, or non-accelerated filer, or a small
reporting company. See definition of "accelerated filer", "large
accelerated filer" and "small reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer _____ Accelerated filer __X__
Non-accelerated filer _____ Small reporting Company _____
Indicate by check mark whether the Registrant is a shell company (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 5, 2008, was 7,867,614.
NASB FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands)
June 30, September 30,
2008 2007
(Unaudited)
---------- -----------
ASSETS
Cash and cash equivalents $ 34,218 26,050
Securities available for sale, at
fair value 38 42
Stock in Federal Home Loan Bank, at cost 26,195 22,307
Mortgage-backed securities:
Available for sale, at fair value 65,528 80,622
Held to maturity, at cost 169 217
Loans receivable:
Held for sale, at lower of amortized
cost or fair value, net 71,729 47,233
Held for investment, net 1,324,157 1,277,456
Allowance for loan losses (10,626) (8,097)
Accrued interest receivable 6,884 8,398
Foreclosed asset held for sale, net 6,230 6,511
Premises and equipment, net 14,790 15,765
Investment in LLCs 19,994 19,058
Mortgage servicing rights, net 783 911
Deferred income tax asset, net 2,426 1,998
Other assets 8,657 8,012
---------- ----------
$ 1,571,172 1,506,483
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Customer deposit accounts $ 670,549 722,102
Brokered deposit accounts 160,985 133,434
Advances from Federal Home Loan Bank 546,108 458,933
Subordinated debentures 25,774 25,774
Escrows 7,388 9,468
Income taxes payable 799 1,261
Liability for unrecognized tax benefit 850 --
Accrued expenses and other liabilities 5,948 6,119
---------- ----------
Total liabilities 1,418,401 1,357,091
---------- ----------
Stockholders' equity:
Common stock of $0.15 par value:
20,000,000 authorized; 9,857,112
issued at June 30, 2008, and
September 30, 2007 1,479 1,479
Serial preferred stock of $1.00 par
value: 7,500,000 shares authorized;
none issued or outstanding -- --
Additional paid-in capital 16,466 16,400
Retained earnings 173,370 170,613
Treasury stock, at cost; 1,989,498
shares at June 30, 2008, and
at September 30, 2007 (38,418) (38,418)
Accumulated other comprehensive
loss (126) (682)
---------- ----------
Total stockholders' equity 152,771 149,392
---------- ----------
$ 1,571,172 1,506,483
========== ==========
See accompanying notes to condensed consolidated financial statements.
1
NASB FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three months ended Nine months ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Interest on loans receivable $ 22,261 24,706 69,818 74,237
Interest on mortgage-backed securities 648 763 1,962 2,445
Interest and dividends on securities 232 452 824 994
Other interest income 47 133 143 239
--------- --------- --------- ---------
Total interest income 23,188 26,054 72,747 77,915
--------- --------- --------- ---------
Interest on customer and brokered
deposit accounts 7,169 8,534 23,980 24,664
Interest on advances from FHLB 5,866 6,569 18,697 20,445
Interest on subordinated debentures 295 443 1,071 974
Interest on securities sold under
agreements to repurchase -- 72 -- 396
--------- --------- --------- ---------
Total interest expense 13,330 15,618 43,748 46,479
--------- --------- --------- ---------
Net interest income 9,858 10,436 28,999 31,436
Provision for loan losses 1,600 175 3,000 934
--------- --------- --------- ---------
Net interest income after provision
for loan losses 8,258 10,261 25,999 30,502
--------- --------- --------- ---------
Other income (expense):
Loan servicing fees, net 172 138 51 160
Impairment (loss) recovery on mortgage
servicing rights (36) (28) 23 (2)
Customer service fees and charges 1,448 1,582 4,166 4,425
Provision for loss on real estate owned (400) (340) (1,250) (445)
Gain on sale of securities available
for sale -- -- 122 --
Gain on sale of loans held for sale 4,251 4,166 9,956 11,397
Other 1,337 340 1,382 1,229
--------- --------- --------- ---------
Total other income 6,772 5,858 14,450 16,764
--------- --------- --------- ---------
General and administrative expenses:
Compensation and fringe benefits 4,136 4,122 11,748 11,818
Commission-based mortgage banking compensation 2,214 2,075 5,741 5,570
Premises and equipment 1,004 953 3,113 2,713
Advertising and business promotion 1,144 1,220 3,106 3,163
Federal deposit insurance premiums 23 25 70 79
Other 1,387 1,566 3,913 4,196
--------- --------- --------- ---------
Total general and administrative expenses 9,908 9,961 27,691 27,539
--------- --------- --------- ---------
Income before income tax expense 5,122 6,158 12,758 19,727
Income tax expense 1,512 2,372 4,473 7,598
--------- --------- --------- ---------
Net income $ 3,610 3,786 8,285 12,129
========= ========= ========= =========
Basic earnings per share $ 0.46 0.47 1.05 1.48
========= ========= ========= =========
Diluted earnings per share $ 0.45 0.47 1.04 1.47
========= ========= ========= =========
Basic weighted average shares outstanding 7,867,614 7,986,967 7,867,614 8,169,670
See accompanying notes to condensed consolidated financial statements.
2
NASB FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
(In thousands)
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, 2007 $ 1,479 16,400 170,613 (38,418) (682) 149,392
Comprehensive income:
Net income -- -- 8,285 -- -- 8,285
Other comprehensive income (loss),
net of tax:
Unrealized gain on securities -- -- -- -- 556 556
available for sale -------
Total comprehensive income 8,841
Cash dividends paid -- -- (5,311) -- -- (5,311)
Stock based compensation expense -- 66 -- -- -- 66
Adoption of FIN 48 -- -- (217) -- -- (217)
----------------------------------------------------------------------
Balance at June 30, 2008 $ 1,479 16,466 173,370 (38,418) (126) 152,771
======================================================================
See accompanying notes to condensed consolidated financial statements.
3
NASB FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine months ended
June 30,
----------------------
2008 2007
----------------------
Cash flows from operating activities:
Net income $ 8,285 12,129
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,363 863
Amortization and accretion, net (981) (1,340)
Gain on sale of securities available for sale (122) --
Loss from investment in LLCs 119 66
Impairment (recovery) loss on mortgage
servicing rights (23) 2
Gain on sale of loans receivable held for sale (9,956) (11,397)
Provision for loan losses 3,000 934
Provision for loss on real estate owned 1,250 445
Origination of loans receivable held for sale (681,837) (754,225)
Sale of loans receivable held for sale 667,297 748,838
Stock based compensation - stock options 66 55
Changes in:
Net fair value of loan-related commitments (716) (88)
Accrued interest receivable 1,514 105
Accrued expenses and other liabilities and
income taxes payable (1,208) 2,082
----------------------
Net cash used in operating activities (11,949) (1,531)
Cash flows from investing activities:
Principal repayments of mortgage-backed securities:
Held to maturity 48 62
Available for sale 15,747 11,670
Principal repayments of mortgage loans receivable
held for investment 245,873 321,184
Principal repayments of other loans receivable 8,806 7,097
Maturity of investment securities available for sale 4 4
Loan origination - mortgage loans held for investment (298,575) (307,631)
Loan origination - other loans receivable (6,529) (7,273)
Purchase of mortgage loans receivable held
for investment (330) --
Purchase of Federal Home Loan Bank stock (3,888) (578)
Proceeds from sale of securities available for sale 122 --
Proceeds from sale of real estate owned 4,202 5,869
Purchases of premises and equipment, net (388) (3,744)
Investment in LLCs (1,055) (2,148)
Other 426 (1,923)
----------------------
Net cash provided by (used in) investing activities (35,537) 22,589
4
NASB FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine months ended
June 30,
----------------------
2008 2007
----------------------
Cash flows from financing activities:
Net decrease in customer and
brokered deposit accounts (24,305) (1,941)
Proceeds from advances from Federal Home Loan Bank 324,000 278,650
Repayment on advances from Federal Home Loan Bank (236,650) (283,848)
Proceeds from subordinated debentures -- 25,774
Proceeds from the sale of securities
under agreements to repurchase -- 30,900
Repayment of securities sold under
agreements to repurchase -- (30,900)
Cash dividends paid (5,311) (5,552)
Repurchase of common stock for treasury -- (14,407)
Change in escrows (2,080) (1,878)
----------------------
Net cash provided by (used in) financing activities 55,654 (3,202)
----------------------
Net increase in cash and cash equivalents 8,168 17,856
Cash and cash equivalents at beginning of the period 26,050 11,442
----------------------
Cash and cash equivalents at end of period $ 34,218 29,298
======================
Supplemental disclosure of cash flow information:
Cash paid for income taxes (net of refunds) $ 5,078 8,812
Cash paid for interest 45,287 44,249
Supplemental schedule of non-cash investing and financing
activities:
Conversion of loans receivable to real estate owned $ 8,413 12,820
Conversion of real estate owned to loans receivable 2,499 4,461
Capitalization of originated mortgage servicing rights -- 6
See accompanying notes to condensed consolidated financial statements.
5
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed 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, 2008,
are not necessarily indicative of the results that may be expected for
the fiscal year ending September 30, 2008. The condensed consolidated
balance sheet of the Company as of September 30, 2007, 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,
valuation of mortgage servicing rights, and unrecognized tax benefits.
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
condensed consolidated financial statements as of June 30, 2008, have
remained unchanged from September 30, 2007. These policies relate to
the allowance for loan losses and the valuation of 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, 2007.
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
---------------------- ----------------------
6/30/08 6/30/07 6/30/08 6/30/07
---------------------- ----------------------
Net income (in thousands) $ 3,610 3,786 8,285 12,129
Average common shares outstanding 7,867,614 7,986,967 7,867,614 8,169,670
Average common share stock options
outstanding 112,568 63,293 109,257 58,086
---------------------- ----------------------
Average diluted common shares 7,980,182 8,050,260 7,976,871 8,227,756
Earnings per share:
Basic $ 0.46 0.47 1.05 1.48
Diluted 0.45 0.47 1.04 1.47
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) 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, 2008
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
-------------------------------------------
Pass-through certificates
guaranteed by GNMA
- fixed rate $ 138 2 -- 140
Pass-through certificates
guaranteed by FNMA
- adjustable rate 8,910 -- 18 8,892
FHLMC participation
certificates:
- fixed rate 787 -- 41 746
- adjustable rate 55,898 -- 148 55,750
------------------------------------------
Total $ 65,733 2 207 65,528
===========================================
(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.
June 30, 2008
-------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
-------------------------------------------
FHLMC participation
certificates:
Balloon maturity and
adjustable rate $ 77 4 -- 81
FNMA pass-through
certificates:
Fixed rate 41 -- -- 41
Balloon maturity and
adjustable rate 48 -- -- 48
Pass-through certificates
guaranteed by GNMA
- fixed rate 3 -- -- 3
-------------------------------------------
Total $ 169 4 -- 173
===========================================
7
(5) LOANS RECEIVABLE
Loans receivable are as follows:
June 30,
2008
---------------------
(Dollars in thousands)
LOANS HELD FOR INVESTMENT:
Mortgage loans:
Permanent loans on:
Residential properties $ 377,282
Business properties 499,951
Partially guaranteed by VA or
insured by FHA 1,615
Construction and development 424,956
----------
Total mortgage loans 1,303,804
Commercial loans 94,273
Installment loans to individuals 15,271
----------
Total loans held for investment 1,413,348
Less:
Undisbursed loan funds (82,748)
Unearned discounts and fees and costs
on loans, net (6,443)
----------
Net loans held for investment $1,324,157
==========
June 30,
2008
---------------------
(Dollars in thousands)
LOANS HELD FOR SALE:
Mortgage loans:
Permanent loans on:
Residential properties $ 94,972
Installment loans to individuals 335
Less:
Undisbursed loan funds (23,578)
----------
Net loans held for sale $ 71,729
==========
Included in the loans receivable balances at June 30, 2008, are
participating interests in mortgage loans and wholly owned mortgage
loans serviced by other institutions in the amount of $68,000. Loans
and participations serviced for others amounted to approximately $68.6
million at June 30, 2008.
The following table presents the activity in the allowance for
losses on loans for the period ended June 30, 2008. Allowance for
losses on mortgage loans includes specific valuation allowances and
valuation allowances associated with homogenous pools of loans. Dollar
amounts are expressed in thousands.
Balance at October 1, 2007 $ 8,097
Provisions 3,000
Charge-offs (484)
Recoveries 13
--------
Balance at June 30, 2008 $ 10,626
========
8
(6) FORECLOSED ASSETS HELD FOR SALE
Real estate owned and other repossessed property consisted of the
following:
June 30,
2008
---------------------
(Dollars in thousands)
Real estate acquired through (or deed
in lieu of) foreclosure $ 6,577
Less: allowance for losses (347)
----------
Total $ 6,230
==========
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.
(7) MORTGAGE SERVICING RIGHTS
The following provides information about the Bank's mortgage
servicing rights for the period ended June 30, 2008. Dollar amounts are
expressed in thousands.
Balance at October 1, 2007 $ 911
Additions:
Impairment recovery 23
Reductions:
Amortization (151)
--------
Balance at June 30, 2008 $ 783
========
(8) SUBORDINATED DEBENTURES
On December 13, 2006, NASB Financial, Inc. (the "Company"), through
its wholly owned statutory trust, NASB Preferred Trust I (the "Trust"),
issued $25 million of pooled Trust Preferred Securities. The Trust used
the proceeds from the offering to purchase a like amount of NASB
Financial Inc.'s subordinated debentures. The debentures, which have a
variable rate of 1.65% over the 3-month LIBOR and a 30-year term, are
the sole assets of the Trust. In exchange for the capital contributions
made to the Trust by NASB Financial, Inc. upon formation, NASB
Financial. Inc. owns all the common securities of the Trust.
In accordance with Financial Accounting Standards Board
Interpretation No. 46R, Consolidation of Variable Interest Entities (FIN
46R), the Trust qualifies as a special purpose entity that is not
required to be consolidated in the financial statements of the Company.
The $25.0 million Trust Preferred Securities issued by the Trust will
remain on the records of the Trust. The debentures are included in Tier
I capital for regulatory capital purposes.
The Trust Preferred Securities have a variable interest rate of
1.65% over the 3-month LIBOR, and are mandatorily redeemable upon the
30-year term of the debentures, or upon earlier redemption as provided
in the Indenture. The debentures are callable, in whole or in part,
after five years from the issuance date. The Company did not incur a
placement or annual trustee fee related to the issuance. The securities
are subordinate to all other debt of the Company and interest may be
deferred up to five years.
9
(9) INCOME TAXES
Effective October 1, 2007, the Company adopted Financial Accounting
Standards Board Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" (FIN 48). Upon adoption of FIN 48, the Company recognized
a $217,000 increase in the liability for unrecognized tax benefits,
which, as required, was accounted for as a decrease to the October 1,
2007 balance of retained earnings. The resulting amount of unrecognized
tax benefits of $1.3 million included $511,000 of related accrued
interest and penalties.
During the quarter ended June 30, 2008, the statute of limitations
lapsed with regard to the $1.3 million aforementioned unrecognized tax
benefit. As a result, this liability was derecognized during the
period, resulting in a decrease in income tax expense.
Additionally, during the quarter ended June 30, 2008, the Company
recognized an $850,000 liability for unrecognized tax benefits, which
included $149,000 of related interest and penalties. This unrecognized
tax benefit is expected to decrease in the next twelve months as a
result of the settlements with various taxing authorities.
The Company's policy is to recognize interest and penalties related
to unrecognized tax benefits within income tax expense in the
consolidated statements of income.
The Company's federal and state income tax returns for fiscal years
2005 through 2007 remain subject to examination by the Internal Revenue
Service and various state jurisdictions, based on the statute of
limitations.
(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 via
the internet primarily for sale to investors. The Local Mortgage
Banking segment originates mortgage loans for sale to investors and for
the portfolio of the Banking segment. Effective October 1, 2007, the
National Mortgage Banking and Local Mortgage Banking segments were
combined for reporting purposes due to the consolidation of substantial
operating and occupancy resources. 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
June 30, 2008 Banking Banking Eliminations Consolidated
-------------------------------------------------------------------------------
Net interest income $ 10,128 -- (270) 9,858
Provision for loan losses 1,600 -- -- 1,600
Other income 1,247 6,273 (748) 6,772
General and administrative
expenses 4,542 5,522 (156) 9,908
Income tax expense (benefit) 2,015 289 (792) 1,512
---------------------------------------------------
Net income $ 3,218 462 (70) 3,610
===================================================
10
Local National
Three months ended Mortgage Mortgage Other and
June 30, 2007 Banking Banking Banking Eliminations Consolidated
---------------------------------------------------------------------------------------
Net interest income $ 10,862 -- -- (426) 10,436
Provision for loan losses 175 -- -- -- 175
Other income 1,025 1,863 3,543 (573) 5,858
General and administrative
expenses 4,354 2,037 3,627 (57) 9,961
Income tax expense (benefit) 2,833 (67) (32) (362) 2,372
-----------------------------------------------------------
Net income $ 4,525 (107) (52) (580) 3,786
===========================================================
Nine months ended Mortgage Other and
June 30, 2008 Banking Banking Eliminations Consolidated
-------------------------------------------------------------------------------
Net interest income $ 30,009 -- (1,010) 28,999
Provision for loan losses 3,000 -- -- 3,000
Other income 1,560 15,804 (2,914) 14,450
General and administrative
expenses 13,117 15,163 (589) 27,691
Income tax expense (benefit) 5,949 247 (1,723) 4,473
---------------------------------------------------
Net income $ 9,503 394 (1,612) 8,285
===================================================
Local National
Nine months ended Mortgage Mortgage Other and
June 30, 2007 Banking Banking Banking Eliminations Consolidated
---------------------------------------------------------------------------------------
Net interest income $ 32,356 -- -- (920) 31,436
Provision for loan losses 934 -- -- -- 934
Other income 3,260 4,987 9,971 (1,454) 16,764
General and administrative
expenses 12,282 5,476 9,925 (144) 27,539
Income tax expense (benefit) 8,624 (188) 18 (856) 7,598
-----------------------------------------------------------
Net income $ 13,776 (301) 28 (1,374) 12,129
===========================================================
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,
advances from the Federal Home Loan Bank ("FHLB"), and the purchase of
brokered deposit accounts. 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, 2008, were $1,571.2
million, an increase of $64.7 million from September 30, 2007, the prior
fiscal year end.
11
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, 2008, the Bank
originated and purchased $681.8 million in mortgage loans held for sale,
$298.9 million in mortgage loans held for investment, and $6.5 million
in other loans. This total of $987.2 million in loans compares to
$1,069.1 million in loans originated and purchased during the nine
months ended June 30, 2007.
Loans held for sale as of June 30, 2008 were $71.7 million, and
consisted entirely of 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.
6/30/08 9/30/07 6/30/07
-------------------------------------
Asset Classification:
Substandard $ 30,273 11,726 11,301
Doubtful -- -- --
Loss 215 357 427
-------------------------------------
30,488 12,083 11,728
Allowance for losses on
loans and real estate
owned (10,973) (8,301) (8,123)
-------------------------------------
$ 19,515 3,782 3,605
=====================================
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.
6/30/08 9/30/07 6/30/07
----------------------------------------
Total Assets $ 1,571,172 1,506,483 1,535,846
========================================
Non-accrual loans $ 10,936 3,284 2,036
Troubled debt
restructurings -- -- 70
Net real estate and
other assets acquired
through foreclosure 6,230 6,511 7,631
----------------------------------------
Total $ 17,166 9,795 9,737
========================================
Percent of total assets 1.09% 0.65% 0.63%
========================================
12
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.
LIABILITIES AND EQUITY
Customer and brokered deposit accounts decreased $24.0 million
during the nine months ended June 30, 2008. The weighted average rate
on customer and brokered deposits as of June 30, 2008, was 3.51%, a
decrease from 4.22% as of June 30, 2007.
Advances from the FHLB were $546.1 million as of June 30, 2008, an
increase of $87.2 million from September 30, 2007. During the nine-
month period, the Bank borrowed $324.0 million of new advances and
repaid $236.7 million. Management regularly uses FHLB advances as an
alternate funding source to provide operating liquidity and to fund the
origination and purchase of mortgage loans.
Subordinated debentures were $25.8 million as of June 30, 2008.
Such debentures resulted from the issuance of pooled Trust Preferred
Securities through the Company's wholly owned statutory trust, NASB
Preferred Trust I. The Trust used the proceeds from the offering to
purchase a like amount of the Company's subordinated debentures. The
debentures, which have a variable rate of 1.65% over the 3-month LIBOR
and a 30-year term, are the sole assets of the Trust.
Escrows were $7.4 million as of June 30, 2008, a decrease of $2.1
million from September 30, 2007. This decrease is due to amounts paid
for borrowers' taxes during the fourth calendar quarter of 2007.
Total stockholders' equity as of June 30, 2008, was $152.8 million
(9.7% of total assets). This compares to $149.4 million (9.9% of total
assets) at September 30, 2007. On a per share basis, stockholders'
equity was $19.42 on June 30, 2008, compared to $18.99 on September 30,
2007.
The Company paid cash dividends on its common stock of $0.225 per
share on November 30, 2007, February 22, 2008, and May 23, 2008.
Subsequent to the quarter ended June 30, 2008, the Company announced a
cash dividend of $0.225 per share to be paid on August 22, 2008, to
stockholders of record as of August 1, 2008.
Total stockholders' equity as of June 30, 2008, includes an
unrealized loss of $126,000 net of deferred income taxes, on available
for sale securities. This amount is reflected in the line item
"Accumulated other comprehensive loss."
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
------------------------
6/30/08 6/30/07
------------------------
Return on assets 0.72% 1.06%
Return on equity 7.31% 10.58%
Equity-to-assets ratio 9.72% 9.71%
Dividend payout ratio 64.10% 45.78%
RESULTS OF OPERATIONS - Comparison of three and nine months ended June
30, 2008 and 2007.
For the three months ended June 30, 2008, the Company had net
income of $3,610,000 or $0.46 per share. This compares to net income of
$3,786,000 or $0.47 per share for the quarter ended June 30, 2007.
13
For the nine months ended June 30, 2008, the Company had net income
of $8,285,000 or $1.05 per share. This compares to net income of
$12,129,000 or $1.48 per share for the nine months ended June 30, 2007.
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 and brokered 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, 2008 and 2007. 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.
Nine months ended 6/30/08 As of
--------------------------- 6/30/08
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $1,367,604 69,818 6.81% 6.39%
Mortgage-backed securities 74,217 1,962 3.52% 4.14%
Securities 25,923 824 4.23% 4.00%
Bank deposits 8,656 143 2.20% 1.63%
--------------------------------------
Total earning assets 1,476,400 72,747 6.57% 6.22%
---------------------------
Non-earning assets 60,775
----------
Total $1,537,175
==========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 166,160 1,478 1.19% 1.00%
Customer and brokered
certificates of deposit 643,638 22,502 4.66% 4.15%
FHLB Advances 535,499 18,697 4.66% 4.28%
Subordinated debentures 25,000 1,071 5.71% 4.55%
--------------------------------------
Total costing liabilities 1,370,297 43,748 4.26% 3.83%
---------------------------
Non-costing liabilities 16,060
Stockholders' equity 150,818
----------
Total $1,537,175
==========
Net earning balance $ 106,103
==========
Earning yield less costing rate 2.31% 2.39%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $1,476,400 28,999 2.62%
============================
Nine months ended 6/30/07 As of
--------------------------- 6/30/07
Average Yield/ Yield/
Balance Interest Rate Rate
-------------------------------------
Interest-earning assets
Loans $1,342,913 74,237 7.37% 7.25%
Mortgage-backed securities 92,042 2,445 3.54% 4.24%
Securities 25,539 994 5.19% 4.25%
Bank deposits 6,955 239 4.58% 4.74%
--------------------------------------
Total earning assets 1,467,449 77,915 7.08% 7.01%
---------------------------
Non-earning assets 63,379
----------
Total $1,530,828
==========
Interest-costing liabilities
Customer checking and savings
deposit accounts $ 169,806 1,503 1.18% 1.03%
Customer and brokered
certificates of deposit 644,628 23,161 4.79% 5.08%
FHLB Advances 521,642 20,445 5.23% 5.14%
Subordinated debentures 18,500 974 7.01% 7.01%
Repurchase agreements 9,810 396 5.37% --%
--------------------------------------
Total costing liabilities 1,364,386 46,479 4.54% 4.61%
---------------------------
Non-costing liabilities 11,922
Stockholders' equity 154,520
----------
Total $1,530,828
==========
Net earning balance $ 103,063
==========
Earning yield less costing rate 2.54% 2.40%
================
Average interest-earning assets,
net interest, and net yield
spread on average interest-
earning assets $1,467,449 31,436 2.86%
============================
14
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, 2008, compared to
nine months ended June 30, 2007
-----------------------------------------------
Yield/
Yield Volume Volume Total
-----------------------------------------------
Components of interest income:
Loans $ (5,640) 1,365 (144) (4,419)
Mortgage-backed securities (14) (473) 4 (483)
Securities (184) 15 (1) (170)
Bank deposits (124) 58 (30) (96)
-----------------------------------------------
Net change in interest income (5,962) 965 (171) (5,168)
-----------------------------------------------
Components of interest expense:
Customer and brokered
deposit accounts (550) (140) 6 (684)
FHLB Advances (2,230) 544 (62) (1,748)
Subordinated debentures (180) 342 (65) 97
Repurchase agreements -- -- (396) (396)
-----------------------------------------------
Net change in interest expense (2,960) 746 (517) (2,731)
-----------------------------------------------
Decrease in net interest
margin $ (3,002) 219 346 (2,437)
===============================================
Net interest margin before loan loss provision for the three months
ended June 30, 2008, decreased $578,000 from the same period in the
prior year. Specifically, interest income decreased $2.9 million due to
a decrease in the average rate earned on interest-earning assets, which
was partially offset by an increase in the average balance of such
assets. The decrease in interest income was largely offset by a $2.3
million decrease in interest expense, which resulted primarily from
decreases in the average rate paid on interest-costing liabilities.
Net interest margin before loan loss provision for the nine months
ended June 30, 2008, decreased $2.4 million from the same period in the
prior year. Specifically, interest income decreased $5.2 million, which
was partially offset by a $2.7 million decrease in interest expense for
the period. Interest on loans decreased $4.4 million as the result of a
56 basis point decrease in the average yield earned on loans outstanding
during the period. The effect of this decrease was partially offset by
a $24.7 million increase in the average balance of loans receivable.
Interest on mortgage-backed securities decreased $483,000 due primarily
to a $17.8 million decrease in the average balance of such securities.
Interest on investment securities decreased $170,000 due primarily to a
96 basis point decrease in the average yield earned on such securities.
Interest expense on FHLB advances decreased $1.7 million primarily as
the result of a 57 basis point decrease in the average rate paid on such
liabilities. The effect of this decrease was partially offset by a
$13.9 million increase in the average balance of FHLB advances
outstanding. Interest expense on customer and brokered deposit accounts
decreased $684,000 due to a 71 basis point decrease in the average rate
and $4.6 million decrease in the average balance of such interest-
costing liabilities. Interest expense on securities sold under
agreements to repurchase decreased $396,000 due to a $9.8 million
decrease in the average balance of securities sold under agreements to
repurchase.
PROVISION FOR LOAN LOSSES
The Company recorded a provision for loan losses of $1.6 million
during the quarter ended June 30, 2008, due primarily to increases in
residential construction and development loans classified as
substandard. The Company recorded a provision for loan losses of
$700,000 during both the quarter ended December 31,2007 and the quarter
ended March 31, 2008, due to increases in loan charge-offs related to
the residential construction and development loan portfolio and
increases in commercial real estate loans and residential construction
and development 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, the allowance for
losses on loans and real estate owned was 36.0% of total classified
assets at June 30, 2008, 68.7% at September 30, 2007, and 69.3% at June
30, 2007.
15
Management believes that the provisions for loan losses is
adequate. The provision can fluctuate based on changes in economic
conditions, changes in the level of classified assets, changes in the
amount of loan charge-offs and recoveries, or changes in other
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, 2008, increased
$914,000 from the same period in the prior year. Specifically, other
income increased $997,000 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. This was offset by a decrease in customer service
fees and charges of $134,000, which resulted primarily from a decrease
in miscellaneous loan origination fees resulting from the decrease in
mortgage banking volume.
Other income for the nine months ended June 30, 2008, decreased
$2.3 million from the same period in the prior year. Specifically, gain
on sale of loans held for sale decreased $1.4 million due to decreased
mortgage banking volume during the period. Provision for loss on real
estate owned increased $805,000 due to an increase in charge-offs of
foreclosed assets held for sale during the period. Customer service
fees and charges decreased $259,000 due to a decrease in miscellaneous
loan origination fees resulting from the decrease in mortgage banking
volume, and a decrease in appraisal fee income resulting from the
elimination of the Company's internal appraisal department in March
2008. Loan servicing fees decreased $109,000 due primarily to an
increase in capitalized servicing amortization, which resulted from an
increase in actual prepayments and estimated future repayments of the
underlying mortgage loans during the period. These decreases were
partially offset by a $122,000 increase in gain on sale of securities
due to the redemption of Visa, Inc. common stock during their initial
public offering in March 2008. In addition, other income increased
$153,000 due to a $628,000 increase in 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 decreases in income received on
foreclosed assets held for sale, loan prepayment penalties, and official
check processing fee income.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative expenses for the three months
ended June 30, 2008, decreased $53,000 from the same period in the prior
year. Specifically, other expense decreased $179,000 due primarily to
decreases in credit, appraisal, underwriting, and other costs related to
the consolidation of loan origination offices in fiscal 2007. This
decrease was partially offset by a $153,000 increase in compensation,
fringe benefits, and commission-based mortgage banking compensation due
primarily to an increase in mortgage banking spreads for the quarter.
Total general and administrative expenses for the nine months ended
June 30, 2008, increased $152,000 from the same period in the prior
year. Specifically, compensation, fringe benefits, and commission-based
mortgage banking compensation increased $101,000 due primarily to an
increase in mortgage banking spreads for the period. Premises and
equipment expense increased $400,000 due primarily to costs related to a
new loan origination system implemented in fiscal 2007. These increases
were partially offset by a $283,000 decrease in other expense due to
decreases in professional fees and other lending-related costs resulting
from the consolidation of loan origination offices in fiscal 2007 and
from the decrease in mortgage banking volume for the period.
REGULATION
The Bank is a member of the FHLB System and its customers' deposits
are insured by the Deposit Insurance Fund ("DIF") 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 DIF-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.
16
INSURANCE OF ACCOUNTS
The DIF insures the Bank's customer deposit accounts to a maximum
of $100,000 for each insured owner, with the exception of self-directed
retirement accounts, which are insured to a maximum of $250,000.
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 5 to 43 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. DIF-insured institutions are also assessed a premium to
service the interest on Financing Corporation ("FICO") debt.
REGULATORY CAPITAL REQUIREMENTS
At June 30, 2008, 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, 2008,
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, 2008 Amount
----------------------------------------------------------------
GAAP capital (Bank only) $ 155,776
Adjustment for regulatory capital:
Intangible assets (2,796)
Disallowed portion of servicing assets
and deferred tax assets (2,426)
Reverse the effect of SFAS No. 115 126
---------
Tangible capital 150,680
Qualifying intangible assets --
---------
Tier 1 capital (core capital) 150,680
Qualifying general valuation allowance 10,421
---------
Risk-based capital $ 161,101
=========
As of June 30, 2008
-------------------------------------------------------------------
Minimum required for Minimum required to be
Actual Capital Adequacy "Well Capitalized"
------------------- ---------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------------- ---------------------- -----------------------
Total capital to risk-weighted assets $ 161,101 12.5% 103,105 >=8% 128,881 >=10%
Core capital to adjusted tangible assets 150,680 9.8% 61,769 >=4% 77,212 >=5%
Tangible capital to tangible assets 150,680 9.8% 23,163 >=1.5% -- --
Tier 1 capital to risk-weighted assets 150,680 11.7% -- -- 77,329 >=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. The Bank has
received regulatory approval from the OTS under 12 CFR 560.93 to
increase its loans-to-one-borrower limit to $30 million for loans
secured by certain residential housing units. Such loans must not, in
the aggregate, exceed 150% of the Bank's unimpaired capital and surplus.
17
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, 2008, there was $47.6 million available to
the Bank in the form of additional 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, 2008, the Bank has $161.0 million in brokered deposits, and it
could purchase up to $268.9 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, 2007.
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, 2007.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial
officer, we conducted an evaluation of our disclosure controls and
procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934. Based on this
evaluation, our principal executive officer and our principal financial
officer concluded that our disclosure controls and procedures were
effective at the end of the period covered by this quarterly report.
There were no changes in the Company's internal control over financial
reporting during the period covered by this quarterly report on Form 10-
Q that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting.
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
(a) Exhibits
Exhibit 31.1 - Certification of Chief Executive Officer pursuant to
Rules 13a-15(e) and 15d-15(e)
Exhibit 31.2 - Certification of Chief Financial Officer pursuant to
Rules 13a-15(e) and 15d-15(e)
Exhibit 32.1 - Certification of Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 - Certification of Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
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 8, 2008 By: /s/David H. Hancock
David H. Hancock
Chairman and
Chief Executive Officer
August 8, 2008 By: /s/Rhonda Nyhus
Rhonda Nyhus
Vice President and
Treasurer
20
19