Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
For the period ended SEPTEMBER 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)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.15 par value
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.
[X]Yes [ ] No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act).
[ ]Yes [X]No
The aggregate market value of the voting stock held by non-
affiliates of the Registrant, based on the asking price of its Common
Stock on March 31, 2004, was approximately $336.5 million.
As of December 15, 2004, there were issued and outstanding
8,455,442 shares of the Registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
1. Part II - Annual report to Stockholders for the Fiscal Year Ended
September 30, 2004.
2. Part III - Proxy Statement for the 2005 Annual Meeting of
Stockholders.
PART I
ITEM 1. BUSINESS
General Description
NASB Financial, Inc. (the "Company") was formed in 1998 as a
unitary thrift holding company of North American Savings Bank, F.S.B.
("North American" or the "Bank"). The Bank is a federally chartered
stock savings bank, with its headquarters in the Kansas City area.
The Bank began operating in 1927, and became a member of the Federal
Home Loan Bank of Des Moines ("FHLB") in 1940. Its customer deposit
accounts are insured by the Savings Association Insurance Fund
("SAIF"), a division of the Federal Deposit Insurance Corporation
("FDIC"). The Bank converted to a stock form of ownership in
September 1985.
The Bank's primary market area includes the counties of Jackson,
Cass, Clay, Buchanan, Andrew, Platte, and Ray in Missouri, and Johnson
and Wyandotte counties in Kansas. The Bank currently has eight
customer deposit offices in Missouri including one each in Grandview,
Lee's Summit, Independence, Harrisonville, Excelsior Springs, and St.
Joseph, and two in Kansas City. North American also operates loan
production offices in Lee's Summit, St. Louis, St. Charles and
Springfield in Missouri, Overland Parka and Leawood in Kansas, and
Davenport, Iowa. The economy of the Kansas City area is diversified
with major employers in agribusiness, greeting cards, automobile
production, transportation, telecommunications, and government.
The Bank's principal business is to attract deposits from the
general public and to originate real estate loans, other loans and
short-term investments. The Bank obtains funds mainly from deposits
received from the general public, sales of loans and loan
participations, advances from the FHLB, and principal repayments on
loans and mortgage-backed securities ("MBS"). The Bank's primary
sources of income include interest on loans, interest on MBS, customer
service fees, and mortgage banking fees. Its primary expenses are
interest payments on customer deposit accounts and borrowings and
normal operating costs.
WEIGHTED AVERAGE YIELDS AND RATES
The following table presents the balances of interest-earning
assets and interest-costing liabilities with weighted average yields
and rates. Balances and weighted average yields include all accrual
and non-accrual loans. Dollar amounts are expressed in thousands.
Fiscal 2004
----------------------
Average Yield/
Balance Rate
----------------------
Interest-earning assets:
Loans $ 1,058,919 6.30%
Mortgage-backed securities 149,209 3.90%
Investments 19,217 2.40%
Bank deposits 16,282 0.71%
----------------------
Total earning assets 1,243,627 5.88%
Non-earning assets 46,966 ---------
-----------
Total $ 1,290,593
===========
Interest-costing liabilities:
Customer checking and savings
deposit accounts $ 208,935 0.70%
Customer and brokered
certificates of deposit 464,152 2.44%
FHLB advances 345,596 1.60%
Other borrowings 133,954 1.31%
----------------------
Total costing liabilities 1,152,637 1.74%
Non-costing liabilities 6,723 ---------
Stockholders' equity 131,233
-----------
Total $1,290,593
===========
Net earning balance $ 90,990
===========
Earning yield less costing rate 4.14%
=========
Fiscal 2003
----------------------
Average Yield/
Balance Rate
----------------------
Interest-earning assets:
Loans $ 992,780 7.16%
Mortgage-backed securities 7,114 6.17%
Investments 25,483 3.77%
Bank deposits 20,752 0.88%
----------------------
Total earning assets 1,046,129 6.94%
Non-earning assets 31,759 ---------
-----------
Total $1,077,888
===========
Interest-costing liabilities:
Customer checking and savings
deposit accounts $ 200,865 1.00%
Customer certificates of deposit 420,010 2.96%
FHLB advances 323,278 2.84%
Other borrowings -- --
----------------------
Total costing liabilities 944,153 2.50%
Non-costing liabilities 16,986 ---------
Stockholders' equity 116,749
-----------
Total $1,077,888
===========
Net earning balance $ 101,976
===========
Earning yield less costing rate 4.44%
=========
Fiscal 2002
----------------------
Average Yield/
Balance Rate
----------------------
Interest-earning assets:
Loans $ 870,532 8.13%
Mortgage-backed securities 6,552 7.42%
Investments 24,455 4.48%
Bank deposits 22,521 1.52%
----------------------
Total earning assets 924,060 7.86%
Non-earning assets 29,193 ---------
-----------
Total $ 953,253
===========
Interest-costing liabilities:
Customer checking and savings
deposit accounts $ 168,781 1.45%
Customer certificates of deposit 398,936 4.33%
FHLB advances 274,717 4.84%
Other borrowings -- --
----------------------
Total costing liabilities 842,434 3.92%
Non-costing liabilities 10,157 ---------
Stockholders' equity 100,662
-----------
Total $ 953,253
===========
Net earning balance $ 81,626
===========
Earning yield less costing rate 3.94%
=========
1
RATIOS
The following table sets forth, for the periods indicated, the
Company's return on assets (net income divided by average total
assets), return on equity (net income divided by average equity), and
equity-to-assets ratio (average equity divided by average total
assets), and dividend payout ratio (total cash dividends paid divided
by net income).
Year ended September 30,
---------------------------------------
2004 2003 2002 2001 2000
---------------------------------------
Return on average assets 2.04% 2.30% 2.04% 1.67% 1.63%
Return on average equity 18.88% 20.24% 19.40% 18.25% 18.12%
Equity to asset ratio 10.21% 11.51% 11.19% 9.83% 8.50%
Dividend payout ratio 48.74% 23.23% 24.41% 24.87% 22.89%
The following table sets forth the amount of cash dividends per
share paid on the Company's common stock during the months indicated.
Calendar year
-----------------------------------------------
2004 2003 2002 2001 2000
-----------------------------------------------
February $ 0.20 0.17 0.15 0.125 0.10
May 0.20 0.17 0.15 0.125 0.10
August 0.20 0.17 0.15 0.125 0.10
November 1.00 0.85 0.15 0.125 0.10
The dividend paid in November 2004 was made up of a quarterly
dividend of $0.20 per share and a special dividend of $0.80 per share.
ASSET ACTIVITIES
LENDING ACTIVITIES
The Bank, has traditionally concentrated its lending activities
on mortgage loans secured by residential and business property and, to
a lesser extent, development lending. The residential mortgage loans
originated have predominantly long-term fixed and adjustable rates.
The Bank also has a portfolio of mortgage loans that are secured by
multifamily, construction, development, and commercial real estate
properties. The remaining part of North American's loan portfolio
consists of non-mortgage commercial loans and installment loans. The
following table presents the Bank's total loans receivable, held for
investment plus held for sale, for the periods indicated. The related
discounts, premiums, deferred fees and loans-in-process accounts are
excluded. Dollar amounts are expressed in thousands.
As of September 30,
--------------------------------------------------------------------------
2004 2003 2002 2001 2000
Amount Pct. Amount Pct. Amount Pct. Amount Pct. Amount Pct.
------------- ------------ ------------ ------------ ------------
Mortgage loans:
Permanent Loans on:
Residential properties $447,006 34% 371,282 33 355,314 35 387,828 38 468,997 46
Business properties 413,887 31 411,435 36 391,381 38 314,025 31 214,882 21
Partially guaranteed
by VA or insured
by FHA 6,667 1 13,759 1 8,042 1 30,898 3 27,138 3
Construction and
development 378,154 29 280,126 25 207,729 20 217,354 22 246,822 24
------------- ------------- ------------- -------------- ------------
Total mortgage loans 1,245,714 95 1,076,602 95 962,466 94 950,105 94 957,839 94
Commercial loans 40,250 3 28,298 3 15,822 2 10,857 1 7,143 1
Installment loans to
individuals 22,489 2 27,127 2 37,904 4 49,075 5 48,646 5
------------- ------------- ------------- -------------- -------------
$1,308,453 100 1,132,027 100 1,016,192 100 1,010,037 100 1,013,628 100
============= ============= ============= ============== =============
2
The following table sets forth information at September 30, 2004,
regarding the dollar amount of loans maturing in the Bank's portfolio
based on their contractual terms to maturity. Demand loans, which
have no stated schedule of repayment and no stated maturity, are
reported as due in one year or less. Scheduled repayments are
reported in the maturity category in which the payment is due. Dollar
amounts are expressed in thousands.
2006
Through After
2005 2009 2009 Total
------------------------------------------
Mortgage Loans:
Permanent:
- at fixed rate $ 6,843 8,507 216,975 232,325
- at adjustable rates 2,352 1,416 631,467 635,235
Construction and development:
- at fixed rates 15,862 16,130 -- 31,992
- at adjustable rates 285,857 60,305 -- 346,162
-----------------------------------------
Total mortgage loans 310,914 86,358 848,442 1,245,714
Commercial loans 7,038 3,132 30,080 40,250
Installment loans to
Individuals 4,292 3,744 14,453 22,489
------------------------------------------
Total loans receivable $322,244 93,234 892,975 1,308,453
==========================================
RESIDENTIAL REAL ESTATE LOANS
The Bank offers a range of residential loan programs. At
September 30, 2004, 34% of total loans receivable were permanent loans
on residential properties. Also, the Bank is authorized to originate
loans guaranteed by the Veterans Administration ("VA") and loans
insured by the Federal Housing Administration ("FHA"). Included in
residential loans as of September 30, 2004, are $6.7 million or 1% of
the Bank's total loans that were insured by the FHA or VA.
The Bank's residential loans come from several sources. The
loans that the Bank originates are generally a result of direct
solicitations of real estate brokers, builders, developers, or
potential borrowers via the internet. North American periodically
purchases real estate loans from other savings institutions or
mortgage bankers. Loan originations and purchases must be approved by
various levels of management and, depending on the loan amount, are
subject to review by the Board of Directors.
At the time a potential borrower applies for a single family
residential mortgage loan, it is designated as either a portfolio
loan, which is held for investment and carried at amortized cost, or a
loan held-for-sale in the secondary market and carried at the lower of
cost or fair value. All the loans on single family property that the
Bank holds for sale conform to secondary market underwriting criteria
established by the Federal Home Loan Mortgage Corporation ("FHLMC")
and the Federal National Mortgage Association ("FNMA"). All loans
originated, whether held for sale or held for investment, conform to
internal underwriting guidelines, which consider, among other things,
a property's value and the borrower's ability to repay the loan.
CONSTRUCTION AND DEVELOPMENT LOANS
Construction and land development loans are made primarily to
builders/developers, who construct properties for resale. As of
September 30, 2004, 29% of the Bank's total loans receivable were
construction and development loans. The Bank originates both fixed
and variable rate construction loans, and most are due and payable
within one year. In some cases, extensions are permitted if payments
are current and construction has progressed satisfactorily.
3
The Bank's requirements for a construction loan are similar to
those of a mortgage on an existing residence. In addition, the
borrower must submit accurate plans, specifications, and cost
projections of the property to be constructed. North American's staff
performs periodic inspections of each property during construction to
ensure adequate progress is achieved before scheduled loan
disbursements are made.
COMMERCIAL REAL ESTATE LOANS
The Bank purchases and originates several different types of
commercial real estate loans. As of September 30, 2004, commercial
real estate loans on business properties were $413.9 million or 31% of
the Bank's total loan portfolio. Permanent multifamily mortgage loans
on properties of 5 to 36 dwelling units have a 50% risk-weight for
risk-based capital requirements if they have an initial loan-to-value
ratio of not more than 80% and if their annual average occupancy rate
exceeds 80%. All other performing commercial real estate loans have
100% risk-weights.
INSTALLMENT LOANS
As of September 30, 2004, consumer installment loans and lease
financing to individuals represented approximately 2% of loans
receivable. These loans consist primarily of loans on savings
accounts and consumer lines of credit that are secured by a customer's
equity in their primary residence.
SALES OF MORTGAGE LOANS
The Bank is an active seller of loans in the national secondary
mortgage market. A portion of loans originated are sold to various
investors with the rights to service the loans (servicing released).
Another portion are originated for sale with loan servicing rights
kept by the Bank (servicing retained), or with servicing rights sold
to a third party servicer. At the time of each loan commitment,
management decides if the loan will be held in portfolio or sold and,
if sold, which investor is appropriate. During fiscal 2004, the Bank
sold $818.9 million in loans with servicing released.
The Bank records loans held for sale at the lower of cost or
estimated fair value, and any adjustments made to record them at
estimated fair value are made through the income statement. As of
September 30, 2004, the Bank had loans held for sale with a carrying
value of $246.5 million.
CLASSIFIED ASSETS, DELINQUENCIES, AND ALLOWANCE FOR LOSS
Classified Assets. In accordance with the asset classification
system outlined by the Office of Thrift Supervision ("OTS"), North
American's problem assets are classified as either "substandard,"
"doubtful," or "loss."
An asset is considered substandard if it is inadequately
protected by the borrower's ability to repay, or the value of
collateral. Substandard assets include those characterized by a
possibility that the institution will sustain some loss if the
deficiencies are not corrected. Assets classified as doubtful have
the same weaknesses of those classified as substandard with the added
characteristic that the weaknesses present make collection or
liquidation in full, on the basis of currently existing facts,
conditions, and values, highly questionable and improbable. Assets
classified as loss are considered uncollectible and of such little
value that their existence without establishing a specific loss
allowance is not warranted.
When the Bank classifies a problem asset, it establishes a
specific loss allowance needed to reduce its book value to the present
value of the expected future cash flows discounted at the loan's
initial effective interest rate, or as a practical expedient, to the
loan's observable market price or the fair value of the collateral, if
the loan is dependent on collateral. In addition, Allowances for Loan
and Lease Losses ("ALLL") are established by management. ALLL
represent allowances that recognize inherent risks associated with
distinct and homogenous loans pools. When the Bank classifies all or
part of problem assets as loss, it establishes a specific loss
allowance equal to 100% of the loss classification. The OTS reviews
North American's asset classification during each examination and can
require changes to asset classifications, specific loss allowances,
ALLL, and loan loss provision.
Each month, management reviews the problem loans in its portfolio
to determine whether changes to the asset classifications or
allowances are needed. 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.
4
As of September 30,
-----------------------------------------
2004 2003 2002 2001 2000
-----------------------------------------
Asset Classification
Substandard $ 17,462 15,932 14,822 18,780 17,235
Doubtful -- -- -- -- --
Loss 1,861 2,325 1,395 1,851 2,857
-----------------------------------------
Total Classified 19,323 18,257 16,217 20,631 20,092
Allowance for loan/REO
losses (9,315) (9,348) (6,854) (7,035) (8,386)
-----------------------------------------
Net classified assets $ 10,008 8,909 9,363 13,596 11,706
=========================================
Net classified to total
classified assets 52% 49% 58% 66% 58%
=========================================
When a loan becomes 90 days past due, the Bank stops accruing
interest and establishes a reserve for the interest accrued-to-date.
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.
September 30,
---------------------------------------------
2004 2003 2002 2001 2000
---------------------------------------------
Total Assets $ 1,361,888 1,107,359 978,222 972,056 984,525
=============================================
Non-accrual loans $ 15,748 6,924 6,361 6,877 4,447
Troubled debt
restructurings 2,844 3,565 3,337 3,575 8,142
Net real estate and
other assets acquired
through foreclosure 4,014 4,561 4,938 8,043 3,683
---------------------------------------------
Total $ 22,606 15,050 14,636 18,495 16,272
=============================================
Percent of total assets 1.66% 1.36% 1.50% 1.90% 1.65%
=============================================
Delinquencies. The following table summarizes delinquent loan
information.
As of September 30, 2004
----------------------------------------------------------------------
Number of Percent of
Loans delinquent for Loans Amount Total Loans
----------------------------------------------------------------------
30 to 89 days 118 $ 10,867 0.9%
90 or more days 108 15,748 1.3%
----------- -----------------------------
Total 226 $ 26,615 2.2%
=========== =============================
As of September 30, 2003
----------------------------------------------------------------------
Number of Percent of
Loans delinquent for Loans Amount Total Loans
----------------------------------------------------------------------
30 to 89 days 140 $ 14,998 1.4%
90 or more days 121 6,924 0.6%
----------- -----------------------------
Total 261 $ 21,922 2.0%
=========== =============================
The effect of non-performing loans on interest income for fiscal
year 2004 is presented below. Dollar amounts are expressed in
thousands.
Principal amount of non-performing loans
as of September 30, 2004 $ 15,748
========
Gross amount of interest income that would
have been recorded during fiscal 2004 if
these loans had been performing $ 1,560
Actual amount included in interest income for
fiscal 2004 349
--------
Interest income not recognized on non-performing
loans $ 1,211
========
5
Allowance for loss. Management records a provision for estimated
loan losses in an amount sufficient to cover current net charge-offs
and probable losses based on an analysis of risks inherent in the loan
portfolio. Management continually monitors the performance of the
loan portfolio and establishes specific loss allowances when
warranted. Specifically, when it appears that a property and borrower
are no longer capable of full repayment, management establishes a
specific loss allowance to reduce the loan's book value to fair value
based on the anticipated results of collections. In addition,
management establishes ALLL through charges to the provision for loan
loss based on an assessment of the portfolio's credit risk, other than
specifically identified problem loans. Management attempts to
maintain ALLL proportionate to the level of risk in the Bank's
performing loan portfolio.
Management records an Allowance for Loan and Lease Losses
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 ALLL recognizes the
inherent risks associated with lending activities but, unlike a
specific allowance, has not been allocated to particular problem
assets but to a homogenous pool of loans. Management analyzes the
adequacy of the allowance on a monthly basis and believes that the
Bank's specific loss allowances and ALLL are adequate. While
management uses information currently available to determine these
allowances, they can fluctuate based on changes in economic conditions
and changes in the information available to management. Also,
regulatory agencies review the Bank's allowances for loan loss as part
of their examination, and they may require the Bank to recognize
additional loss provisions based on the information available at the
time of their examinations.
Management estimates the required level of ALLL using a formula
based on various subjective and objective factors. ALLL is
established and maintained in the form of a provision on loss charged
to earnings. Based on its analysis, management may determine that
ALLL is above appropriate levels. If so, a negative loss provision
would be recorded to reduce the ALLL. This could occur due to
significant asset recoveries or significant reductions in the level of
classified assets. Each quarter management assesses the risk of the
assets in the loan portfolio using historical loss data and current
economic conditions in order to determine impairment of the various
loan portfolios and adjusts the level of ALLL. At any given time, the
ALLL should be sufficient to absorb at least all estimated credit
losses on outstanding balances over the next twelve months.
When considering the adequacy of ALLL, management's evaluation of
the asset portfolio has two primary components: foreclosure
probability and loss severity. Foreclosure probability is the
likelihood of loans not repaying in accordance with their original
terms, which would result in the foreclosure and subsequent
liquidation of the property. Loss severity is any potential loss
resulting from the loan's foreclosure and subsequent liquidation.
Management calculates estimated foreclosure frequency and loss
severity ratios for each homogenous loan pool based upon historical
data plus an estimate of certain subjective factors including future
market trends and economic conditions. These ratios are applied to
the balances of the homogeneous loan pools to determine the adequacy
of the ALLL each month.
In addition to analyzing homogenous pools of loans for
impairment, management reviews individual loans for impairment each
month. A loan becomes impaired when management believes it will be
unable to collect all principal and interest due according to the
contractual terms of the loan. If a loan is impaired, the Bank
records a specific allowance equal to the excess of the loan's
carrying value over the present value of the estimated future cash
flows discounted at the loan's effective rate based on the loan's
observable market price or the fair value of the collateral if the
loan is collateral dependent. Loans on residential properties with
greater than four units and loans on construction/development and
commercial properties are evaluated for impairment on a loan by loan
basis.
6
The following table sets forth the activity in the allowance for
loan losses. Dollar amounts are expressed in thousands.
September 30,
-----------------------------------------
2004 2003 2002 2001 2000
-----------------------------------------
Balance at beginning of year $ 7,986 5,865 5,835 7,157 6,671
Total provisions 465 538 557 460 600
Recoveries (charge-offs)on:
Residential properties 51 87 (108) 10 (17)
Business properties (273) (92) (291) (1,730) (15)
Construction and development -- 320 (3) 1 (1)
Commercial loans -- -- -- -- --
Installment loans (8) (41) (125) (63) (81)
-----------------------------------------
Total net recoveries
(charge-offs) (230) 274 (527) (1,782) (114)
Acquired in merger -- 1,309 -- -- --
-----------------------------------------
Balance at end of year $ 8,221 7,986 5,865 5,835 7,157
=========================================
The following table sets forth the allocation of the allowance
for loan losses. Dollar amounts are expressed in thousands.
As of September 30,
--------------------------------------------------------------------------
2004 2003 2002 2001 2000
Amount Pct. Amount Pct. Amount Pct. Amount Pct. Amount Pct.
------------- ------------ ------------ ------------ ------------
Residential properties $ 893 11% 1,325 16 1,161 20 1,344 23 1,473 20
Business properties 5,280 64 4,772 60 3,589 61 2,754 47 3,345 47
Construction and
development 1,295 16 965 12 626 11 916 16 1,780 25
Commercial loans 283 3 162 2 59 1 61 1 54 1
Installment loans 470 6 762 10 430 7 760 13 505 7
------------- ------------- ------------- -------------- -------------
$ 8,221 100 7,986 100 5,865 100 5,835 100 7,157 100
============= ============= ============= ============== =============
REAL ESTATE ACQUIRED THROUGH FORECLOSURE
The Bank's staff attempts to contact borrowers who fail to make
scheduled payments, generally after a payment is more than 15 days
past due. In most cases, delinquencies are cured promptly. If a
delinquency exceeds 90 days, North American will implement measures to
remedy the default, such as accepting a voluntary deed for the
property in lieu of foreclosure or commencing a foreclosure action.
If a foreclosure occurs, the property is classified as real estate
owned ("REO") until the property is sold. North American sometimes
finances the sale of foreclosed real estate ("loan to facilitate").
Loans to facilitate may involve a reduced down payment, a reduced
rate, or a longer term than the Bank's typical underwriting standards.
If a loan has a specific loss reserve at the time it is
foreclosed, the specific reserve is netted against the loan balance in
recording the foreclosed loan as REO. Management records a provision
for losses on REO when, subsequent to foreclosure, the estimated net
realizable value of a repossessed asset declines below its book value.
The following table sets forth activity in the allowance for loss on
REO. Dollar amounts are expressed in thousands.
September 30,
---------------------------------------
2004 2003 2002 2001 2000
---------------------------------------
Beginning allowance for loss $ 1,019 646 1,200 1,229 1,289
Provisions (237) 1,984 (236) 140 --
Net recoveries (charge-offs) 311 (1,611) (318) (169) (60)
---------------------------------------
Allowance for loss at year-end $ 1,093 1,019 646 1,200 1,229
=======================================
7
SECURITIES AND MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
Management classifies debt securities as available for sale if
the Bank does not have the intention and ability to hold until
maturity. Assets available for sale are carried at estimated fair
value, with all fair value adjustments recorded as accumulated other
comprehensive income or loss.
MORTGAGE-BACKED SECURITIES HELD TO MATURITY
The Bank's MBS portfolio consists primarily of securities issued
by the FHLMC, FNMA, and GNMA. As of September 30, 2004 the Bank had
$474,000 in fixed rate and $118,000 in balloon and adjustable rate
mortgage-backed securities ("MBS") issued by these agencies. The Bank
also had $22,000 in CMO bonds held to maturity.
INVESTMENT SECURITIES
As of September 30, 2004, the Bank held no investment security
from a single issuer for which the market value exceeded 10% of the
Bank's stockholders' equity.
SOURCE OF FUNDS
In addition to customer deposits, the Bank obtains funds from
loan and MBS repayments, sales of loans held-for-sale and securities
available-for-sale, investment maturities, FHLB advances, and other
borrowings. Loan repayments, as well as the availability of customer
deposits, are influenced significantly by the level of market interest
rates. Borrowings may be used to compensate for insufficient customer
deposits or to support expanded loan and investment activities.
CUSTOMER DEPOSIT AND BROKERED DEPOSIT ACCOUNTS
The following table sets forth the composition of various types
of customer deposit accounts. Dollar amounts are expressed in
thousands.
September 30,
----------------------------------------------------------------------------
2004 2003 2002 2001 2000
------------ ------------ ------------ ------------ ------------
Amount Pct. Amount Pct. Amount Pct. Amount Pct. Amount Pct.
------------ ------------ ------------ ------------ ------------
Type of Account and Rate:
Demand deposit accounts $ 84,016 12 82,880 13 70,919 13 65,885 11 63,010 10
Savings accounts 104,277 15 109,038 17 100,737 18 84,918 15 77,839 13
Money market demand
accounts 16,453 2 16,635 2 9,298 2 6,782 1 6,505 1
Certificates of deposit 448,954 66 446,135 68 368,483 67 418,455 71 474,311 76
Brokered accounts 30,040 5 -- -- -- -- 9,997 2 -- --
------------- ------------ ------------ ------------ -----------
$683,740 100 654,688 100 549,437 100 586,037 100 621,665 100
============= ============ ============ ============ ===========
Weighted average
interest rate 2.02% 2.13% 2.78% 4.55% 5.46%
The following table presents the deposit activities at the Bank.
Dollar amounts are expressed in thousands.
For the years ended September 30,
-------------------------------------------------
2004 2003 2002 2001 2000
-------------------------------------------------
Deposit receipts $ 1,199,330 1,178,584 873,622 908,522 884,054
Withdrawals 1,183,083 1,171,160 930,237 924,111 857,358
-------------------------------------------------
Deposit receipts
and purchases in
excess of (less
than) withdrawals 16,247 7,424 (56,615) (15,589) 26,696
Deposits sold -- -- -- (51,631) --
Deposits acquired in
merger -- 82,750 -- -- --
Interest credited 12,805 15,077 20,015 31,592 29,506
-------------------------------------------------
Net increase
(decrease) $ 29,052 105,251 (36,600) (35,628) 56,202
=================================================
Balance at end
of year $ 683,740 654,688 549,437 586,037 621,665
=================================================
Customers who wish to withdraw certificates of deposit prior to
maturity are subject to a penalty for early withdrawal.
8
The following table presents contractual maturities of
certificate accounts of $100,000 or more at September 30, 2004.
Dollar amounts are expressed in thousands.
Maturing in three months or less $ 14,439
Maturing in three to six months 14,353
Maturing in six to twelve months 11,851
Maturing in over twelve months 24,165
--------
$ 64,808
========
FHLB ADVANCES AND OTHER BORROWINGS
FHLB advances are an important source of borrowing for North
American. The FHLB functions as a central reserve bank providing
credit for thrifts and other member institutions. As a member of the
FHLB, North American is required to own stock in the FHLB of Des
Moines and can apply for advances, collateralized by the stock and
certain types of mortgages, provided that certain standards related
to credit-worthiness are met.
The Bank has historically relied on customer deposits and loan
repayments as its primary sources of funds. Advances are sometimes
used as a funding supplement when management determines that it can
profitably invest the advances over their term. During fiscal 2004,
the Bank borrowed an additional $560.9 million in advances, repaid
$501.4 million, and as of September 30, 2004, had a balance of $367.3
million (30% of total liabilities) of advances from the FHLB.
Other borrowings at September 30, 2004, consist of various
adjustable-rate mortgage-backed securities under agreements to
repurchase. The outstanding balance of such repurchase agreements was
$159.1 million at September 30, 2004. These agreements have a
weighted average rate of 1.45% and a weighted average maturity of 67
days.
The following table presents, for the periods indicated, certain
information as to the Bank's advances from the FHLB and other
borrowings. Dollar amounts are expressed in thousands.
As of September 30,
--------------------------------------------------
2004 2003 2002 2001 2000
--------------------------------------------------
FHLB advances $ 367,341 308,088 295,192 273,471 264,436
Other borrowings 159,100 -- -- -- 100
--------------------------------------------------
Total $ 526,441 308,088 295,192 273,471 264,536
==================================================
Weighted average
rate 1.91% 1.62% 3.73% 5.47% 6.67%
==================================================
OTHER ACTIVITIES
SERVICE CORPORATION ACTIVITIES
The Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA") substantially limits the types of service corporation
activities permissible by the Bank. North American's service
corporation, Nor-Am, was incorporated in 1972. Nor-Am sells tax-
deferred annuities and mutual funds through the Bank's branch offices
and credit life and disability insurance to loan customers.
OTHER INFORMATION
EMPLOYEES
As of September 30, 2004, the Bank and its subsidiaries had 429
employees. Management considers its relations with the employees to
be excellent.
9
The Bank currently maintains a comprehensive employee benefit
program including a qualified pension plan, hospitalization and major
medical insurance, paid vacations, paid sick leave, long-term
disability insurance, life insurance, and reduced loan fees for
employees who qualify. The Bank's employees are not represented by
any collective bargaining group.
COMPETITION
The Bank, like other savings institutions, is operating in a
changing environment. Non-depository financial service companies such
as securities dealers, insurance agencies, and mutual funds have
become competitors for retail savings and investments. In addition to
offering competitive interest rates, a savings institution can attract
customer deposits by offering a variety of services and convenient
office locations and business hours. Mortgage banking/brokerage firms
compete for the residential mortgage business. The primary factors in
competing for loans are interest rates and rate adjustment provisions,
loan maturity, loan fees, and the quality of service to borrowers and
brokers.
REGULATION
GENERAL
Federal savings institutions are members of the FHLB System and
their deposits are insured by the SAIF, a division of the Federal
Deposit Insurance Corporation ("FDIC"). They are subject to extensive
regulation by the OTS as the chartering authority and now, since the
passage of the FIRREA, the FDIC. SAIF insured institutions are
limited in the transactions in which they may engage by statute and
regulation, which in certain instances may require an institution to
conform with regulatory standards or to receive prior approval from
regulators. Institutions must also file periodic reports with these
government 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. If it is
deemed appropriate, the FDIC can require a re-valuation of the Bank's
assets based on examinations and they can require the Bank to
establish specific allowances for loss that reflect any such re-
valuation. This supervision and regulation is intended primarily for
the protection of depositors. Savings institutions are also subject
to certain reserve requirements under Federal Reserve Board
regulations.
The enforcement provisions of the Federal Deposit Insurance Act
("FDI Act") are applicable to savings institutions and savings and
loan holding companies. While the OTS is primarily responsible for
enforcing those provisions, the FDIC also has authority to impose
enforcement action on savings institutions in certain situations. The
jurisdiction of the FDI Act's enforcement powers cover all "insured-
related parties" including stockholders, attorneys, appraisers and
accountants who knowingly or recklessly participate in wrongful action
likely to have an adverse effect on an insured institution.
Regulators have broad flexibility to impose enforcement action on an
institution that fails to comply with its regulatory requirements,
particularly with respect to the capital requirements. Possible
enforcement action ranges from requiring a capital plan, restricting
operations, or terminating deposit insurance. The FDIC can recommend
to the director of the OTS (the "Director") enforcement action, and if
action is not taken by the Director, the FDIC has the authority to
compel such action under certain circumstances.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
("FDICIA")
Key provisions of FDICIA allow the Bank Insurance Fund ("BIF") of
the FDIC to increase its borrowing from the Treasury Department. The
BIF can also borrow up to 90% of the fair market value of its assets
to provide working capital. These borrowed funds will be repaid from
assessments on the banking industry.
The FDICIA required the FDIC to formulate safety and soundness
standards, effective December 31, 1993. The standards address matters
such as underwriting and documentation standards, internal controls
and audit systems, interest rate risk, and compensation and other
employee benefits.
10
FEDERAL HOME LOAN BANKING SYSTEM
The Bank is a member of the FHLB System, which consists of 12
regional Federal Home Loan Banks each subject to OTS supervision and
regulation. The FHLBs provide a central credit facility for member
institutions. The Bank, as a member of the FHLB of Des Moines, is
required to hold shares of capital stock of the FHLB in an amount
equal to at least 1% of the aggregate principal amount of its unpaid
residential mortgage loans, home purchase contracts and similar
obligations at the beginning of each year, or 1/20 of its advances
from the FHLB of Des Moines, whichever is greater. The Bank complies
with this requirement and holds stock in the FHLB of Des Moines at
September 30, 2004, of $17.8 million. FHLB advances must be secured
by specified types of collateral. Also, standards of community
investment and community service must be met by members that apply for
FHLB advances.
LIQUIDITY
Effective July 18, 2001, the OTS adopted a rule that removed the
regulation to maintain a specific average daily balance of liquid
assets, but retained a provision that requires institutions to
maintain sufficient liquidity to ensure their safe and sound
operation. North American maintains a level of liquid assets adequate
to meet the requirements of normal banking activities, including the
repayment of maturing debt and potential deposit withdrawals. The
Bank's primary sources of liquidity are the sale and repayment of
loans, retention or newly acquired retail deposits, and FHLB advances.
Management continues to use FHLB advances as a primary source of
short-term funding. At September 30, 2004, the Bank had available
advances at FHLB of $102.6 million. The Bank has established
relationships with various brokers, and, as a secondary source of
liquidity, the Bank may purchase brokered deposit accounts. At
September 30, 2004, the Bank has $30.0 million in brokered deposits,
and could purchase up to $281.1 million and remain "well capitalized"
as defined by the OTS.
INSURANCE ON CUSTOMER DEPOSIT ACCOUNTS
The SAIF insures the Bank's deposit accounts to a maximum of
$100,000 for each insured member. Deposit 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 subgroups. The capital groups are an objective
measure of risk based on regulatory capital calculations and include
well capitalized, adequately capitalized, and undercapitalized. The
supervisory subgroups (A, B, and C) are more subjective and are
determined by the FDIC based on recent regulatory examinations.
Member institutions are eligible for reclassification every six
months.
Annual deposit insurance premiums range from 0 to 27 basis points
of insured deposits based on where an institution fits on the RRPS.
North American is considered to be "well capitalized" and has been
placed in the most favorable capital subgroup. In addition to deposit
insurance premiums, SAIF-insured institutions are currently assessed a
premium, which is used to service the interest on the Financing
Corporation ("FICO") debt.
The FDIC has authority to conduct examinations of, require
reporting of, and initiate enforcement actions against a thrift.
Regardless of an institution's capital level, insurance of deposits
may be terminated by the FDIC upon a finding that the institution has
engaged in unsafe or unsound practices, is in an unsafe or unsound
condition to continue operations, or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC or the OTS.
REGULATORY CAPITAL REQUIREMENTS
Regulations require that thrifts maintain minimum levels of
regulatory capital, which are at least as stringent as those imposed
on national banks by the Office of the Comptroller of the Currency
("OCC").
Leverage Limit. The leverage limit requires that a thrift
maintain "core capital" of at least 4% of its adjusted tangible
assets. "Core capital" includes (i) common stockholders' equity,
including retained earnings; non-cumulative preferred stock and
related earnings; and minority interest in the equity accounts of
consolidated subsidiaries, minus (ii) those intangibles (including
goodwill) and investments in and loans to subsidiaries not permitted
in computing capital for national banks, plus (iii) certain purchased
mortgage servicing rights and certain qualifying supervisory goodwill.
At September 30, 2004, intangible assets of $3.2 million and servicing
rights and deferred tax assets totaling an additional $5.4 million
were deducted from the Bank's regulatory capital. At September 30,
2004, the Bank's core capital ratio was 9.0%.
11
Tangible Capital Requirement. The tangible capital requirement
mandates that a thrift maintain tangible capital of at least 1.5% of
tangible assets. For the purposes of this requirement, adjusted total
assets are generally calculated on the same basis as for the leverage
ratio requirement. Tangible capital is defined in the same manner as
core capital, except that all goodwill and certain other intangible
assets must be deducted. As of September 30, 2004, North American's
regulatory tangible capital was 9.0% of tangible assets.
Risk-Based Capital Requirement. The OTS's standards require that
institutions maintain risk-based capital equal to at least 8% of risk-
weighted assets. Total risk-based capital includes core capital plus
supplementary capital. In determining risk-weighted assets, all
assets including certain off-balance-sheet items are multiplied by a
risk weight factor from 0% to 100%, based on risk categories assigned
by the OTS. The RRPS categorizes bank risk-based capital ratio over
10% as well capitalized, 8% to 10% as adequately capitalized, and
under 8% as undercapitalized. As of September 30, 2004, the Bank's
current risk-based regulatory capital was 12.1% of risk-weighted
assets.
OTS ASSESSMENTS
The OTS has a sliding scale assessment formula to provide funding
for its operations. Troubled savings associations are charged a
"premium assessment" at a rate of 50% higher than non-troubled savings
associations at the same level of assets. Non-troubled institutions
are charged "general assessments." The changes in assessment fees
reflect the increased supervisory attention that troubled institutions
require from the OTS, which in turn increases the cost of regulation
and examinations.
EQUITY RISK INVESTMENTS
OTS regulations limit the aggregate amount that an insured
institution may invest in real estate, service corporations, equity
securities, and nonresidential construction loans and loans with loan-
to-value ratios greater than 80%. Under the regulations, savings
associations which meet their minimum regulatory capital requirements
and have tangible capital of less than 6% of total liabilities may
make aggregate equity risk investments equal to the greater of 3% of
assets or two and one-half times their tangible capital. Savings
associations that meet their minimum regulatory capital requirements
and have tangible capital equal to or greater than 6% of total
liabilities may make aggregate equity risk investments of up to three
times their tangible capital.
LOANS TO ONE BORROWER
FIRREA prohibits an institution from investing in any one real
estate project in an amount in excess of the applicable loans-to-one-
borrower limit, which is an amount equal to 15% of unimpaired capital
on an unsecured basis and an additional amount equal to 10% of
unimpaired capital and surplus if the loan is secured by certain
readily marketable collateral. Renewals that exceed the loans-to-one-
borrower limit are permissible if the original borrower remains liable
for the debt and no additional funds are disbursed. As of September
30, 2004, North American had no loans that exceeded its loans-to-one-
borrower limit. 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 September 30, 2004, the Bank
has obtained one such exception to the loans to one borrower limit
from the OTS.
INVESTMENT IN SUBSIDIARIES
Investments in and extensions of credit to subsidiaries not
engaged in activities permissible for national banks must generally be
deducted from capital. As of September 30, 2004, the Bank did not
have any investments in or advances to subsidiaries engaged in
activities not permissible for national banks.
FEDERAL RESERVE SYSTEM
Regulations require that institutions maintain reserves of 3%
against transaction accounts up to a specified level and an initial
reserve of 10% against that portion of total transaction accounts in
excess of such amount. In addition, an initial reserve of 3% must be
maintained on non-personal time deposits, which include borrowings
with maturities of less than four years. Such reserves are non-
interest bearing. These percentages are subject to change by the
Federal Reserve Board. As of September 30, 2004, North American met
its reserve requirements.
Savings institutions have authority to borrow from the Federal
Reserve Bank's "discount window," but only after exhausting all FHLB
sources of borrowing.
12
TAXATION
The Company is subject to the general applicable corporate tax
provisions of the Internal Revenue Code ("Code") and the Bank is
subject to certain additional provisions of the Code which apply to
savings institutions and other types of financial institutions.
BAD DEBT RESERVES
Prior to October 1, 1996, the Bank was allowed a special bad debt
deduction for additions to tax bad debt reserves established for the
purpose of absorbing losses. This deduction was either based on an
institution's actual loss experience (the "experience method") or,
subject to certain tests relating to the composition of assets, based
on a percentage of taxable income ("percentage method"). Under the
percentage method, qualifying institutions generally deducted 8% of
their taxable income.
As a result of changes in the Federal tax code, the Bank's bad
debt deduction for the year ended September 30, 2004 and 2003, was
based on actual experience as the percentage method for additions to
the tax bad debt reserve has been eliminated. Under current tax
rules, thrift institutions are required to recapture their accumulated
tax bad debt reserve, except for the portion that was established
prior to 1988, the "base-year". The recapture was completed over a
six-year phase-in period. The phase-in period was delayed for two
years for institutions who met certain residential lending
requirements. As of September 30, 2004, North American had
approximately $3.7 million established as a tax bad debt reserve in
the base-year, and zero tax bad debt reserve after the base year.
Distributing the Bank's capital in the form of purchasing treasury
stock forced North American to recapture its after base-year bad debt
reserve prior to the phase-in period. Management believes that
accelerating the recapture was more than offset by the opportunity to
buy treasury stock at lower average market prices.
MINIMUM TAX
For taxable years beginning after December 31, 1986, the
alternative minimum tax rate is 20%. The alternative minimum tax
generally applies to a base of regular taxable income plus certain tax
preferences and is payable to the extent such preferences exceed an
exemption amount.
STATE TAXATION
The Bank is subject to a special financial institution state tax
based on approximately 7% of net income. This tax is in lieu of all
other taxes on thrift institutions except taxes on real estate,
tangible personal property owned by the Bank, contributions paid to
the State unemployment insurance fund, and sales/use taxes.
13
ITEM 2. PROPERTIES
North American's main office is located at 12498 South 71
Highway, Grandview, Missouri. In addition to its main office, the
Bank has eight branch offices, seven loan origination offices, one
internet loan origination office, and one customer service office.
Net book value of premises owned and leasehold improvement (net of
accumulated depreciation) at September 30, 2004, was approximately
$5.9 million.
Date Owned/ Lease
Location Occupied Leased Expiration
----------------------------------------------------------------------
12498 South 71 Highway
Grandview, Missouri 1972 Owned
646 N, 291 Highway
Lees Summit, Missouri 1992 Owned
8501 North Oak Trafficway
Kansas City, Missouri 1994 Owned
920 North Belt
St. Joseph, Missouri 1979 Owned
2002 E Mechanic
Harrisonville, Missouri 1975 Owned
11400 E 23rd St.
Independence, Missouri 2000 Owned
7012 NW Barry Road
Kansas City, Missouri 2001 Owned
1001 N Jesse James Road
Excelsior Springs, Missouri 2002 Owned
12125-D Blue Ridge Extension
Grandview, Missouri 1990 Leased January 2007
949 NE Columbus
Lee's Summit, Missouri 1993 Leased November 2007
12900 Metcalf - Suite 140
Overland Park, Kansas 1996 Leased December 2004
12800 Corporate Hill Drive
St. Louis, Missouri 2000 Leased April 2005
14
1014 Country Club Road
St. Charles, Missouri 1997 Leased December 2006
One Hallbrook Place, Suite 225
Leawood, Kansas 2002 Leased April 2007
3322 South Campbell - Suite W
Springfield, Missouri 1993 Leased August 2005
5177 Utica Ridge Road
Davenport, Iowa 2003 Leased March 2009
11225 College Boulevard, Suite 400 2003 Leased June 2005
Overland Park, Kansas
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal actions that arose in
the normal course of business. There are no legal proceedings to
which the Company or its subsidiaries is a party that would have a
material impact on its consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information appearing on page 44 through 45 of the 2004
Annual Report to Stockholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing on page 3 of the 2004 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information appearing on pages 4 through 12 in the 2004
Annual Report to Stockholders is incorporated herein by reference.
ITEM 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing on pages 9 through 10 in the 2004
Annual Report to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information appearing on pages 13 through 40 of the 2004
Annual Report to Stockholders is incorporated herein by reference.
See Item 15 below for a list of the financial statements and notes so
incorporated.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCE DISCLOSURE
None.
15
ITEM 9a. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. The
undersigned, principal executive officer and principal financial
officer of NASB Financial, Inc. conclude that the disclosure controls
and procedures of NASB Financial, Inc. are effective based on their
evaluation of these controls and procedures as of a date within 90
days of the filing date of this report.
Changes in Internal Controls. There have been no significant
changes in the internal controls of NASB Financial, Inc. or in other
factors that could significantly affect these controls subsequent to
the date of the evaluation of these controls by the undersigned
principal executive officer and principal financial officer of NASB
Financial, Inc.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing on pages 2 through 10 of the Company's
Proxy Statement for the 2005 Annual Meeting and information appearing
on pages 42 and 43 of the 2004 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing on pages 6 through 10 of the Company's
Proxy Statement for the 2005 Annual Meeting is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information appearing on page 2 through 4 of the Company's
Proxy Statement for the 2005 Annual Meeting is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing on page 9 of the Company's Proxy
Statement for the 2005 Annual Meeting s incorporated herein by
reference.
ITEM 14. PRINCIPAL ACCOUTING FEES AND SERVICES
BKD, LLP billed the Company a total of $92,100 for
professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended September
30, 2004, and the reviews of financial statements included in
the Company's quarterly reports on Forms 10-Q. For fiscal year
ended September 30, 2003, BKD, LLP billed the Company a total
of $74,500 for professional services rendered in connection
with the audit of annual financial statements and reviews of
quarterly reports.
For the fiscal year ended September 30, 2004, BKD, LLP billed the
Company a total of $4,830 for professional services rendered for the
preparation of income tax returns, tax compliance, tax advice, and tax
planning. Tax related services during the year ended September 30,
2003, which were provided by Deloitte & Touche, totaled $8,775.
There were no fees billed by BKD, LLP for financial
information systems design or implementation fees during the
Company's fiscal years ended September 30, 2004 or 2003.
BKD, LLP billed the Company a total of $6,300 and $10,435
for all other fees for the fiscal years ended September 30,
2004 and 2003, respectively. Such other fees consisted of
services related to the audit of the Bank's retirement plan
and, in fiscal 2003, a review of the Company's acquisition of
CBES Bancorp, Inc.
The Audit Committee considered whether the provision of non-audit
services (which relate to audit of the Bank's retirement plan and to
preparation and review of tax returns) is compatible with maintaining
BKD's independence. The Audit Committee concluded that performance of
such services did not affect the independence of BKD, LLP in
performing its function as auditor of the Company. All services
provided to the Company by BKD, LLP, both audit and non-audit, are
approved by the Audit Committee.
16
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements
The following consolidated financial statements of NASB
Financial, Inc. and the independent auditor's report thereon which
appear in the Company's 2004 Annual report to Stockholders ("Annual
Report") have been incorporated herein by reference to Item 8.
Consolidated Balance Sheets at September 30, 2004, and 2003
(Annual Report - Page 13).
Consolidated Statements of Income for the years ended September
30, 2004, 2003, and 2002 (Annual Report - Page 13).
Consolidated Statements of Cash Flows for the years ended
September 30, 2004, 2003, and 2002 (Annual Report - Pages 15 and 16).
Consolidated Statements of Stockholders' Equity for the years
ended September 30, 2004, 2003, and 2002 (Annual Report - Page 17).
Notes to Consolidated Financial Statements (Annual Report - Pages
18 through 40).
Independent Accountants' Report (Annual Report - Page 41).
(2) Financial Statement Schedules.
Schedules are provided in the Consolidated Financial Statements.
17
(3) EXHIBITS.
Exhibit
Number
---------
2) Agreement and Plan of Merger by and among North American Savings
Bank, F.S.B., NASB Interim Savings Bank, F.S.B., and NASB
Financial, Inc. Exhibit 2 to Form 8-K, dated April 15, 1998, and
incorporated herein by reference.
3) Federal Stock Savings Bank Charter and Bylaws. Exhibit 3 to Form
10-K for fiscal year ended September 30, 1992, dated December 27,
1992, and incorporated herein by reference.
3.1) Articles of Incorporation of NASB Financial, Inc. Exhibit 3.1 to
Form 8-K, dated April 15, 1998, and incorporated herein by
reference.
3.2) Bylaws of NASB Financial, Inc. Exhibit 3.2 to Form 8-K, dated
April 15, 1998, and incorporated herein by reference.
10.1)Employees' Stock Option Plan and specimen copy of Option
Agreement entered into between the Company and the Plan
participants. (Exhibit 10.4 to Form 10-K for fiscal year ended
September 30, 1986, dated December 26, 1986, and incorporated
herein by reference.)
10.2)Amended and Restated Retirement Income Plan for Employees of
North American Savings Bank dated September 30, 1988, dated
December 20, 1988, and incorporated herein by reference).
10.3)NASB Financial, Inc. Equity Incentive Compensation Plan
dated adopted on October 28, 2003. (Exhibit B to the Company's
Proxy Statement for the 2004 Annual Meeting and incorporated
herein by Reference.)
*13) 2004 Annual Report to Stockholders.
22) Subsidiaries of the Registrant at September 30, 2004, listed on
page 1.
23) Proxy Statement of NASB Financial, Inc. for the 2005 Annual
Meeting of Stockholders filed with the SEC (certain portions of
such proxy Statement are incorporated herein by reference to page
numbers in the text of this report on Form 10-K).
*99.1) Statement under Oath of Chief Executive Officer
*99.2) Statement under Oath of Chief Financial Officer
* Filed Herewith
(b) Reports of Form 8-K.
A report on Form 8-K was filed on October 28, 2003, which
announced a cash dividend of $0.68 per share payable on November
28, 2003 to shareholder's of record as of November 7, 2003.
A report on Form 8-K was filed on December 18, 2003, which
announced financial results for the quarter ended September 30,
2003.
18
A report on Form 8-K was filed on January 27, 2004, which
announced a cash dividend of $0.20 per share payable on February
27, 2004 to shareholder's of record as of February 6, 2004.
A report on Form 8-K was filed on February 11, 2004, which
announced financial results for the quarter ended December 31,
2003.
A report on Form 8-K was filed on April 27, 2004, which
announced a cash dividend of $0.20 per share 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.
A report on Form 8-K was filed on July 22, 2004, which
announced a cash dividend of $0.20 per share payable on August
27, 2004 to shareholder's of record as of August 6, 2004.
A report on Form 8-K was filed on August 11, 2004, which
announced financial results for the quarter ended June 30, 2004.
19
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) 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.
By: /s/ David H. Hancock
David H. Hancock
Chairman
Date: December 29, 2004
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on December 30, 2003, by the
following persons on behalf of the Registrant and in the capacities
indicated.
Signature Title
/s/ David H. Hancock Chairman (Chief Executive
David H. Hancock Officer)
/s/ Rhonda Nyhus Chief Financial Officer
Rhonda Nyhus (Principal Accounting
Officer)
/s/ Keith B. Cox Director
Keith B. Cox
/s/ Frederick V. Arbanas Director
Frederick V. Arbanas
/s/ A. Ray Cecrle Director
A Ray Cecrle
/s/ Barrett Brady Director
Barrett Brady
/s/ Linda S. Hancock Director
Linda S. Hancock
/s/ W. Russell Welsh Director
W. Russell Welsh
20
I, David Hancock, Chairman and Chief Executive Officer, certify that:
1. I have reviewed this report on Form 10-K 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.
Date: December 29, 2004 By: /s/David H. Hancock
David H. Hancock
Chairman and
Chief Executive Officer
21
I, Rhonda Nyhus, Vice President and Treasurer, certify that:
1. I have reviewed this report on Form 10-K 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.
Date: December 29, 2004 By: /s/ Rhonda Nyhus
Rhonda Nyhus
Vice President and Treasurer
22