-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ntqxl/nQYzGMEKdTOx21xKacu0w54/MwxRxXC3szGa8ynhpVXr6TEWpdHyzT8f77 Zt3xY2BtADP8/xGGDTmszA== 0001059131-06-000007.txt : 20060209 0001059131-06-000007.hdr.sgml : 20060209 20060209115521 ACCESSION NUMBER: 0001059131-06-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060209 DATE AS OF CHANGE: 20060209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASB FINANCIAL INC CENTRAL INDEX KEY: 0001059131 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 431805201 STATE OF INCORPORATION: MO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24033 FILM NUMBER: 06591573 BUSINESS ADDRESS: STREET 1: 12498 SOUTH 71 HIGHWAY CITY: GRANDVIEW STATE: MO ZIP: 64030 BUSINESS PHONE: 8167652200 MAIL ADDRESS: STREET 1: 12498 SOUTH 71 HIGHWAY CITY: GRANDVIEW STATE: MO ZIP: 64030 10-Q 1 form10q.txt FORM 10-Q 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 December 31, 2005 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 a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer X Non-accelerated filer 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 February 6, 2006, was 8,417,442. NASB FINANCIAL, INC. AND SUBSIDIARY Consolidated Balance Sheets (In thousands)
December 31, September 30, 2005 2005 (Unaudited) ---------- ----------- ASSETS Cash and cash equivalents $ 38,437 35,334 Securities available for sale 237 237 Stock in Federal Home Loan Bank, at cost 23,411 22,390 Mortgage-backed securities: Available for sale, at fair value 119,802 129,302 Held to maturity (fair value of $410 and $447 at December 31, 2005, and September 30, 2005, respectively) 396 431 Loans receivable: Held for sale 47,250 94,130 Held for investment, net 1,278,548 1,234,050 Allowance for loan losses (7,312) (7,536) Accrued interest receivable 7,427 6,997 Foreclosed asset held for sale, net 8,410 7,760 Premises and equipment, net 11,058 10,558 Investment in LLC 14,559 12,206 Mortgage servicing rights, net 901 911 Deferred income tax asset 2,642 2,671 Other assets 7,120 6,903 ---------- ---------- $ 1,552,886 1,556,344 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Customer deposit accounts $ 721,374 707,892 Brokered deposit accounts 126,731 94,802 Advances from Federal Home Loan Bank 488,771 465,907 Securities sold under agreements to repurchase 52,500 122,000 Escrows 3,594 9,423 Income taxes payable 3,430 796 Accrued expenses and other liabilities 6,908 6,637 ---------- ---------- Total liabilities 1,403,308 1,407,457 ---------- ---------- Stockholders' equity: Common stock of $0.15 par value: 20,000,000 authorized; 9,857,112 issued at December 31, 2005, and September 30, 2005 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 16,256 16,256 Retained earnings 152,744 151,331 Treasury stock, at cost; 1,439,670 shares and 1,419,670 shares at December 31, 2005, and September 30, 2005, respectively (18,721) (17,952) Accumulated other comprehensive loss (2,180) (2,227) ---------- ---------- Total stockholders' equity 149,578 148,887 ---------- ---------- $ 1,552,886 1,556,344 ========== ==========
See accompanying notes to consolidated financial statements. 1 NASB FINANCIAL, INC. AND SUBSIDIARY Consolidated Statements of Income (Unaudited) (In thousands, except share data)
Three months ended December 31, ---------------------- 2005 2004 --------- --------- Interest on loans $ 22,434 17,683 Interest on mortgage-backed securities 1,160 1,575 Interest and dividends on securities 277 134 Other interest income 121 46 --------- --------- Total interest income 23,992 19,438 --------- --------- Interest on customer and brokered deposit accounts 6,367 3,330 Interest on advances from FHLB 4,759 2,145 Interest on securities sold under agreements to repurchase 606 731 --------- --------- Total interest expense 11,732 6,206 --------- --------- Net interest income 12,260 13,232 Provision for loan losses 65 167 --------- --------- Net interest income after provision for loan losses 12,195 13,065 --------- --------- Other income (expense): Loan servicing fees, net 30 12 Impairment recovery on mortgage servicing rights 1 19 Customer service fees and charges 1,676 1,621 Recovery on real estate owned -- 681 Gain on sale of loans held for sale 3,852 3,654 Other 282 517 --------- --------- Total other income 5,841 6,504 --------- --------- General and administrative expenses: Compensation and fringe benefits 4,492 4,193 Commission-based mortgage banking compensation 1,871 1,529 Premises and equipment 874 793 Advertising and business promotion 1,108 845 Federal deposit insurance premiums 26 26 Other 1,526 1,287 --------- --------- Total general and administrative expenses 9,897 8,673 --------- --------- Income before income tax expense 8,139 10,896 Income tax expense 2,930 3,977 --------- --------- Net income $ 5,209 6,919 ========= ========= Basic earnings per share $ 0.62 0.82 ========= ========= Diluted earnings per share $ 0.61 0.82 ========= ========= Basic weighted average shares outstanding 8,434,562 8,455,442
See accompanying notes to consolidated financial statements. 2 NASB FINANCIAL, INC. AND SUBSIDIARY Consolidated Statements of Stockholders' Equity (Unaudited) (In thousands, except share data)
Accumulated Additional other Total Common paid-in Retained Treasury comprehensive stockholders stock capital earnings stock income (loss) equity ----------------------------------------------------------------------- (Dollars in thousands) Balance at October 1, 2005 $ 1,479 16,256 151,331 (17,952) (2,227) 148,887 Comprehensive income: Net income -- -- 5,209 -- -- 5,209 Other comprehensive income (loss), net of tax: Unrealized loss on securities -- -- -- -- 47 47 available for sale ------- Total comprehensive income -- -- -- -- -- 5,256 Cash dividends paid -- -- (3,796) -- -- (3,796) Purchase of common stock for treasury -- -- -- (769) -- (769) ---------------------------------------------------------------------- Balance at December 31, 2005 $ 1,479 16,256 152,744 (18,721) (2,180) 149,578 ======================================================================
See accompanying notes to consolidated financial statements. 3 NASB FINANCIAL, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited) (In thousands, except share data)
Three months ended December 31, ---------------------- 2005 2004 ---------------------- Cash flows from operating activities: Net income $ 5,209 6,919 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 306 271 Amortization and accretion, net (541) (554) Impairment recovery on mortgage servicing rights (1) (19) Gain on sale of loans receivable held for sale (3,852) (3,654) Provision for loan losses 65 167 Recovery on real estate owned -- (681) Origination of loans held for sale (317,269) (269,298) Sale of loans receivable held for sale 365,383 260,190 Changes in: Net fair value of loan related commitments 52 (229) Accrued interest receivable (430) (120) Accrued expenses and other liabilities and income taxes payable 5,588 4,129 ---------------------- Net cash provided by (used in) operating activities 54,510 (2,879) Cash flows from investing activities: Principal repayments of mortgage-backed securities: Held to maturity 35 51 Available for sale 9,458 9,174 Principal repayments of mortgage loans receivable 93,671 104,606 Principal repayments of other loans receivable 1,941 2,259 Loan origination - mortgage loans held for investment (141,023) (138,532) Loan origination - other loans receivable (1,209) (2,921) Purchase of mortgage loans held for investment -- (1,207) Purchase of FHLB stock (1,021) (4,086) Proceeds for sale of real estate owned 1,817 3,722 Purchases of premises and equipment, net of sales (805) (876) Investment in LLC (2,354) (271) Other (373) (861) ---------------------- Net cash used in investing activities (39,863) (28,942)
4 NASB FINANCIAL, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows (continued) (In thousands, except share data)
Three months ended December 31, ---------------------- 2005 2004 ---------------------- Cash flows from financing activities: Net increase (decrease) in customer and brokered deposit accounts 45,428 (4,564) Proceeds from advances from FHLB 150,000 185,000 Repayment on advances from FHLB (127,079) (117,075) Proceeds from sale of securities under agreements to repurchase -- 189,900 Repayment of securities sold under agreements to repurchase (69,500) (195,900) Cash dividends paid (3,796) (8,455) Purchase of common stock for treasury (769) -- Change in escrows (5,828) (4,846) ---------------------- Net cash provided by (used in) financing activities (11,544) 44,060 ---------------------- Net increase in cash and cash equivalents 3,103 12,239 Cash and cash equivalents at beginning of the period 35,334 18,263 ---------------------- Cash and cash equivalents at end of period $ 38,437 30,502 ====================== Supplemental disclosure of cash flow information: Cash paid for income taxes (net of refunds) $ 296 -- Cash paid for interest 11,682 5,919 Supplemental schedule of non-cash investing and financing activities: Conversion of loans receivable to real estate owned $ 887 1,017 Capitalization of mortgage servicing rights 68 --
See accompanying notes to consolidated financial statements. 5 (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements are prepared in accordance with instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. All adjustments are of a normal and recurring nature and, in the opinion of management, the statements include all adjustments considered necessary for fair presentation. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K to the Securities and Exchange Commission. Operating results for the three months ended December 31, 2005, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2006. The consolidated balance sheet of the Company as of September 30, 2005, has been derived from the audited balance sheet of the Company as of that date. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowances for losses on loans, real estate owned, and valuation of mortgage servicing rights. Management believes that these allowances are adequate, however, future additions to the allowances may be necessary based on changes in economic conditions. The Company's critical accounting policies involving the more significant judgements and assumptions used in the preparation of the consolidated financial statements as of December 31, 2005, have remained unchanged from September 30, 2005. These policies relate to provision for loan losses and mortgage servicing rights. Disclosure of these critical accounting policies is incorporated by reference under Item 8 "Financial Statements and Supplementary Data" in the Company's Annual Report on Form 10-K for the Company's year ended September 30, 2005. 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 ---------------------- 12/31/05 12/31/04 ---------------------- Net income (in thousands) $ 5,209 6,919 Average common share outstanding 8,434,562 8,455,442 Average common share stock options outstanding 42,303 12,148 ---------------------- Average diluted common shares 8,476,865 8,467,590 Earnings per share: Basic $ 0.62 0.82 Diluted 0.61 0.82
The dilutive securities included for each period presented above consist entirely of stock options granted to employees as incentive stock options under Section 442A of the Internal Revenue Code as amended. 6 (3) SECURITIES AVAILABLE FOR SALE The following table presents a summary of securities available for sale. Dollar amounts are expressed in thousands. December 31, 2005 ------------------------------------------- Gross Gross Estimated Amortized unrealized unrealized fair cost gains losses value ------------------------------------------- Equity securities $ 180 -- -- 180 Municipal securities 57 -- -- 57 ------------------------------------------- Total $ 237 -- -- 237 =========================================== (4) MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE The following table presents a summary of mortgage-backed securities available for sale. Dollar amounts are expressed in thousands. December 31, 2005 ------------------------------------------- Gross Gross Estimated Amortized unrealized unrealized fair cost gains losses value ------------------------------------------- Pass-through certificates guaranteed by GNMA - fixed rate $ 327 -- 1 326 Pass-through certificates guaranteed by FNMA - adjustable rate 17,568 -- 519 17,049 FHLMC participation certificates - fixed rate 1,452 -- 89 1,363 - adjustable rate 104,000 -- 2,936 101,064 ------------------------------------------- Total $ 123,347 -- 3,545 119,802 =========================================== (5) MORTGAGE-BACKED SECURITIES HELD TO MATURITY The following table presents a summary of mortgage-backed securities held to maturity. Dollar amounts are expressed in thousands. December 31, 2005 ------------------------------------------- Gross Gross Estimated Amortized unrealized unrealized market cost gains losses value ------------------------------------------- FHLMC participation certificates: Balloon maturity and adjustable rate $ 171 11 -- 182 FNMA pass-through certificates: Fixed rate 100 -- -- 100 Balloon maturity and adjustable rate 78 -- -- 78 Pass-through certificates guaranteed by GNMA - fixed rate 47 3 -- 50 ------------------------------------------- Total $ 396 14 -- 410 =========================================== 7 (6) LOANS RECEIVABLE Loans receivable are as follows: December 31, 2005 --------------------- (Dollars in thousands) LOANS HELD FOR INVESTMENT: Mortgage loans: Permanent loans on: Residential properties $ 385,573 Business properties 453,154 Partially guaranteed by VA or insured by FHA 2,587 Construction and development 511,585 ---------- Total mortgage loans 1,352,899 Commercial loans 55,819 Installment loans to individuals 20,681 ---------- Total loans held for investment 1,429,399 Less: Undisbursed loan funds (146,609) Unearned discounts and fees and costs on loans, net (4,242) ---------- Net loans held for investment $1,278,548 ========== December 31, 2005 --------------------- (Dollars in thousands) LOANS HELD FOR SALE: Mortgage loans: Permanent loans on: Residential properties $ 64,651 Less: Undisbursed loan funds (17,407) Unearned discounts and fees and costs on loans, net 6 ---------- Net loans held for sale $ 47,250 ========== Included in the loans receivable balances at December 31, 2005, are participating interests in mortgage loans and wholly owned mortgage loans serviced by other institutions in the approximate amount of $142,000. Loans and participations serviced for others amounted to approximately $104.3 million at December 31, 2005. (7) FORECLOSED ASSETS HELD FOR SALE Real estate owned and other repossessed property consisted of the following: December 31, 2005 --------------------- (Dollars in thousands) Real estate acquired through (or deed in lieu of) foreclosure $ 8,582 Less: allowance for losses (172) ---------- Total $ 8,410 ========== 8 Foreclosed assets held for sale are initially recorded at fair value as of the date of foreclosure minus any estimated selling costs (the "new basis"), and are subsequently carried at the lower of the new basis or fair value less selling costs on the current measurement date (8) MORTGAGE SERVICING RIGHTS The following provides information about the Bank's mortgage servicing rights for the period ended December 31, 2005. Dollar amounts are expressed in thousands. Balance at October 1, 2005 $ 911 Additions: Originated mortgage servicing rights 68 Impairment recovery 1 Reductions: Amortization (79) -------- Balance at December 31, 2005 $ 901 ======== (9) REPURCHASE AGREEMENTS During the three-month period ended December 31, 2005, the Bank sold various adjustable-rate mortgage-backed securities under agreements to repurchase. The outstanding balance of such repurchase agreements was $52.5 million at December 31, 2005. These agreements have a weighted average rate of 3.49% and a weighted average maturity of 36 days. (10) SEGMENT INFORMATION In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," the Company has identified three principal operating segments for purposes of financial reporting: Banking, Local Mortgage Banking, and National Mortgage Banking. These segments were determined based on the Company's internal financial accounting and reporting processes and are consistent with the information that is used to make operating decisions and to assess the Company's performance by the Company's key decision makers. The National Mortgage Banking segment originates mortgage loans 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. The Banking segment provides a full range of banking services through the Bank's branch network, exclusive of mortgage loan originations. A portion of the income presented in the Mortgage Banking segment is derived from sales of loans to the Banking segment based on a transfer pricing methodology that is designed to approximate economic reality. The Other and Eliminations segment includes financial information from the parent company plus inter-segment eliminations. The following table presents financial information from the Company's operating segments for the periods indicated. Dollar amounts are expressed in thousands.
Local National Three months ended Mortgage Mortgage Other and December 31, 2005 Banking Banking Banking Eliminations Consolidated - --------------------------------------------------------------------------------------- Net interest income $ 12,242 -- -- 18 12,260 Provision for loan losses 65 -- -- -- 65 Other income 1,267 2,558 2,578 (562) 5,841 General and administrative expenses 3,860 2,686 3,443 (92) 9,897 Income tax expense (benefit) 3,450 (46) (311) (163) 2,930 ----------------------------------------------------------- Net income $ 6,134 (82) (554) (289) 5,209 ===========================================================
9
Local National Three months ended Mortgage Mortgage Other and December 31, 2004 Banking Banking Banking Eliminations Consolidated - --------------------------------------------------------------------------------------- Net interest income $ 13,214 -- -- 18 13,232 Provision for loan losses 167 -- -- -- 167 Other income 2,266 3,073 2,071 (906) 6,504 General and administrative expenses 3,650 3,020 2,250 (247) 8,673 Income tax expense (benefit) 4,257 19 (65) (234) 3,977 ----------------------------------------------------------- Net income $ 7,406 34 (114) (407) 6,919 ===========================================================
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. GENERAL The principal business of the Company is to provide banking services through the Bank. Specifically, the Bank obtains savings and checking deposits from the public, then uses those funds to originate and purchase real estate loans and other loans. The Bank also purchases mortgage-backed securities ("MBS") and other investment securities from time to time as conditions warrant. In addition to customer deposits, the Bank obtains funds from the sale of loans held-for-sale, the sale of securities available-for-sale, repayments of existing mortgage assets, and advances from the Federal Home Loan Bank ("FHLB"). The Bank's primary sources of income are interest on loans, MBS, and investment securities plus customer service fees and income from mortgage banking activities. Expenses consist primarily of interest payments on customer deposits and other borrowings and general and administrative costs. The Bank is regulated by the Office of Thrift Supervision ("OTS") and the Federal Deposit Insurance Corporation ("FDIC"), and is subject to periodic examination by both entities. The Bank is also subject to the regulations of the Board of Governors of the Federal Reserve System ("FRB"), which establishes rules regarding reserves that must be maintained against customer deposits. FINANCIAL CONDITION ASSETS The Company's total assets as of December 31, 2005, were $1,552.9 million, a decrease of $3.5 million from September 30, 2005, the prior fiscal year end. 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 three months ended December 31, 2005, the Bank originated $317.3 million in mortgage loans held for sale, $141.0 million in mortgage loans held for investment, and $1.2 million in other loans. This total of $459.5 million in loans originated compares to $411.9 million in loans originated during the three months ended December 31, 2004. Included in the $47.3 million in loans held for sale as of December 31, 2005, are $44.0 million in mortgage loans held for sale with servicing released. All loans held for sale are carried at the lower of cost or fair value. The Bank classifies problem assets as "substandard," "doubtful" or "loss." Substandard assets have one or more defined weaknesses, and it is possible that the Bank will sustain some loss unless the deficiencies are corrected. Doubtful assets have the same defects as substandard assets plus other weaknesses that make collection or full liquidation improbable. Assets classified as loss are considered uncollectible and of such little value that a specific loss allowance is warranted. 10 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. 12/31/05 9/30/05 12/31/04 ------------------------------------- Asset Classification: Substandard $ 11,872 13,346 16,511 Doubtful -- -- -- Loss 526 595 1,700 ------------------------------------- 12,398 13,941 18,211 Allowance for losses (7,485) (7,731) (9,379) ------------------------------------- $ 4,913 6,210 8,832 ===================================== 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. 12/31/05 9/30/05 12/31/04 ---------------------------------------- Total Assets $ 1,552,886 1,556,344 1,417,560 ======================================== Non-accrual loans $ 2,805 5,643 11,668 Troubled debt restructurings 3,479 74 3,602 Net real estate and other assets acquired through foreclosure 8,410 7,760 2,359 ---------------------------------------- Total $ 14,694 13,477 17,629 ======================================== Percent of total assets 0.95% 0.87% 1.24% ======================================== Management records a provision for loan losses in amounts sufficient to cover current net charge-offs and an estimate of probable losses based on an analysis of risks that management believes to be inherent in the loan portfolio. The Allowance for Loan and Lease Losses ("ALLL") recognizes the inherent risks associated with lending activities but, unlike specific allowances, have not been allocated to particular problem assets but to a homogenous pool of loans. Management believes that the specific loss allowances and ALLL are adequate. While management uses available information to determine these allowances, future allowances may be necessary because of changes in economic conditions. Also, regulatory agencies (OTS and FDIC) review the Bank's allowance for losses as part of their examinations, and they may require the Bank to recognize additional loss provisions based on the information available at the time of their examinations. The following table sets forth the activity in the allowance for loan losses for the three months ending December 31, 2005, and 2004. Dollar amounts are expressed in thousands. 2005 2004 ------------------------- Balance at beginning of year $ 7,536 8,221 Provision for loan losses 65 167 Recoveries 9 13 Charge-offs (298) (13) ------------------------- Balance at December 31 $ 7,312 8,388 ========================= 11 LIABILITIES AND EQUITY Customer and brokered deposit accounts increased $45.4 million during the three months ended December 31, 2005. The weighted average rate on customer and brokered deposits as of December 31, 2005, was 3.20%, an increase from 1.03% as of December 31, 2004. Advances from the FHLB were $488.8 million as of December 31, 2005, an increase of $22.9 million from September 30, 2005. During the three- month period, the Bank borrowed $150.0 million of new advances and repaid $127.1 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. Securities sold under agreements to repurchase were $52.5 million as of December 31, 2005, a decrease of $69.5 million from September 30, 2005. This decrease was due to repayments of repurchase agreements during the three-month period ended December 31, 2005. Escrows were $3.6 million as of December 31, 2005, a decrease of $5.8 million from September 30, 2005. This decrease is due to amounts paid for borrowers' taxes during the fourth calendar quarter of 2005. Total stockholders' equity as of December 31, 2005, was $149.6 million (9.6% of total assets). This compares to $148.9 million (9.6% of total assets) at September 30, 2005. On a per share basis, stockholders' equity was $17.77 on December 31, 2005, compared to $17.65 on September 30, 2005. The Company paid cash dividends on its common stock of $0.45 per share on November 25, 2005. Subsequent to the quarter ended December 31, 2005, the Company announced a cash dividend of $0.225 per share to be paid on February 24, 2006, to stockholders of record as of February 3, 2006. Total stockholders' equity as of December 31, 2005, includes an unrealized loss of $2.2 million, net of deferred income taxes, on available for sale securities. This amount is reflected in the line item "Accumulated other comprehensive income." RATIOS The following table illustrates the Company's return on assets (annualized net income divided by average total assets); return on equity (annualized net income divided by average total equity); equity- to-assets ratio (ending total equity divided by ending total assets); and dividend payout ratio (dividends paid divided by net income). Three months ended ------------------------ 12/31/05 12/31/04 ------------------------ Return on assets 1.34% 1.99% Return on equity 13.96% 19.99% Equity-to-assets ratio 9.63% 9.73% Dividend payout ratio 72.87% 122.20% RESULTS OF OPERATIONS - Comparison of three months ended December 31, 2005 and 2004. For the three months ended December 31, 2005, the Company had net income of $5,209,000 or $0.62 per share. This compares to net income of $6,919,000 or $0.82 per share for the quarter ended December 31, 2004. NET INTEREST MARGIN The Company's net interest margin is comprised of the difference ("spread") between interest income on loans, MBS and investments and the interest cost of customer deposits and other borrowings. Management monitors net interest spreads and, although constrained by certain market, economic, and competition factors, it establishes loan rates and customer deposit rates that maximize net interest margin. 12 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 three months ended December 31, 2005 and 2004. 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. Three months ended 12/31/05 As of --------------------------- 12/31/05 Average Yield/ Yield/ Balance Interest Rate Rate ------------------------------------- Interest-earning assets Loans $1,322,660 22,434 6.78% 6.73% Mortgage-backed securities 124,803 1,160 3.72% 4.26% Securities 22,982 277 4.82% 2.79% Bank deposits 13,785 121 3.51% 3.72% -------------------------------------- Total earning assets 1,484,230 23,992 6.47% 6.41% --------------------------- Non-earning assets 59,245 ---------- Total $1,543,475 ========== Interest-costing liabilities Customer checking and savings deposit accounts $ 190,744 491 1.03% 1.04% Customer and brokered certificates of deposit 644,522 5,876 3.65% 3.82% FHLB Advances 474,028 4,759 4.02% 4.39% Repurchase agreements 72,000 606 3.37% 3.49% -------------------------------------- Total costing liabilities 1,381,294 11,732 3.40% 3.63% --------------------------- Non-costing liabilities 12,853 Stockholders' equity 149,328 ---------- Total $1,543,475 ========== Net earning balance $ 102,936 ========== Earning yield less costing rate 3.07% 2.78% ================ Average interest-earning assets, net interest, and net yield spread on average interest- earning assets $1,484,230 12,260 3.30% ============================ Three months ended 12/31/04 As of --------------------------- 12/31/04 Average Yield/ Yield/ Balance Interest Rate Rate ------------------------------------- Interest-earning assets Loans $1,137,747 17,683 6.22% 5.95% Mortgage-backed securities 167,252 1,575 3.77% 4.18% Securities 20,288 134 2.64% 2.72% Bank deposits 13,389 46 1.37% 1.82% -------------------------------------- Total earning assets 1,338,676 19,438 5.81% 5.65% --------------------------- Non-earning assets 42,867 ---------- Total $1,381,543 ========== Interest-costing liabilities Customer checking and savings deposit accounts $ 207,443 365 0.70% 0.68% Customer and brokered certificates of deposit 469,912 2,965 2.52% 2.80% FHLB Advances 401,650 2,145 2.14% 2.48% Repurchase agreements 154,600 731 1.89% 2.03% -------------------------------------- Total costing liabilities 1,233,605 6,206 2.01% 2.26% --------------------------- Non-costing liabilities 9,452 Stockholders' equity 138,486 ---------- Total $1,381,543 ========== Net earning balance $ 105,071 ========== Earning yield less costing rate 3.80% 3.39% ================ Average interest-earning assets, net interest, and net yield spread on average interest- earning assets $1,338,676 13,232 3.95% ============================ 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. 13
Three months ended December 31, 2005, compared to three months ended December 31, 2004 ----------------------------------------------- Yield/ Yield Volume Volume Total ----------------------------------------------- Components of interest income: Loans $ 1,593 2,875 283 4,751 Mortgage-backed securities (21) (400) 6 (415) Securities 111 18 14 143 Bank deposits 72 1 2 75 ----------------------------------------------- Net change in interest income 1,755 2,494 305 4,554 ----------------------------------------------- Components of interest expense: Customer and brokered deposit accounts 1,829 778 430 3,037 FHLB Advances 1,888 387 339 2,614 Repurchase agreements 572 (390) (307) (125) ----------------------------------------------- Net change in interest expense 4,289 775 462 5,526 ----------------------------------------------- Decrease in net interest margin $ (2,534) 1,719 (157) (972) ===============================================
Net interest margin before loan loss provision for the three months ended December 31, 2005, decreased $972,000 from the same period in the prior year. Specifically, interest income increased $4.6 million. This increase was the result of a $145.6 million increase in the average balance of interest-earning assets and a 66 basis point increase in the average rate earned on such assets. The increase in interest income was offset by a $5.5 million increase in interest expense, which resulted from a 139 basis point increase in the average rate paid on interest-costing liabilities and a $147.7 million increase in the average balance of such liabilities. PROVISION FOR LOAN LOSSES The Company recorded a provision for loan losses of $65,000 during the quarter ended December 31, 2005, due to an increase in commercial real estate loans classified as "special mention." Management performs an ongoing analysis of individual loans and of homogenous pools of loans to assess for any impairment. On a consolidated basis, loan loss reserve was 60.4% of total classified assets at December 31, 2005, 55.5% at September 30, 2005, and 51.5% at December 31, 2004. As stated above, management believes that the provisions for loan losses is adequate. The provision can fluctuate based on changes in economic conditions or changes in the information available to management. Also, regulatory agencies review the Company's allowances for losses as a part of their examination process and they may require changes in loss provision amounts based on information available at the time of their examination. OTHER INCOME Other income for the three months ended December 31, 2005, decreased $663,000 from the same period in the prior year. Recovery on real estate owned decreased $681,000 due to recoveries realized on the sale of foreclosed assets held for sale in the prior fiscal year. Other income decreased $235,000 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." These decreases in other income were offset by an increase in gain on sale of loans held for sale of $198,000 due to an increase in mortgage banking volume. GENERAL AND ADMINISTRATIVE EXPENSES Total general and administrative expenses for the three months ended December 31, 2005, increased $1.2 million from the same period in the prior year. Specifically, compensation, fringe benefits, and commission-based mortgage banking compensation increased $641,000 due primarily to increased mortgage banking volume, and continued growth of the local and national mortgage banking operations. Advertising increased $263,000 due to increased costs related to the national mortgage banking operation. Additionally, other expense increased $239,000 due to an increase in costs attributable to the increased loan origination volume, an increase in audit fees due to the implementation of Section 404 of the Sarbanes-Oxley Act of 2002, and costs related to the conversion of the Company's loan origination system. 14 REGULATION The Bank is a member of the FHLB System and its customers' deposits are insured by the Savings Association Insurance Fund ("SAIF") of the FDIC. The Bank is subject to regulation by the OTS as its chartering authority. Since passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA" or the "Act"), the FDIC also has regulatory control over the Bank. The transactions of SAIF- insured institutions are limited by statute and regulations that may require prior supervisory approval in certain instances. Institutions also must file reports with regulatory agencies regarding their activities and their financial condition. The OTS and FDIC make periodic examinations of the Bank to test compliance with the various regulatory requirements. The OTS can require an institution to re-value its assets based on appraisals and to establish specific valuation allowances. This supervision and regulation is intended primarily for the protection of depositors. Also, savings institutions are subject to certain reserve requirements under Federal Reserve Board regulations. INSURANCE OF ACCOUNTS The SAIF insures the Bank's customer deposit accounts to a maximum of $100,000 for each insured member. Deposit insurance premiums are determined using a Risk-Related Premium Schedule ("RRPS"), a matrix which places each insured institution into one of three capital groups and one of three supervisory groups. Currently, deposit insurance premiums range from 0 to 27 basis points of the institution's total deposit accounts, depending on the institution's risk classification. The Bank is currently considered "well capitalized", which is the most favorable capital group and supervisory subgroup. SAIF-insured institutions are also assessed a premium to service the interest on Financing Corporation ("FICO") debt. REGULATORY CAPITAL REQUIREMENTS At December 31, 2005, 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 December 31, 2005, 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 December 31, 2005 Amount - ---------------------------------------------------------------- GAAP capital (Bank only) $ 131,086 Adjustment for regulatory capital: Intangible assets (3,046) Disallowed portion of servicing assets and deferred tax assets (2,642) Reverse the effect of SFAS No. 115 2,180 --------- Tangible capital 127,578 Qualifying intangible assets -- --------- Tier 1 capital (core capital) 127,578 Qualifying general valuation allowance 6,786 --------- Risk-based capital $ 134,364 =========
As of December 31, 2005 ------------------------------------------------------------------- Minimum required for Minimum required to be Actual Capital Adequacy "Well Capitalized" ------------------- ---------------------- ----------------------- Amount Ratio Amount Ratio Amount Ratio ------------------- ---------------------- ----------------------- Total capital to risk-weighted assets $ 134,364 11.1% 96,860 >=8% 121,075 >=10% Core capital to adjusted tangible assets 127,578 8.3% 61,399 >=4% 76,749 >=5% Tangible capital to tangible assets 127,578 8.3% 23,025 >=1.5% -- -- Tier 1 capital to risk-weighted assets 127,578 10.5% -- -- 72,645 >=6%
15 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 enrolled with the OTS to participate in the "Lending Limits Pilot Program." This program allows a federally chartered institution to increase it's loans-to-one-borrower limit by an additional amount equal to the lesser of: a) $10 million; b) 10% of its unimpaired capital and surplus; or c) the percentage of its capital and surplus, in excess of 15%, that a state institution is permitted to lend. Participation in this program increased North American's loans-to-one-borrower limit by $10 million. This pilot program is set to expire on September 10, 2007. 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 December 31, 2005, there was $82.0 million available to the Bank in the form of FHLB advances. The Bank has established relationships with various brokers, and, as a secondary source of liquidity, the Bank purchases brokered deposit accounts. At December 31, 2005, the Bank has $126.7 million in brokered deposits, and it could purchase up to $100.1 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, 2005. 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, 2005. Item 4. Controls and Procedures An evaluation of the Company's disclosure controls and procedures was carried out under the supervision and with the participation of the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") within the 90-day period preceding the filing date of this quarterly report. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective in ensuring that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) accumulated and communicated to management in a timely manner, and (ii) recorded, processed, summarized, and reported within the time periods specified by the SEC. Since the date of this evaluation, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect those controls. 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings There were no material proceedings pending other than ordinary and routine litigation incidental to the business of the Company. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a)Exhibits Exhibit 31.1 - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2 - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) Exhibit 32.2 - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (b) Reports of Form 8-K A report on Form 8-K was filed on October 25, 2005, which announced a quarterly cash dividend of $0.225 per share and a special cash dividend of $0.225 per share payable on November 25, 2005 to shareholder's of record as of November 4, 2005. A report on Form 8-K was filed on December 1, 2005, which announced financial results for the quarter ended September 30, 2005. 17 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) February 9, 2006 By: /s/David H. Hancock David H. Hancock Chairman and Chief Executive Officer February 9, 2006 By: /s/Rhonda Nyhus Rhonda Nyhus Vice President and Treasurer 18 19 EX-31 2 exhibit31_1.txt CEO CERTIFICATION EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David Hancock, Chairman and Chief Executive Officer, certify that: 1. I have reviewed this report on Form 10-Q of NASB Financial, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statement were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles: c) 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 d) 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 control over financial reporting 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: February 9, 2006 By: /s/David H. Hancock David H. Hancock Chairman and Chief Executive Officer EX-31 3 exhibit31_2.txt CFO CERTIFICATION EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Rhonda Nyhus, Vice President and Treasurer, certify that: 1. I have reviewed this report on Form 10-Q of NASB Financial, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statement were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles: c) 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 d) 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 control over financial reporting 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: February 9, 2006 By: /s/Rhonda Nyhus Rhonda Nyhus Vice President and Treasurer EX-32 4 exhibit32_1.txt CEO CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of NASB Financial, Inc. (the "Company") on Form 10-Q for the period ending December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David H. Hancock, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. February 9, 2006 By: /s/ David H. Hancock David H. Hancock Chairman and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to NASB Financial, Inc. and will be retained by NASB Financial, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein , and not for any other purpose. EX-32 5 exhibit32_2.txt CFO CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of NASB Financial, Inc. (the "Company") on Form 10-Q for the period ending December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Rhonda Nyhus, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. February 9, 2006 By: /s/ Rhonda Nyhus Rhonda Nyhus Vice President and Treasurer A signed original of this written statement required by Section 906 has been provided to NASB Financial, Inc. and will be retained by NASB Financial, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein , and not for any other purpose. -----END PRIVACY-ENHANCED MESSAGE-----