The year 2001 was, all things considered, a mixed bag as respects both the economy and the bank. Eleven consecutive Fed rate reductions did nothing to spark an anemic economy, and matters were made worse by the events of September 11th. While those rate reductions worked to the advantage of borrowers with existing debt, they have done nothing to stimulate the economy. Like all banks, our margins have narrowed and loan growth has been more difficult to achieve in a borrower's market. We have, therefore, elected to let expensive C.D.'s leave the bank in the absence of profitable lending opportunities. As a result, bank assets declined during 2001 to $617,308,828. On a positive note, however, earnings improved to a record $6,809,272.

We look forward to the new year believing that our economy will rebound and that the end of the recession will be accompanied by a return to traditional interest rate patterns.

As mentioned above, we have a borrower's market here in St. Louis, and Jefferson Bank has money to lend. We invite your consideration and comparison.

When you call, a real person will answer the phone. (314) 621-0100.

Sincerely,

Michael J. Ross,
Chairman of the Board