SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
          
                                   (MARK ONE)
         
                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
             [X] SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
                                       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 0-6848

                             JEFFERSON BANCORP, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                     FLORIDA                        59-1284885
--------------------------------------------------------------------------------
          (STATE OR OTHER JURISDICTION OF      (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)        IDENTIFICATION NO.)

            301 ARTHUR GODFREY ROAD
            MIAMI BEACH, FLORIDA                           33140
--------------------------------------------------------------------------------
        (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)         (ZIP CODE)

                                 (305) 534-8341
--------------------------------------------------------------------------------
              (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 SECTIONS 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 THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

                CLASS                          OUTSTANDING AT OCTOBER 31, 1996
                -----                          -------------------------------

COMMON STOCK, $1.00 PAR VALUE, OF A SINGLE CLASS        3,791,040

<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

THE FOLLOWING FINANCIAL STATE-
MENTS ARE FILED AS PART OF THIS
REPORT:
                                                  PAGES IN QUARTERLY REPORT
                                                  AS OF SEPTEMBER 30, 1996 TO
                                                  SECURITIES AND EXCHANGE
                                                  COMMISSION

CONSOLIDATED BALANCE SHEETS                                 3-4
STATEMENTS OF CONSOLIDATED INCOME                            5
STATEMENT OF CONSOLIDATED STOCK-
  HOLDERS' EQUITY                                            6
STATEMENTS OF CONSOLIDATED
  CASH FLOWS                                                 7
NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTS                                                8-13



ITEM 2.    MANAGEMENT'S DISCUSSION AND
           ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS                       14-24

                           PART II. OTHER INFORMATION

ITEM 6(a)  EXHIBITS FILED
                NONE

      (b)  REPORTS ON FORM 8-K
           NO REPORTS ON FORM 8-K HAVE BEEN
           FILED DURING THE QUARTER FOR
           WHICH THIS REPORT IS FILED


SIGNATURES                                                  25

<PAGE>

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
                                                                           
JEFFERSON BANCORP, INC. & SUBSIDIARIES                                    
CONSOLIDATED BALANCE SHEETS                                                

                                                          SEPTEMBER 30, 1996  DECEMBER 31, 1995
                                                             (Unaudited)      
                                                          ------------------  -----------------
<S>                                                         <C>                  <C>
ASSETS                                                                       
                                                                    
 CASH AND DEMAND BALANCES DUE FROM BANKS                    $  8,624,168         $ 17,545,682
                                                            ------------         ------------
INVESTMENT SECURITIES

 OBLIGATIONS OF STATES AND POLITICAL
   SUBDIVISIONS (NON-TAXABLE)                                     87,301              103,912
 OTHER SECURITIES                                              1,014,642            1,139,348
                                                            ------------         ------------
  TOTAL INVESTMENT SECURITIES 
    (APPROXIMATE MARKET 
    VALUE 1996-$1,043,000; 1995-$1,254,000)                    1,101,943            1,243,260
                                                            ------------         ------------

SECURITIES AVAILABLE FOR SALE

 U.S. TREASURY SECURITIES                                      7,937,188           10,056,875
 SECURITIES OF OTHER U.S. GOVERNMENT AGENCIES                104,166,054          101,900,477
 OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS
  (NON-TAXABLE)                                                5,104,543            4,610,180
 COLLATERALIZED MORTGAGE OBLIGATIONS                             304,272            1,586,315
                                                            ------------         ------------
  TOTAL SECURITIES AVAILABLE FOR SALE
    (AT MARKET VALUE)                                        117,512,057          118,153,847
                                                            ------------         ------------

FEDERAL FUNDS SOLD AND OTHER SHORT-TERM INVESTMENTS            1,600,000            4,500,000
                                                            ------------         ------------
LOANS                                                        308,807,719          268,786,404
LESS: UNEARNED INCOME                                          2,114,844            2,186,667
      ALLOWANCE FOR CREDIT LOSSES                              2,424,472            2,434,357
                                                            ------------         ------------
  TOTAL LOANS, NET                                           304,268,403          264,165,380
                                                            ------------         ------------
LOANS HELD FOR SALE                                              956,683            1,716,917
                                                            ------------         ------------
PREMISES AND EQUIPMENT, NET                                    4,818,494            6,186,810
                                                            ------------         ------------
OTHER REAL ESTATE OWNED                                          543,076              633,678
                                                            ------------         ------------
OTHER ASSETS                                                  19,049,753           18,857,212
                                                            ------------         ------------
  TOTAL ASSETS                                              $458,474,577         $433,002,786
                                                            ============         ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
                                       3


<PAGE>

<TABLE>
<CAPTION>

JEFFERSON BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY                            SEPTEMBER 30, 1996    DECEMBER 31, 1995
                                                                   (Unaudited)    
                                                                -----------------     ----------------
<S>                                                               <C>                   <C>
DEPOSITS: 
  DEMAND (NON-INTEREST-BEARING)                                   $  46,356,874         $  55,814,702
  SAVINGS                                                            21,924,785            27,396,006
  INTEREST-PAYING CHECKING                                           54,866,647            67,489,951
  MONEY MARKET ACCOUNTS                                              36,338,236            36,937,656
  CERTIFICATES AND PUBLIC FUNDS                                     226,368,183           183,648,700
                                                                  -------------         -------------
    TOTAL DEPOSITS                                                  385,854,725           371,287,015

  FEDERAL FUNDS PURCHASED AND SECURITIES SOLD
    UNDER AGREEMENTS TO REPURCHASE                                   29,069,426            19,424,965
  DEFERRED GAIN ON SALE OF BUILDINGS                                     27,721                31,812
  OTHER LIABILITIES                                                   6,072,171             4,635,204
                                                                  -------------         -------------
    TOTAL LIABILITIES                                               421,024,043           395,378,996
                                                                  -------------         -------------
COMMITMENTS AND CONTINGENT LIABILITIES
                                                                    
STOCKHOLDERS' EQUITY:
                                                                    
  COMMON STOCK, $1.00 PAR VALUE, 10,000,000 SHARES
  AUTHORIZED; ISSUED - SEPTEMBER 30, 1996-4,018,418;
    DECEMBER 31, 1995-3,999,496 SHARES                                4,018,418             3,999,496
  CAPITAL SURPLUS                                                    29,510,842            29,349,762
  RETAINED EARNINGS                                                   9,530,509             8,912,103
  TREASURY STOCK, AT COST-SEPTEMBER 30,1996-227,378 SHARES;
    DECEMBER 31, 1995-193,378 SHARES                                 (2,299,454)           (1,862,204)
  DEFERRED COMPENSATION                                                (658,838)           (1,027,343)
  NET UNREALIZED (LOSSES) GAINS ON SECURITIES
    AVAILABLE-FOR-SALE
           (NET OF APPLICABLE INCOME TAXES)                          (2,650,943)           (1,748,024)
                                                                  -------------         -------------
    TOTAL STOCKHOLDERS' EQUITY                                       37,450,534            37,623,790
                                                                  -------------         -------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $ 458,474,577         $ 433,002,786
                                                                  =============         =============
BOOK VALUE PER COMMON SHARE EXCLUDING UNREALIZED
    GAINS (LOSS) ON SECURITIES AVAILABLE FOR SALE                 $       10.58         $       10.34
                                                                  =============         =============
BOOK VALUE PER COMMON SHARE                                       $        9.88         $        9.89
                                                                  =============         =============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

                                        4

<PAGE>

<TABLE>
<CAPTION>

JEFFERSON BANCORP, INC. AND SUBSIDIARIES                          FOR THE QUARTER ENDED         FOR THE NINE MONTHS ENDED
STATEMENTS OF CONSOLIDATED INCOME                                     SEPTEMBER 30,                   SEPTEMBER 30,
                                                                  1996            1995            1996             1995
                                                               (UNAUDITED)     (UNAUDITED)     (UNAUDITED)      (UNAUDITED
                                                               ---------------------------     ---------------------------
<S>                                                            <C>             <C>             <C>             <C>
INTEREST INCOME:
  INTEREST AND FEES ON LOANS                                   $ 7,172,696      $5,658,054     $20,347,748     $16,343,892
  INVESTMENTS AND SECURITIES HELD FOR SALE:
    U.S. TREASURY SECURITIES                                       102,217         124,347         339,248         369,472
    SECURITIES OF OTHER U.S. GOVERNMENT AGENCIES                 1,513,647       1,870,984       4,169,262       5,201,410
    OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS-
      NON-TAXABLE                                                   59,544          64,685         171,697         246,906
    COLLATERIZED MORTGAGE OBLIGATIONS AND OTHER SECURITIES          (7,567)         49,081          27,705         153,888
    FEDERAL FUNDS SOLD AND OTHER SHORT-TERM INVESTMENTS             10,565         165,206          71,547         351,744
                                                               -----------      ----------     -----------     -----------
    TOTAL INTEREST INCOME                                        8,851,102       7,932,357      25,127,207      22,667,292
                                                               -----------      ----------     -----------     -----------
INTEREST EXPENSE:
 DEPOSITS:
  SAVINGS                                                          136,541         194,260         429,116         607,970
  INTEREST-PAYING CHECKING                                         238,357         298,794         758,390         888,065
  MONEY MARKET ACCOUNTS                                            180,733         235,702         551,902         684,456
  CERTIFICATES AND PUBLIC FUNDS                                  3,250,800       2,860,294       9,082,057       6,871,211
 SHORT-TERM BORROWINGS                                             349,895         158,315         639,468         775,117
                                                               -----------      ----------     -----------     -----------
    TOTAL INTEREST EXPENSE                                       4,156,326       3,747,365      11,460,933       9,826,820
                                                               -----------      ----------     -----------     -----------
    NET INTEREST INCOME                                          4,694,776       4,184,992      13,666,274      12,840,472
  PROVISION FOR CREDIT LOSSES                                       75,000               0          95,000         150,000
                                                               -----------      ----------     -----------     -----------
    NET INTEREST INCOME AFTER PROVISION FOR
      CREDIT LOSSES                                              4,619,776       4,184,992      13,571,274      12,690,472
                                                               -----------      ----------     -----------     -----------
OTHER INCOME :
  TRUST INCOME                                                     300,315         335,896         845,308       1,017,394
  SERVICE CHARGES, COMMISSIONS AND FEES                            334,614         303,219       1,014,218         936,164
  GAIN ON SALE OF SECURITIES AVAILABLE FOR SALE, NET                  --              --             6,031         323,985
  OTHER OPERATING INCOME                                           232,787         162,093         685,223         562,977
  GAIN ON SALE OF SUBSIDIARY BANK                                     --              --           757,167            --
                                                               -----------      ----------     -----------     -----------
    TOTAL OTHER INCOME                                             867,716         801,208       3,307,947       2,840,520
                                                               -----------      ----------     -----------     -----------
OPEATING EXPENSES:
  SALARIES AND EMPLOYEE BENEFITS                                 2,254,428       2,175,381       7,187,072       6,721,933
  OCCUPANCY EXPENSE, NET                                           707,690         726,987       2,115,635       2,133,125
  OTHER OPERATING EXPENSES                                       1,467,195       1,454,563       4,611,452       4,678,924
                                                               -----------      ----------     -----------     -----------
    TOTAL OPERATING EXPENSES                                     4,429,313       4,356,931      13,914,159      13,533,982
                                                               -----------      ----------     -----------     -----------
    INCOME BEFORE PROVISION FOR INCOME TAXES                     1,058,179         629,269       2,965,062       1,997,010
  PROVISION FOR INCOME TAXES                                       314,000         186,200         916,100         608,700
                                                               -----------      ----------     -----------     -----------
    NET INCOME                                                 $   744,179      $  443,069     $ 2,048,962     $ 1,388,310
                                                               ===========      ==========     ===========     ===========
EARNINGS PER COMMON SHARE:
AVERAGE NUMBER OF SHARES OUTSTANDING                             3,893,020       3,831,395       3,901,771       3,800,941
                                                               ===========      ==========     ===========     ===========
NET INCOME PER SHARE                                           $      0.19      $     0.12     $      0.53     $      0.37
                                                               ===========      ==========     ===========     ===========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                
(UNAUDITED)       

                                        5
                                                                           

<PAGE>

<TABLE>
<CAPTION>

JEFFERSON BANCORP, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996                                                                          NET UNREALIZED
                                                                                                                      ON SECURITIES
                                                     COMMON       CAPITAL        RETAINED    TREASURY    DEFERRED        AVAILABLE
                                                     STOCK        SURPLUS        EARNINGS      STOCK    COMPENSATION     FOR SALE
                                                   ----------   -----------    ----------- -----------  ------------  --------------
<S>                                                <C>          <C>            <C>         <C>          <C>            <C>
BALANCE, JANUARY 1, 1996                           $3,999,496   $29,349,762    $8,912,103  ($1,862,204) ($1,027,343)   ($1,748,024)

    NET INCOME                                         -             -          2,048,962       -            -              -

    $.125 PER SHARE CASH DIVIDEND                      -             -           (476,336)      -            -              -

    $.125 PER SHARE CASH DIVIDEND                      -             -           (476,337)      -            -              -

    $.125 PER SHARE CASH DIVIDEND                      -             -           (477,883)      -            -              -

    EXERCISE OF STOCK OPTIONS (18,922 SHARES)          18,922       161,080        -            -            -              -

    PURCHASE OF TREASURY SHARES (34,000 SHARES)        -             -             -          (437,250)      -              -

    AMORTIZATION OF DEFERRED COMPENSATION              -             -             -            -           368,505         -

    CHANGE IN NET UNREALIZED GAINS/(LOSSES)
            ON AVAILABLE-FOR-SALE SECURITIES           -             -             -            -            -            (902,919)
                                                   ----------   -----------    ----------  ------------  -----------   ------------

BALANCE, SEPTEMBER 30,1996                         $4,018,418   $29,510,842    $9,530,509  ($2,299,454)   ($658,838)   ($2,650,943)
                                                   ==========   ===========    ==========  ===========  ===========   ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

                                        6

<PAGE>

<TABLE>
<CAPTION>

JEFFERSON BANCORP, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,

                                                                   1996              1995
                                                               (UNAUDITED)        (UNAUDITED)
                                                               ------------      ------------
<S>                                                            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 NET INCOME                                                    $  2,048,962      $  1,388,310
 ADJUSTMENTS TO RECONCILE NET INCOME TO
  NET CASH PROVIDED BY OPERATING ACTIVITIES:
  DEPRECIATION AND AMORTIZATION                                     573,561           615,123
  GAIN ON SALE OF BUILDINGS                                          (4,091)           (4,090)
  LOSS (GAIN) ON SALE OF OTHER REAL ESTATE OWNED                     12,029            86,888
  GAIN ON SALE SUBSIDIARY BANK                                     (757,167)             --
  PROVISION FOR CREDIT LOSSES                                        95,000           150,000
  PREMIUM AMORTIZATION AND DISCOUNT ACCRETION, NET                  124,821           113,819
  NET GAIN ON SALE OF SECURITIES AVAILABLE FOR SALE                  (6,031)         (323,985)
  AMORTIZATION OF DEFERRED COMPENSATION                             368,505           305,235
  ORIGINATION OF LOANS HELD FOR SALE                            (20,851,789)      (18,845,676)
  DISPOSITION OF LOANS HELD FOR SALE                             21,612,023        18,677,206
  INCREASE IN OTHER ASSETS                                       (7,882,091)       (9,268,201)
  INCREASE IN OTHER LIABILITIES                                   1,508,104         2,282,735
                                                               ------------      ------------
 NET CASH USED BY OPERATING ACTIVITIES                           (3,158,164)       (4,822,636)
                                                               ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 NET INCREASE IN LOANS                                          (49,228,610)      (30,445,790)
  SALE OF SECURITIES AVAILABLE FOR SALE                          25,306,696        30,120,655
  PROCEEDS FROM MATURITIES AND PAYDOWNS OF
         SECURITIES AVAILABLE FOR SALE                            4,233,924        20,664,272
  PURCHASE OF SECURITIES AVAILABLE FOR SALE                     (34,093,401)      (66,375,465)
 PROCEEDS FROM MATURITIES OF INVESTMENT SECURITIES                  121,317         1,506,245
 NET INCREASE IN FEDERAL FUNDS SOLD AND INTEREST-EARNING
  DEPOSITS IN OTHER FINANCIAL INSTITUTIONS                         (600,000)       (2,000,000)
 SALE PROCEEDS FROM SALE OF SUBSIDIARY BANK                       3,000,000              --
 DISPOSITION OF OTHER REAL ESTATE OWNED                             204,573           836,842
 ACQUISITION OF OTHER REAL ESTATE OWNED                            (126,000)         (412,695)
 PURCHASES OF PREMISES AND EQUIPMENT                               (369,814)         (793,754)
                                                               ------------      ------------
 NET CASH USED BY INVESTING ACTIVITIES                          (51,551,315)      (46,899,690)
                                                               ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 NET INCREASE IN DEPOSITS                                        36,235,476        58,999,295
 NET INCREASE (DECREASE) IN FEDERAL FUNDS PURCHASED AND
  SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE                 11,240,293        (8,598,735)
 PAYMENT OF CASH DIVIDENDS                                       (1,430,556)       (1,355,964)
 PURCHASE OF TREASURY STOCK                                        (437,250)             --
 PROCEEDS FROM EXERCISE OF STOCK OPTIONS                            180,002           101,625
                                                               ------------      ------------
 NET CASH PROVIDED BY FINANCING ACTIVITIES:                      45,787,965        49,146,221
                                                               ------------      ------------
 NET (DECREASE) INCREASE IN CASH AND DEMAND BALANCES
  DUE FROM BANKS                                                 (8,921,514)       (2,576,105)
 CASH AND DEMAND BALANCES DUE FROM BANKS AT BEGINNING OF Y       17,545,682        14,542,225
                                                               ------------      ------------
 CASH AND DEMAND BALANCES DUE FROM BANKS AT SEPTEMBER 30,      $  8,624,168      $ 11,966,120
                                                               ============      ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 INTEREST PAID                                                 $ 10,669,883      $  8,033,068
                                                               ============      ============
 INCOME TAX PAYMENTS                                           $    909,500      $    405,000
                                                               ============      ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

                                        7

<PAGE>

ITEM 1.    JEFFERSON BANCORP. INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(A)   SIGNIFICANT ACCOUNTING POLICIES - The accounting policies followed for
quarterly reporting purposes are the same as those disclosed in the 1995 Annual
Report to Stockholders of Jefferson Bancorp, Inc.(the "Company"). In the opinion
of management, the accompanying consolidated financial statements reflect all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation of the information provided. These statements have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
statements have been omitted pursuant to such rules and regulations. Although
the Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these financial statements be
read in conjunction with the Company's audited 1995 consolidated financial
statements and the notes thereto.

(B)   RESTRICTED STOCK, STOCK OPTION AND NON-QUALIFIED OPTION PLANS

RESTRICTED STOCK PLANS - On September 1, 1989, the Company adopted a restricted
stock plan (the "1989 Plan") whereby an aggregate of not more than 300,000
shares of common stock were made available for awards to certain key executives.
The number of shares awarded to the eligible executives are based on the
executive's salary and length of time employed by the Company. The stock issued
in connection with the 1989 Plan vests on the third anniversary of the date of
grant. Deferred compensation, a contra-equity account, is recorded for the fair
market value of any shares of common stock awarded under the 1989 Plan and is
then amortized as compensation expense over the vesting period. At June 30,
1996, 24,654 shares were available under the 1989 Plan for the future awards.

Effective May 1, 1996, the Company adopted a second restricted stock plan (the
"1996 Plan") which is substantially identical to the 1989 Plan, except that no
participant may be awarded more than 20,000 shares under the 1996 Plan in any
calendar year. At September 30, 1996, 300,000 shares were available for awards
under the 1996 Plan.

STOCK OPTION PLANS - Under various stock option plans approved by the Board of
Directors, options may be granted to key employees of the Company and its
subsidiaries, including officers and directors who are also employees, to
purchase an aggregate of 585,328 shares of the common stock of the Company. At
June 30, 1996, the total number of stock options available for future grants
were 87,231 shares. Options under these plans are granted at a price of not less
than the fair market value of the shares on the date granted. No charge is made
to income with respect to stock options.

                                        8

<PAGE>

The following table presents additional information concerning the activity in
these stock option plans:

                                              OPTION PRICE
                                       -------------------------
                         NUMBER OF      AVERAGE
                         SHARES         PER SHARE     AGGREGATE
                         ---------      ---------     ---------

January 1, 1993           328,576         $8.37      $2,748,205
Grants                     25,000          9.90         247,500
3% stock dividend             750           -              -
Exercised                 (28,623)         8.37        (239,548)
Rescissions               (30,044)         8.25        (247,800)
                         --------                     ---------
Options outstanding:
December 31, 1993         295,659          8.49       2,508,357
Grants                     88,000         10.12         890,375
3% stock dividend           2,640           -              -
Exercised                 (28,224)         7.64        (215,546)
Rescissions               (29,802)         7.83        (233,330)
                         --------                     ---------
Options outstanding:
December 31, 1994         328,273          8.99       2,949,856
Grants                     1,,000         13.25          13,250
Exercised                 (79,012)         8.74        (690,487)
                         --------                     ---------
Options outstanding:
December 31, 1995         250,261          9.08       2,272,619
Exercised                 (16,345)         9.47        (154,846)
Canceled                  (63,792)         9.13        (582,111)
                         --------                     ---------
Options outstanding:
September 30, 1996        170,124          9.03       1,535.662
                         --------                     ---------

Options exercisable at
December 31, 1995         249,011
                          -------

September 30, 1996        170,124
                          -------


Non-employee Directors Option Plan:

On June 20, 1994, with all non-employee directors abstaining and subject to
stockholder approval, the Board of Directors granted to non-employee directors
non-qualified options to purchase 27,500 (28,325 after restatement for 3% stock
dividend) shares of the common stock of the Company at a price of $10.125 per
share ($9.83 after restatement for 3% stock dividend), the fair market value of
the shares on that date. The grants were presented to the stockholders of the
Company for their consideration at the annual meeting held April 25, 1995 and
ratified by the holders of 88% of the total shares outstanding.

                                        9

<PAGE>
                                               OPTION PRICE
                                         -----------------------
                            NUMBER OF    AVERAGE
                            SHARES       PER SHARE   AGGREGATE
                            ---------    ---------   ---------

January 1, 1993               113,300     $  7.53   $  852,500
Grants                         27,500       10.00      275,000
3% stock dividend                 825          -             -
                              -------                ---------
Options outstanding:
December 31, 1993             141,625        7.97    1,127,500
Grants                         27,500       10.13      278,438
3% stock dividend                 825          -             -
Exercised                     (29,200)       7.53     (219,713)
                              -------               ----------
Options outstanding:
December 31, 1994             140,750        8.43    1,186,225
Exercised                     (76,374)       8.55     (652,945)
                              -------               ----------
Options outstanding:
December 31, 1995              64,376        8.28      533,280
Exercised                      (2,576)       9.77      (25,156)
                              -------               ----------
Options Outstanding:
September 30, 1996             61,800        8.22      508,124
                              -------               ----------

Options exercisable at:
December 31, 1995              64,376
                              -------

September 30, 1996             61,800
                              -------

(C)   DEATH AND DISABILITY, SEVERANCE AND RETIREMENT PLANS: Effective May 1,
1989, the Company adopted a death and disability plan that provides for cash
payments in the event of the death or permanent disability of directors who are
not employees of the Company and certain senior officers of the Company. The
death and disability plan is substantially funded through life insurance
policies.

Also, effective May 1, 1989, the Company adopted an unfunded severance plan that
provided for cash payments to certain senior officers of the Company in the
event that their employment was voluntarily or involuntarily terminated at any
time during a one-year period following a change in control, as defined by the
Company.

Effective January 1, 1994, the Company amended the severance plan to provide for
cash payments to directors and senior officers upon a change in control, whether
or not their employment is terminated as a result thereof, or upon their
retirement. During the nine months ended September 30, 1996, the Company accrued
approximately $393,855 of benefits. It is the Company's intent that benefits
under the amended severance plan and benefits under the death and disability
plan be mutually exclusive and not duplicative.

(D)   IMPACT OF NEW ACCOUNTING ISSUES: In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation". This Statement requires certain
disclosures about stock-based employee compensation arrangements, regardless of
the method used to account for them, defines a fair value method of accounting
for an employee stock option or similar equity instrument, and encourages all
entities to adopt that method of accounting for all of their employee stock
compensation plans. However, it also allows an entity to continue to measure

                                       10

<PAGE>

compensation cost for stock-based compensation plans using the intrinsic value
method of accounting prescribed by Accounting Principles Board Opinion No.
25,"Accounting for Stock Issued to Employees". Entities electing to remain with
the accounting in APB Opinion No. 25 must make proforma disclosures of net
income and, if presented, earnings per share, as if the fair value method of
accounting defined in this Statement had been applied. Under the fair value
method, compensation cost is measured at the grant date based on the value of
the award and is recognized over the service period, which is usually the
vesting period. Under the intrinsic value method, compensation cost is the
excess, if any, of the quoted market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock. The
disclosure requirements of this Statement are effective for financial statements
for fiscal years beginning after December 15, 1995. Proforma disclosures
required for entities that elect to continue to measure compensation cost using
APB Opinion No. 25 must include the effects of all awards granted in fiscal
years that begin after December 15, 1994. Management adopted SFAS No. 123
effective January 1, 1996, and has elected to continue to measure compensation
using APB No. 25.

(E)   LOANS: Interest income on certain installment loans is recognized using a
method which approximates the interest method. Interest income on all other
loans is recognized based upon the principal amounts outstanding. Loans are
generally placed on non-accrual status and related accrued interest reversed
when, in the opinion of management, there is substantial doubt as to the ability
of the borrower to pay the interest. When a loan is placed on a non-accruing
status, any interest accrued in the current period, but not collected, is
reversed against interest income. Non-refundable loan origination fees and costs
associated with the lending process are deferred and recognized as a yield
adjustment over the life of the related loan.

Loans held for sale are recorded at the lower of cost or market on an aggregate
basis. Unrealized declines in market value are included in other operating
income.

In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan". The Statement generally would require all creditors to
account for impaired loans at the present value of the expected future cash flow
discounted at the loan's effective interest rate. SFAS No. 114 is effective for
fiscal years beginning after December 15, 1994, and earlier application is
encouraged. SFAS No. 114 is not expected to have a material effect on the
Company's financial statements as most loans in question are collateral
dependent, and the Company already accounts for impaired loans at the lower of
cost or fair value less costs to dispose.

(F)   ALLOWANCE FOR CREDIT LOSSES: The allowance for credit losses is increased
by provision for credit losses and is reduced by loan charge-offs, net of
recoveries. The provision for credit losses is determined based upon
management's review and evaluation of the loan portfolio and the adequacy of the
allowance for credit losses, giving consideration to the overall condition of
the loan portfolio, review of known problem loans for potential losses, economic
factors and business trends that could affect loan collectability. Many of these
factors involve a significant degree of estimation and are subject to rapid
change which could be unforeseen by management. Changes in these factors could
result in material adjustments to the allowance in the near term.

On January 1, 1995, the Bank adopted SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan", and SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan - Recognition and Disclosures", an amendment of SFAS No. 114.  These
standards address the accounting for impairment of certain loans when it is
probable that all amounts due pursuant to the contractual terms of the loan will

                                       11

<PAGE>

not be collected. Adoption of these standards entailed the identification of
commercial loans which are considered impaired under the provisions of SFAS No.
114. Groups of smaller-balance homogeneous loans (generally residential mortgage
and installment loans) are collectively evaluated for impairment. Adoption of
these statements did not have a material impact on the Bank's financial position
or results of operations.

Under the provisions of these standards, individually identified impaired loans
are measured based on the present value of payments expected to be received,
using the historical effective loan rate as the discount rate. Alternatively,
measurement may also be based on observable market prices or for loans that are
solely dependent on the collateral for repayment, measurement may be based on
the fair value of the collateral. Loans that are to be foreclosed are measured
based on the fair value of the collateral. If the recorded investment in the
impaired loans exceeds that measure of fair value, a valuation is required as a
component of the allowance for loan losses. Changes to the valuation allowance
are recorded as a component of the provision for loan losses.

Loans where reasonable doubt exists as to timely collection, including loans
that are individually identified as being impaired under SFAS No. 114, are
generally classified as nonperforming loans unless based on the evaluation of
management the loan is well secured and in the process of collection.

Charge-offs are recorded when, in the judgment of management, an extension of
credit is deemed uncollectible, in whole or in part.

Interest collections on nonperforming loans, including impaired loans, for which
the ultimate collectibility of principal and interest is uncertain, are applied
as reductions in book value. Otherwise, such collections are credited to income
when received.

(G)   OTHER REAL ESTATE OWNED: Property acquired by foreclosure or deed in lieu
of foreclosure is recorded at the lower of cost or estimated fair value at the
time he loan is foreclosed. Upon classification as other real estate owned, the
excess of the recorded investment over the fair value of the collateral, if any,
is charged to the allowance for credit losses.

Once properties are classified as other real estate, such properties are carried
at the lower of cost or fair value minus estimated costs to sell. Net expenses
incurred in maintaining properties, subsequent write-downs due to changes in
market values, and gains or losses upon disposition are included in other
operating expenses. Expenditures to complete or improve properties are
capitalized only if reasonably expected to be recovered; otherwise, they are
expensed as incurred.

The amounts the Company could ultimately recover from property acquired by
foreclosure or deed in lieu of foreclosure could differ materially from the
amounts used in arriving at the net carrying value of the assets because of
future market factors beyond the Company's control or changes in the Company's
strategy for recovering its investment.

(H)   GOODWILL: In 1987, the Company acquired Broward Bancorp, a Florida bank
holding company. Broward Bancorp's sole banking subsidiary, which was known as
Broward Bank, became a subsidiary of the Company and was renamed Jefferson Bank.
The purchase price and costs of this acquisition exceeded the fair market value

                                       12

<PAGE>

of the net assets by approximately $1,134,000. This excess is being amortized
over a period of 20 years using the straight line method and is included in
"other assets" in the Company's consolidated balance sheets. The accumulated
amortization through September 30, 1996, after giving effect to a write-off of
$242,833 occasioned by the sale of Jefferson Bank on February 14, 1996, totaled
$809,149.

(I)   INCOME TAXES: Deferred taxes are provided for timing differences between
income reported for financial reporting and for income tax purposes. The Company
files consolidated income tax returns.

The Company provides for deferred taxes under the liability method. Under such
method, deferred taxes are adjusted for tax rate changes as they occur. Deferred
income tax assets and liabilities are computed annually for differences between
the financial statements and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future based on enacted tax laws
and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.

(J)   RECLASSIFICATION: Certain amounts in the prior period in the consolidated
financial statements have been reclassified for comparative purposes.

(K)   MERGER: On October 25, 1996, the Company announced that it has signed a
definitive merger agreement with Colonial BancGroup. The proposed transaction
remains subject to approval by Jefferson's stockholders and regulatory approval.
The closing of the merger is expected to take place in the first quarter of
1997.
                                       13

<PAGE>

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY

The consolidated earnings of Jefferson Bancorp, Inc. and subsidiaries
(collectively, the "Company") reflect principally the operations of the banking
subsidiaries, Jefferson Bank of Florida ("Jefferson Florida"), and Jefferson
Bank ("Jefferson Broward"). The smaller of the two, Jefferson Broward was sold
on February 14, 1996 to Peoples National Bank of Commerce, Miami, Florida.

Earnings are comprised of net interest income and other income. Net interest
income, or the difference between total interest income from earning assets and
total interest expense from key liabilities, for any given period is determined
by the average volume of interest-earning assets (mainly loans, loans held for
sale, investment securities, securities available for sale, and federal funds
sold), the average yield earned on such assets, the average volume of deposits
and borrowings on which interest is paid, the average rate of interest paid on
such deposits and borrowings and the average volume of demand deposits upon
which no interest is paid.

Other income is comprised of service charges on deposit accounts, fees and
commissions for various banking services and trust department income. Earnings
from these functions are affected chiefly by the volume of activity and the
level of fees charged. Other income also includes net gains recognized from the
sale of investment securities, loans and fixed assets.

                                       14


<PAGE>

<TABLE>
<CAPTION>

JEFFERSON BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


NET INTEREST INCOME, AVERAGE BALANCES        QUARTER ENDED SEPT. 30,1996    QUARTER ENDED SEPT. 30,1995
AND AVERAGE RATES
(IN THOUSANDS)                                  AVERAGE                     AVERAGE   AVERAGE                     AVERAGE
                                                BALANCE      INTEREST         RATE    BALANCE      INTEREST         RATE
                                                -------      --------         ----    -------      --------         ----
<S>                                            <C>           <C>            <C>       <C>          <C>            <C>
INTEREST-EARNING ASSETS:
Loans and loans held for sale:
  Real estate, commercial and financial and 
    government guaranteed loans (1)             $288,289      $ 7,178         9.88%    $219,310      $5,228         9.46%
  Installment loans, net of unearned income       12,168          286         9.40%      12,184         302         9.91%
Investment securities and securities
  available for sale:
  U.S. Treasury securities                         8,152          102         4.96%      10,201         125         4.86%
  Securities of other U.S. Government
    agencies                                     107,000        1,513         5.66%     132,840       1,870         5.63%
  Obligations of states and political
    subdivisions
     (non-taxable) (2)                             5,262           92         6.96%       5,336          99         7.44%
  Collateralized mortgage obligations and
    other securities                               1,466           (7)       -1.91%       3,161          49         6.20%
  Federal funds sold and other short-term
    investments                                      807           10         4.92%      11,123         165         5.89%
                                                --------      -------         -----    --------      ------         -----
      Total interest-earning assets (2)         $423,142        9,174         8.62%    $394,154       7,838         7.89%
                                                ========      =======         =====    ========      ======         =====

KEY LIABILITIES:
  Deposits:
    Savings                                       22,459          136         2.41%      30,106         194         2.56%
    Interest-paying checking                      55,517          238         1.71%      70,205         299         1.69%
    Money market                                  33,850          181         2.13%      43,327         236         2.16%
    Certificates                                 188,372        2,674         5.65%     142,313       2,214         6.17%
    Public funds                                  37,298          578         6.17%      40,704         646         6.30%
                                                --------      -------       -------     -------      ------         -----
     Total deposits                                    0            0                                     0
  Borrowings                                      27,810          349         4.99%      18,370         158         3.41%
                                                --------      -------                   -------      ------         -----
    Total interest-bearing liabilities            27,810          349         4.99%      18,370         158         3.41%
                                                --------      -------       -------     -------      ------         -----
    Total noninterest-bearing liabilities         46,988                                 48,693
                                                --------                                -------
    Total key liabilities                       $ 74,798                               $ 67,062
                                                ========                               ========
  Net interest income/spread (2)                              $ 8,825         3.62%                  $7,680         4.48%
                                                              =======        ======                  ======         =====
  Net interest income as a percent of total
      average interest-earning assets (2)                                     8.30%                                 3.58%

<FN>
      (1) Average balances include nonaccrual loans. Interest income includes 
          fees on loans of approximately $157,000 and $66,000 for quarters 
          ended September 30, 1996 and 1995, $584,000 and $507,000 for the 
          nine months ended September 30, 1996 and 1995, and $676,000 for the 
          year ended December 31, 1995, respectively.
      (2) Interest income includes the effects of taxable-equivalent
          adjustment, using a 34% tax rate to adjust interest on tax-exempt 
          securities to taxable-equivalent basis.
</FN>
</TABLE>
                                       15

<PAGE>

<TABLE>
<CAPTION>
JEFFERSON BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


NET INTEREST INCOME, AVERAGE BALANCES          NINE MONTHS ENDED             NINE MONTHS ENDED                YEAR ENDED 
AND AVERAGE RATES                                SEPT. 30, 1995                SEPT. 30, 1995             DECEMBER 31, 1995
-----------------                            ------------------------    -------------------------    -------------------------
(IN THOUSANDS)                               AVERAGE          AVERAGE    AVERAGE            AVERAGE   AVERAGE           AVERAGE
                                             BALANCE INTEREST  RATE      BALANCE   INTEREST   RATE    BALANCE  INTEREST   RATE
                                             ------------------------    -------------------------    ------------------------
<S>                                         <C>      <C>      <C>       <C>        <C>      <C>      <C>       <C>      <C>
INTEREST-EARNING ASSETS:
Loans and loans held for sale:
  Real estate, commercial and financial 
    and government guaranteed loans (1)     $268,945  19,127   9.50%    $208,184    14,752    9.47%   $213,097  20,882   9.80%
  Installment loans, net of unearned income   11,865     847   9.52%      10,711       781    9.72%     11,210   1,094   9.76%
Investment securities and securities 
  available for sale:
  U.S. Treasury securities                     9,259     339   4.89%      10,213       370    4.84%     10,207     493   4.83%
  Securities of other U.S. Government
    agencies                                 102,956   4,169   5.40%     124,983     5,201    5.55%    125,996   6,975   5.54%
  Obligations of states and political 
    subdivisions (non-taxable) (2)             5,031     261   6.91%       6,575       374    7.59%      6,273     471   7.51%
  Collateralized mortgage obligations and  
    other securities                           1,791      28   2.08%       3,349       155    6.17%      3,223     164   5.09%
  Federal funds sold and other short-term 
    investments                                1,788      71   5.30%       8,365       352    5.63%      7,376     410   5.56%
                                            --------  -------           --------   -------             -------  ------
      Total interest-earning assets (2)     $401,635  24,842   8.26%    $372,380    21,985    7.89%   $377,382  30,489   8.08%
                                            ========  -------           ========   -------             =======  ------

KEY LIABILITIES:
  Deposits:
    Savings                                   23,471     429   2.44%      30,809       608    2.64%     29,958     784   2.62%
    Interest-paying checking                  59,734     758   1.70%      70,613       888    1.68%     70,399   1,184   1.68%
    Money market                              34,437     552   2.14%      41,391       685    2.21%     40,913     897   2.19%
    Certificates                             165,499   7,211   5.83%     119,463     5,319    5.95%    125,307   7,479   5.97%
    Public funds                              40,525   1,872   6.18%      34,515     1,552    6.01%     36,105   2,198   6.09%
                                            --------  ------            --------   -------             -------  ------
     Total deposits                                0       0                   0         0                   0       0   4.14%
  Borrowings                                  19,198     639   4.45%      26,635       775    3.89%     24,982     921   3.69%
                                            --------  ------            --------   -------             -------  ------
    Total interest-bearing liabilities        19,198     639   4.45%      26,635       775    3.89%     24,982     921   4.11%
                                            --------  ------            --------   -------             -------  ------
    Total noninterest-bearing liabilities     50,197                      49,079                        49,520
                                            --------                    --------                       -------
    Total key liabilities                    $69,395                     $75,714                       $74,502
                                            ========                    ========                       =======
  Net interest income/spread (2)                     $24,203  3.81%                $21,210   4.00%             $17,026   3.97%
                                                     =======                       =======                      ======
  Net interest income as a percent of total
      average interest-earning assets (2)                     8.05%                          4.37%                       4.51%

<FN>
      (1) Average balances include nonaccrual loans. Interest income includes 
          fees on loans of approximately $157,000 and $66,000 for quarters 
          ended September 30, 1996 and 1995, $584,000 and $507,000 for the 
          nine months ended September 30, 1996 and 1995, and $676,000 for the 
          year ended December 31, 1995, respectively.
      (2) Interest income includes the effects of taxable-equivalent 
          adjustment, using a 34% tax rate to adjust interest on tax-exempt 
          securities to taxable-equivalent basis.
</FN>
</TABLE>
                                       16


<PAGE>

MATERIAL CHANGES IN FINANCIAL CONDITION

As shown in the Net Interest Income analysis on pages 15 and 16, the total
average daily balance of the Company's consolidated interest-earning assets for
the nine months ended September 30, 1996 increased by $24,253,000, or 6%, from
the total average daily balance for the year ended December 31, 1995. The
primary cause of the growth in average interest-earning assets in the first nine
months of 1996 was the increase in the Company's loans. The average balance of
such loans increased by $56,503,000, or 25%. At the same time, the average daily
balance of the Company's portfolio of investment securities and securities
available for sale decreased by $32,250,000, or 21%. The increase in the
Company's portfolio of loans in the first nine months of 1996 was accomplished
by the use of proceeds of the sale of securities held for sale, and by the
growth in the average balance of certificates of deposits, public funds, and
demand deposits. The total average daily balance of the Company's key
liabilities for the nine months ended September 30, 1996, was $393,061,000 as
compared to $377,184,000 for the year ended December 31, 1995, an increase of
$15,877,000, or 4%. The primary cause of the growth in the average balance of
key liabilities was the increase in the average daily balance of certificates of
deposit, which increased by $40,192,000, or 32%, public funds deposits, which
increased by $4,420,000, or 12%, and demand deposits, which increased by
$677,000, or 1%. At the same time, the average daily balance of savings deposits
decreased by $6,487,000, or 22%, interest-paying checking deposits decreased by
$10,665,000, or 15%, money market deposits decreased by $6,476,000, or 16%, and
borrowings (federal funds purchased, securities sold under agreement to
repurchase, and federal reserve bank borrowings) decreased by $5,784,000, or
23%.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Consolidated net income for the nine months ended September 30, 1996 was
$2,048,962 compared to $1,388,310 for the comparable period in 1995, an increase
of 48%. Per-share net income for the nine months ended September 30, 1996 was
$.53 compared to $.37 for the comparable period in 1995. The increase in
consolidated net income for the nine months ended September 30, 1996 was
primarily due to a gain of $757,167 from the sale of a subsidiary bank in the
first quarter of 1996. The other contributing factor for higher net income in
the first nine months of 1996 was an increase of $880,802, or 7%, in net
interest income after provision for credit losses.

Consolidated net income for the quarter ended September 30, 1996 was $744,179
compared to $443,069 for the comparable period in 1995, an increase of 68%. Per-
share net income for the quarter ended September 30, 1996 was $.19, compared to
$.12 for the comparable period in 1995. The increase in consolidated net income
was primarily due to an increase of $434,784 in net interest income after
provision for credit losses.

                                       17

<PAGE>

NET INTEREST INCOME

The Company's net interest income (on a fully taxable equivalent basis inclusive
of loan service charge income) for the first nine months of 1996 was $1,223,000
higher than the comparable period in 1995, an increase of 10%. A primary reason
for this increase was a growth in the interest-earning assets of the Company.
The Company total interest-earning assets in the first nine months of 1996 were
$401,635,000, compared with $372,380,000 in the comparable period in 1995, or an
increase of 8%. The Company's net interest income on the same basis for the
quarter ended September 30, 1996 was $927,000 higher than the comparable period
in 1995, an increase of 23%. A primary reason for this increase was a growth in
the net interest spread during the quarter ended September 30, 1996.

In the first nine months of 1996, the net interest spread decreased by 4 basis
points from the comparable period in 1995, or 1%. This decrease was caused by a
change in the average cost of funds on total interest-bearing liabilities, which
increased to 4.47% for the nine months ended September 30, 1996 from 4.06% for
the comparable period in 1995. The higher average rate earned on average total
interest-earning assets in combination with higher balances of total
interest-earnings assets offset the increase in the average cost of funds and
resulted in higher net interest income. The average rate earned on
interest-earning assets and average balances of interest-earning assets
increased from 7.89% and $372,380,000for the nine months ended September 30,
1995 to 8.26% and $401,635,000 for the comparable period in 1996. The spread for
the quarter ended September 30, 1996 increased by 51 basis points from the
comparable period in 1995, or 14%. This increase was caused by the higher
average rate earned on average total interest-earnings assets. The average rate
earned on interest-earning assets increased to 8.62% for the quarter ended
September 30, 1996 from 7.89% for the comparable period in 1995.

PROVISION FOR CREDIT LOSSES

The provision for credit losses represents the expense which, based on
management's review and evaluation of the Company's consolidated portfolio, is
required to maintain the reserve for credit losses at an appropriate level.
Although it is impossible to predict future credit losses accurately, the
adequacy of the reserve for credit losses is determined by management through
the ongoing evaluation of various factors influencing potential loss exposure.
These factors include the collectibility of individual credits, credit loss
trends, and concentrations within the loan portfolio in light of the present
economic and regulatory environment. Changes in economic factors which influence
potential loss exposure are also considered in management's evaluation when the
likelihood of such changes can be reasonably determined. In the first nine
months of 1996, the provision for credit losses amounted to $95,000 versus
$150,000 in the comparable period of 1995. In the quarter ended September 30,
1996, this expense amounted to $75,000 versus none in the comparable period of
1995.

It is management's policy to charge off loans when there appears to be little
likelihood of recovery. Management considers the allowance for credit losses to
be adequate to cover estimated losses inherent in the Company's consolidated
loan portfolio.

                                       18


<PAGE>

OTHER OPERATING INCOME

Other income for the first nine months of 1996 totaled $3,307,947 as compared to
$2,840,520 for the first nine months of 1995, an increase of 16%. Other income
for the quarter ended September 30, 1996 was $867,716 as compared to $801,208
for the quarter ended September 30, 1995, an increase of 8%. Trust income
decreased for the nine- and three-month periods because of a decrease in trust
assets under management.

Gain on sale of securities available for sale for the first nine months of 1996
was $6,031 as compared to $323,985 for the comparable period in 1995; there was
no such gain in either of the quarters ended September 30, 1996 and 1995. The
portfolio of securities available for sale is managed with the primary objective
of maintaining an appropriate level of liquidity, and to control interest rate
risk.

Other operating income increased for the nine- and three-month periods ended
September 30, 1996 primarily due to recovery of $63,778 with respect to a
corporate bond which was previously charged-off and gains on sale of loans of
$37,783; there were no such recovery and gains in the comparable periods in
1995.

OPERATING EXPENSES

Total operating expenses for the first nine months of 1996 were $13,914,159 as
compared to $13,533,982 for the first nine months of 1995, an increase of 3%.
The operating expenses for the quarter ended September 30, 1995 were $4,429,313
as compared to $4,356,931 for the quarter ended September 30, 1995, an increase
of 2%. Personnel expenses increased for the nine- month period ended September
30, 1996 primarily due to the payout of $338,946 to option holders upon the
cancellation of their incentive stock options in the quarter ended March 31,
1996; they increased in the quarter ended September 30, 1996 primarily because
of normal merit increases. The occupancy expenses decreased for the nine- and
three-month periods ended September 30, 1996 primarily due to the divestiture of
a subsidiary bank in February 1996. Other operating expenses were $4,611,452 for
the nine-month period and $1,467,195 for the quarter ended September 30, 1996,
as compared to $4,678,924 and $1,454,563 for the comparable periods in 1995.

ASSET/LIABILITY MANAGEMENT

The primary objective of asset and liability management is to structure the
balance sheet appropriately in order to maximize net interest income while
maintaining acceptable levels of liquidity and interest-rate risk. The policies
and guidelines for managing balance sheet and off-balance sheet activities are
formulated and monitored by the Company's Asset and Liability Committee
("ALCO").

INTEREST-SENSITIVITY

Interest-sensitivity management is concerned with optimizing the effects of
interest rate changes on net interest income. Interest-sensitivity is measured
by gaps defined as the difference between interest-sensitive assets and
interest-sensitive liabilities within any specific time frame. For example, a
negative, or liability-sensitive, gap occurs when interest-sensitive liabilities
exceed interest-sensitive assets. This generally indicates that net interest
income will improve if interest rates fall. The opposite would be true in the
case of a positive or asset-sensitive gap.

Interest-sensitivity analysis is a valuable tool in assessing the potential
impact of interest rate changes on net interest income. The Company's interest-
sensitivity position is closely monitored by ALCO, which regularly examines and
evaluates the potential impact of varying scenarios of market interest rates and
balance sheet composition. Other factors, however, such as changes in balance
sheet mix and interest rate spread relationships, also play a vital role in
maximizing net interest income.

                                       19

<PAGE>

On September 30, 1996, interest-bearing assets of the Company maturing in twelve
months or less were equal to approximately 89% of the interest-bearing
liabilities of the Company falling due in twelve months or less. Therefore at
that date the Company was considered to be 89% liability-sensitive for a
twelve-month period. This means that for each $100 of liabilities which can be
expected to reprice during that period, $89 of assets can be expected to
reprice. In a declining rate environment, for each $100 of liabilities which
reprice and thus lower the expenses of the Company, $89 of assets will also
reprice, therefore generating higher income for the Company; the net result will
be an increase in the interest spread. In an increasing rate environment the
converse would be true; the net interest spread would decrease.

On September 30, 1996, the Company had a positive gap (rate-sensitive assets in
excess of rate-sensitive liabilities) with respect to rate-sensitive assets and
rate-sensitive liabilities maturing in less than three months and over five
years; for those maturing in over three months and under five years,
rate-sensitive liabilities exceeded rate-sensitive assets. The cumulative
interest rate sensitivity gap (that is, the cumulative ratio of
interest-sensitive assets expressed as a percentage of interest-sensitive
liabilities) for maturities up to three months was 161.45%; for maturities up to
twelve months it was 88.55%; for maturities up to five years it was 90.67%; and
for all maturities, including maturities over five years, it was 116.09%.

                                       20


<PAGE>

The Company's interest-sensitivity position at September 30, 1996 is presented
below.

Interest Rate Sensitivity Analysis
(Dollars in thousands)

                                   0-3     3-12      1-5     Over
SEPTEMBER 30, 1996               MONTHS   MONTHS   YEARS  5 YEARS TOTAL
------------------               ------   ------   -----  ------- -----

Investment securities and
  securities held for sale(1)    $21,909    $7,054   $36,590   $53,061  $118,614
Federal funds sold and other
  short-term investments           1,600       ---        --        --     1,600
Loans and loans held for sale    101,689    56,665    78,310    70,985   307,649
                                 -------    ------   -------   -------   -------
Earning assets                   125,198    63,719   114,900   124,046   427,863
Deposits:
  Interest-paying checking(2)        ---        --    54,867        --    54,867
  Money market                    36,338        --        --        --    36,338
  Savings(2)                          --        --    21,925        --    21,925
  Certificates of deposit
   and public funds               12,138   135,794    44,954    33,482   226,368
Federal funds purchased
  and other short-term
  borrowings                      29,069       --         --        --    29,069
Interest-bearing liabilities      77,545   135,794   121,746    33,482   368,567
                                 -------    ------   -------   -------   -------

Interest-sensitivity gap         $47,653  $(72,075)  $(6,846)  $90,564   $59,296
                                 =======  ========   =======   =======   =======

Cumulative gap                   $47,653  $(24,422) $(31,268) $59,296
                                 =======  ========   =======  =======
Cumulative gap to total
 earning assets (%)                11.14     (5.71)    (7.31)   13.86
                                 =======  ========   =======  =======

Cumulative ratio of interest-
 sensitive assets to interest-
 sensitive liabilities (%)        161.45     88.55     90.67   116.09
                                 =======  ========   =======  =======

Loans are stated net of unearned income.
Non-earning assets and non-interest-bearing liabilities have been excluded from
analysis.

(1) The rate sensitivity schedule included above lists securities in time frames
of their stated or final maturities. Literally all of the securities in the
over-5-year category have shorter average lives or call dates and are expected
to mature or be called well before the stated maturity and even prior to the
5-year term.

(2) It has been our experience that through a variety of interest rate
scenarios, interest- paying checking and savings accounts have not materially
increased or decreased as a result of interest rate changes. It is for this
reason that the Company has felt comfortable classifying its deposit accounts as
1-5 year liabilities.

                                       21

<PAGE>

RISK ELEMENTS

NON-ACCRUAL, PAST DUE AND RESTRUCTURED LOANS

The table below presents an analysis of consolidated risk elements of the
Company classified as follows: (a) non-accrual loans; (b) 90-day loans; and (c)
troubled debt restructurings as defined in Statement of Financial Accounting
Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings."

                                 (In Thousands)

                                   09/30/96     06/30/96    03/31/96    12/31/95
                                   --------     --------    --------    --------
(a)  Non-accrual loans             $ 1,009      $ 1,314     $ 2,419     $ 1,520
(b)  90-day loans                    1,878        1,470       1,132         852
(c)  Troubled debt restructurings     NONE         NONE        NONE        NONE
(d)  Other Real Estate Owned           543          477         459         634

Non-accrual loans decreased $305,000 in the quarter ended September 30, 1996 due
primarily to three loans totalling $320,000. One loan for $136,000 was brought
current and returned to accrual status. A second loan for $108,000 was
foreclosed and transferred to other real estate owned. A third loan for $76,000
was brought current and returned to accrual status.

Ninety-day loans increased by $408,000 due primarily to three loans totalling
$410,000. One loan for $140,000 is real estate secured and requires renewal
pending receipt of current financial data. A second loan for $131,000 is secured
by real estate which is for sale. A third loan for $139,000 is unsecured but
supported by strong guarantors; the business is suffering from cash flow
problems. The loan is now 60 days past due, but the borrower is making payments
to bring it current.

Potential problem loans were as follows at the dates set forth:

     9/30/96      6/30/96           03/31/96        12/31/95
     -------      -------           --------        --------

     $ 200        $  121            $ 121           $1,278


At September 30, 1995 the non-accrual loans were broken down as follows:

Residential Real Estate     $  737       73%
Commercial                     204       20%
Installment Loans               68        7%
                            ------

Total non-accrual loans     $1,009
                            ======

There are no major concentrations within the non-accruing portfolio.

There are two major concentrations within the classified loans. One loan, which
comprises 37% of total classified loans, is secured with real estate and
assignment of a note receivable. This loan is classified substandard due to
chronic delinquency; however, it is current and accruing. A second loan, which
comprises 15% of total classified loans, is secured with the borrower's
residence. This loan is classified substandard due to chronic delinquency;
however, it is current and accruing.

Other real estate owned increased $66,000 in the quarter ended September 30,
1996 due primarily to the addition of two properties totalling $127,000,offset
in part by the sale of two properties totalling $60,000. One of the properties
added is for $108,000; it is fully secured and is expected to be sold before the
end of the year.

                                       22

<PAGE>

LIQUIDITY MANAGEMENT

In order for the Company's banking subsidiary to satisfy the requirements of
depositors wanting to withdraw funds and to meet the credit needs of borrowers,
the banking subsidiary must maintain certain levels of liquidity. Asset and
liability management strategy is designed to achieve the maintenance of an
adequate level of liquidity and the management of the interest-rate sensitive
structure of the balance sheet. The basic objective of interest-rate sensitive
management is the protection of net interest income from sharp fluctuations
caused by changes in the market. The management of liquidity and interest-rate
sensitivity are closely related as both are affected by maturities of assets and
the source of funds.

Liquidity and interest-rate sensitive positions are closely monitored by an
Asset and Liability Committee which regularly examines and evaluates the
potential impact of varying scenarios of market interest rates, balance sheet
compositions and funding source requirements.

Liquidity of the Company's banking subsidiary is provided in part through the
cash flow generated by transactions in the ordinary course of business. Loan
repayments and maturing assets furnish additional cash flow sources. Liquidity
is also provided by the acquisition of new deposits, as well as by the ability
to raise funds in a variety of money markets. Liquidity is also provided by
securities available for sale. As of September 30, 1996, securities available
for sale amounted to $117,512,000.

CAPITAL RESOURCES

The Company has continued to maintain a strong capital base during 1996. At
September 30, 1996 the Company's total and Tier 1 risk-based capital ratios (as
more fully described below) were 9.65% and 10.28%, respectively. The Company's
leverage ratio was 8.52% at September 30, 1996. These ratios were well above the
minimum capital requirements established by government agencies.

The Company and its banking subsidiary are subject to a minimum Tier 1 capital
to risk-rated assets ratio of 4% and total capital (Tier 1 plus Tier 2) to risk-
rated asset ratio of 8%. The Federal Reserve Board has also established
additional capital adequacy guidelines referred to as the Tier 1 leverage ratio
that measures the ratio of Tier 1 capital to average assets. The most highly
rated bank holding companies will be required to maintain a Tier 1 leverage
ratio of 3%. The required ratio will be based on the Board's assessment of the
individual bank holding company's asset quality, earnings performance, interest
rate risk and liquidity. The FDIC Improvement Act of 1991 ("FDICIA") requires
the establishment of a capital-based supervisory system of prompt corrective
action of all depository institutions. The Board's regulations under FDICIA
define "well capitalized" institutions as those whose capital ratios equal or
exceed the following minimum ratios: Tier 1 capital ratio of 6%, total risk-
based ratio of 10%, and Tier 1 leverage ratio of 5%.

As of September 30, 1996, the Company's Tier 1 capital, total risk-based capital
and Tier 1 leverage ratios were 9.65%, 10.28%, and 8.52%, respectively. These
ratios, as well as the corresponding ratios of the Company's banking subsidiary,
are well above industry averages.

                                       23

<PAGE>

Stockholders' equity and book value per share as of September 30, 1996 decreased
to $37,450,533 and $9.88, respectively, from $37,623,790 and $9.89 per share as
of December 31, 1995. Stockholders' equity and book value per share (not
including unrealized losses on securities available for sale, net of applicable
income taxes) as of September 30, 1996 were $40,101,477 and $10.58,as compared
to $39,371,814 and $10.34 as of December 31, 1995. It is noteworthy that the
number of outstanding shares increased to 3,791,040 at September 30, 1996 from
3,806,118 at December 31, 1995. Unless there were a permanent impairment,
unrealized gains or losses on securities available for sale are not reflected in
the statement of consolidated income until they are sold.

As of September 30, 1996, the Company had no material commitments for capital
expenditures.

On October 25, 1996, the Company announced that it has signed a definitive
merger agreement with Colonial BancGroup. The proposed transaction remains
subject to approval by Jefferson's stockholders and regulatory approval. The
closing of the merger is expected to take place in the first quarter of 1997.


                                       24

<PAGE>

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.

  JEFFERSON BANCORP, INC.




    NOVEMBER 14, 1996               BARTON S. GOLDBERG
---------------------------         -----------------------------------
                                    Secretary-Treasurer (Principal
                                    Financial Officer and Director)






    NOVEMBER 14, 1996               SYED F. ZAFAR
---------------------------         -----------------------------------
                                    Senior Vice President & Comptroller
                                    (Principal Accounting Officer)

                                       25