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JEFFERSON BANCSHARES ANNOUNCES FIRST QUARTER RESULTS
Morristown, Tennessee -- (October 23, 2003) - Jefferson Bancshares, Inc.
(Nasdaq: JFBI), the holding company for Jefferson Federal Bank, today reported a
net loss of $1.6 million, or ($0.19) per diluted share, for the quarter ended
September 30, 2003 compared to net income of $926,000, or $0.12 per diluted
share, for the quarter ended September 30, 2002. The net loss for the first
quarter of 2003 was due to the nonrecurring expense associated with the $4.0
million contribution to the Jefferson Federal Charitable Foundation. On July 1,
2003, Jefferson Federal Bank completed its conversion from the mutual holding
company structure to the stock holding company structure. As part of the
conversion, Jefferson Bancshares also formed the Jefferson Federal Charitable
Foundation, which was funded with $250,000 and 375,000 shares of Jefferson
Bancshares common stock. This stock and cash contribution was recorded as an
expense of $4.0 million, or approximately $2.5 million after income taxes.
Net interest income increased $83,000, or 3.0%, to $2.8 million for the
quarter ended September 30, 2003. The net interest margin decreased 55 basis
points to 3.67% for the quarter ended September 30, 2003. The decline in net
interest margin reflects growth in earning assets with lower yields due to
current low market interest rates. Interest income decreased $435,000, or 9.5%,
to $4.1 million for the current three month period. The average balance of
interest earning assets increased $47.8 million to $306.4 million while the
average yield on interest earning assets declined 167 basis points to 5.41%. The
decline in the yield on interest earning assets was due to a combination of
factors including the investment of conversion proceeds in short-term securities
and a decrease in both the volume and average yield on loans. Interest expense
decreased $518,000, or 28.1%, to $1.3 million for the quarter ended September
30, 2003 as the average balance of deposits declined 4.8% to $213.6 million, and
the average rate paid declined 81 basis points to 2.44%. The interest rate
spread was 2.94% and 3.82% for the quarters ended September 30, 2003 and 2002,
respectively.
The provision for loan losses decreased $307,000 for the quarter ended
September 30, 2003, as there were no additions to the allowance for loan losses
during the period. The allowance for loan losses was $2.7 million, or 1.48% of
total loans, at September 30, 2003 compared to $2.6 million, or 1.34% of total
loans, at September 30, 2002.
Noninterest income decreased $50,000, or 17.6%, to $234,000 for the quarter
ended September 30, 2003 primarily as a result of a decrease in the net gains on
sale of investments which more than offset an increase in service charges on
deposit accounts.
Noninterest expense, excluding the contribution to the Foundation, totaled
$1.5 million for the quarter ended September 30, 2003, compared to $1.2 million
for the same period in 2002. Compensation and benefits increased $171,000, or
29.2%, due primarily to expenses related to the Employee Stock Ownership Plan,
which was adopted in connection with the conversion.
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Total assets at September 30, 2003 were $318.4 million compared to $363.6
million at June 30, 2003. At June 30, 2003, orders received in the subscription
and community offering totaled in excess of $105.0 million. Approximately $39.1
million of unfilled orders was returned to subscribers during the quarter ended
September 30, 2003.
Net loans decreased $2.6 million, or 1.4%, to $177.4 million at September
30, 2003, as new loan originations were offset by loan repayments. Loan
originations for the current quarter were $13.1 million compared to $10.2
million for the same period in 2002.
Investment securities increased $36.3 million, or 47.5%, to $112.7 million
at September 30, 2003, compared to $76.4 million at June 30, 2003. The increase
in investment securities is due primarily to the investment of conversion
proceeds and the reinvestment of proceeds from called securities.
Total equity increased by $59.1 million to $95.7 million at September 30,
2003 due primarily to $64.5 million in net proceeds from the conversion. As a
result of a net loss for the three month period combined with dividends paid to
shareholders, retained earnings decreased $1.9 million to $30.8 million at
September 30, 2003. Unrealized gains and losses, net of taxes, in the
available-for-sale investment portfolio are reflected as an adjustment to
stockholders' equity. At September 30, 2003, the adjustment to stockholders'
equity was a net unrealized gain of $143,000 compared to a net unrealized gain
of $898,000 at June 30, 2003.
Jefferson Federal Bank is a federally chartered stock thrift institution
headquartered in Morristown, Tennessee. Jefferson Federal is a community
oriented financial institution offering traditional financial services within
its local communities through its main office and two drive through facilities
in Morristown.
This news release may contain forward-looking statements, which can be
identified by the use of words such as "believes", "expects", "anticipates",
"estimates", or similar expressions. Such forward-looking statements and all
other statements that are not historic facts, are subject to risks and
uncertainties which could cause actual results to differ materially from those
currently anticipated due to a number of factors. These factors include, but are
not limited to, general economic conditions, changes in the interest rate
environment, legislative or regulatory changes that may adversely affect our
business, changes in accounting policies and practices, changes in competition
and demand for financial services, adverse changes in the securities markets,
and changes in the quality or composition of the Company's loan or investment
portfolios. Should one or more of these risks materialize, actual results may
vary from those anticipated, estimated, or projected. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date of this press release.
Specific factors that could cause future results to vary from current
management expectations may be detailed, from time to time in the Company's
filings with the
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Securities and Exchange Commission, which are available through the SEC's
website at www.sec.gov.
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Contacts:
Jefferson Bancshares, Inc.
Anderson L. Smith 423-586-8421
Jane P. Hutton 423-586-8421
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JEFFERSON BANCSHARES, INC.
At At
Sept. 30, 2003 June 30, 2003
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FINANCIAL CONDITION DATA:
Total assets $ 318,380 $ 363,602
Loans receivable, net 177,413 180,010
Cash and cash equivalents, and
interest-bearing deposits 15,716 96,543
Investment securities 112,669 76,400
Borrowings 2,000 2,000
Deposits 219,618 324,247
Stockholders' equity $ 95,722 $ 36,625
Three Months Ended September 30,
2003 2002
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OPERATING DATA:
Interest Income $ 4,142 $ 4,577
Interest expense 1,329 1,847
Net interest income 2,813 2,730
Provision for loan losses - 307
Net interest income after
provision for loan losses 2,813 2,423
Noninterest income 234 284
Noninterest expense 5,548 1,230
Earnings before income taxes (2,501) 1,477
Total income taxes (910) 551
Net Earnings $ (1,591) $ 926
PER SHARE DATA:
Earnings per share, basic $ (0.19) $ 0.12 *
Earnings per share, diluted $ (0.19) $ 0.12 *
Dividends per share $ 0.04 $ 0.029*
* Per share amounts have been adjusted to reflect the exchange of shares in the
conversion
Three Months Ended September 30,
2003 2002
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ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,841 $ 2,696
Provision for loan losses - 307
Recoveries 73 89
Charge-offs (223) (477)
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Net Charge-offs (150) (388)
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Allowance at end of period $ 2,691 $ 2,615
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Net charge-offs to average outstanding
loans during the period 0.08% 0.20%
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AT AT AT
SEPT. 30, 2003 JUNE 30, 2003 SEPT. 30, 2002
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NONPERFORMING ASSETS:
Nonaccrual loans:
Real Estate $ 1,373 $ 1,739 $ 2,414
Commercial business 30 - 2
Consumer 55 17 30
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Total 1,458 1,756 2,446
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Real Estate Owned 1,581 1,227 1,591
Other nonperforming assets 13 16 47
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Total nonperforming assets $ 3,052 $ 2,999 $ 4,084
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THREE
MONTHS ENDED YEAR ENDED
SEPT. 30, 2003 JUNE 30, 2003
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PERFORMANCE RATIOS:
Return on average assets NM 1.32%
Return on average equity NM 10.25%
Interest rate spread 2.94% 3.66%
Net interest margin 3.67% 4.10%
Efficiency ratio (excludes $4.0 million 51.17% 45.30%
contribution to the Charitable Foundation)
Average interest-earning assets to
average interest-bearing liabilities 142.10% 117.67%
CAPITAL RATIOS:
Tangible capital 21.05% 9.75%
Core capital 21.05% 9.75%
Risk-based capital 38.83% 21.06%
Average equity to average assets 29.98% 12.90%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.48% 1.54%
Allowance for loan losses as a
percent of nonperforming loans 184.57% 161.79%
Nonperforming loans as a percent
of total loans 0.80% 0.95%
Nonperforming assets as as percent
of total assets 0.96% 0.82%