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JEFFERSON BANCSHARES ANNOUNCES SECOND QUARTER RESULTS
Morristown, Tennessee -- (January 30, 2004) - Jefferson Bancshares, Inc.
(Nasdaq: JFBI), the holding company for Jefferson Federal Bank, today reported a
16.9% increase in net income for the three months ended December 31, 2003
compared to the same period in 2002. Net income was $966,000, or $0.11 per
diluted share, for the quarter ended December 31, 2003 compared to net income of
$826,000, or $0.10 per diluted share, for the quarter ended December 31, 2002.
The increase in earnings was primarily the result of an increase in net interest
income combined with reduced provision for loan losses, which more than offset
an increase in noninterest expense. For the six month period ended December 31,
2003, the Company recorded a net loss of $625,000 compared to net income of $1.8
million for the comparable period in 2002. The net loss for the six month period
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 $161,000, or 6.1%, to $2.8 million for the quarter
ended December 31, 2003. The net interest margin decreased 51 basis points to
3.66% for the quarter ended December 31, 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 $304,000 or 7.0%, to $4.1
million for the current three month period. The average balance of interest
earning assets increased $53.0 million to $306.3 million while the average yield
on interest earning assets declined 159 basis points to 5.31%. 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 $465,000, or 26.9%, to $1.3 million for the quarter ended December 31,
2003 as the average balance of interest-bearing deposits decreased $7.9 million
to $210.9 million, and the average rate paid declined 77 basis points to 2.35%.
The interest rate spread was 2.93% and 3.76% for the quarters ended December 31,
2003 and 2002, respectively. For the six month period ended December 31, 2003,
net interest income increased 4.5% to $5.6 million compared to $5.4 million for
the comparable period in 2002. For the six months ended December 31, 2003, the
interest rate spread declined to 2.94% from 3.79% for the same period in 2002.
Net interest margin for the six months ended December 31, 2003 was 3.66%
compared to 4.20% for the same period in 2002.
Noninterest income increased $17,000, or 7.2%, to $252,000 for the quarter ended
December 31, 2003 primarily as a result of an increase in dividends from
investments.
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For the six month period ended December 31, 2003, noninterest income decreased
$33,000, or 6.4%, to $486,000 due primarily to a decrease in gain on sale of
investments.
Noninterest expense increased $210,000, or 16.1%, to $1.5 million for the three
month period ended December 31, 2003, primarily due to expenses associated with
the Employee Stock Ownership Plan. For the six month period ended December 31,
2003, noninterest expense totaled $7.1 million compared to $2.5 million for the
same period in 2002. The $4.6 million increase was primarily attributable to the
nonrecurring expense associated with the $4.0 million contribution to the
Jefferson Federal Charitable Foundation and to expenses associated with the
Employee Stock Ownership Plan.
Nonperforming assets totaled $2.0 million at December 31, 2003, compared to $3.0
million at June 30, 2003 and $4.2 million at December 31, 2002. The provision
for loan losses decreased $547,000 for the six months ended December 31, 2003,
as there were no additions to the allowance for loan losses during the period.
The allowance for loan losses was $2.6 million, or 1.38% of gross loans, at
December 31, 2003 compared to $2.7 million, or 1.40% of gross loans, at December
31, 2002. Net charge-offs amounted to $109,000 and $259,000 for the three and
six month period ended December 31, 2003 compared to $165,000 and $553,000 for
the comparable periods in 2002.
Total assets at December 31, 2003 were $314.8 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 in the following quarter.
Net loans increased $2.5 million, or 1.4%, to $182.5 million at December 31,
2003, compared to $180.0 million at June 30, 2003. Investment securities
increased $36.1 million, or 47.3%, to $112.5 million at December 31 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 $59.9 million to $96.5 million at December 31, 2003
due primarily to $64.5 million in net proceeds from the conversion. As a result
of a net loss for the six month period combined with dividends paid to
shareholders, retained earnings decreased $1.3 million to $31.4 million at
December 31, 2003.
Jefferson Bancshares, Inc. is the holding company for Jefferson Federal Bank, 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. More information
about Jefferson Bancshares and Jefferson Federal Bank can be found at its
website: www.jeffersonfederal.com.
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
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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 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
DEC. 31, 2003 JUNE 30, 2003
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FINANCIAL CONDITION DATA:
Total assets $ 314,780 $ 363,602
Loans receivable, net 182,465 180,010
Cash and cash equivalents, and
interest-bearing deposits 7,700 96,543
Investment securities 112,499 76,400
Deposits 215,661 324,247
Borrowings 2,000 2,000
Stockholders' equity $ 96,561 $ 36,625
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
2003 2002 2003 2002
-------------- -------------- ------------ -----------------
OPERATING DATA:
Interest income $ 4,063 $ 4,367 $ 8,205 $ 8,944
Interest expense 1,264 1,729 2,593 3,576
Net interest income 2,799 2,638 5,612 5,368
Provision for loan losses - 240 - 547
Net interest income after
provision for loan losses 2,799 2,398 5,612 4,821
Noninterest income 252 235 486 519
Noninterest expense 1,514 1,304 7,062 2,534
Earnings before income taxes 1,537 1,329 (964) 2,806
Total income taxes 571 503 (339) 1,054
Net earnings $ 966 $ 826 $ (625) $ 1,752
PER SHARE DATA:
Earnings per share, basic $ 0.12 $ 0.10 * $ (0.07) $ 0.22 *
Earnings per share, diluted $ 0.11 $ 0.10 * $ (0.07) $ 0.22 *
Dividends per share $ 0.04 $ 0.029 * $ 0.08 $ 0.059 *
* Per share amounts have been adjusted to reflect the exchange of shares in the conversion
SIX MONTHS ENDED DECEMBER 31,
2003 2002
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ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,841 $ 2,696
Provision for loan losses - 547
Recoveries 174 278
Charge-offs (433) (831)
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Net charge-offs (259) (553)
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Allowance at end of period $ 2,582 $ 2,690
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Net charge-offs to average outstanding
loans during the period 0.28% 0.58%
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AT AT AT
DEC. 31, 2003 JUNE 30, 2003 DEC. 31, 2002
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NONPERFORMING ASSETS:
Nonaccrual loans:
Real Estate $ 1,184 $ 1,739 $ 2,326
Commercial business - - -
Consumer 5 17 53
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Total 1,189 1,756 2,379
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Real estate owned 846 1,227 1,775
Other nonperforming assets 1 16 72
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Total nonperforming assets $ 2,036 $ 2,999 $ 4,226
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SIX SIX
MONTHS ENDED YEAR ENDED MONTHS ENDED
DEC. 31, 2003 JUNE 30, 2003 DEC. 31, 2002
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PERFORMANCE RATIOS:
Return on average assets NM 1.32% 1.33%
Return on average equity NM 10.25% 10.25%
Interest rate spread 2.94% 3.66% 3.79%
Net interest margin 3.66% 4.10% 4.20%
Efficiency ratio 116.23% 45.30% 43.64%
Efficiency ratio (excludes $4.0 million
contribution to the Charitable Foundation 50.39% 45.30% 43.64%
Average interest-earning assets to
average interest-bearing liabilities 142.98% 117.67% 114.47%
CAPITAL RATIOS:
Tangible capital 21.59% 9.75% 13.00%
Core capital 21.59% 9.75% 13.00%
Risk-based capital 38.21% 21.06% 22.38%
Average equity to average assets 30.19% 12.90% 12.94%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.38% 1.54% 1.40%
Allowance for loan losses as a
percent of nonperforming loans 217.16% 161.79% 113.07%
Nonperforming loans as a percent
of gross loans 0.63% 0.95% 1.24%
Nonperforming assets as as percent
of total assets 0.65% 0.82% 1.62%