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EXHIBIT 99.1
JEFFERSON BANCSHARES REPORTS
QUARTERLY AND YEAR END EARNINGS
Morristown, Tennessee -- (July 29, 2004) - Jefferson Bancshares, Inc. (Nasdaq:
JFBI), the holding company for Jefferson Federal Bank, today reported an 18.0%
increase in net income for the three months ended June 30, 2004 compared to the
same period in 2003. Net income was $979,000, or $0.13 per diluted share, for
the quarter ended June 30, 2004 compared to $830,000, or $0.10 per diluted
share, for the quarter ended June 30, 2003. For the year ended June 30, 2004,
the Company recorded net income of $1.4 million, or $0.18 per diluted share,
compared to net income of $3.6 million, or $0.45 per diluted share, for the year
ended June 30, 2003. The decrease in net income for fiscal 2004 was primarily
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 for fiscal 2004 increased $550,000, or 5.1%, to $11.3
million compared to $10.7 million for fiscal 2003. Due to continuing
improvements in asset quality, there was no provision for loan losses for fiscal
2004 compared to $787,000 for fiscal 2003. Interest income decreased $1.2
million, or 6.9%, to $16.1 million for 2004 due to lower market interest rates
and changes in the volume and composition of interest-earning assets. The
average yield on interest earning assets declined 123 basis points to 5.36% for
2004. Interest expense decreased $1.7 million, or 26.7%, to $4.8 million for the
year due to a decline in the average balance of deposits and a decline in the
average rate paid. The average rate paid on deposits declined 65 basis points to
2.26%. The decline in the average rate paid was the result of lower market rates
and changes in the deposit mix. For the three month period ended June 30, 2004,
net interest income increased $167,000, or 6.3%, to $2.8 million compared to
$2.6 million for the three month period ended June 30, 2003.
Noninterest expense totaled $10.3 million for fiscal 2004 compared to $5.3
million for fiscal 2003. The $5.0 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 and the Stock Based Incentive Plan. Noninterest
expense increased $136,000, or 9.7%, to $1.5 million for the three month period
ended June 30, 2004, primarily due to expenses associated with the Employee
Stock Ownership Plan and the Stock Based Incentive Plan.
Nonperforming assets totaled $1.6 million, or 0.54% of total assets at June 30,
2004, compared to $3.0 million, or 0.82% of total assets at June 30, 2003. The
allowance for loan losses was $2.5 million, or 1.31% of gross loans at June 30,
2004 compared to $2.8 million, or 1.54% of gross loans at June 30, 2003. Net
charge-offs for 2004 amounted to $362,000 compared to $642,000 for 2003.
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Total assets at June 30, 2004 were $305.5 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 were returned to subscribers in the following
quarter. Net loans increased $6.6 million, or 3.7%, to $186.6 million at June
30, 2004, compared to $180.0 million at June 30, 2003. Investment securities
increased $18.6 million, or 24.4%, to $95.0 million at June 30, 2004, 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 $56.8 million to $93.4 million at June 30, 2004 due
primarily to $64.5 million in net proceeds from the conversion. Retained
earnings decreased $335,000 to $32.3 million at June 30, 2004 due to the expense
recognition of our contribution to the Jefferson Federal Charitable Foundation
and the payment of dividends to shareholders.
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 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
JUNE 30, 2004 JUNE 30, 2003
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FINANCIAL CONDITION DATA:
Total assets $ 305,474 $ 363,602
Loans receivable, net 186,601 180,010
Cash and cash equivalents, and
interest-bearing deposits 6,411 96,543
Investment securities 95,005 76,400
Deposits 204,933 324,247
Borrowings 6,000 2,000
Stockholders' equity $ 93,383 $ 36,625
THREE MONTHS ENDED JUNE 30, YEAR ENDED JUNE 30,
2004 2003 2004 2003
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OPERATING DATA:
Interest income $ 3,866 $ 4,093 $ 16,067 $ 17,259
Interest expense 1,053 1,447 4,776 6,518
Net interest income 2,813 2,646 11,291 10,741
Provision for loan losses - - - 787
Net interest income after
provision for loan losses 2,813 2,646 11,291 9,954
Noninterest income 316 218 1,067 979
Noninterest expense 1,533 1,397 10,265 5,273
Earnings before income taxes 1,596 1,467 2,093 5,660
Total income taxes 617 637 706 2,068
Net earnings $ 979 $ 830 $ 1,387 $ 3,592
PER SHARE DATA:
Earnings per share, basic $ 0.13 $ 0.10* $ 0.18 $ 0.45*
Earnings per share, diluted $ 0.13 $ 0.10* $ 0.18 $ 0.45*
Dividends per share $ 0.09 $ 0.08* $ 0.21 $ 0.16*
* Per share amounts have been adjusted to reflect the exchange of shares in the conversion
YEAR ENDED JUNE 30,
2004 2003
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ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,841 $ 2,696
Provision for loan losses - 787
Recoveries 263 435
Charge-offs (625) (1,077)
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Net charge-offs (362) (642)
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Allowance at end of period $ 2,479 $ 2,841
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Net charge-offs to average outstanding
loans during the period 0.19% 0.34%
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AT AT
JUNE 30, 2004 JUNE 30, 2003
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NONPERFORMING ASSETS:
Nonaccrual loans:
Real Estate $ 1,027 $ 1,739
Commercial business 35 -
Consumer 21 17
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Total 1,083 1,756
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Real estate owned 552 1,227
Other nonperforming assets - 16
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Total nonperforming assets $ 1,635 $ 2,999
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YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
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PERFORMANCE RATIOS:
Return on average assets 0.44% 1.32%
Return on average equity 1.46% 10.25%
Interest rate spread 3.08% 3.66%
Net interest margin 3.76% 4.10%
Efficiency ratio 83.21% 45.30%
Efficiency ratio (excludes $4.0 million
contribution to the Charitable Foundation 50.78% 45.30%
Average interest-earning assets to
average interest-bearing liabilities 143.13% 117.67%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.31% 1.54%
Allowance for loan losses as a
percent of nonperforming loans 228.90% 161.79%
Nonperforming loans as a percent
of total loans 0.58% 0.95%
Nonperforming assets as as percent
of total assets 0.54% 0.82%