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JEFFERSON BANCSHARES ANNOUNCES THIRD QUARTER RESULTS
Morristown, Tennessee -- (April 29, 2005) - Jefferson Bancshares, Inc. (Nasdaq:
JFBI), the holding company for Jefferson Federal Bank, announced net income of
$862,000, or $0.12 per diluted share, for the quarter ended March 31, 2005
compared to net income of $1.0 million, or $0.13 per diluted share, for the
quarter ended March 31, 2004. Net income for the three-month period in 2005
reflects an increase in noninterest expense related to the lending office in
Knoxville, Tennessee which opened on January 1, 2005. The most significant item
contributing to the overall increase in noninterest expense was compensation
expense, which increased $170,000 for the quarter ended March 31, 2005 compared
to the same period in 2004. For the nine-month period ended March 31, 2005, the
Company reported net income of $2.7 million compared to net income of $408,000
for the comparable period in 2004. Net income for the nine-month period in 2004
reflects the nonrecurring expense associated with the $4.0 million contribution
to the Jefferson Federal Charitable Foundation which was formed in connection
with the Company's conversion and 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 decreased $31,000, or 1.1%, to $2.8 million for the quarter
ended March 31, 2005. The net interest margin improved 15 basis points to 4.02%
for the quarter ended March 31, 2005. Interest income remained steady at $4.0
million for the current three-month period as a decline in the volume of
interest-earning assets was offset by an increase in the average yield. Interest
expense increased $35,000, or 3.1%, to $1.2 million for the quarter ended March
31, 2005, primarily due to an increase in the average rate paid on deposits. The
interest rate spread was 3.36% and 3.20% for the quarters ended March 31, 2005
and 2004, respectively. For the nine months ended March 31, 2005, net interest
income decreased $64,000 to $8.4 million due primarily to a decrease in the
volume of investment securities. For the nine months ended March 31, 2005, the
interest rate spread and net interest margin was 3.25% and 3.88%, respectively,
compared to 3.02% and 3.73% for the same period in 2004.
Noninterest income increased $62,000, or 23.4%, to $327,000 for the three months
ended March 31, 2005 primarily due to an increase in mortgage origination fee
income, an increase in gain on sale of foreclosed property and an increase in
the cash surrender value of bank owned life insurance more than offsetting a
decline in service charges and fees. Noninterest income increased $38,000, or
5.1%, to $789,000 for the nine months ended March 31, 2005 as a result of an
increase in mortgage origination fee income and an increase in the cash
surrender value of bank owned life insurance more than offsetting a decline in
service charges and fees and a loss on sale of investment securities.
Noninterest expense increased $245,000, or 14.7%, to $1.9 million for the
three-month period ended March 31, 2005, primarily due to an increase in
compensation expense. Compensation expense increased $170,000, or 18.9%, to $1.1
million for the current three-month period primarily due to staff additions for
the lending office in Knoxville, Tennessee which opened on January 1, 2005.
Consulting fees relating to the internal control requirement of the
Sarbanes-Oxley Act of 2002 amounted to $50,000 for the three-month period ended
March 31, 2005. We expect that ongoing fees for professional services will
exceed historical levels due to the Sarbanes Oxley Act of 2002. For the
nine-month period ended March 31, 2005, noninterest expense totaled $5.1 million
compared to $8.7 million for the same period in 2004. The $3.7 million decrease
was primarily attributable to the nonrecurring expense associated with the $4.0
million contribution to the Jefferson Federal Charitable Foundation during the
nine months ended March 31, 2004.
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Nonperforming assets totaled $1.5 million at March 31, 2005, compared to $1.6
million at June 30, 2004 and $2.0 million at March 31, 2004. There were no
additions to the allowance for loan losses for either period. The allowance for
loan losses was $2.3 million, or 1.18% of total gross loans, at March 31, 2005
compared to $2.5 million, or 1.34% of total gross loans, at March 31, 2004. Net
charge-offs amounted to $50,000 and $141,000 for the three- and nine-month
period ended March 31, 2005 compared to $58,000 and $317,000 for the comparable
periods in 2004.
Total assets at March 31, 2005 were $294.5 million compared to $305.5 million at
June 30, 2004. Total loans increased $8.3 million, or 4.5%, to $194.9 million at
March 31, 2005, compared to $186.6 million at June 30, 2004. Investment
securities decreased $24.9 million, or 26.2%, to $70.1 million at March 31,
2005, compared to $95.0 million at June 30, 2004. The decrease in investment
securities was due primarily to the deployment of conversion proceeds into stock
repurchases and higher yielding assets. Total deposits decreased $8.2 million,
or 4.0%, to $196.6 million at March 31, 2004 due to a decline in certificates of
deposit more than offsetting an increase in demand deposits.
Total equity decreased $8.4 million, or 9.0%, to $85.0 million at March 31, 2005
due to a combination of factors, including the repurchase of shares in the
amount of $10.9 million and dividend payments of $1.2 million more than
offsetting net income of $2.7 million.
Return on average assets for the nine months ended March 31, 2005 was 1.18%
compared to 0.44% for the year ended June 30, 2004. Return on average equity was
4.01% for the nine months ended March 31, 2005 compared to 1.46% for the year
ended June 30, 2004. The improvement in the return on average equity was aided
by stock repurchases during the current nine-month period.
Stock repurchases for the three and nine months ended March 31, 2005 totaled
255,356 shares at an average cost of $13.24 per share and 828,552 shares at an
average cost of $13.21 per share, respectively. An additional 10,000 shares
remain eligible for repurchase under the current stock repurchase program.
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 and a lending office
in Knoxville, Tennessee. More information about Jefferson Bancshares and
Jefferson Federal Bank can be found at its website: www.jeffersonfederal.com.
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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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JEFFERSON BANCSHARES, INC.
AT AT
MARCH 31, 2005 JUNE 30, 2004
------------------- --------------------
(In thousands)
FINANCIAL CONDITION DATA:
Total assets $ 294,500 $ 305,474
Loans receivable, net 194,943 186,601
Cash and cash equivalents, and
interest-bearing deposits 11,904 6,411
Investment securities 70,078 95,005
Deposits 196,641 204,933
Borrowings 12,000 6,000
Stockholders' equity $ 84,958 $ 93,383
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31,
2005 2004 2005 2004
---------------- ------------------- ---------------- ---------------
(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $ 4,000 $ 3,996 $ 11,786 $ 12,201
Interest expense 1,165 1,130 3,372 3,723
Net interest income 2,835 2,866 8,414 8,478
Provision for loan losses - - - -
Net interest income after
provision for loan losses 2,835 2,866 8,414 8,478
Noninterest income 327 265 789 751
Noninterest expense 1,915 1,670 5,079 8,732
Earnings before income taxes 1,247 1,461 4,124 497
Total income taxes 385 428 1,428 89
Net earnings $ 862 $ 1,033 $ 2,696 $ 408
SHARE DATA:
Earnings per share, basic $ 0.12 $ 0.13 $ 0.36 $ 0.05
Earnings per share, diluted $ 0.12 $ 0.13 $ 0.36 $ 0.05
Dividends per share $ 0.05 $ 0.04 $ 0.15 $ 0.12
Weighted average shares:
Basic 7,171,692 7,737,418 7,443,856 7,718,515
Diluted 7,188,557 7,784,096 7,462,315 7,765,484
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31,
2005 2004 2005 2004
---------------- ------------------- ---------------- ---------------
(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,388 $ 2,582 $ 2,479 $ 2,841
Provision for loan losses - - - -
Recoveries 66 44 252 219
Charge-offs (116) (102) (393) (536)
----------------- ------------------- --------------- ----------------
Net Charge-offs (50) (58) (141) (317)
----------------- ------------------- --------------- -----------------
Allowance at end of period $ 2,338 $ 2,524 $ 2,338 $ 2,524
================= =================== =============== =================
Net charge-offs to average outstanding
loans during the period, annualized 0.10% 0.12% 0.09% 0.23%
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AT AT AT
MARCH 31, 2005 JUNE 30, 2004 MARCH 31, 2004
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(In thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $ 296 $ 1,047 $ 1,225
Commercial business 46 15 20
Consumer - 21 32
------------------- -------------------- -------------------
Total 342 1,083 1,277
------------------- -------------------- -------------------
Real estate owned 1,143 552 670
Other nonperforming assets - - 3
------------------- -------------------- -------------------
Total nonperforming assets $ 1,485 $ 1,635 $ 1,950
=================== ==================== ===================
NINE
MONTHS ENDED YEAR ENDED
MARCH 31, 2005 JUNE 30, 2004
------------------- --------------------
PERFORMANCE RATIOS:
Return on average assets 1.18% 0.44%
Return on average equity 4.01% 1.46%
Interest rate spread 3.25% 3.08%
Net interest margin 3.88% 3.76%
Efficiency ratio 54.94% 83.21% (1)
Average interest-earning assets to
average interest-bearing liabilities 140.25% 143.13%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.18% 1.31%
Allowance for loan losses as a
percent of nonperforming loans 683.63% 228.90%
Nonperforming loans as a percent
of total loans 0.18% 0.58%
Nonperforming assets as a percent
of total assets 0.50% 0.54%
(1) Excluding the $4.0 million contribution to the Charitable Foundation, the
efficiency ratio for the year ended June 30, 2004 would be 50.78%.
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Contact:
Jefferson Bancshares, Inc., Morristown
Anderson L. Smith 423-586-8421
or
Jane P. Hutton 423-586-8421