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JEFFERSON BANCSHARES ANNOUNCES QUARTERLY AND YEAR END EARNINGS
Morristown, Tennessee -- (July 29, 2005) - Jefferson Bancshares, Inc. (Nasdaq:
JFBI), the holding company for Jefferson Federal Bank, announced net income of
$754,000, or $0.11 per diluted share, for the quarter ended June 30, 2005
compared to net income of $979,000, or $0.13 per diluted share, for the quarter
ended June 30, 2004. Net income for the fourth quarter was adversely affected by
an increase in noninterest expense related to expansion activities in Knoxville,
Tennessee. For the year ended June 30, 2005, the Company reported net income of
$3.5 million compared to net income of $1.4 million for the year ended June 30,
2004. Net income for the year ended June 30, 2004 reflected the nonrecurring
expense associated with the $4.0 million contribution to the Jefferson Federal
Charitable Foundation which was formed in July 2003.
Net interest income decreased $87,000, or 3.1%, to $2.7 million for the quarter
ended June 30, 2005. The interest rate spread and net interest margin for the
quarter ended June 30, 2005 were 3.22% and 3.89%, respectively, compared to
3.25% and 3.87% for the same period in 2004. Interest income increased $128,000,
or 3.3%, to $4.0 million for the three-month period ended June 30, 2005 as a
decline in the volume of interest-earning assets was offset by an increase in
the average yield. Interest expense increased $215,000, or 20.4%, to $1.3
million for the quarter ended June 30, 2005, due to an increase in the average
rate paid on deposits and to an increase in the average balance of Federal Home
Loan Bank ("FHLB") advances. For the year ended June 30, 2005, net interest
income decreased $151,000 to $11.1 million due primarily to a decrease in the
volume of investment securities. For the year ended June 30, 2005, the interest
rate spread and net interest margin were 3.24% and 3.88%, respectively, compared
to 3.08% and 3.76% for fiscal 2004.
Noninterest income increased $99,000, or 31.3%, to $415,000 for the three months
ended June 30, 2005 primarily due to increases in mortgage origination fee
income and gain on sale of investment securities more than offsetting declines
in service charges and fees and gain on sale of foreclosed property. Mortgage
origination fee income increased due to the initiation of secondary market
operations. Noninterest income increased $137,000, or 12.8%, to $1.2 million for
the year ended June 30, 2005 as a result of increases in mortgage origination
fee income and cash surrender value of bank owned life insurance.
Noninterest expense increased $418,000, or 27.3%, to $2.0 million for the
three-month period ended June 30, 2005, primarily due to an increase in
compensation expense. Compensation expense increased $355,000, or 44.1%, to $1.2
million for the three-month period ended June 30, 2005, 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 $24,000 for the three-month period ended
June 30, 2005 and approximately $75,000 for the year ended June 30, 2005. We
expect that ongoing fees for professional services will exceed historical levels
due to the Sarbanes Oxley Act of 2002. For the year ended June 30, 2005,
noninterest expense totaled $7.0 million compared to $10.3 million for the same
period in 2004. The $3.2 million decrease was primarily attributable to the
nonrecurring
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expense associated with the $4.0 million contribution to the Jefferson Federal
Charitable Foundation during the year ended June 30, 2004.
Nonperforming assets totaled $1.3 million, or 0.45% of total assets at June 30,
2005, compared to $1.6 million, or 0.54% of total assets at June 30, 2004. There
were no additions to the allowance for loan losses for either period. The
allowance for loan losses was $2.3 million, or 1.07% of total gross loans, at
June 30, 2005 compared to $2.5 million, or 1.31% of total gross loans, at June
30, 2004. Net charge-offs amounted to $186,000 for 2005 compared to $362,000 for
2004.
Total assets at June 30, 2005 were $295.0 million compared to $305.5 million at
June 30, 2004. Total loans increased $25.0 million, or 13.4%, to $211.6 million
at June 30, 2005, compared to $186.6 million at June 30, 2004. The majority of
the growth in the loan portfolio was concentrated in the commercial business
segment. Investment securities decreased $41.6 million, or 43.8%, to $53.4
million at June 30, 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 $10.2 million, or 5.0%, to $194.7 million at June 30, 2005
due to a decline in certificates of deposit more than offsetting an increase in
transaction accounts. Transaction accounts accounted for 37.8% of total deposits
at June 30, 2005 compared to 32.2% at June 30, 2004.
Total equity decreased $11.4 million, or 12.2%, to $82.0 million at June 30,
2005 due to a combination of factors, including the repurchase of shares in the
amount of $14.6 million and dividend payments of $1.9 million more than
offsetting net income of $3.5 million.
Return on average assets for the year ended June 30, 2005 was 1.14% compared to
0.44% for the year ended June 30, 2004. Return on average equity was 3.92% for
the year ended June 30, 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 2005 fiscal year.
Stock repurchases for the three and twelve months ended June 30, 2005 totaled
277,280 shares at an average cost of $13.17 per share and 1,105,832 shares at an
average cost of $13.20 per share, respectively. An additional 571,720 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.
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
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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
JUNE 30, 2005 JUNE 30, 2004
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(In thousands)
FINANCIAL CONDITION DATA:
Total assets $ 295,041 $ 305,474
Loans receivable, net 211,575 186,601
Cash and cash equivalents, and
interest-bearing deposits 11,027 6,411
Investment securities 53,366 95,005
Deposits 194,706 204,933
Borrowings 17,000 6,000
Stockholders' equity $ 82,028 $ 93,383
THREE MONTHS ENDED YEAR ENDED
JUNE 30, JUNE 30,
------------------------------------- --------------------------------------
2005 2004 2005 2004
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(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $ 3,994 $ 3,866 $ 15,779 $ 16,067
Interest expense 1,268 1,053 4,639 4,776
Net interest income 2,726 2,813 11,140 11,291
Provision for loan losses - - - -
Net interest income after
provision for loan losses 2,726 2,813 11,140 11,291
Noninterest income 415 316 1,204 1,067
Noninterest expense 1,951 1,533 7,031 10,265
Earnings before income taxes 1,190 1,596 5,313 2,093
Total income taxes 436 617 1,863 706
Net earnings $ 754 $ 979 $ 3,450 $ 1,387
SHARE DATA:
Earnings per share, basic $ 0.11 $ 0.13 $ 0.47 $ 0.18
Earnings per share, diluted $ 0.11 $ 0.13 $ 0.47 $ 0.18
Dividends per share $ 0.10 $ 0.09 $ 0.25 $ 0.21
Weighted average shares:
Basic 6,929,559 7,737,418 7,265,831 7,723,215
Diluted 6,940,069 7,736,135 7,282,327 7,765,481
YEAR ENDED JUNE 30,
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2005 2004
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(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,479 $ 2,841
Provision for loan losses - -
Recoveries 289 263
Charge-offs (475) (625)
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Net Charge-offs (186) (362)
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Allowance at end of period $ 2,293 $ 2,479
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Net charge-offs to average outstanding
loans during the period, annualized 0.09% 0.19%
AT AT
JUNE 30, JUNE 30,
2005 2004
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(In thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $ 426 $ 1,047
Commercial business - 15
Consumer - 21
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Total 426 1,083
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Real estate owned 914 552
Other nonperforming assets - -
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Total nonperforming assets $ 1,340 $ 1,635
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YEAR ENDED YEAR ENDED
JUNE 30, 2005 JUNE 30, 2004
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PERFORMANCE RATIOS:
Return on average assets 1.14% 0.44%
Return on average equity 3.92% 1.46%
Interest rate spread 3.24% 3.08%
Net interest margin 3.88% 3.76%
Efficiency ratio 57.17% 83.21% (1)
Average interest-earning assets to
average interest-bearing liabilities 139.49% 143.13%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.07% 1.31%
Allowance for loan losses as a
percent of nonperforming loans 538.26% 228.90%
Nonperforming loans as a percent
of total loans 0.20% 0.58%
Nonperforming assets as a percent
of total assets 0.45% 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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Contacts:
Jefferson Bancshares, Inc., Morristown
Anderson L. Smith 423-586-8421
or
Jane P. Hutton 423-586-8421