JEFFERSON BANCSHARES ANNOUNCES QUARTERLY EARNINGS
Morristown, Tennessee -- (October 28, 2005) - Jefferson Bancshares, Inc.
(Nasdaq: JFBI), the holding company for Jefferson Federal Bank, announced net
income of $785,000, or $0.12 per diluted share, for the quarter ended September
30, 2005 compared to net income of $952,000, or $0.12 per diluted share, for the
quarter ended September 30, 2004. Net income for the quarter ended September 30,
2005 was adversely affected by an increase in noninterest expense related to
expansion activities in Knoxville, Tennessee, as well as our adoption of
Financial Accounting Standards Board's ("FASB") Statement 123R, which requires
the expensing of stock options.
Annualized return on average assets for the three months ended September 30,
2005 was 1.05% compared to 1.22% for the same period in 2004. Annualized return
on average equity was 3.87% for the three months ended September 30, 2005
compared to 4.09% for the same period in 2004.
Net interest income increased $21,000 to $2.8 million for the quarter ended
September 30, 2005 from the corresponding quarter in 2004. The interest rate
spread and net interest margin for the quarter ended September 30, 2005 were
3.38% and 4.06%, respectively, compared to 3.17% and 3.78% for the same period
in 2004. The increase in short-term interest rates has improved the yield on
earning assets; however, our cost of funds has also been affected by the
increase in rates. Interest income increased $306,000, or 7.9%, to $4.2 million
for the three-month period ended September 30, 2005 due to an increase of 79
basis points in the yield on earning assets more than offsetting a decline in
the volume of earning assets. Interest expense increased $285,000, or 26.0%, to
$1.4 million for the quarter ended September 30, 2005, due to an increase of 57
basis points in the average rate paid on interest-bearing liabilities.
Noninterest income increased $211,000, or 73.0%, to $500,000 for the quarter
ended September 30, 2005 from the corresponding 2004 quarter. Mortgage
origination fee income accounted for the largest increase in noninterest income
with $186,000 for the current three-month period and no comparable income from
mortgage originations in 2004. Gain on sale of foreclosed property was $77,000
for the three months ended September 30, 2005 compared to $28,000 for the same
period in 2004.
Noninterest expense increased $497,000, or 30.6%, to $2.1 million for the
three-month period ended September 30, 2005, primarily due to an increase in
compensation expense. Compensation expense increased $342,000, or 36.4%, to $1.3
million for the three-month period ended September 30, 2005, primarily due to
staff additions for both the lending office in Knoxville, Tennessee which opened
on January 1, 2005 and our two Knoxville, Tennessee branch offices anticipated
to open in 2006. On July 1, 2005, we adopted FASB Statement No.123R,
"Share-Based Payment" which requires the expensing of stock options at fair
value. Accordingly, for the three months ended September 30, 2005, compensation
expense included $66,000 related to the expensing of stock options.
Nonperforming assets totaled $480,000, or 0.16% of total assets at September 30,
2005, compared to $1.3 million, or 0.45% of total assets at June 30, 2005.
Annualized net charge-offs for the three months ended September 30, 2005 were
..02% of average loans for the quarter, compared to .01% for the same period in
2004. The allowance for loan losses was $2.3 million, or 1.05% of total gross
loans, at September 30, 2005 compared to $2.3 million, or 1.09% of total gross
loans, at June 30, 2005. There were no additions to the allowance for loan
losses for either period.
Total assets at September 30, 2005 were $300.2 million compared to $295.0
million at June 30, 2005. During the quarter ended September 2005, net loans
receivable increased $6.6 million, or 3.2%, to $215.0 million, due to growth in
real estate and consumer loans. Investment securities decreased $5.9 million, or
11.1%, to $47.5 million at September 30, 2005, compared to $53.4 million at June
30, 2005 due primarily to sales of investment securities. Proceeds from the sale
of investment securities were used to fund stock repurchases and to fund growth
in the loan portfolio. Total deposits increased $1.4 million to $196.1 million
at September 30, 2005 as a result of a $3.3 million increase in transaction
accounts, more than offsetting a $1.9 million decrease in certificates of
deposit. Transaction accounts represented 39.2% of total deposits at September
30, 2005 compared to 37.8% at June 30, 2005 and 33.1% at September 30, 2004.
Total equity decreased $1.2 million, or 1.5%, to $80.8 million at September 30,
2005 due to a combination of factors, including the repurchase of shares in the
amount of $1.8 million and dividend payments of $429,000, more than offsetting
net income of $785,000. Stock repurchases for the three months ended September
30, 2005 totaled 137,981 shares at an average cost of $13.16 per share. An
additional 433,739 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 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
SEPT. 30, 2005 JUNE 30, 2005
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(Dollars in thousands)
FINANCIAL CONDITION DATA:
Total assets $ 300,191 $ 295,041
Loans receivable, net 215,040 208,438
Cash and cash equivalents, and
interest-bearing deposits 17,074 11,027
Investment securities 47,452 53,366
Deposits 196,075 194,706
Borrowings 22,000 17,000
Stockholders' equity 80,784 82,028
THREE MONTHS ENDED SEPTEMBER 30,
2005 2004
--------------------- ---------------------
(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $ 4,194 $ 3,888
Interest expense 1,380 1,095
Net interest income 2,814 2,793
Provision for loan losses - -
Net interest income after
provision for loan losses 2,814 2,793
Noninterest income 500 289
Noninterest expense 2,119 1,622
Earnings before income taxes 1,195 1,460
Total income taxes 410 508
Net earnings 785 952
SHARE DATA:
Earnings per share, basic $ 0.12 $ 0.12
Earnings per share, diluted $ 0.12 $ 0.12
Dividends per share $ 0.06 $ 0.05
Weighted average shares:
Basic 6,620,320 7,701,618
Diluted 6,633,489 7,717,483
THREE MONTHS ENDED SEPT. 30,
2005 2004
--------------------- ---------------------
(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 2,293 $ 2,479
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Provision for loan losses - -
Recoveries 36 112
Charge-offs (48) (119)
---------- ----------
Net Charge-offs (12) (7)
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Allowance at end of period $ 2,281 $ 2,472
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Net charge-offs to average outstanding
loans during the period, annualized 0.02% 0.01%
AT AT AT
SEPT. 30, 2005 JUNE 30, 2005 SEPT. 30, 2004
--------------------- --------------------- --------------------
(Dollars in thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $ 221 $ 426 $ 2,280
Commercial business - - 33
Consumer - - 23
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Total 221 426 2,336
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Real estate owned 259 914 503
Other nonperforming assets - - -
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Total nonperforming assets $ 480 $ 1,340 $ 2,839
========= ======== =========
THREE
MONTHS ENDED YEAR ENDED
SEPT. 30, 2005 JUNE 30, 2005
--------------------- ---------------------
PERFORMANCE RATIOS:
Return on average assets 1.05% 1.14%
Return on average equity 3.87% 3.92%
Interest rate spread 3.38% 3.24%
Net interest margin 4.06% 3.88%
Efficiency ratio 62.61% 57.17%
Average interest-earning assets to
average interest-bearing liabilities 133.92% 139.49%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 1.05% 1.09%
Allowance for loan losses as a
percent of nonperforming loans 1032.13% 538.26%
Nonperforming loans as a percent
of total loans 0.10% 0.20%
Nonperforming assets as a percent
of total assets 0.16% 0.45%
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Contacts:
Jefferson Bancshares, Inc.
Anderson L. Smith, 423-586-8421
or
Jane P. Hutton, 423-586-8421