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Exhibit 99.1
JEFFERSON BANCSHARES, INC. ANNOUNCES 50% INCREASE IN
EARNINGS FOR THE QUARTER ENDED SEPTEMBER 30, 2007
Morristown, Tennessee -- (October 25, 2007) - Jefferson Bancshares, Inc.
(Nasdaq: JFBI), the holding company for Jefferson Federal Bank, announced net
income of $434,000, or $0.07 per diluted share, for the quarter ended September
30, 2007, an increase of 49.7% over net income of $290,000, or $0.05 per diluted
share, for the quarter ended September 30, 2006. The increase in net income for
the three-month period ended September 30, 2007 was the result of an increase in
net interest income and noninterest income combined with a decrease in
noninterest expense. Return on average assets and return on average equity for
the three months ended September 30, 2007 were 0.52% and 2.35%, respectively,
compared to 0.35% and 1.55% for the corresponding period in 2006.
Anderson L. Smith, President and Chief Executive Officer, commented, "We are
pleased to report that earnings for the 2008 first quarter increased 50% over
last year's first quarter as a result of our ongoing strategic efforts. We
experienced strong deposit growth during the quarter that reduced our reliance
on other borrowings and should result in a gradual improvement in our overall
cost of funds. However, competition for loans and deposits is very intense and
the interest rate environment continues to be challenging for financial
institutions. We continue to focus on attracting new customer relationships and
expanding our banking products and services to satisfy our customers' financial
needs."
Net interest income increased $152,000, or 5.5%, to $2.9 million for the quarter
ended September 30, 2007 from the corresponding quarter in 2006. The interest
rate spread and net interest margin for the quarter ended September 30, 2007
were 2.91% and 3.72%, respectively, compared to 2.84% and 3.62% for the same
period in 2006. Interest income increased $277,000, or 5.4%, to $5.4 million for
the quarter ended September 30, 2007 primarily as a result of loan growth and
higher yields in the loan portfolio. Interest expense increased $125,000, or
5.2%, to $2.5 million for the quarter ended September 30, 2007, primarily due to
growth in interest-bearing deposits combined with higher average rates paid on
deposits, partially offset by a lower volume and lower rate paid on Federal Home
Loan Bank ("FHLB") borrowings.
Noninterest income increased $25,000, or 6.5%, to $412,000 for the quarter
ended September 30, 2007 compared to the corresponding 2006 period primarily due
to increases in service charges and fees and an increase in gain on sale of
foreclosed property that more than offset a decrease in mortgage origination
income.
Noninterest expense decreased $97,000, or 3.6%, to $2.6 million for the quarter
ended September 30, 2007 compared to the corresponding period in 2006 due to a
decrease in compensation and benefits and advertising expense.
Nonperforming assets increased to 0.40% of total assets at September 30, 2007,
compared to 0.08% of total assets at September 30, 2006, primarily due to a
large commercial relationship that was moved to nonaccrual status during the
quarter. Net charge-offs for the three months ended September 30, 2007 were
$68,000, or 0.10% of average loans, compared to $28,000, or 0.04% of average
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loans, for the same period in 2006. The allowance for loan losses was $2.0
million, or 0.71% of total gross loans, at September 30, 2007 compared to $2.1
million, or 0.80% of total gross loans at September 30, 2006. The provision for
loan losses totaled $68,000 for the three months ended September 30, 2007
primarily as a result of growth in the loan portfolio, compared to no provision
for loan losses for the three months ended September 30, 2006.
Total assets at September 30, 2007 were $335.5 million compared to $339.7
million at June 30, 2007. Net loans receivable decreased $2.5 million, or 0.9%,
to $272.4 million at September 30, 2007, primarily due to a decline in real
estate and consumer loans. Total deposits increased $9.1 million, or 4.2%, to
$229.2 million at September 30, 2007 as a result of marketing efforts and
certificate of deposit specials. The increase in deposits has reduced our
reliance on FHLB advances during the three months ended September 30, 2007. FHLB
advances were $31.0 million at September 30, 2007, a decrease of $13.8 million,
or 30.8%, compared to $44.8 million at June 30, 2007.
Total stockholders' equity increased $321,000 to $74.0 million at September 30,
2007f. Stock repurchases for the three months ended September 30, 2007 totaled
16,631 shares at an average cost of $11.73 per share. On February 24, 2006, the
Company announced its third stock repurchase program in which up to 690,261
shares, or 10% of the Company's outstanding common stock, may be repurchased. At
September 30, 2007, 315,945 shares remained eligible for repurchase under the
current stock repurchase program. The Company paid a $0.06 per share dividend to
shareholders during the quarter ended September 30, 2007 totaling $384,000.
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 with offices in Hamblen and Knox
Counties, Tennessee. The Company's stock is listed on the NASDAQ Global Market
under the symbol "JFBI." More information about Jefferson Bancshares and
Jefferson Federal Bank can be found at its website: www.jeffersonfederal.com.
This press release, as well as other written communications made from time to
time by the Company and its subsidiaries and oral communications made from time
to time by authorized officers of the Company, may contain statements relating
to the future results of the Company (including certain projections and business
trends) that are considered "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such
forward-looking statements may be identified by the use of such words as
"believe," "expect," "anticipate," "should," "planned," "estimated," "intend"
and "potential." For these statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the PSLRA.
The Company cautions you that a number of important factors could cause actual
results to differ materially from those currently anticipated in any
forward-looking statement. Such factors include, but are not limited to:
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prevailing economic and geopolitical conditions; changes in interest rates, loan
demand, real estate values and competition; changes in accounting principles,
policies and guidelines; changes in any applicable law, rule, regulation or
practice with respect to tax or legal issues; and other economic, competitive,
governmental, regulatory and technological factors affecting the Company's
operations, pricing, products and services and other factors that may be
described in the Company's annual report on Form 10-K and quarterly reports on
Form 10-Q as filed with the Securities and Exchange Commission. The
forward-looking statements are made as of the date of this release, and, except
as may be required by applicable law or regulation, the Company assumes no
obligation to update the forward-looking statements or to update the reasons why
actual results could differ from those projected in the forward-looking
statements.
Contacts:
Jefferson Bancshares, Inc.
Anderson L. Smith, President and Chief Executive Officer 423-586-8421
Jane P. Hutton, Chief Financial Officer 423-586-8421
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JEFFERSON BANCSHARES, INC.
<Table>
<Caption>
AT AT
SEPTEMBER 30, 2007 JUNE 30, 2007
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(Dollars in thousands)
FINANCIAL CONDITION DATA:
Total assets $ 335,457 $ 339,703
Loans receivable, net 272,353 274,881
Cash and cash equivalents, and
interest-bearing deposits 10,139 7,734
Investment securities 25,503 27,278
Deposits 229,218 220,082
Borrowings 31,000 44,800
Stockholders' equity 73,965 73,644
</Table>
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
2007 2006
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(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $ 5,411 $ 5,134
Interest expense 2,510 2,385
Net interest income 2,901 2,749
Provision for loan losses 68 -
Net interest income after
provision for loan losses 2,833 2,749
Noninterest income 412 387
Noninterest expense 2,569 2,666
Earnings before income taxes 676 470
Total income taxes 242 180
Net earnings 434 290
SHARE DATA:
Earnings per share, basic $ 0.07 $ 0.05
Earnings per share, diluted $ 0.07 $ 0.05
Dividends per share $ 0.06 $ 0.06
Weighted average shares:
Basic 5,879,990 6,041,551
Diluted 5,879,990 6,049,466
</Table>
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
2007 2006
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(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 1,955 $ 2,172
Provision for loan losses 68 -
Recoveries 10 25
Charge-offs (78) (53)
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Net Charge-offs (68) (28)
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Allowance at end of period $ 1,955 $ 2,144
========== =========
Net charge-offs to average outstanding
loans during the period 0.10% 0.04%
</Table>
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<Table>
<Caption>
AT AT AT
SEPTEMBER 30, 2007 JUNE 30, 2007 SEPTEMBER 30, 2006
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(Dollars in thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $ 1,245 $ 251 $ 138
Commercial business - - 50
Consumer 6 - 17
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Total 1,251 251 205
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Real estate owned 100 275 66
Other nonperforming assets - - -
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Total nonperforming assets $ 1,351 $ 526 $ 271
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</Table>
<Table>
<Caption>
THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2007 JUNE 30, 2007
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PERFORMANCE RATIOS:
Return on average assets 0.52% 0.51%
Return on average equity 2.35% 2.28%
Interest rate spread 2.91% 2.93%
Net interest margin 3.72% 3.73%
Efficiency ratio 77.55% 79.11%
Average interest-earning assets to
average interest-bearing liabilities 124.98% 125.18%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 0.71% 0.71%
Allowance for loan losses as a
percent of nonperforming loans 156.27% 778.88%
Nonperforming loans as a percent
of total loans 0.46% 0.09%
Nonperforming assets as a percent
of total assets 0.40% 0.15%
</Table>