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EXHIBIT 99.1
JEFFERSON BANCSHARES, INC. ANNOUNCES EARNINGS FOR THE QUARTER AND YEAR ENDED
JUNE 30, 2008
Morristown, Tennessee -- (July 31, 2008) - Jefferson Bancshares, Inc. (NASDAQ:
JFBI), the holding company for Jefferson Federal Bank, announced net income of
$494,000, or $0.09 per diluted share, for the quarter ended June 30, 2008,
compared to net income of $598,000, or $0.10 per diluted share, for the quarter
ended June 30, 2007. The decrease in net income was attributable to a decrease
in net interest income and an increase in both the provision for loan losses and
noninterest expense, partially offset by an increase in noninterest income.
Financial results for the year ended June 30, 2008 included a $667,000 non-cash
charge to deferred income tax expense to establish a valuation allowance against
deferred tax assets. The deferred tax asset written down was the charitable
contribution carryforward directly attributable to the contribution made to the
Jefferson Federal Charitable Foundation in connection with the Company's public
offering in July 2003. The tax benefit of the contribution may not be fully
utilized based on our assessment of future taxable income within the time
allowed by the Internal Revenue Service. This charge to deferred income tax
expense resulted in net income of $1.2 million, or $0.22 per diluted share, for
the year ended June 30, 2008 compared to net income of $1.7 million, or $0.28
per diluted share, for the year ended June 30, 2007. Excluding this tax charge,
core net earnings were $1.9 million, or $0.33 per diluted share, for the year
ended June 30, 2008 compared to GAAP earnings of $1.7 million, or $0.28 per
diluted share, for the corresponding 2007 period. (1)
Anderson L. Smith, President and Chief Executive Officer, commented, "We are
pleased to report solid core financial results for the quarter and fiscal year,
given a challenging operating environment and competitive pressures. Economic
conditions have resulted in weakened loan demand; however our asset quality
remains solid as evidenced by a non- performing loans to total loans ratio of
0.11% at June 30, 2008 compared to 0.09% and 0.13% for the previous two fiscal
years. We continue to focus on improving our core earnings while maintaining
sound asset quality."
Net interest income decreased $115,000, or 3.9%, to $2.8 million for the quarter
ended June 30, 2008 from the corresponding period in 2007. The interest rate
spread and net interest margin for the quarter ended June 30, 2008 were 3.09%
and 3.73%, respectively, compared to 3.04% and 3.84%, respectively, for the same
period in 2007. The decrease in net interest income was driven by lower interest
rates.
For the year ended June 30, 2008, net interest income increased $254,000, or
2.2%, to $11.6 million. The interest rate spread and net interest margin for the
year ended June 30, 2008 were 3.00% and 3.73%, respectively, compared to 2.93%
and 3.73%, respectively, for the same period in 2007. The increase in net
interest income was attributable to a decrease in interest expense. Interest
expense decreased $412,000, or 4.3%, to $9.2 million for the year ended June 30,
2008 primarily due to a lower average balance and decreased cost of borrowings.
Noninterest income increased $49,000, or 14.7%, to $383,000 for the three months
ended June 30, 2008 and increased $165,000, or 12.2%, to $1.5 million for the
year ended June 30, 2008 compared to the corresponding 2007 periods. The largest
increase in noninterest income for both periods was in service charges and fees,
which increased $98,000, or 70.5%, for the three months ended June 30, 2008 and
increased $246,000, or 47.1%, for the year ended June 30, 2008.
Noninterest expense increased $76,000, or 3.1%, to $2.5 million for the
three-month period ended June 30, 2008 and decreased $181,000, or 1.8%, to $9.9
million for the year ended June 30, 2008 compared to the corresponding periods
in 2007. Compensation and benefits expense decreased $129,000, or 8.7%, to $1.4
million for the three-month period ended June 30, 2008 and decreased $493,000,
or 8.2%, to $5.5 million for the year ended June 30, 2008 due to a lower number
of employees.
Nonperforming assets totaled $768,000, or 0.23% of total assets at June 30,
2008, compared to $526,000, or 0.15% of total assets at June 30, 2007. The
increase in nonperforming assets was due to increases in both foreclosed real
estate and nonperforming loans. Net charge-offs for the quarter ended June 30,
2008 were $49,000, or 0.07% of average loans on an annualized basis, compared to
$94,000, or 0.14% of average loans on an annualized basis, for the same period
in 2007. The allowance for loan losses was $1.8 million, or 0.65%, of total
gross loans, at June 30, 2008 compared to $2.0 million, or 0.71%, of total gross
loans at June 30, 2007. A provision for loan losses of $80,000 was recorded for
the three months ended June 30, 2008 due to current economic conditions,
compared to no provision for the comparable period in 2007.
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Total assets at June 30, 2008 were $330.3 million compared to $339.7 million at
June 30, 2007. For fiscal 2008, net loans receivable increased $7.6 million, or
2.8%, to $282.5 million, primarily due to increases in commercial loans. Total
deposits increased $3.5 million, or 1.6%, to $223.6 million at June 30, 2008 as
a result of a $17.3 million increase in transaction accounts, more than
offsetting a $13.8 million decrease in certificates of deposit. Changes in the
deposit mix were attributable to a continued emphasis on increasing the number
of retail and business transaction accounts while reducing reliance on higher
costing certificates of deposit. Federal Home Loan Bank advances decreased $11.8
million to $33.0 million at June 30, 2008, compared to $44.8 million at June 30,
2007. Proceeds from called investment securities were used to repay advances
during the year ended June 30, 2008.
Total stockholders' equity amounted to $72.8 million at June 30, 2008 compared
to $73.6 million at June 30, 2007. Book value per common share was $11.72 at
June 30, 2008 compared to $11.49 at June 30, 2007. The Company declared a $0.06
per share dividend, totaling $372,000, to shareholders of record on June 30,
2008.
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:
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.
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JEFFERSON BANCSHARES, INC.
RECONCILIATION OF GAAP AND CORE NET EARNINGS
(Unaudited)
(1) While core net earnings is not a measure of performance calculated in
accordance with GAAP, the Company believes that this measure is important
for the year ended June 30, 2008 to convey to investors the Company's
earnings for this period absent the $667,000 non-cash charge to deferred
income tax expense to establish a valuation allowance against deferred
tax assets during the year ended June 30, 2008. The valuation allowance
was related to the charitable contribution carryforward directly
attributable to the Company's contribution to the Jefferson Federal
Charitable Foundation in July 2003. The Company calculated its core net
earnings for the year ended June 30, 2008 by subtracting this $667,000
non-cash charge from net income for the period. Core net earnings should
not be considered in isolation or as a substitute for net income, cash
flows from operating activities or other income or cash flow statement
data calculated in accordance with GAAP. Moreover, the manner in which
the Company calculates core net earnings may differ from that of other
companies reporting measures with similar names. Reconciliation of the
Company's GAAP and core net earnings for the year ended June 30, 2008
follows.
Year Ended
June 30,
2008 2007
---- ----
(Dollars in thousands,
except per share data)
GAAP net earnings $ 1,247 $ 1,691
Plus: non-cash charge to deferred income
tax expense $ 667 $ 0
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Core net earnings $ 1,914 $ 1,691
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GAAP earnings per diluted share $ 0.22 $ 0.28
Plus: non-cash charge to deferred income
tax expense $ 0.11 $ 0.00
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Core net earnings per diluted share $ 0.33 $ 0.28
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JEFFERSON BANCSHARES, INC.
AT AT
JUNE 30, JUNE 30,
2008 2007
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(Dollars in thousands)
FINANCIAL CONDITION DATA:
Total assets $330,265 $339,703
Loans receivable, net 282,483 274,881
Cash and cash equivalents, and
interest-bearing deposits 17,616 7,734
Investment securities 3,478 27,278
Deposits 223,552 220,082
Borrowings 33,000 44,800
Stockholders' equity $ 72,777 $ 73,644
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THREE MONTHS ENDED YEAR ENDED
JUNE 30, JUNE 30,
2008 2007 2008 2007
---------- ---------- ----------- ----------
(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $ 4,746 $ 5,417 $ 20,846 $ 21,004
Interest expense 1,910 2,466 9,248 9,660
Net interest income 2,836 2,951 11,598 11,344
Provision for loan losses 80 - 451 30
Net interest income after
provision for loan losses 2,756 2,951 11,147 11,314
Noninterest income 383 334 1,520 1,355
Noninterest expense 2,492 2,416 9,889 10,070
Earnings before income taxes 647 869 2,778 2,599
Total income taxes 153 271 1,531 908
Net earnings $ 494 $ 598 $ 1,247 $ 1,691
SHARE DATA:
Earnings per share, basic $ 0.09 $ 0.10 $ 0.22 $ 0.28
Earnings per share, diluted $ 0.09 $ 0.10 $ 0.22 $ 0.28
Dividends per share $ 0.06 $ 0.06 $ 0.24 $ 0.24
Book value per common share $ 11.72 $ 11.49 $ 11.72 $ 11.49
Weighted average shares:
Basic 5,645,304 5,916,839 5,717,375 5,977,094
Diluted 5,645,304 5,916,839 5,717,375 5,977,094
YEAR ENDED JUNE 30,
2008 2007
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(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $ 1,955 $ 2,172
Provision for loan losses 451 30
Recoveries 114 127
Charge-offs (684) (374)
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Net Charge-offs (570) (247)
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Allowance at end of period $ 1,836 $ 1,955
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Net charge-offs to average
outstanding loans during
the period, annualized 0.20% 0.09%
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AT AT
JUNE 30, JUNE 30,
2008 2007
--------- ---------
(Dollars in thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $ 139 $ 251
Commercial business 162 -
Consumer - -
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Total 301 251
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Real estate owned 462 275
Other nonperforming assets 5 -
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Total nonperforming assets $ 768 $ 526
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YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
2008 2007
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PERFORMANCE RATIOS:
Return on average assets 0.37% 0.51%
Return on average equity 1.69% 2.28%
Interest rate spread 3.00% 2.93%
Net interest margin 3.73% 3.73%
Efficiency ratio 75.38% 79.11%
Average interest-earning assets to
average interest-bearing liabilities 124.75% 125.18%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 0.65% 0.71%
Allowance for loan losses as a
percent of nonperforming loans 609.97% 778.88%
Nonperforming loans as a percent
of total loans 0.11% 0.09%
Nonperforming assets as a percent
of total assets 0.23% 0.15%
Contacts: Jefferson Bancshares, Inc.
Anderson L. Smith, President and Chief Executive Officer
423-586-8421
Jane P. Hutton, Chief Financial Officer
423-586-8421