1
EXHIBIT 99.1
JEFFERSON BANCSHARES, INC. ANNOUNCES EARNINGS FOR THE
THREE AND SIX MONTHS ENDED DECEMBER 31, 2008
Morristown, Tennessee -- (February 6, 2009) - Jefferson Bancshares, Inc.
(Nasdaq: JFBI), the holding company for Jefferson Federal Bank, announced net
earnings for the quarter ended December 31, 2008 of $790,000, or $0.13 per
diluted share, compared to a net loss of $176,000, or ($0.03) per diluted share,
for the quarter ended December 31, 2007. For the six months ended December 31,
2008, net earnings were $1.3 million, or $0.22 per diluted share, compared to
$258,000, or $0.04 per diluted share, for the comparable period in 2007. The
2008 results reflect the Company's acquisition of State of Franklin Bancshares,
Inc., the parent company of State of Franklin Bank, a Tennessee chartered
savings bank headquartered in Johnson City, Tennessee, (collectively, "State of
Franklin") on October 31, 2008. Costs associated with the acquisition were
approximately $11.8 million, consisting of 736,000 shares of Company common
stock issued to former State of Franklin shareholders and $4.9 million in cash.
Financial results for the quarter ended December 31, 2007 include a $637,000
non-cash charge to deferred income tax expense to establish a valuation
allowance against deferred tax assets. Excluding this tax charge, core net
earnings were $461,000, or $0.08 per diluted share and $895,000, or $0.15 per
diluted share, respectively, for the three and six month periods ended December
31, 2007. For a reconciliation of GAAP and core net earnings, see the table
below.
Anderson L. Smith, President and Chief Executive Officer commented, "We are very
pleased with the completion of the State of Franklin acquisition and the
opportunity to expand our franchise into the Tri-Cities market. This acquisition
has resulted in the addition of six branches and has doubled both our asset size
and customer base. However, we recognize that 2009 will be a challenging year
for the banking industry due to economic conditions and pressures on net
interest margins. We have strengthened our allowance for loan losses and we
continue to monitor asset quality diligently."
At December 31, 2008, total assets were $658.6 million compared to $330.3
million at June 30, 2008. Net loans increased $227.0 million to $509.5 million
at December 31, 2008, compared to $282.5 million at June 30, 2008, reflecting
the State of Franklin acquisition. Deposits increased $254.7 million to $478.2
million at December 31, 2008, due to deposits assumed in connection with the
State of Franklin acquisition. Total shareholders' equity was $78.5 million at
December 31, 2008 compared to $72.8 million at June 30, 2008.
Nonperforming assets increased to 0.72% of total assets at December 31, 2008,
compared to 0.56% of total assets at December 31, 2007, primarily due to an
increase in nonaccrual real estate loans. Net charge-offs for the six months
ended December 31, 2008 were $31,000, or 0.02% of average loans on an annualized
basis, compared to $256,000, or 0.18% of average loans on an annualized basis,
for the same period in 2007. The allowance for loan losses was $4.7 million, or
0.91% of total gross loans, at December 31, 2008 compared to $1.8 million, or
0.64% of total gross loans, at December 31, 2007.
2
The provision for loan losses totaled $310,000 for the six months ended December
31, 2008, compared to $128,000 for the six months ended December 31, 2007. In
addition, the allowance increased $2.6 million due to the addition of the State
of Franklin allowance for loan losses.
Jefferson Bancshares, Inc. is the holding company for Jefferson Federal Bank, a
Tennessee-chartered savings bank headquartered in Morristown, Tennessee.
Jefferson Federal is a community oriented financial institution offering
traditional financial services with offices in Hamblen, Knox, Washington and
Sullivan 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.
3
JEFFERSON BANCSHARES, INC.
RECONCILIATION OF GAAP AND CORE NET EARNINGS
(Unaudited)
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 three and six month periods ended December 31, 2007 to convey to investors
the Company's earnings for these periods absent the $637,000 non-cash charge to
deferred income tax expense to establish a valuation allowance against deferred
tax assets during the quarter ended December 31, 2007. 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 three and six
month periods ended December 31, 2007 by subtracting this $637,000 non-cash
charge from net income for the respective periods. 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. Reconciliations of the Company's GAAP and core net earnings for
the three and six month periods ended December 31, 2007 follow.
Three Months ended Six Months Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
(Dollars in thousands, except per share data)
GAAP net earnings (loss) $790 ($176) $1,323 $258
Plus: non-cash charge to deferred income tax expense $0 $637 $0 $637
-------- -------- -------- --------
Core net earnings $790 $461 $1,323 $895
======== ======== ======== ========
GAAP earnings (loss) per diluted share $0.13 ($0.03) $0.22 $0.04
Plus: non-cash charge to deferred income tax expense $0.00 $0.11 $0.00 $0.11
-------- -------- -------- --------
Core net earnings per diluted share $0.13 $0.08 $0.22 $0.15
======== ======== ======== ========
4
JEFFERSON BANCSHARES, INC.
AT AT
DECEMBER 31, 2008 JUNE 30, 2008
----------------- ----------------
(Dollars in thousands)
FINANCIAL CONDITION DATA:
Total assets $658,625 $330,265
Loans receivable, net 509,538 282,483
Cash and cash equivalents, and
interest-bearing deposits 20,330 17,616
Investment securities 44,295 3,478
Deposits 478,217 223,552
Borrowings 90,545 33,000
Stockholders' equity $78,520 $72,777
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
2008 2007 2008 2007
----------- ---------- ---------- ------------
(Dollars in thousands, except per share data)
OPERATING DATA:
Interest income $7,072 $ 5,491 $11,740 $ 10,902
Interest expense 3,081 2,535 4,762 5,045
Net interest income 3,991 2,956 6,978 5,857
Provision for loan losses 150 60 310 128
Net interest income after
provision for loan losses 3,841 2,896 6,668 5,729
Noninterest income 629 347 1,023 759
Noninterest expense 3,535 2,538 5,874 5,107
Earnings before income taxes 935 705 1,817 1,381
Total income taxes 145 881 494 1,123
Net earnings $790 (176) $1,323 258
SHARE DATA:
Earnings per share, basic $0.13 ($0.03) $0.22 $0.04
Earnings per share, diluted $0.13 ($0.03) $0.22 $0.04
Dividends per share $0.06 $0.06 $0.06 $0.12
Book value per common share $11.59 $11.58 $11.59 $11.58
Weighted average shares:
Basic 6,091,206 5,840,831 5,879,310 5,860,409
Diluted 6,091,206 5,840,831 5,879,310 5,860,409
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
2008 2007 2008 2007
----------- ---------- ---------- ------------
(Dollars in thousands)
ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period $1,958 $ 1,955 $1,836 $ 1,955
Allowance of acquired bank $2,577 $ - $2,577 $ -
Provision for loan losses 150 60 310 128
Recoveries 31 20 41 30
Charge-offs (24) (208) (72) (286)
----------- ---------- ---------- ------------
Net Charge-offs 7 (188) (31) (256)
----------- ---------- ---------- ------------
Allowance at end of period $4,692 $ 1,827 $4,692 $ 1,827
=========== ========== ========== ============
Net charge-offs to average outstanding
loans during the period, annualized 0.00% 0.27% 0.02% 0.18%
5
AT AT AT
DECEMBER 31, 2008 JUNE 30, 2008 DECEMBER 31, 2007
----------------- ------------- -----------------
(Dollars in thousands)
NONPERFORMING ASSETS:
Nonaccrual loans:
Real estate $3,563 $139 $280
Commercial business 182 162 534
Consumer 7 - -
------------- ---------- -----------
Total 3,752 301 814
------------- ---------- -----------
Real estate owned 1,012 462 1,107
Other nonperforming assets 5 5 -
------------- ---------- -----------
Total nonperforming assets $4,769 $768 $1,921
============= ========== ===========
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 2008 JUNE 30, 2008
----------------- -------------
PERFORMANCE RATIOS:
Return on average assets 0.60% 0.37%
Return on average equity 3.51% 1.69%
Interest rate spread 3.13% 3.00%
Net interest margin 3.52% 3.73%
Efficiency ratio 73.42% 75.38%
Average interest-earning assets to
average interest-bearing liabilities 115.99% 124.75%
ASSET QUALITY RATIOS:
Allowance for loan losses as a
percent of total gross loans 0.91% 0.65%
Allowance for loan losses as a
percent of nonperforming loans 125.05% 609.97%
Nonperforming loans as a percent
of total loans 0.73% 0.11%
Nonperforming assets as a percent
of total assets 0.72% 0.23%
Contacts:
Jefferson Bancshares, Inc.
Anderson L. Smith, President and Chief Executive Officer
423-586-8421
Jane P. Hutton, Chief Financial Officer
423-586-8421