EXHIBIT 99.2

                                 GIFT INSTRUMENT
                               CHARITABLE GIFT TO
                     JEFFERSON FEDERAL CHARITABLE FOUNDATION

     Jefferson Bancshares, Inc. (the "Company"), desires to make a gift of its
common stock to Jefferson Federal Charitable Foundation (the "Foundation"), a
nonprofit corporation organized under the laws of the State of Tennessee. The
purpose of the donation is to establish a bond between Jefferson Bancshares,
Inc. and the community in which it and its affiliates operate to enable the
community to share in the potential growth and success of the Company and its
affiliates over the long term. To that end, Jefferson Bancshares, Inc. now
gives, transfers, and delivers to the Foundation 375,000 shares of its common
stock and $250,000, subject to the following conditions:

     1.   The Foundation shall use the donation solely for charitable purposes,
including community development, in the communities in which the Company and its
affiliates operate in accordance with the provisions of the Foundation's
Certificate of Incorporation; and

     2.   Consistent with the Company's intent to form a long-term bond between
the Company and the community, the amount of Common Stock that may be sold by
the Foundation in any one year shall not exceed 5% of the market value of the
assets held by the Foundation, except that this restriction shall not prohibit
the board of directors of the Foundation from selling a greater amount of Common
Stock in any one year if the board of directors of the Foundation determines
that the failure to sell a greater amount of the Common Stock held by the
Foundation would: (a) result in a long-term reduction of the value of the
Foundation's assets relative to their then current value that would jeopardize
the Foundation's capacity to carry out its charitable purposes; or (b) otherwise
jeopardize the Foundation's tax-exempt status.

     3.   The Common Stock contributed to the Foundation by the Company shall,
for so long as such shares are held by the Foundation, be voted in the same
ratio as all other shares of Common Stock of the Company which are voted on each
and every proposal considered by the stockholders of the Company.

     4.   For a period of five years from the date of the organization of the
Corporation: (i) one board seat shall be reserved for an individual who has
experience with local community charitable organizations and grant making in
Morristown, Tennessee or its neighboring communities who is not an officer
and/or director of Jefferson Bancshares, Inc. or Jefferson Federal Savings and
Loan Association of Morristown and who is not an associate of any officer or
director of Jefferson Bancshares, Inc. or its affiliates or subsidiaries
("Community Member") and (ii) one board seat shall be reserved for an individual
who is also a member of the board of directors of Jefferson Federal Savings and
Loan Association of Morristown or a member of the board of directors of an
acquiror or resulting institution in the event of a merger or acquisition of the
Association.



     5.   The Foundation shall comply with the following regulatory requirements
imposed by the Office of Thrift Supervision ("OTS"):

     (a)  the OTS may examine the Foundation at the Foundation's expense;

     (b)  the Foundation must comply with all supervisory directives that the
          OTS imposes;

     (c)  the Foundation must submit a copy of its Form 990-PF to the OTS on an
          annual basis;

     (d)  the Foundation must operate in accordance with written policies
          adopted by its Board of Directors, including a conflict of interest
          policy; and

     (e)  the Foundation may not engage in self-dealing, and must comply with
          all laws necessary to maintain its tax exempt status under the
          Internal Revenue Code.

Dated: ___________, 2003                             JEFFERSON BANCSHARES, INC.


                                                     By:________________________