EXHIBIT 99.1
For Immediate Release July 12, 2005
Contact: Richard G. Harwood, President and CEO
Phone: (423) 623-6088
United Tennessee Bankshares, Inc. Announces Second Quarter Earnings
United Tennessee Bankshares, Inc. (Nasdaq:UTBI) reported that net income
for the six months ended June 30, 2005 increased $101,000, or 11.3% compared to
the same six month period in the previous year, from $891,000 to $992,000. The
increase in net income is primarily the result of net gains on the sales of
investments of $484,000, offset by an increase in interest expense of $220,000
as a result of an increase in our cost of funds, and an increase in other
non-interest expense of $105,000. On April 4, 2005, Harland Financial Solutions
("Harland") announced that it was acquiring our third-party data processor,
Intrieve, Inc. Proceeds from Harland for UTBI's Intrieve, Inc. stock resulted in
a gain of $582,000. The increase in non-interest expense is primarily due to an
increase in accounting and legal expenses related to our going private
transaction as discussed below.
Total assets at June 30, 2005 were $118.2 million while total assets at
December 31, 2004 were $122.7 million. The decrease in total assets was
primarily the result of a decrease in amounts due from depository institutions
and investment securities which were used to fund a similar decrease in deposit
accounts.
The Company's equity increased primarily due to net income of $992,000,
proceeds from stock options exercised of $68,000 and a decrease in unearned
compensation related to the Company's ESOP of $180,000, offset by a decrease due
to the cost of stock options surrendered of $95,000, dividends paid of $474,000
and a decrease in accumulated other comprehensive income of $173,000. The market
value of UTBI's investment portfolio decreased due to changes in the current
interest rate environment.
As announced on April 14, 2005, United Tennessee Bankshares, Inc., the
holding company for Newport Federal announced that the Company's Board of
Directors has approved proceeding with a proposed going private transaction. The
proposed transaction would reduce the number of stockholders of record from
approximately 545 to approximately 96. Following the proposed transaction, the
Company would continue operations as a privately held corporation that would not
be required to file periodic public reports with the Securities and Exchange
Commission (the "SEC"). The terms of the proposed transaction are expected to
provide that each stockholder of record of the Company beneficially owning fewer
than 2,500 common shares will receive cash of $22.00 per share. The price was
established by the Board of Directors based on an independent valuation by a
qualified valuation firm. Each stockholder of record beneficially owning 2,500
or more common shares will continue to hold the same number of shares of the
Company after the transaction and will not receive any cash for those shares.
Beneficial ownership includes stock owned by a person's immediate family and
stock that a person has the power to vote, as well as stock directly owned. UTBI
anticipates delivering the Proxy to shareholders sometime in early August.
Presented below are condensed statements of income for the three-month and
six-month periods ended June 30, 2005 and 2004 and selected financial condition
data as of June 30, 2005 and December 31, 2004.
UNITED TENNESSEE BANKSHARES, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
(In Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Interest Income $1,712 $1,694 $3,409 $3,376
Interest Expense 541 391 1,020 767
------- ------ -------- -------
Net Interest Income 1,171 1,303 2,389 2,609
Provision for loan losses 18 24 36 52
------- ------ -------- -------
Net interest income after provision for loan losses 1,153 1,279 2,353 2,557
Noninterest income 630 133 760 263
Noninterest operating expense 993 718 1,619 1,537
------- ------ -------- -------
Income before income taxes 790 694 1,494 1,283
Income taxes 275 195 502 392
------ ------ ------- ------
Net Income $ 515 $ 499 $ 992 $ 891
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Earnings per Share:
Basic $ 0.43 $ 0.41 $ 0.83 $ 0.73
Diluted $ 0.43 $ 0.41 $ 0.83 $ 0.73
UNITED TENNESSEE BANKSHARES, INC.
SELECTED FINANCIAL CONDITION DATA
(In Thousands)
As of
June 30,
2005 As of
December 31,
(Unaudited) 2004
---------- ------------
Total Assets $118,244 $ 122,659
Loans Receivable, net 80,399 78,830
Cash and amounts due from depository institutions 3,449 3,444
Investment Securities, available for sale, at fair
value 28,466 35,579
Deposit Accounts 97,148 100,919
Equity 18,850 18,419