EXHIBIT 99.1
For Immediate Release October 13, 2005
Contact: Richard G. Harwood, President and CEO
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Phone: (423) 623-6088
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United Tennessee Bankshares, Inc. Announces Third Quarter Earnings
United Tennessee Bankshares, Inc. (Nasdaq:UTBI) reported that net income
for the nine months ended September 30, 2005 increased $77,000, or 5.8% compared
to the same nine month period in the previous year, from $1.34 million to $1.42
million. The increase in net income is primarily the result of net gains on the
sales of investments of $517,000, offset by an increase in interest expense of
$417,000 as a result of an increase in our cost of funds. 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 $614,000.
Total assets at September 30, 2005 were $119.3 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 decreased primarily due to the repurchase of
approximately 36,000 shares of stock at a cost of $784,000, a decrease due to
the cost of stock options surrendered of $151,000, dividends paid of $474,000
and a decrease in accumulated other comprehensive income of $480,000, offset by
net income of $1.42 million, proceeds from stock options exercised of $68,000
and a decrease in unearned compensation related to the Company's ESOP of
$180,000. The market value of UTBI's investment portfolio decreased due to
changes in the current interest rate environment.
As announced on April 14, 2005, the Company's Board of Directors has
approved proceeding with a proposed going private transaction. On October 3,
2005, the Securities and Exchange Commission approved the proposed transaction
which would reduce the number of stockholders of record from approximately 545
to approximately 96. Following shareholder approval, 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 transaction are to provide that each stockholder of record of
the Company 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
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.
Presented below are condensed statements of income for the three-month and
nine-month periods ended September 30, 2005 and 2004 and selected financial
condition data as of September 30, 2005 and December 31, 2004.
UNITED TENNESSEE BANKSHARES, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
Interest Income $ 1,660 $ 1,733 $ 5,069 $ 5,109
Interest Expense 595 431 1,615 1,198
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Net Interest Income 1,065 1,302 3,454 3,911
Provision for loan losses 18 24 54 76
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Net interest income after provision for loan losses 1,047 1,278 3,400 3,835
Noninterest income 183 157 943 420
Noninterest operating expense 513 729 2,132 2,266
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Income before income taxes 717 706 2,211 1,989
Income taxes 294 259 796 651
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Net Income $ 423 $ 447 $ 1,415 $ 1,338
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Earnings per Share:
Basic $ 0.36 $ 0.37 $ 1.19 $ 1.09
Diluted $ 0.36 $ 0.37 $ 1.19 $ 1.10
UNITED TENNESSEE BANKSHARES, INC.
SELECTED FINANCIAL CONDITION DATA
(In Thousands)
As of
September 30, As of
2005 December 31,
(Unaudited) 2004
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Total Assets $119,319 $122,659
Loans Receivable, net 82,284 78,830
Cash and amounts due from depository institutions 3,223 3,444
Investment Securities, available for sale, at
fair value 26,978 35,579
Total Liabilities 101,162 104,240
Deposits 98,085 100,919
Advances from FHLB 1,000 1,000
Total Equity 18,157 18,419