EX-99.1 2 jefferson8kapril2805ex99-1.txt 1 JEFFERSON BANCSHARES ANNOUNCES THIRD QUARTER RESULTS Morristown, Tennessee -- (April 29, 2005) - Jefferson Bancshares, Inc. (Nasdaq: JFBI), the holding company for Jefferson Federal Bank, announced net income of $862,000, or $0.12 per diluted share, for the quarter ended March 31, 2005 compared to net income of $1.0 million, or $0.13 per diluted share, for the quarter ended March 31, 2004. Net income for the three-month period in 2005 reflects an increase in noninterest expense related to the lending office in Knoxville, Tennessee which opened on January 1, 2005. The most significant item contributing to the overall increase in noninterest expense was compensation expense, which increased $170,000 for the quarter ended March 31, 2005 compared to the same period in 2004. For the nine-month period ended March 31, 2005, the Company reported net income of $2.7 million compared to net income of $408,000 for the comparable period in 2004. Net income for the nine-month period in 2004 reflects the nonrecurring expense associated with the $4.0 million contribution to the Jefferson Federal Charitable Foundation which was formed in connection with the Company's conversion and was funded with $250,000 and 375,000 shares of Jefferson Bancshares common stock. This stock and cash contribution was recorded as an expense of $4.0 million, or approximately $2.5 million after income taxes. Net interest income decreased $31,000, or 1.1%, to $2.8 million for the quarter ended March 31, 2005. The net interest margin improved 15 basis points to 4.02% for the quarter ended March 31, 2005. Interest income remained steady at $4.0 million for the current three-month period as a decline in the volume of interest-earning assets was offset by an increase in the average yield. Interest expense increased $35,000, or 3.1%, to $1.2 million for the quarter ended March 31, 2005, primarily due to an increase in the average rate paid on deposits. The interest rate spread was 3.36% and 3.20% for the quarters ended March 31, 2005 and 2004, respectively. For the nine months ended March 31, 2005, net interest income decreased $64,000 to $8.4 million due primarily to a decrease in the volume of investment securities. For the nine months ended March 31, 2005, the interest rate spread and net interest margin was 3.25% and 3.88%, respectively, compared to 3.02% and 3.73% for the same period in 2004. Noninterest income increased $62,000, or 23.4%, to $327,000 for the three months ended March 31, 2005 primarily due to an increase in mortgage origination fee income, an increase in gain on sale of foreclosed property and an increase in the cash surrender value of bank owned life insurance more than offsetting a decline in service charges and fees. Noninterest income increased $38,000, or 5.1%, to $789,000 for the nine months ended March 31, 2005 as a result of an increase in mortgage origination fee income and an increase in the cash surrender value of bank owned life insurance more than offsetting a decline in service charges and fees and a loss on sale of investment securities. Noninterest expense increased $245,000, or 14.7%, to $1.9 million for the three-month period ended March 31, 2005, primarily due to an increase in compensation expense. Compensation expense increased $170,000, or 18.9%, to $1.1 million for the current three-month period primarily due to staff additions for the lending office in Knoxville, Tennessee which opened on January 1, 2005. Consulting fees relating to the internal control requirement of the Sarbanes-Oxley Act of 2002 amounted to $50,000 for the three-month period ended March 31, 2005. We expect that ongoing fees for professional services will exceed historical levels due to the Sarbanes Oxley Act of 2002. For the nine-month period ended March 31, 2005, noninterest expense totaled $5.1 million compared to $8.7 million for the same period in 2004. The $3.7 million decrease was primarily attributable to the nonrecurring expense associated with the $4.0 million contribution to the Jefferson Federal Charitable Foundation during the nine months ended March 31, 2004. 2 Nonperforming assets totaled $1.5 million at March 31, 2005, compared to $1.6 million at June 30, 2004 and $2.0 million at March 31, 2004. There were no additions to the allowance for loan losses for either period. The allowance for loan losses was $2.3 million, or 1.18% of total gross loans, at March 31, 2005 compared to $2.5 million, or 1.34% of total gross loans, at March 31, 2004. Net charge-offs amounted to $50,000 and $141,000 for the three- and nine-month period ended March 31, 2005 compared to $58,000 and $317,000 for the comparable periods in 2004. Total assets at March 31, 2005 were $294.5 million compared to $305.5 million at June 30, 2004. Total loans increased $8.3 million, or 4.5%, to $194.9 million at March 31, 2005, compared to $186.6 million at June 30, 2004. Investment securities decreased $24.9 million, or 26.2%, to $70.1 million at March 31, 2005, compared to $95.0 million at June 30, 2004. The decrease in investment securities was due primarily to the deployment of conversion proceeds into stock repurchases and higher yielding assets. Total deposits decreased $8.2 million, or 4.0%, to $196.6 million at March 31, 2004 due to a decline in certificates of deposit more than offsetting an increase in demand deposits. Total equity decreased $8.4 million, or 9.0%, to $85.0 million at March 31, 2005 due to a combination of factors, including the repurchase of shares in the amount of $10.9 million and dividend payments of $1.2 million more than offsetting net income of $2.7 million. Return on average assets for the nine months ended March 31, 2005 was 1.18% compared to 0.44% for the year ended June 30, 2004. Return on average equity was 4.01% for the nine months ended March 31, 2005 compared to 1.46% for the year ended June 30, 2004. The improvement in the return on average equity was aided by stock repurchases during the current nine-month period. Stock repurchases for the three and nine months ended March 31, 2005 totaled 255,356 shares at an average cost of $13.24 per share and 828,552 shares at an average cost of $13.21 per share, respectively. An additional 10,000 shares remain eligible for repurchase under the current stock repurchase program. 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 within its local communities through its main office and two drive through facilities in Morristown and a lending office in Knoxville, Tennessee. More information about Jefferson Bancshares and Jefferson Federal Bank can be found at its website: www.jeffersonfederal.com. 3 This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates," or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, and changes in the quality or composition of the Company's loan or investment portfolios. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated, or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Specific factors that could cause future results to vary from current management expectations may be detailed, from time to time in the Company's filings with the Securities and Exchange Commission, which are available through the SEC's website at www.sec.gov. 4
JEFFERSON BANCSHARES, INC. AT AT MARCH 31, 2005 JUNE 30, 2004 ------------------- -------------------- (In thousands) FINANCIAL CONDITION DATA: Total assets $ 294,500 $ 305,474 Loans receivable, net 194,943 186,601 Cash and cash equivalents, and interest-bearing deposits 11,904 6,411 Investment securities 70,078 95,005 Deposits 196,641 204,933 Borrowings 12,000 6,000 Stockholders' equity $ 84,958 $ 93,383
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31, 2005 2004 2005 2004 ---------------- ------------------- ---------------- --------------- (Dollars in thousands, except per share data) OPERATING DATA: Interest income $ 4,000 $ 3,996 $ 11,786 $ 12,201 Interest expense 1,165 1,130 3,372 3,723 Net interest income 2,835 2,866 8,414 8,478 Provision for loan losses - - - - Net interest income after provision for loan losses 2,835 2,866 8,414 8,478 Noninterest income 327 265 789 751 Noninterest expense 1,915 1,670 5,079 8,732 Earnings before income taxes 1,247 1,461 4,124 497 Total income taxes 385 428 1,428 89 Net earnings $ 862 $ 1,033 $ 2,696 $ 408 SHARE DATA: Earnings per share, basic $ 0.12 $ 0.13 $ 0.36 $ 0.05 Earnings per share, diluted $ 0.12 $ 0.13 $ 0.36 $ 0.05 Dividends per share $ 0.05 $ 0.04 $ 0.15 $ 0.12 Weighted average shares: Basic 7,171,692 7,737,418 7,443,856 7,718,515 Diluted 7,188,557 7,784,096 7,462,315 7,765,484
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31, 2005 2004 2005 2004 ---------------- ------------------- ---------------- --------------- (Dollars in thousands) ALLOWANCE FOR LOAN LOSSES: Allowance at beginning of period $ 2,388 $ 2,582 $ 2,479 $ 2,841 Provision for loan losses - - - - Recoveries 66 44 252 219 Charge-offs (116) (102) (393) (536) ----------------- ------------------- --------------- ---------------- Net Charge-offs (50) (58) (141) (317) ----------------- ------------------- --------------- ----------------- Allowance at end of period $ 2,338 $ 2,524 $ 2,338 $ 2,524 ================= =================== =============== ================= Net charge-offs to average outstanding loans during the period, annualized 0.10% 0.12% 0.09% 0.23%
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AT AT AT MARCH 31, 2005 JUNE 30, 2004 MARCH 31, 2004 ------------------- -------------------- ------------------- (In thousands) NONPERFORMING ASSETS: Nonaccrual loans: Real estate $ 296 $ 1,047 $ 1,225 Commercial business 46 15 20 Consumer - 21 32 ------------------- -------------------- ------------------- Total 342 1,083 1,277 ------------------- -------------------- ------------------- Real estate owned 1,143 552 670 Other nonperforming assets - - 3 ------------------- -------------------- ------------------- Total nonperforming assets $ 1,485 $ 1,635 $ 1,950 =================== ==================== ===================
NINE MONTHS ENDED YEAR ENDED MARCH 31, 2005 JUNE 30, 2004 ------------------- -------------------- PERFORMANCE RATIOS: Return on average assets 1.18% 0.44% Return on average equity 4.01% 1.46% Interest rate spread 3.25% 3.08% Net interest margin 3.88% 3.76% Efficiency ratio 54.94% 83.21% (1) Average interest-earning assets to average interest-bearing liabilities 140.25% 143.13% ASSET QUALITY RATIOS: Allowance for loan losses as a percent of total gross loans 1.18% 1.31% Allowance for loan losses as a percent of nonperforming loans 683.63% 228.90% Nonperforming loans as a percent of total loans 0.18% 0.58% Nonperforming assets as a percent of total assets 0.50% 0.54%
(1) Excluding the $4.0 million contribution to the Charitable Foundation, the efficiency ratio for the year ended June 30, 2004 would be 50.78%. ------------------------------ Contact: Jefferson Bancshares, Inc., Morristown Anderson L. Smith 423-586-8421 or Jane P. Hutton 423-586-8421