8-K

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT

                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of earliest event reported) October 23, 2008
                                                         ----------------


                           JEFFERSON BANCSHARES, INC.
                           --------------------------
             (Exact name of registrant as specified in its charter)

         Tennessee                     0-50347                 45-0508261
         ---------                     ---------               ----------
(State or other jurisdiction of       (Commission             (IRS Employer
        incorporation)                File Number)          Identification No.)

         120 Evans Avenue, Morristown, Tennessee               37814
         ---------------------------------------               ------
         (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (423) 586-8421
                                                           --------------

                                 Not Applicable
                                 --------------
          (Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities Act
     (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act
     (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

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ITEM 8.01       OTHER EVENTS
                ------------

         On October 23, 2008, Jefferson Bancshares, Inc., the holding company
for Jefferson Federal Bank, announced that it has received all necessary
regulatory and shareholder approvals to complete its previously announced
acquisition of State of Franklin Bancshares, Inc., Johnson City, Tennessee. The
transaction is expected to close on October 31, 2008. For more information, see
the press release dated October 23, 2008 included as Exhibit 99.1 to this report
and furnished herewith.

ITEM 9.01       FINANCIAL STATEMENTS AND EXHIBITS
                ---------------------------------

          (d)   Exhibits

                Number            Description
                ------            -----------

                99.1              Press Release dated October 23, 2008




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                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                                JEFFERSON BANCSHARES, INC.


Dated: October 24, 2008                         By: /s/ Anderson L. Smith
                                                    ----------------------------
                                                    Anderson L. Smith
                                                    President and
                                                      Chief Executive Officer

EX-99.1

                                                                   EXHIBIT 99.1

Press Release


*FOR IMMEDIATE RELEASE*


            JEFFERSON BANCSHARES, INC. ANNOUNCES APPROVAL TO ACQUIRE
                       STATE OF FRANKLIN BANCSHARES, INC.

         Morristown, Tennessee, October 23, 2008 -- Jefferson Bancshares, Inc.
(Nasdaq: JFBI) announced today that it has received all necessary regulatory and
shareholder approvals to complete its previously announced acquisition of State
of Franklin Bancshares, Inc., Johnson City, Tennessee. The transaction is
expected to close on October 31, 2008.

         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 with offices in Hamblen and
Knox 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:
http://www.jeffersonfederal.com.

         State of Franklin Bancshares, Inc. is the holding company for State of
Franklin Savings Bank. State of Franklin Savings Bank operates six offices in
Johnson City and Kingsport with a branch under construction in Bristol,
Tennessee.

Forward-Looking Statements

         This news release contains certain forward-looking statements about the
proposed merger of Jefferson Bancshares and State of Franklin Bancshares. These
statements include statements regarding the anticipated closing date of the
transaction and anticipated future results. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include words like "believe," "expect," "anticipate,"
"estimate," and "intend" or future or conditional verbs such as "will," "would,"
"should," "could" or "may." Certain factors that could cause actual results to
differ materially from expected results include delays in completing the merger
and other risks and uncertainties disclosed from time to time in documents that
Jefferson Bancshares files with the Securities and Exchange Commission.

For further information contact:

Anderson L. Smith
President and Chief Executive Officer
Jefferson Bancshares, Inc.
(423) 586-8421

Charles E. Allen Jr.
Chairman and Chief Executive Officer
State of Franklin Bancshares, Inc.
(423) 722-9820