Jefferson Bancshares, Inc. Announces Earnings for the Three and Six Months Ended December 31, 2009

MORRISTOWN, Tenn., Jan. 29, 2010 (GLOBE NEWSWIRE) -- Jefferson Bancshares, Inc. (Nasdaq:JFBI), the holding company for Jefferson Federal Bank, announced a net loss for the quarter ended December 31, 2009 of $415,000, or ($0.07) per diluted share, compared to net earnings of $790,000, or $0.13 per diluted share, for the quarter ended December 31, 2008. The decrease in net earnings for the three months ended December 31, 2009 was due primarily to provision for loan losses of $1.5 million compared to $150,000 for the comparable period in 2008. The increase in the provision for loan losses was due to an increase in non-performing assets and continued deterioration in local and national economic conditions. For the six months ended December 31, 2009, net earnings were $69,000, or $.01 per diluted share, compared to net earnings of $1.3 million, or $0.22 per diluted share, for the six months ended December 31, 2008.  The decrease in net earnings for the six months ended December 31, 2009 was due primarily to provision for loan losses of $1.8 million compared to $310,000 for the comparable period in 2008. 

Anderson L. Smith, President and Chief Executive Officer commented, “Like many of our peers, our earnings have been negatively impacted by higher loan loss provisions and historically low interest rates.   We have strengthened the allowance for loan losses in response to continued weakness in the economy and deterioration in asset quality.  We are proactive in identifying the risk within our loan portfolio and in managing problem loans. In response to the increase in loan loss provision, we have increased our efforts to lower our funding costs and operating expenses.” 

The net interest margin was 3.11% for the quarter ended December 31, 2009 compared to 3.25% for the same period in 2008. The yield on interest-earning assets declined 46 basis points to 5.28% for the quarter ended December 31, 2009 compared to 5.74% for the same period in 2008 due primarily to reductions in market interest rates. The yield on assets was also impacted in the current quarter by higher levels of non-performing assets. The cost of interest-bearing liabilities declined 44 basis points to 2.32% for the quarter ended December 31, 2009 compared to 2.76% for the same period in 2008 primarily due to lower market interest rates and a change in the mix of deposits.

At December 31, 2009, total assets were $670.6 million compared to $662.7 million at June 30, 2009. Investment securities increased $20.9 million, or 57.1%, to $57.4 million at December 31, 2009 compared to $36.5 million at June 30, 2009, due primarily to purchases of federal agency securities. Net loans decreased $38.4 million to $459.7 million at December 31, 2009, compared to $498.1 million at June 30, 2009, due primarily to lower loan demand combined with both residential and commercial loan payoffs during the period.  

Total deposits increased $8.3 million to $490.5 million at December 31, 2009 compared to $482.2 million at June 30, 2009 due to increases in transaction accounts which more than offset planned runoff of higher costing time deposits. Transaction accounts increased $45.8 million, or 21.8%, to $255.9 million while time deposits decreased $37.5 million to $234.6 million at December 31, 2009 compared to June 30, 2009. The average cost of interest-bearing deposits for the three month period ended December 31, 2009 was 2.02% compared to 2.50% for the corresponding period in 2008. Total Federal Home Loan Bank advances were virtually unchanged at $90.1 million at December 31, 2009 compared to $90.3 million at June 30, 2009. 

Total stockholders’ equity increased $803,000 to $80.3 million at December 31, 2009 compared to $79.5 million at June 30, 2009. Unrealized gains and losses, net of taxes, in the available-for-sale investment portfolio are reflected as an adjustment to stockholders’ equity. At December 31, 2009, the adjustment to stockholders’ equity was a net unrealized gain of $873,000 compared to a net unrealized gain of $150,000 at June 30, 2009. As of December 31, 2009 the Company had 6,703,911 common shares outstanding with a book value of $11.98 per common share. The Bank continues to be well-capitalized under regulatory requirements.

Nonperforming assets totaled $23.8 million, or 3.55% of total assets at December 31, 2009, compared to $9.5 million, or 1.43% of total assets at June 30, 2009 and $4.8 million, or 0.72% of total assets at December 31, 2008. Nonaccrual loans totaled $18.9 million at December 31, 2009 compared to $6.0 million at June 30, 2009 and $3.8 million at December 31, 2008. The increase in nonaccrual loans is primarily due to an increase in both nonaccrual commercial and residential real estate loans. Foreclosed real estate amounted to $4.3 million at December 31, 2009 compared to $3.3 million at June 30, 2009 and $1.0 million at December 31, 2008.   Net charge-offs for the six months ended December 31, 2009 were $1.4 million, or 0.56% of average loans on an annualized basis, compared to $31,000, or 0.02% of average loans on an annualized basis, for the same period in 2008. The allowance for loan losses was $5.2 million, or 1.11% of total loans, at December 31, 2009 compared to $4.7 million, or 0.94% of total loans, at June 30, 2009 and $4.7 million, or 0.91% of total loans, at December 31, 2008. The provision for loan losses totaled $1.8 million for the six months ended December 31, 2009, compared to $310,000 for the comparable 2008 period. The increase in the provision for loan losses was primarily the result of the increase in nonperforming assets and continued deterioration in local and national economic conditions.

 Jefferson Bancshares, Inc. is the holding company for Jefferson Federal Bank, a Tennessee-chartered savings bank headquartered in Morristown, Tennessee. Jefferson Federal is a community oriented financial institution offering traditional financial services with offices in Hamblen, Knox, Washington and Sullivan 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: www.jeffersonfederal.com.

The Jefferson Bancshares, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3655

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “intend” and “potential.” For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services and other factors that may be described in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.