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Jefferson Bancshares Inc. Reports Operating Results (10-Q)

November 15, 2010 | About:
10qk

10qk

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Jefferson Bancshares Inc. (JFBI) filed Quarterly Report for the period ended 2010-09-30.

Jefferson Bancshares Inc. has a market cap of $22.87 million; its shares were traded at around $3.435 with and P/S ratio of 0.67. JFBI is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Net income for the three months ended September 30, 2010 was $259,000, or $0.04 per diluted share, compared to net income of $484,000, or $0.08 per diluted share, for the corresponding period in 2009. The decrease in net income for the quarter ended September 30, 2010 was primarily the result of write-downs and losses on other real estate owned (OREO).

Interest on loans decreased $847,000, or 11.9%, to $6.3 million for the three months ended September 30, 2010 primarily due to a lower average balance of loans. The average balance of loans decreased $58.8 million, or 12.3%, to $418.2 million, due to the combination of reduced loan demand, normal paydowns on existing loans, transfers to OREO and charge-offs. Reduced loan demand has resulted from continued economic weakness in the Banks market areas. The average yield on loans was 5.96% for the three months ended September 30, 2010 compared to 5.93% for the same period in 2009.

Interest on investment securities decreased $263,000 to $482,000 for the three months ended September 30, 2010 due primarily to a lower average yield on investment securities. The average yield on investment securities decreased to 3.64% for the three months ended September 30, 2010 compared to 7.07% for the same period in 2009 due to lower market interest rates and changes in the composition of the portfolio. A portion of the proceeds from called securities has been reinvested in similar securities but with lower yields. The average balance of investment securities increased $11.8 million, to $54.6 million, during the three months ended September 30, 2010 compared to the same period in 2009 period due to the investment of a portion of the Companys excess liquidity into short- and intermediate-term U.S. agency securities.

Total interest expense decreased $742,000 to $2.5 million for the three months ended September 30, 2010. The average balance of interest-bearing liabilities increased $5.3 million, to $536.5 million during the quarter ended September 30, 2010, while the rate paid on interest-bearing liabilities declined 57 basis points to 1.85%. The Company experienced an increase in average interest-bearing deposits of $10.2 million, or 2.4%, to $443.2 million, primarily due to an increase in the average balance of transaction accounts more than offsetting a decrease in the average balance of time deposits. The average rate paid on deposits decreased 66 basis points to 1.49% for the three months ended September 30, 2010, primarily as a result of declining market interest rates as well as a shift in the mix of deposits towards more transaction accounts. Average FHLB borrowings decreased slightly to $85.1 million for the three months ended September 30, 2010 compared to $90.3 million for the three months ended September 30, 2009, while the average rate paid on borrowings remained stable at 3.60%.

Noninterest income decreased $508,000 to $390,000 for the three months ended September 30, 2010 compared to $898,000 for the corresponding period in 2009 due primarily to an increase in loss on sale of foreclosed property. Loss on sale of foreclosed property increased $338,000 to $347,000 for the three months ended September 30, 2010. Service charges and fees declined $90,000, or 20.2% primarily due to decreases in late fees and overdraft fees. Management believes fee revenue decreased due to heightened customer awareness of fees and a resultant increased management of account balances in the current economic downturn. In addition, recently enacted legislation requiring customer opt-in for point-of-sale overdrafts became effective in mid-August 2010. This legislation may have a negative impact on future noninterest income.

Noninterest expense decreased $248,000, or 5.4%, to $4.4 million for the three months ended September 30, 2010 compared to the corresponding 2009 period. Compensation expense decreased $247,000, or 12.4%, to $1.7 million for the three months ended September 30, 2010 compared to the same period in 2009 due to an overall reduction in number of employees. The number of full-time equivalent employees was 130 at September 30, 2010 compared to 157 for

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