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

November 09, 2009 | About:
10qk

10qk

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Jefferson Bancshares Inc. (JFBI) filed Quarterly Report for the period ended 2009-09-30.

Jefferson Bancshares, Inc. operates as the holding company for Jefferson Federal Bank, which provides financial services to consumers and businesses in Hamblen and Knoxville Counties, Tennessee. The Bank operates as a community-oriented financial institution offering traditional financial services to consumers and businesses in its market area. It offers various deposits products, which include NOW accounts, money market accounts, Christmas club savings accounts, certificates of deposit, and retirement savings plans. The company's loan portfolio includes one-to four-family residential loans, home equity lines of credit, commercial real estate and multi family loans, construction loans, land loans, and commercial business loans, as well as consumer loans, including loans secured by automobiles and savings accounts, loans on recreational vehicles and boats, debt consolidation loans, and personal unsecured debt. It also offers automated teller machine, insurance agency, and safe d Jefferson Bancshares Inc. has a market cap of $34.87 million; its shares were traded at around $5.2 with and P/S ratio of 1.11. The dividend yield of Jefferson Bancshares Inc. stocks is 2.31%.

Highlight of Business Operations:

Net income was $484,000, or $0.08 per diluted share, for the quarter ended September 30, 2009 compared to $533,000, or $0.09 per diluted share, for the corresponding quarter in 2008.

Total interest expense increased $1.6 million, or 93.3%, to $3.3 million for the quarter ended September 30, 2009. The average balance of interest-bearing liabilities increased $293.2 million, or 123.2%, to $531.2 million, while the rate paid on interest-bearing liabilities declined 38 basis points to 2.43% for the quarter ended September 30, 2009. The Company experienced an increase of $230.0 million, or 113.3%, in average interest-bearing deposits primarily due to deposits assumed in connection with the State of Franklin acquisition. The average rate paid on deposits decreased 45 basis points to 2.15% for the quarter ended September 30, 2009. The Company benefited from declining market interest rates as well as a shift in the mix of deposits towards more transaction accounts. Average FHLB borrowings increased $55.2 million to $90.3 million due to the assumption of borrowings related to the State of Franklin acquisition, while the average rate paid on borrowings decreased 43 basis points to 3.60%.

The provision for loan losses for the quarter ended September 30, 2009 amounted to $300,000 compared to $160,000 for the comparable period in 2008. Management reviews the level of the allowance for loan losses on a monthly basis and establishes the provision for loan losses based on changes in the nature and volume of the loan portfolio, the amount of impaired and classified loans, historical loan loss experience and other qualitative factors. The increase in the provision for loan losses reflects managements evaluation of credit quality and current economic conditions. Nonperforming loans totaled $7.0 million at September 30, 2009 compared to $6.0 million at June 30, 2009 and $725,000 at September 30, 2008. The increase in nonperforming loans compared to the 2008 period is due in part to the addition of nonperforming loans from the State of Franklin acquisition, as well as the current economic environment.

Noninterest income increased $504,000, or 127.9%, to $898,000 for the quarter ended September 30, 2009 compared to $394,000 for the corresponding period in 2008. Service charges and fee income increased $201,000 to $446,000 for the quarter ended September 30, 2009 due primarily to additional fee income generated following the acquisition of State of Franklin. Mortgage origination fee income increased $90,000, or 166.7%, to $144,000 for the quarter ended September 30, 2009 due to a higher volume of loan originations related to refinancing.

Noninterest expense increased $2.3 million, or 96.7%, to $4.6 million for the quarter ended September 30, 2009 compared to the corresponding 2008 period. The increase in noninterest expense includes the costs incurred in operating six additional full-service offices obtained in connection with the acquisition of State of Franklin. Deposit insurance premiums increased $151,000, to $160,000, due to the increase in the balance of insurable accounts combined with higher deposit insurance premiums. Noninterest expense includes the amortization of the core deposit intangible (CDI) resulting from the acquisition of State of Franklin. The CDI totaled $3.4 million at the acquisition date and is being amortized over a 10 year period on an accelerated basis. The expense incurred for CDI amortization for the three month period ended September 30, 2009 was $147,000 compared to no CDI amortization expense for the same period in 2008.

Investment securities increased to $55.4 million at September 30, 2009 compared to $36.5 million at June 30, 2009 due primarily to purchases of government agency securities. Investments classified as available-for-sale are carried at fair market value and reflect an unrealized gain of $1.2 million, or $742,000 net of taxes.

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