Jefferson Bancshares, Inc. (NASDAQ: JFBI), the holding company for Jefferson Federal Bank (the “Bank”), announced net income for the quarter ended December 31, 2012 of $348,000, or $0.05 per diluted share, compared to a net loss of $3.7 million, or $0.59 per diluted share, for the quarter ended December 31, 2011. The improvement in net income is primarily due to a decrease in the provision for loan losses and a decrease in valuation adjustments and expenses on other real estate owned (“OREO”). The provision for loan losses was $300,000 for the quarter ended December 31, 2012 compared to $5.7 million for the comparable period in 2011.
For the six months ended December 31, 2012, the Company reported net income of $643,000, or $0.10 per diluted share, compared to a net loss of $4.6 million, or $0.74 per diluted share, for the six months ended December 31, 2011. The provision for loan losses was $600,000 for the six months ended December 31, 2012 compared to $8.7 million for the comparable period in 2011.
Anderson L. Smith, President and Chief Executive Officer, commented, “We are pleased to report our fourth consecutive quarter of profitability. Improvements in asset quality trends have resulted in a lower provision for loan losses for the quarter and six months ended December 31, 2012 compared to the prior year. We have focused our efforts on improving asset quality and are pleased with the steady progress made in reducing the level of adversely classified assets. We continue to maintain a strong liquidity position and our regulatory capital ratios exceed those required to be considered ‘well capitalized’ for regulatory purposes. However, as with most financial institutions, we expect pressure on the net interest margin during 2013 due to the ongoing low interest rate environment. Loan growth is expected to be a challenge during 2013 due to tepid loan demand and heightened competition for high quality loans.”
Net interest income decreased $430,000, or 9.4%, to $4.1 million for the quarter ended December 31, 2012 compared to $4.6 million for the same period in 2011. The decrease in net interest income is primarily due to lower average balances and lower yields on loans, partially offset by lower average balances and lower rates on deposits. The net interest margin was 3.69% for the quarter ended December 31, 2012 compared to 3.77% for the same period in 2011. The net interest margin continues to trend downward, as yields on interest-earning assets have declined more than the reductions in the cost of funds. For the six months ended December 31, 2012, net interest income decreased $1.1 million, or 11.5%, to $8.3 million compared to $9.3 million for the six months ended December 31, 2011, while the net interest margin decreased 17 basis points to 3.63% compared to 3.80% for the same period in 2011.
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