The Bank continues to be well-capitalized under regulatory requirements. At June 30, 2013, the Bank's total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 14.18%, 12.93%, and 9.21%, respectively, compared to 13.42%, 12.17%, and 8.23%, respectively, at June 30, 2012. At June 30, 2013, the Company had 6,601,091 common shares outstanding with a book value of $8.03 per common share.

Nonperforming assets totaled $19.2 million, or 3.81% of total assets, at June 30, 2013, compared to $25.2 million, or 4.82% of total assets, at June 30, 2012. Nonaccrual loans totaled $12.8 million at June 30, 2013 compared to $18.6 million at June 30, 2012. Nonaccrual loans with a current payment status represented approximately 71% of total nonaccrual loans at June 30, 2013. Foreclosed real estate totaled $5.4 million at June 30, 2013 compared to $6.1 million at June 30, 2012. Net charge-offs for the three months ended June 30, 2013 were $10,000, or 0.01% of average loans annualized, compared to $1.6 million, or 1.84% of average loans annualized, for the quarter ended June 30, 2012. The allowance for loan losses was $5.7 million, or 1.73% of total loans, at June 30, 2013 compared to $5.9 million, or 1.78% of total loans, at June 30, 2012. There was no provision for loan losses recorded for the quarter ended June 30, 2013, compared to $600,000 for the quarter ended June 30, 2012. The decrease in the provision for loan losses is the result of improvements in asset quality.

Jefferson Bancshares, Inc. is the holding company for Jefferson Federal Bank, a Tennessee-chartered savings bank headquartered in Morristown, Tennessee. Jefferson Federal Bank 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.

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.