Year-end assets increased by 10.8% to $551 million and earnings reached a record $6.416 million. One half billion in assets is a milestone which took 108 years to acheive. The next milestone, one billion, won't take nearly that long.

You will notice that we have changed our logo. It is no coincidence that the new logo is three-dimensional and appears more nimble and up-to-date. We think that both existing and prospective clients will find that to be an apt symbol of the attitude and service of the personnel associated with Jefferson Bank.

In keeping with our continuing commitment to the community, we will be introducing a free checking account product in February and intend to continue with our high rate C.D. program. As usual, our pursuit of quality credits will carry forward unabated. Our Concord Village facility is gaining community acceptance with 3500 accounts and over $50 million in deposits, and we now have two experienced lenders in place. We look forward to further growth in South County and all our locations.

Even though bank consolidation has slowed, recent legislation (Gramm-Leach) insures that it will continue. And at some point, clients tire of following their bankers from old bank to acquireing bank to start-up bank. All that movement and uncertainty makes a bank like Jefferson a welcome home for the weary, much traveled bank client. To those looking for a place to rest amid the hallmarks of unexcelled service and permanence of management, welcome to Jefferson Bank. When you call, the phone will be answered by a real person. To our existing customers we extend our thanks for your friendship and business.

Sincerely,

Michael J. Ross,
Chairman of the Board