Jefferson Bancshares, Inc. (the "Company") completed its previously announced acquisition of State of Franklin Bancshares, Inc. ("State of Franklin Bancshares") effective October 31, 2008. The merger was consummated pursuant to the Agreement and Plan of Merger, dated as of September 4, 2008 ("Merger Agreement"), by and between the Company and State of Franklin Bancshares. In accordance with the Merger Agreement, State of Franklin Bancshares merged with and into the Company and the Company's primary subsidiary, Jefferson Federal Bank, merged with and into State of Franklin Savings Bank, the primary subsidiary of State of Franklin Bancshares. The resulting institution will continue to operate as a Tennessee chartered savings bank under the name "Jefferson Federal Bank."

For further information, reference is made to the press release dated October 31, 2008, which is included as Exhibit 99.1 to this Current Report on Form 8-K and is furnished herewith.

In connection with the merger of State of Franklin Bancshares with and into the Company on October 31, 2008, Randal E. Greene was appointed as the President of the Tri-Cities division of Jefferson Federal Bank. Pursuant to this arrangement, Mr. Greene executed a two-year employment agreement with the Company and Jefferson Federal Bank, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is furnished herewith. Mr. Greene had formerly served as President of State of Franklin Bancshares and State of Franklin Savings Bank.

a. Financial statements of businesses acquired.

The Company will provide the financial statements of State of Franklin Bancshares required by paragraph (a) of Item 9.01 of Form 8-K on a Form 8-K/A within 71 days of the date that this initial report on Form 8-K is required to be filed with the Securities and Exchange Commission.

b. Pro forma financial information.

The Company will provide the pro forma information required by paragraph (b) of Item 9.01 of Form 8-K on a Form 8-K/A within 71 days of the date that this initial report on Form 8-K is required to be filed with the Securities and Exchange Commission.

d. Exhibits.

         Exhibit Number       Description
         --------------       -----------

         2.1                  Agreement and Plan of Merger, dated as of
                              September 4, 2008, by and between Jefferson
                              Bancshares, Inc. and State of Franklin Bancshares,
                              Inc. (Incorporated by reference to the Current
                              Report on Form 8-K filed by Jefferson Bancshares,
                              Inc. on September 5, 2008)

         10.1                 Employment Agreement by and among Jefferson
                              Federal Bank, Jefferson Bancshares, Inc. and
                              Randal R. Greene, dated October 31, 2008

         99.1                 Press release dated October 31, 2008