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EXHIBIT 99.1 PRESS RELEASE
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FIRST FEDERAL BANCSHARES, INC.
FOR IMMEDIATE RELEASE
February 18, 2004
Contact:
James J. Stebor, President and CEO
Phone: (309) 776-3225
FIRST FEDERAL BANCSHARES, INC. ANNOUNCES
4th QUARTER EARNINGS
Colchester, Illinois - February 18, 2004 - (NASDAQ - FFBI) - First Federal
Bancshares, Inc., the holding company for First Federal Bank, announced net
income of $502,000, or $.30 per share, for the quarter ended December 31, 2003
compared to $438,000 or $.26 per share, for the quarter ended December 31, 2002.
Diluted earnings per share were $.28 per share and $.25 per share for both
periods, respectively. Net income was $2,832,000 or $1.58 per share, for the
twelve months ended December 31, 2003, compared to $1,937,000, or $1.09 per
share, for the twelve months ended December 31, 2002.
Net interest income for the quarter ended December 31, 2003 totaled $2.1 million
compared to $1.7 million for the prior year quarter. The increase in net
interest income was primarily a result of an increase in the net interest spread
and the net interest margin to 2.43% and 2.69%, respectively, for the quarter
ended December 31, 2003 from 2.27% and 2.67% for the same period in 2002, and an
increase in volume of interest-earning assets and interest-bearing liabilities
as a result of the Company's acquisition of PFSB Bancorp, Inc. in November 2002.
The ratio of average interest-earning assets to average interest-bearing
liabilities decreased to 114.07% from 116.04% for the three-month periods,
respectively.
Noninterest income increased to $355,000 for the quarter ended December 31, 2003
compared to $184,000 for the same period in 2002. The increase was a result of
an increase of $12,000 in service charge income, an increase of $49,000 in the
gain on the sale of securities, an increase in the recovery of impairment loss
of $97,000, and an increase in other income of $12,000.
Noninterest expense increased to $1.7 million for the quarter ended December 31,
2003 from $1.3 million in the prior year's same quarter. The increase was
primarily a result of increased compensation and benefits expense of $326,000
associated with an increase in the number of employees due to the PFSB
acquisition and an increase in employee benefits expense including health
insurance premiums and retirement funds. Occupancy and equipment expense
increased $99,000, professional fees increased $14,000, and other noninterest
expense increased $21,000. Data processing expense and advertising expense also
experienced small increases during the period.
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Total assets were $329.1 million at December 31, 2003 compared to $316.4 million
at December 31, 2002. The growth in total assets was primarily due to an
increase in securities available-for-sale of $68.8 million, offset by a decrease
of $13.7 million in cash and cash equivalents, a decrease in securities
held-to-maturity of $24.5 million, and a decrease in loans receivable of $18.2
million. The decrease in cash and cash equivalents primarily resulted from the
timing of called and purchased securities. The increase in securities
available-for-sale is partially a result of the transfer of securities from
held-to-maturity in January 2003 as more fully discussed below. The remainder of
the increase in securities available-for-sale resulted from additional purchases
funded by the decrease in cash and cash equivalents and increases in customer
deposits, and repayments of loans receivable. Loans decreased $18.2 million
primarily as a result of portfolio loans refinancing into the Federal Home Loan
Bank Mortgage Partnership Finance fixed rate program and also to other
competitors due to the lower interest rate environment.
During the first quarter of 2003, in accordance with FAS 115, the Company
reevaluated the classification of the securities portfolio. As a result of the
acquisition of PFSB, changes in the structure of the balance sheet, and for
asset/liability management purposes, management revised the Company policy to
classify all securities as available-for-sale. Effective January 31, 2003, the
Company reclassified all of its securities held-to-maturity to securities
available-for-sale. The securities that were reclassified had a book value of
$24.2 million and a fair value of $24.5 million as of that date. The
reclassification of these securities resulted in a decrease in securities
held-to-maturity of $24.5 million from December 31, 2002 to December 31, 2003.
Stockholders' equity decreased to $41.4 million at December 31, 2003 from $47.0
million at December 31, 2002. The decrease was primarily a result of the
purchase of treasury stock totaling $7.3 million, a decrease in the fair value
of securities available-for-sale, net of tax of $1.8 million, and dividends paid
of $203,000. Equity was also favorably impacted by net income of $2.8 million
and an increase in ESOP shares and stock awards earned, as well as, the exercise
of stock options.
During the quarter ended December 31, 2001, the Company recorded an impairment
loss of $596,000 related to certificates of deposit purchased through a broker
who was charged by the SEC with securities fraud in relation to these
certificates of deposit. The Company received a check in the amount of $355,000
during April 2003 as an initial distribution of receivership assets. The
distribution represented 59.6% of the allowed claim. During December 2003, the
Company received a check in the amount of $97,000 as a second distribution of
receivership assets. This distribution represented 16.4% of the allowed claim.
During December 2003, the Company also received a letter indicating that a third
distribution for receivership of assets is in progress. The Company expects to
recover an additional $25,000 through the third distribution, however, due to
the uncertainty of the ultimate distribution, no additional amounts have been
recorded in income.
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First Federal Bancshares, Inc. is headquartered in Colchester, Illinois with
four additional full-service west-central Illinois branches located in Quincy
(2), Macomb, and Bushnell, and three additional full-service northeastern
Missouri branches located in Palmyra, Canton, and Kahoka. Financial highlights
of the Company are attached.
Statements contained in this news release that are not historical facts may
constitute forward-looking statements (within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended), which involve significant risks
and uncertainties. The Company intends such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations and future prospects of the Company and its subsidiaries include, but
are not limited to, changes in interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including the U.S. treasury and the Federal Reserve Board, the
quality or composition of the Company's loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Company's market area, the possible short-term dilutive effect of potential
acquisitions and accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward looking statements and
undue reliance should not be placed on such statements.
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FIRST FEDERAL BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION
DECEMBER 31, DECEMBER 31,
2003 2002
---- ----
(IN THOUSANDS)
SELECTED FINANCIAL CONDITION DATA
- ---------------------------------
Total assets $ 329,068 $ 316,400
Cash and cash equivalents 29,124 42,827
Loans receivable, net 132,098 150,269
Securities 160,337 116,033
Deposits 271,850 263,834
Advances from Federal Home Loan Bank 6,000 4,000
Stockholders' equity 41,393 47,031
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
(IN THOUSANDS)
SELECTED OPERATIONS DATA
- ------------------------
Total interest income $ 3,625 $ 3,393 $ 15,311 $ 13,092
Total interest expense 1,487 1,649 6,555 6,154
----------- ----------- ---------- -----------
Net interest income 2,138 1,744 8,756 6,938
Provision for loan losses 30 - 90 7
----------- ----------- ---------- -----------
Net interest income after provision
for loan losses 2,108 1,744 8,666 6,931
Noninterest income 355 267 2,493 573
Noninterest expense 1,728 1,354 6,613 4,443
----------- ----------- ---------- -----------
Income before taxes 735 657 4,546 3,061
Income tax provision 233 219 1,714 1,124
----------- ----------- ---------- -----------
Net income $ 502 $ 438 $ 2,832 $ 1,937
----------- ----------- ---------- -----------
Earnings per share
Basic $ .30 .26 1.58 1.09
Diluted .28 .25 1.48 1.07
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
SELECTED FINANCIAL RATIOS (1) 2003 2002 2003 2002
- ----------------------------- ---- ---- ---- ----
Return on average assets .62 % .82 % .88 % .77 %
Return on average equity 4.91 4.89 6.26 4.49
Average equity to average assets 12.56 16.86 13.99 17.15
Interest rate spread during the period 2.43 2.42 2.50 2.36
Net interest margin 2.69 2.89 2.80 2.84
General and administrative expenses
to average assets 2.12 1.67 2.05 1.70
Efficiency ratio (2) 69.31 67.33 58.79 59.15
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AS OF AS OF
DECEMBER 31, 2003 DECEMBER 31, 2002
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Non-performing assets to total assets .41 % .69%
Book value per share (3) $ 23.88 $ 24.48
Number of shares outstanding (4) 1,733,092 1,921,355
(1) ALL APPLICABLE QUARTERLY RATIOS REFLECT ANNUALIZED FIGURES.
(2) Represents noninterest expense divided by net interest income plus
noninterest income.
(3) Represents total equity divided by actual number of shares outstanding
which is exclusive of treasury stock and unearned ESOP shares.
(4) Exclusive of treasury stock and unearned ESOP shares.