EXHIBIT 99.1
PRESS RELEASE
October 21, 2002
For Immediate Release
For Further Information Contact: Barry Backhaus
First Federal Bankshares, Inc.
329 Pierce Street, P.O. Box 897
Sioux City, IA 51102
712.277.0200
FIRST FEDERAL BANKSHARES ANNOUNCES QUARTERLY RESULTS
Sioux City, Iowa. First Federal Bankshares, Inc. (the "Company") (Nasdaq
National Market - "FFSX") reported net earnings of $1.2 million, or diluted
earnings per share of $0.29, for the quarter ended September 30, 2002. This
compares to net earnings of $1.1 million, or diluted earnings per share of
$0.25, for the quarter ended September 30, 2001 and to net earnings of $563,000,
or diluted earnings per share of $0.13 for the immediately preceding quarter
ended June 30, 2002.
Net interest income before provision for loan losses increased by $611,000, or
14.3%, to $4.9 million for the three months ended September 30, 2002 from $4.3
million for the three months ended September 30, 2001. Interest income decreased
by $1.4 million while interest expense decreased by $2.0 million. The increase
in net interest income was primarily due to an increase in the net yield on
interest-earning assets to 3.40% for the three months ended September 30, 2002
from 2.90% for the three months ended September 30, 2001. In addition, the
interest rate spread increased to 3.20% for the three months ended September 30,
2002 from 2.55% for the three months ended September 30, 2001.
Provision for loan loss expense decreased by $50,000 to $830,000 for the three
months ended September 30, 2002 from $880,000 for the three months ended
September 30, 2001. Non-performing loans increased to $6.8 million, or 1.6% of
total loans, at September 30, 2002 from $6.0 million, or 1.4% of total loans, at
September 30, 2001. The increase in non-performing loans was primarily due to
continuing effects of generally less favorable economic conditions in the
Company's market area that adversely affected several of its commercial and
industrial borrowers. During the three months ended September 30, 2002 the
Company recorded a $725,000 charge-off of a commercial real estate loan. As of
September 30, 2002 non-performing loans with balances totaling $4.2 million were
on non-accrual status compared with $5.1 million of loan balances on non-accrual
status at June 30, 2002.
Noninterest income decreased by $297,000, or 12.5%, to $2.1 million for the
quarter ended September 30, 2002 from $2.4 million for the quarter ended
September 30, 2001. During the quarter ended September 30, 2001 the Company
recorded a pretax gain of $456,000 on the sale of the deposits, selected loans
and the building and fixtures of a branch office to another financial
institution. Excluding the prior year gain on the branch office sale,
noninterest income
increased by $159,000 for the three months ended September 30, 2002 as compared
to the three months ended September 30, 2001. The increase in noninterest income
was partly due to increases of $47,000 and $29,000, respectively in fees and
service charges and in gain on sale of loans held for sale. In addition, an
increase in the cash surrender value of bank owned life insurance (BOLI) that
totaled $108,000 was recorded during the three months ended September 30, 2002.
The initial investment in BOLI was made in November 2001, so no income related
to BOLI was recorded in the prior year quarter.
Noninterest expense increased by $255,000, or 6.2%, to $4.4 million for the
three months ended September 30, 2002 from $4.1 million for the three months
ended September 30, 2001. The increase in noninterest expense was largely due to
an increase of $156,000, or 7.0%, in compensation and benefits expense. During
the three months ended September 30, 2002 the Company recorded an accrual for
pension contribution expense that totaled $90,000. The Company is a participant
in the Financial Institutions Retirement Fund (FIRF) and has been notified that
a contribution will be required for fiscal 2003. The FIRF had been in
fully-funded status since July 1987; therefore, no pension contribution expense
was recorded for fiscal 1988 through fiscal 2002.
Earnings before taxes on income totaled $1.8 million and $1.7 million,
respectively, for the three months ended September 30, 2002 and 2001. Income tax
expense totaled $590,000, or an effective tax rate of 33.2%, for the three
months ended September 30, 2002 and $596,000, or an effective tax rate of 35.7%,
for the three months ended September 30, 2001. The lower effective tax rate
during the current year period resulted from an increase in tax-exempt
investments such as municipal bonds and BOLI.
Assets totaled $640.5 million, $650.8 million and $643.2 million, respectively,
at September 30, 2002, June 30, 2002 and September 30, 2001. Stockholders'
equity per share increased to $17.29 at September 30, 2002 from $16.47 at
September 30, 2001. Stockholders' equity to total assets was 11.13% and 10.98%,
respectively, at September 30, 2002 and 2001. During the three months ended
September 30, 2002 the Company repurchased 40,500 shares of its common stock at
a cost of $535,000 to complete a stock repurchase program announced in December
2000. In addition, the Company repurchased 47,500 shares of its common stock at
a cost of $684,000 under a new repurchase program. The Company expects to
repurchase up to 378,500 additional shares under the new stock repurchase
program announced in August 2002. The Company had 4,124,669 shares outstanding
at September 30, 2002.
The Company's common stock is traded on the NASDAQ National Market under the
symbol FFSX. The Company is headquartered in Sioux City, Iowa. First Federal
Bank, the Company's bank subsidiary, operates ten offices in northwest Iowa, an
office in South Sioux City, Nebraska, and five offices in central Iowa.
Except for the historical information contained in this press release, the
matters discussed may be deemed to be forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that involve
risks and uncertainties, including changes in economic conditions in the
Company's market area, changes in policies by regulatory agencies, fluctuations
in interest rates, demand for loans in the Company's market area, competition,
and other risks detailed from time to time in the Company's SEC reports. Actual
strategies and results in future periods may differ materially from those
currently expected. These forward-looking statements represent the Company's
judgment as of the date of this release.
The Company disclaims, however, any intent or obligation to update these
forward-looking statements.
FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) September 30, June 30, September 30,
2002 2002 2001
-------------- --------------- ---------------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $23,972 $23,114 $21,310
Interest-bearing deposits in other financial institutions 108 103 58,752
-------------- --------------- ---------------
Cash and cash equivalents 24,080 23,217 80,062
Securities available-for-sale 83,832 92,313 65,409
Securities held-to-maturity 59,857 63,295 25,519
Loans receivable, net 416,421 418,382 423,743
Office property and equipment, net 13,581 13,770 14,290
Federal Home Loan Bank stock, at cost 5,707 5,038 4,530
Accrued interest receivable 2,814 2,804 3,427
Goodwill 18,524 18,524 18,524
Other assets 15,704 13,414 7,685
-------------- --------------- ---------------
Total assets $640,520 $650,757 $643,189
============== =============== ===============
LIABILITIES
Deposits 454,236 472,648 480,305
Advances from Federal Home Loan Bank 107,429 99,065 82,086
Advance payments by borrowers for taxes and insurance 962 1,483 1,486
Accrued interest payable 3,547 3,640 6,317
Accrued expenses and other liabilities 3,035 2,658 2,358
-------------- --------------- ---------------
Total liabilities 569,209 579,494 572,552
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 49 49 48
Additional paid-in capital 36,296 36,248 36,064
Retained earnings, substantially restricted 44,408 43,542 42,092
Treasury stock, at cost - 753,764, 665,764 and
560,375 shares at September 30, 2002, June 30, 2002
and September 30, 2001, respectively (8,797) (7,578) (6,178)
Accumulated other comprehensive income 776 490 252
Unearned ESOP (1,293) (1,330) (1,433)
Unearned RRP (128) (158) (208)
-------------- --------------- ---------------
Total stockholders' equity 71,311 71,263 70,637
-------------- --------------- ---------------
Total liabilities and stockholders' equity $640,520 $650,757 $643,189
============== =============== ===============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands) Three months ended
September 30,
-------------------------------
2002 2001
--------------- ---------------
(Unaudited)
Total interest income $9,487 $10,873
Total interest expense 4,591 6,589
--------------- ---------------
Net interest income before provision 4,896 4,284
Less: provision for loan losses 830 880
--------------- ---------------
Net interest income after provision 4,066 3,404
Noninterest income 2,087 2,385
Noninterest expense (4,375) (4,120)
--------------- ---------------
Earnings before taxes on income 1,778 1,669
Taxes on income 590 596
--------------- ---------------
Reported net earnings $1,188 $1,073
=============== ===============
FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Dollars in thousand, except per share amounts)
At or for the three months
ended September 30,
-------------------------------
2002 2001
--------------- ---------------
(Unaudited)
Financial condition data:
- -------------------------
Average interest-earning assets $576,763 $590,311
Average interest-bearing liabilities 543,465 546,473
Net average earning assets 33,298 43,838
Average interest-earning assets to
average interest-bearing liabilities 106.13% 108.02%
Non-performing loans $6,779 $5,999
Non-performing assets 7,234 6,042
Allowance for loan losses 4,503 5,559
Allowance for loan losses to total loans 1.07% 1.29%
Non-performing loans to total loans 1.63% 1.42%
Non-performing assets to total assets 1.13% 0.94%
Shareholders' equity to assets 11.13% 10.98%
Selected operating data: (1)
- ----------------------------
Return on average assets 0.74% 0.66%
Return on average equity 6.62% 5.99%
Net interest rate spread 3.20% 2.55%
Net yield on interest-earning assets 3.40% 2.90%
Efficiency ratio (2) 62.39% 61.42%
- ------------------------------------------
<FN>
(1) Annualized except for efficiency ratio.
(2) Noninterest expense excluding amortization of intangibles divided by the
sum of interest income before provision for loan losses and noninterest
income.
</FN>
Per share data:
Earnings per share:
Basic $0.30 $0.25
Diluted $0.29 $0.25
Book value per share $17.29 $16.47
Tangible book value per share $12.66 $11.91
Market price per share:
High for the period $14.569 $13.170
Low for the period $11.760 $10.700
Close at end of period $14.340 $10.900
Cash dividends declared per share $0.080 $0.080
Average number of shares outstanding (3) 4,009,213 4,211,662
- ------------------------------------------
<FN>
(3) Outstanding shares as defined in FASB 128 for computation of basic EPS.
Includes ESOP shares committed to be released and vested recognition and
retention plan shares.
</FN>