SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2003
First Federal Bankshares, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-25509 42-1485449
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(State or other jurisdiction) (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
Address of principal executive offices:329 Pierce Street, Sioux City, Iowa 51101
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Registrant's telephone number, including area code: (712) 277-0200
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Not Applicable
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(Former name or former address if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
Exhibit No. Description
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99 Press release dated April 22, 2003
Item 9. Regulation FD Disclosure.
The following information is furnished pursuant to this Item 9 and in
satisfaction of Item 12, "Disclosure of Results of Operations and Financial
Condition."
On April 22, 2003, First Federal Bankshares, Inc. (the "Company") announced
earnings for the third quarter of its fiscal year and announced the declaration
of a quarterly dividend. A copy of the press release dated April 22, 2003,
describing earnings for the three months and nine months ended March 31, 2003,
is attached as Exhibit 99 to this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
FIRST FEDERAL BANKSHARES, INC.
DATE: April 22, 2003 By: /s/Colin D Anderson
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Colin D. Anderson
Senior Vice President and CFO
EXHIBIT 99
PRESS RELEASE OF FIRST FEDERAL BANKSHARES, INC.
PRESS RELEASE
April 22, 2003
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 EARNINGS AND DECLARES DIVIDEND
Sioux City, Iowa. First Federal Bankshares, Inc. (the "Company") (Nasdaq
National Market - "FFSX") reported net earnings of $1.8 million, or diluted
earnings per share of $0.45, for the quarter ended March 31, 2003. This compares
to net earnings of $745,000, or diluted earnings per share of $0.18, for the
quarter ended March 31, 2002 and to net earnings of $1.5 million, or diluted
earnings per share of $0.38 for the immediately preceding quarter ended December
31, 2002.
Net interest income before provision for loan losses increased by $400,000, or
9.4%, to $4.6 million for the three months ended March 31, 2003 from $4.2
million for the three months ended March 31, 2002. Interest income decreased by
$1.2 million while interest expense decreased by $1.6 million. The Company's net
yield on average interest-earning assets increased by 33 basis points to 3.30%
for the three months ended March 31, 2003 from 2.97% for the three months ended
March 31, 2002. The average yield on interest-earning assets decreased by 72
basis points to 6.00% for the three months ended March 31, 2003 from 6.72% for
the three months ended March 31, 2002 as market interest rates remained at
historically low levels. More than offsetting the decrease in the average yield
on interest-earning assets was a decrease of 107 basis points in the average
cost of interest-bearing liabilities to 2.85% for the three months ended March
31, 2003 from 3.92% for the three months ended March 31, 2002 resulting in a
reduction in interest expense that more than offset the reduction in interest
income due to lower rates.
Provision for loan loss expense totaled $200,000 and $1.0 million, respectively,
for the three months ended March 31, 2003 and 2002. Non-performing loans
decreased to $4.6 million, or 1.2% of total loans, at March 31, 2003 from $8.2
million, or 2.0% of total loans, at March 31, 2002.
Noninterest income increased by $802,000, or 37.7%, to $2.9 million for the
quarter ended March 31, 2003 from $2.1 million for the quarter ended March 31,
2002. The increase in noninterest income was largely due to increases in fees
and services charges and in gain on sale of loans held for sale. Fees and
service charge income increased by $299,000, or 25.1%, to $1.5 million for the
three months ended March 31, 2003 from $1.2 million for the three months ended
March 31, 2002 largely due to an increase in overdraft activities on retail
accounts and the resulting service fees assessed. Gain on sale of loans held for
sale increased by $223,000, or 167.6%, to $356,000 for the three months ended
March 31, 2003 from $133,000 for the three months ended March 31, 2002 largely
due to a gain of $165,000 on the sale of the Company's credit card portfolio. In
addition, the Company experienced a 29.0% increase in gain on the sale of
single-family residential loans over the prior year period due to the continued
low interest rate environment in which originations and sales of mortgages
remained at elevated levels. The Company also recorded a net gain on sale of
securities that totaled $221,000 for the three months ended March 31, 2003. No
gains on sale of securities were recorded for the three months ended March 31,
2002.
Noninterest expense increased by $455,000, or 10.7%, to $4.7 million for the
three months ended March 31, 2003 from $4.3 million for the three months ended
March 31, 2002. The increase in noninterest expense was largely due to an
increase of $276,000, or 12.0%, in compensation and benefits expense. During the
three months ended March 31, 2003 the Company recorded an accrual for pension
contribution expense that totaled $82,000. 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. Additionally, the increase in compensation
and benefits expense was due to an increase in employees and to annual salary
increases. The increase in noninterest expense was also due to a provision for
loss on other real estate owned property that totaled $100,000 during the three
months ended March 31, 2003.
Earnings before taxes on income increased by $1.6 million, or 147.8%, to $2.7
million for the three months ended March 31, 2003 from $1.1 million for the
three months ended March 31, 2002. Income tax expense totaled $870,000, or an
effective tax rate of 32.8%, for the three months ended March 31, 2003 and
$325,000, or an effective tax rate of 30.4%, for the three months ended March
31, 2002.
Net interest income before provision for loan losses increased by $2.0 million,
or 16.0%, to $14.5 million for the nine months ended March 31, 2003 from $12.5
million for the nine months ended March 31, 2002. The Company's net yield on
interest-earning assets increased to 3.41% for the nine months ended March 31,
2003 from 2.88% for the nine months ended March 31, 2002. The average yield on
interest-earning assets decreased by 66 basis points to 6.36% for the nine
months ended March 31, 2003 from 7.02% for the nine months ended March 31, 2002
as market interest rates remained at historically low levels. More than
offsetting the decrease in the average yield on interest-earning assets was a
decrease of 129 basis points in the average cost of interest-bearing liabilities
to 3.11% for the nine months ended March 31, 2003 from 4.40% for the nine months
ended March 31, 2002 resulting in a reduction in interest expense that more than
offset the reduction in interest income due to lower rates. The average balance
of deposits decreased by $25.4 million, or 5.6% to $431.2 million for the nine
months ended March 31, 2003 from $456.6 million for the nine months ended March
31, 2002 primarily due to a decrease in the balance of higher-costing time
deposits as the Company lowered interest rates offered and replaced retail
deposits with lower-costing wholesale funding.
Provision for loan loss expense totaled $1.4 million and $2.3 million,
respectively, for the nine months ended March 31, 2003 and 2002.
Noninterest income increased by $613,000, or 8.9%, to $7.5 million for the nine
months ended March 31, 2003 from $6.9 million for the nine months ended March
31, 2002. During the nine months ended March 31, 2002 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. The increase in noninterest income was
primarily due to increases in fees and service charges, resulting from an
increase in overdraft activity, and gain on the sale of loans held for sale
totaling $310,000 and $210,000, respectively. In addition, a net gain on sale of
securities totaling $259,000 was recorded during the nine months ended March 31,
2003 while a $23,000 net loss on sale of securities was recorded for the nine
months ended March 31, 2002.
Noninterest expense increased by $1.2 million, or 9.4%, to $13.8 million for the
nine months ended March 31, 2003 from $12.6 million for the nine months ended
March 31, 2002. Compensation and benefits expense increased by $693,000, or
10.1%, to $7.5 million for the nine months ended March 31, 2003 from $6.8
million for the nine months ended March 31, 2002. The increase in compensation
and benefits expense was partly due to the resumption of an accrual for pension
contribution expense totaling $262,000 for the nine months ended March 31, 2002.
In addition, regular annual salary increases contributed to the increase in
compensation and benefits expense. Losses related to repossessed assets and
other real estate owned increased by $226,000 for the nine months ended March
31, 2003 as compared to the nine months ended March 31, 2002. Additionally,
office property and equipment expense increased by $154,000, or 8.3%, for the
nine months ended March 31, 2003 as compared to the nine months ended March 31,
2002.
Earnings before taxes on income increased by $2.3 million, or 52.2%, to $6.8
million for the nine months ended March 31, 2003 from $4.5 million for the nine
months ended March 31, 2002. Income tax expense totaled $2.3 million, or an
effective tax rate of 33.4%, for the nine months ended March 31, 2003 and $1.5
million, or an effective tax rate of 33.8% for the nine months ended March 31,
2002.
Assets totaled $634.9 million, $650.8 million and $657.8 million, respectively,
at March 31, 2003, June 30, 2002 and March 31, 2002. Book value per share
increased to $18.03 at March 31, 2003 from $16.79 at March 31, 2002.
Stockholders' equity to total assets was 11.20% and 10.92%, respectively, at
March 31, 2003 and 2002. During the three months ended March 31, 2003 the
Company repurchased 96,000 shares of its common stock at a cost of $1.5 million
under a repurchase program announced in August 2002. The Company expects to
repurchase up to 184,000 additional shares under this program. The Company had
3,943,091 shares outstanding at March 31, 2003.
On April 17, 2003, the Company's Board of Directors declared a quarterly
dividend of $0.08 per share, the same as distributed last quarter. The dividend
is payable on May 30, 2003 to stockholders of record on May 16, 2003.
FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) March 31, June 30, March 31,
2003 2002 2002
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ASSETS (Dollars in thousands)
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Cash and due from banks $31,278 $23,114 $37,397
Interest-bearing deposits in other financial institutions 4,280 103 11,597
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Cash and cash equivalents 35,558 23,217 48,994
Securities available-for-sale 94,617 92,313 74,153
Securities held-to-maturity 50,217 63,295 60,408
Loans receivable, net 398,558 418,382 419,691
Office property and equipment, net 13,309 13,770 13,970
Federal Home Loan Bank stock, at cost 5,707 5,038 5,013
Accrued interest receivable 2,672 2,804 3,262
Goodwill 18,524 18,524 18,524
Other assets 15,693 13,414 13,822
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Total assets $634,855 $650,757 $657,837
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LIABILITIES
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Deposits 452,468 472,648 482,412
Advances from Federal Home Loan Bank 103,895 99,065 96,077
Advance payments by borrowers for taxes and insurance 597 1,483 641
Accrued interest payable 2,513 3,640 4,467
Accrued expenses and other liabilities 4,300 2,658 2,399
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Total liabilities 563,773 579,494 585,996
STOCKHOLDERS' EQUITY
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Common stock, $.01 par value 49 49 49
Additional paid-in capital 36,459 36,248 36,205
Retained earnings, substantially restricted 47,099 43,542 43,307
Treasury stock, at cost - 948,966, 665,764 and
586,764 shares at March 31, 2003, June 30, 2002
and March 31, 2002, respectively (11,793) (7,578) (6,478)
Accumulated other comprehensive income 594 490 314
Unearned ESOP (1,221) (1,330) (1,367)
Unearned RRP (105) (158) (189)
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Total stockholders' equity 71,082 71,263 71,841
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Total liabilities and stockholders' equity $634,855 $650,757 $657,837
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended Nine months ended
March 31, March 31,
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2003 2002 2003 2002
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(Dollars in thousands)
Total interest income $8,440 $9,600 $27,072 $30,434
Total interest expense 3,797 5,357 12,569 17,934
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Net interest income before provision 4,643 4,243 14,503 12,500
Less: provision for loan losses 200 1,035 1,430 2,315
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Net interest income after provision 4,443 3,208 13,073 10,185
Noninterest income 2,927 2,125 7,479 6,866
Noninterest expense (4,718) (4,263) (13,782) (12,602)
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Earnings before taxes on income 2,652 1,070 6,770 4,449
Taxes on income 870 325 2,263 1,502
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Reported net earnings $1,782 $745 $4,507 $2,947
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FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
At or for the three months At or for the nine months
ended March 31, ended March 31,
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2003 2002 2003 2002
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Financial condition data: (Dollars in thousands, except per share amounts)
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Average interest-earning assets $562,725 $571,803 $567,316 $578,082
Average interest-bearing liabilities 533,232 547,301 538,093 543,573
Net average earning assets 29,493 24,502 29,223 34,509
Average interest-earning assets to
average interest-bearing liabilities 105.53% 104.48% 105.43% 106.35%
Non-performing loans $4,640 $8,239
Non-performing assets 5,120 8,532
Allowance for loan losses 4,580 4,609
Allowance for loan losses to total loans 1.14% 1.08%
Non-performing loans to total loans 1.16% 1.96%
Non-performing assets to total assets 0.73% 1.30%
Shareholders' equity to assets 11.20% 10.92%
Selected operating data: (1)
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Return on average assets 1.13% 0.46% 0.94% 0.61%
Return on average equity 9.96% 4.12% 8.37% 5.48%
Net interest rate spread 3.15% 2.80% 3.25% 2.62%
Net yield on interest-earning assets 3.30% 2.97% 3.41% 2.88%
Efficiency ratio (2) 62.32% 66.94% 62.70% 65.07%
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(1) Annualized except for efficiency ratio.
(2) Noninterest expense divided by net interest income before provision for
loan losses plus noninterest income
Per share data:
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Earnings per share:
Basic $0.46 $0.18 $1.15 $0.71
Diluted $0.45 $0.18 $1.12 $0.70
Book value per share $18.03 $16.79 $18.03 $16.79
Tangible book value per share $13.24 $12.38 $13.24 $12.38
Market price per share:
High for the period $15.750 $12.600 $15.750 $13.170
Low for the period $14.620 $11.750 $11.760 $10.700
Close at end of period $15.280 $12.600 $15.280 $12.600
Cash dividends declared per share $0.080 $0.080 $0.240 $0.240
Weighted-average common shares outstanding:
Basic 3,837,324 4,091,098 3,931,839 4,129,757
Diluted 3,929,413 4,175,668 4,019,180 4,216,800