EXHIBIT 99
PRESS RELEASE OF FIRST FEDERAL BANKSHARES, INC.
PRESS RELEASE
July 25, 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 QUARTERLY RESULTS,
DIVIDEND AND ANNUAL STOCKHOLDERS' MEETING
Sioux City, Iowa. First Federal Bankshares, Inc. (the "Company") (Nasdaq
National Market - "FFSX") reported net earnings of $1.1 million, or diluted
earnings per share of $0.29, for the final quarter of the fiscal year ended June
30, 2003. This compares to net earnings of $563,000, or diluted earnings per
share of $0.13, for the quarter ended June 30, 2002. Net earnings for the fiscal
year ended June 30, 2003 totaled $5.6 million, or diluted earnings per share of
$1.41, compared to net earnings of $3.5 million, or diluted earnings per share
of $0.83, for the fiscal year ended June 30, 2002.
The Company announced a quarterly dividend of $0.08 per share, the same as the
previous quarter.
The Company has scheduled its Annual Meeting of Stockholders for October 30,
2003 at 9:00 a.m. at the Sioux City Convention Center, Sioux City, Iowa. The
meeting is for the purpose of electing directors and ratifying the appointment
of auditors for the fiscal year ending June 30, 2004.
Net interest income before provision for loan losses totaled $4.5 million and
$4.6 million, respectively, for the three months ended June 30, 2003 and 2002.
Interest income and interest expense both decreased by $1.5 million as a result
of the lower interest rate environment and changes in the mix and balances of
interest-earning assets and interest-bearing liabilities. The Company's net
yield on average interest-earning assets increased by 12 basis points to 3.26%
for the three months ended June 30, 2003 from 3.14% for the three months ended
June 30, 2002. The average yield on interest-earning assets decreased by 74
basis points to 5.85% for the three months ended June 30, 2003 from 6.59% for
the three months ended June 30, 2002 as market interest rates remained at
historically low levels. The decrease in the average yield on interest-earning
assets was offset by a decrease of 97 basis points in the average cost of
interest-bearing liabilities to 2.69% for the three months ended June 30, 2003
from 3.66% for the three months ended June 30, 2002.
Provision for loan loss expense totaled $300,000 and $1.5 million, respectively,
for the three months ended June 30, 2003 and 2002.
Noninterest income increased by $155,000, or 7.2%, to $2.3 million for the
quarter ended June 30, 2003 from $2.2 million for the quarter ended June 30,
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 $189,000, or 17.1%, to $1.3 million for the
three months ended June 30, 2003 from $1.1 million for the three months ended
June 30, 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 $101,000, or 121.8%, to $183,000 for the three months ended
June 30, 2003 from $82,000 for the three months ended June 30, 2002 primarily
due to an increase in gain on the sale of single-family residential loans
because of the continued low market interest rate environment in which mortgage
activities remained at elevated levels. These increases in noninterest income
were partly offset by decreases in gain on sale of securities and gain on sale
of real estate owned and real estate held for development for the three months
ended June 30, 2003 as compared to the three months ended June 30, 2002.
Noninterest expense increased by $422,000, or 9.5%, to $4.9 million for the
three months ended June 30, 2003 from $4.5 million for the three months ended
June 30, 2002. The increase in noninterest expense was partly due to an increase
of $121,000, or 4.7%, in compensation and benefits expense resulting from annual
salary increases and increases in incentive payments related to the increased
volume of loan origination activity during the current-year quarter. The
increase in noninterest expense was also due to an increase of $152,000 in
consulting expense primarily due to implementation costs for systems and
processes contracted for during the three months ended June 30, 2003.
Income before taxes increased by $872,000, or 115.3%, to $1.6 million for the
three months ended June 30, 2003 from $757,000 for the three months ended June
30, 2002. Taxes on income totaled $531,000, or an effective tax rate of 32.6%,
for the three months ended June 30, 2003 and $194,000, or an effective tax rate
of 25.6%, for the three months ended June 30, 2002. The effective tax rate
increased for the three months ended June 30, 2003 largely because tax-exempt
income comprised a smaller percentage of pre-tax income for the three months
ended June 30, 2003 than for the three months ended June 30, 2002.
Net interest income before provision for loan losses increased by $1.9 million,
or 11.3%, to $19.0 million for the twelve months ended June 30, 2003 from $17.1
million for the twelve months ended June 30, 2002. The Company's net yield on
interest-earning assets increased by 42 basis points to 3.37% for the twelve
months ended June 30, 2003 from 2.95% for the twelve months ended June 30, 2002.
The average yield on interest-earning assets decreased by 67 basis points to
6.24% for the twelve months ended June 30, 2003 from 6.91% for the twelve months
ended June 30, 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 119 basis points in the average cost
of interest-bearing liabilities to 3.01% for the twelve months ended June 30,
2003 from 4.20% for the twelve months ended June 30, 2002 resulting in a
reduction in interest expense that more than offset the reduction in interest
income. The average balance of deposits decreased by $27.7 million, or 6.1% to
$429.3 million for the twelve months ended June 30, 2003 from $457.0 million for
the twelve months ended June 30, 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 either lower-costing wholesale funding or non
interest-
bearing and transaction accounts. The average balance of Federal Home Loan Bank
advances increased by $16.9 million to $105.9 million for the twelve months
ended June 30, 2003 from $89.0 million for the twelve months ended June 30,
2002.
Provision for loan loss expense totaled $1.7 million and $3.8 million,
respectively, for the twelve months ended June 30, 2003 and 2002. Non-performing
loans decreased to $4.7 million, or 1.1% of total loans, at June 30, 2003 from
$6.2 million, or 1.5% of total loans, at June 30, 2002.
Noninterest income increased by $768,000, or 8.5%, to $9.8 million for the
twelve months ended June 30, 2003 from $9.0 million for the twelve months ended
June 30, 2002. 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 $499,000 and $310,000,
respectively. In addition, net gain on sale of securities increased by $206,000
to $309,000 for the twelve months ended June 30, 2003 from $103,000 for the
twelve months ended June 30, 2002. During the twelve months ended June 30, 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.
Noninterest expense increased by $1.6 million, or 9.4%, to $18.7 million for the
twelve months ended June 30, 2003 from $17.1 million for the twelve months ended
June 30, 2002. Compensation and benefits expense increased by $815,000, or 8.7%,
to $10.2 million for the twelve months ended June 30, 2003 from $9.4 million for
the twelve months ended June 30, 2002. The increase in compensation and benefits
expense was partly due to pension contribution expense totaling $313,000 for the
twelve months ended June 30, 2002. 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. In addition, an increase in the number of
full-time-equivalent employees, annual salary increases and an increase in
commission and bonus expenses contributed to the increase in compensation and
benefits expense. Losses related to repossessed assets and other real estate
owned increased by $204,000 for the twelve months ended June 30, 2003 as
compared to the twelve months ended June 30, 2002. Additionally, office property
and equipment expense increased by $122,000, or 4.8%, for the twelve months
ended June 30, 2003 as compared to the twelve months ended June 30, 2002.
Income before taxes increased by $3.2 million, or 61.3%, to $8.4 million for the
twelve months ended June 30, 2003 from $5.2 million for the twelve months ended
June 30, 2002. Taxes on income totaled $2.8 million, or an effective tax rate of
33.3%, for the twelve months ended June 30, 2003 and $1.7 million, or an
effective tax rate of 32.6% for the twelve months ended June 30, 2002.
Assets totaled $627.9 million and $650.8 million, respectively, at June 30, 2003
and 2002. Book value per share increased to $18.29 at June 30, 2003 from $16.95
at June 30, 2002. Stockholders' equity to total assets was 11.09% and 10.95%,
respectively, at June 30, 2003 and 2002. During the three months ended June 30,
2003 the Company repurchased 139,500 shares of its common stock at a cost of
$2.5 million under a repurchase program announced in August
2002. The Company expects to repurchase up to 44,500 additional shares under
this program. The Company had 3,808,391 shares outstanding at June 30, 2003.
On July 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 August 29, 2003 to stockholders of record on August 15, 2003.
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
(Unaudited)
June 30, June 30,
2003 2002
--------- ---------
ASSETS (Dollars in thousands)
- ------
Cash and due from banks $ 34,006 $ 23,114
Interest-bearing deposits in other financial institutions 281 103
--------- ---------
Cash and cash equivalents 34,287 23,217
Securities available-for-sale 78,526 92,313
Securities held-to-maturity 44,505 63,295
Loans receivable, net 415,267 418,382
Office property and equipment, net 13,166 13,770
Federal Home Loan Bank stock, at cost 5,707 5,038
Accrued interest receivable 2,488 2,804
Goodwill 18,524 18,524
Other assets 15,409 13,414
--------- ---------
Total assets $ 627,879 $ 650,757
========= =========
LIABILITIES
- -----------
Deposits 448,944 472,648
Advances from Federal Home Loan Bank 102,387 99,065
Advance payments by borrowers for taxes and insurance 1,459 1,483
Accrued interest payable 1,795 3,640
Accrued expenses and other liabilities 3,633 2,658
--------- ---------
Total liabilities 558,218 579,494
STOCKHOLDERS' EQUITY
- --------------------
Common stock, $.01 par value 49 49
Additional paid-in capital 36,537 36,248
Retained earnings, substantially restricted 47,901 43,542
Treasury stock, at cost - 1,088,466 and 665,764
shares, respectively, at June 30, 2003 and 2002 (14,265) (7,578)
Accumulated other comprehensive income 710 490
Unearned ESOP (1,186) (1,330)
Unearned RRP (85) (158)
--------- ---------
Total stockholders' equity 69,661 71,263
--------- ---------
Total liabilities and stockholders' equity $ 627,879 $ 650,757
========= =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Twelve months ended
June 30, June 30,
----------------------- -----------------------
2003 2002 2003 2002
-------- -------- -------- --------
(Dollars in thousands)
Total interest income $ 8,044 $ 9,585 $ 35,117 $ 40,020
Total interest expense 3,552 5,012 16,122 22,947
-------- -------- -------- --------
Net interest income before provision 4,492 4,573 18,995 17,073
Less: provision for loan losses 300 1,520 1,730 3,835
-------- -------- -------- --------
Net interest income after provision 4,192 3,053 17,265 13,238
Noninterest income 2,317 2,162 9,796 9,028
Noninterest expense (4,880) (4,458) (18,662) (17,060)
-------- -------- -------- --------
Income before taxes 1,629 757 8,399 5,206
Taxes on income 531 194 2,794 1,696
-------- -------- -------- --------
Reported net earnings $ 1,098 $ 563 $ 5,605 $ 3,510
======== ======== ======== ========
FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
At or for the three months At or for the twelve months
ended June 30, ended June 30,
-------- -------- -------- --------
2003 2002 2003 2002
-------- -------- -------- --------
Financial condition data: (Dollars in thousands, except per share amounts)
- -------------------------
Average interest-earning assets $550,514 $581,669 $563,126 $578,956
Average interest-bearing liabilities 528,247 547,301 535,242 545,975
Net average earning assets 22,267 34,368 27,884 32,981
Average interest-earning assets to
average interest-bearing liabilities 104.22% 106.28% 105.21% 106.04%
Non-performing loans $4,688 $6,191
Non-performing assets 5,100 6,601
Allowance for loan losses 4,615 4,584
Allowance for loan losses to total loans 1.10% 1.08%
Non-performing loans to total loans 1.13% 1.48%
Non-performing assets to total assets 0.81% 1.01%
Shareholders' equity to assets 11.09% 10.95%
Selected operating data: (1)
- ----------------------------
Return on average assets 0.70% 0.35% 0.88% 0.54%
Return on average equity (2) 6.27% 3.14% 7.91% 4.91%
Net interest rate spread 3.16% 2.93% 3.22% 2.71%
Net yield on interest-earning assets (3) 3.26% 3.14% 3.37% 2.95%
Efficiency ratio (4) 71.87% 67.40% 65.59% 66.22%
- ----------------------------------------------
(1) Annualized except for efficiency ratio.
(2) Net income divided by average equity capital excluding average
unrealized gains on available-for-sale securities.
(3) Net interest income divided by average interest-earning assets.
(4) Noninterest expense divided by net interest income before provision
for loan losses plus noninterest income, less gain (loss) on sale of
other real estate owned, less gain (loss) on sale of investments, less
gain (loss) on sale of fixed assets.
Per share data:
- ---------------
Earnings per share:
Basic $ 0.30 $ 0.14 $ 1.44 $ 0.85
Diluted $ 0.29 $ 0.13 $ 1.41 $ 0.83
Book value per share $ 18.29 $ 16.95 $ 18.29 $ 16.95
Market price per share:
High for the period $ 19.40 $ 14.25 $ 19.40 $ 14.25
Low for the period $ 15.40 $ 12.40 $ 11.76 $ 10.70
Close at end of period $ 17.64 $ 13.45 $ 17.64 $ 13.45
Cash dividends declared per share $ 0.08 $ 0.08 $ 0.32 $ 0.32
Weighted-average common shares outstanding:
Basic 3,722,185 4,071,968 3,879,569 4,115,350
Diluted 3,827,474 4,170,138 3,971,396 4,206,004