EXHIBIT 99.1
PRESS RELEASE
October 31, 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
Sioux City, Iowa. First Federal Bankshares, Inc. (the "Company") (Nasdaq
National Market - "FFSX") reported net earnings of $1.5 million, or diluted
earnings per share of $0.41, for the three months ended September 30, 2003, an
increase of $350,000, or 29.5%, from net earnings of $1.2 million, or diluted
earnings per share of $0.29, for the three months ended September 30, 2002.
Net interest income before provision for loan losses decreased by $289,000, or
5.9%, to $4.6 million for the three months ended September 30, 2003 from $4.9
million for the three months ended September 30, 2002. The Company's net yield
on average interest-earning assets decreased by 10 basis points to 3.30% for the
three months ended September 30, 2003 from 3.40% for the three months ended
September 30, 2002. The average yield on interest-earning assets decreased by 87
basis points to 5.71% for the three months ended September 30, 2003 from 6.58%
for the three months ended September 30, 2002 as market interest rates remained
at historically low levels. The decrease in the average yield on
interest-earning assets was partially offset by a decrease of 87 basis points in
the average cost of interest-bearing liabilities to 2.51% for the three months
ended September 30, 2003 from 3.38% for the three months ended September 30,
2002.
Provision for loan loss expense totaled $525,000 and $830,000, respectively, for
the three months ended September 30, 2003 and 2002. Non-performing loans
decreased to $5.2 million, or 1.15% of total loans at September 30, 2003, from
$6.8 million, or 1.63% of total loans at September 30, 2002. Net interest income
after provision for loan losses totaled $4.1 million for each of the three month
periods ended September 30, 2003 and 2002.
Noninterest income increased by $260,000, or 12.5%, to $2.3 million for the
quarter ended September 30, 2003 from $2.1 million for the quarter ended
September 30, 2002. The increase in noninterest income was largely due to
increases in fees and services charges. Fees and service charge income increased
by $222,000, or 18.9%, to $1.4 million for the three months ended September 30,
2003 from $1.2 million for the three months ended September 30, 2002. The
increase in fees and services was largely due to an increase in overdraft
activities on retail accounts and the resulting service fees assessed. In
addition, fee income related to the sustained volume of loan origination
activity in the continued low market interest rate environment contributed to
the increase. The increase in fees and service charges was partly offset by a
loss on sale of securities that totaled $32,000 for the three months ended
September 30, 2003.
Noninterest expense decreased by $271,000, or 6.2%, to $4.1 million for the
three months ended September 30, 2003 from $4.4 million for the three months
ended September 30, 2002. The decrease in noninterest expense was partly due to
a decrease in expense for the amortization of mortgage servicing assets. Such
amortization expense totaled $90,000 for the three months ended September 30,
2002, while no expense was recorded for the three months ended September 30,
2003 since these assets had been fully amortized. In addition, losses on
disposal of repossessed assets and other professional and general expenses of
the Company decreased for the three months ended September 30, 2003 as compared
to the three months ended September 30, 2002.
Earnings before income taxes increased by $548,000, or 30.8%, to $2.3 million
for the three months ended September 30, 2003 from $1.8 million for the three
months ended September 30, 2002. Taxes on income totaled $787,000, or an
effective tax rate of 33.8%, for the three months ended September 30, 2003 and
$590,000, or an effective tax rate of 33.2%, for the three months ended
September 30, 2002.
Assets totaled $641.7 million, $627.9 million and $640.5 million, respectively,
at September 30, 2003, June 30, 2003 and September 30, 2002. Book value per
share increased to $18.50 at September 30, 2003 from $17.29 at September 30,
2002. Stockholders' equity to total assets was 10.88% and 11.13%, respectively,
at September 30, 2003 and 2002. During the three months ended September 30, 2003
the Company repurchased 44,500 shares of its common stock at a cost of $865,000
to complete a repurchase program pursuant to which it repurchased 426,000
shares, or 10% of its issued and outstanding shares. The Company announced a new
repurchase program in August 2003 under which it expects to repurchase up to
377,000 additional shares, or 10% of its issued and outstanding shares. The
Company had 3,771,591 shares outstanding at September 30, 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
(Dollars in thousands)
September 30, June 30, September 30,
2003 2003 2002
------------ --------- ---------
ASSETS (Unaudited) (Unaudited)
- ------
Cash and cash equivalents 30,937 34,287 24,080
Securities available-for-sale 72,804 78,526 83,832
Securities held-to-maturity 29,211 44,505 59,857
Loans receivable, net 450,409 415,267 416,421
Office property and equipment, net 13,525 13,166 13,581
Federal Home Loan Bank stock, at cost 7,574 5,707 5,707
Accrued interest receivable 2,730 2,488 2,814
Goodwill 18,524 18,524 18,524
Other assets 16,002 15,409 15,704
------------ --------- ---------
Total assets $ 641,716 $ 627,879 $ 640,520
============ ========= =========
LIABILITIES
- -----------
Deposits 442,852 448,944 454,236
Advances from FHLB and other borrowings 122,599 102,387 107,429
Advance payments by borrowers for taxes and insurance 724 1,459 962
Accrued interest payable 1,912 1,795 3,547
Accrued expenses and other liabilities 3,842 3,633 3,035
------------ --------- ---------
Total liabilities 571,929 558,218 569,209
STOCKHOLDERS' EQUITY
- --------------------
Common stock, $.01 par value 49 49 49
Additional paid-in capital 36,663 36,537 36,296
Retained earnings, substantially restricted 49,147 47,901 44,408
Treasury stock, at cost - 1,135,766, 1,088,466 and
753,764 shares, respectively, at September 30, 2003,
June 30, 2003 and September 30, 2002 (15,155) (14,265) (8,797)
Accumulated other comprehensive income 286 710 776
Unearned ESOP (1,150) (1,186) (1,293)
Unearned RRP (53) (85) (128)
------------ --------- ---------
Total stockholders' equity 69,787 69,661 71,311
------------ --------- ---------
Total liabilities and stockholders' equity $ 641,716 $ 627,879 $ 640,520
============ ========= =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended
September 30,
-----------------------
2003 2002
---------- --------
(Dollars in thousands)
Total interest income $ 7,962 $ 9,487
Total interest expense 3,355 4,591
---------- --------
Net interest income before provision 4,607 4,896
Less: provision for loan losses 525 830
---------- --------
Net interest income after provision 4,082 4,066
Noninterest income 2,347 2,087
Noninterest expense (4,104) (4,375)
---------- --------
Income before taxes 2,325 1,778
Taxes on income 787 590
---------- --------
Reported net earnings $ 1,538 $ 1,188
========== ========
FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
At or for the three months
ended September 30,
--------------------------
Financial condition data: 2003 2002
- ------------------------- ---------- --------
(Dollars in thousands, except per share amounts)
Average interest-earning assets $ 559,620 $576,763
Average interest-bearing liabilities 534,038 543,465
Net average earning assets 25,582 33,298
Average interest-earning assets to
average interest-bearing liabilities 104.79% 106.13%
Non-performing loans $ 5,238 $ 6,779
Non-performing loans to total loans 1.15% 1.63%
Non-performing assets 5,867 7,234
Non-performing assets to total assets 0.91% 1.13%
Allowance for loan losses 4,908 4,503
Allowance for loan losses to total loans 1.08% 1.07%
Shareholders' equity to assets 10.88% 11.13%
Selected operating data: (1)
- ----------------------------
Return on average assets 0.95% 0.74%
Return on average equity (2) 8.79% 6.62%
Net interest rate spread 3.19% 3.20%
Net yield on interest-earning assets (3) 3.30% 3.40%
Efficiency ratio (4) 58.67% 62.60%
- --------------------------------------------
(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 $ 0.42 $ 0.30
Diluted $ 0.41 $ 0.29
Book value per share $ 18.50 $ 17.29
Market price per share:
High for the period $ 22.60 $ 14.57
Low for the period $ 17.55 $ 11.76
Close at end of period $ 22.10 $ 14.34
Cash dividends declared per share $ 0.08 $ 0.08
Weighted-average common shares outstanding:
Basic 3,640,117 4,009,213
Diluted 3,755,030 4,096,767