EXHIBIT 99.1
PRESS RELEASE
November 1, 2005
For Immediate Release
For Further Information Contact: Barry Backhaus
President and Chief Executive Officer
First Federal Bankshares, Inc.
329 Pierce Street, P.O. Box 897
Sioux City, IA 51102
712.277.0200
FIRST FEDERAL BANKSHARES, INC. ANNOUNCES EARNINGS
Sioux City, Iowa. First Federal Bankshares, Inc. (the "Company") (Nasdaq
National Market - "FFSX") reported net earnings of $825,000, or basic and
diluted earnings per share of $0.24 each, for the three months ended September
30, 2005. The Company reported net earnings of $2.2 million, or basic and
diluted earnings per share of $0.60 and $0.58, respectively, for the three
months ended September 30, 2004 during which a gain of $1.4 million, net of tax
effect, from the sale of two bank branch offices favorably impacted the
Company's net earnings.
Discussion of Operating Results for the Three Months Ended September 30, 2005
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Net interest income before provision for loan losses decreased by $202,000, or
4.6%, to $4.2 million for the three months ended September 30, 2005 from $4.4
million for the three months ended September 30, 2004. The decrease in net
interest income was largely due to an increase in the cost of interest-bearing
deposits due to increases in market interest rates as the Federal Reserve
continued its "measured pace" of interest rate increases. The cost of
interest-bearing deposits increased by 73 basis points to 2.51% for the three
months ended September 30, 2005 from 1.78% for the three months ended September
30, 2004. The yield on interest-earning assets also increased, but less
significantly, partially offsetting the increase in the cost of deposits. The
yield on interest-earning assets increased by 44 basis points to 5.76% for the
three months ended September 30, 2005 from 5.32% for the three months ended
September 30, 2004.
Provision for loan loss expense decreased to $240,000 for the three months ended
September 30, 2005 from $760,000 for the three months ended September 30, 2004.
Due to the decrease in provision for loan loss expense, net interest income
after provision for loan losses increased by $318,000, or 8.8%, to $3.9 million
for the three months ended September 30, 2005 from $3.6 million for the three
months ended September 30, 2004.
Noninterest income decreased by $2.5 million, or 62.0%, to $1.5 million for the
three months ended September 30, 2005 from $4.0 million for the three months
ended September 30, 2004. The decrease in noninterest income was primarily due
to a prior-year pre-tax gain of $2.2 million on the sale of two northwest Iowa
branch offices to a local financial institution that was completed in
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September 2004. The purchaser assumed deposits of $27.1 million and acquired
loans totaling $17.0 million in addition to the buildings and certain equipment.
Service charges on deposit accounts decreased by $161,000 for the three months
ended September 30, 2005 as compared to the three months ended September 30,
2004 primarily due to a decrease in the number of transaction accounts subject
to such service charges that resulted largely from the branch office sale
described above.
Noninterest expense decreased by $57,000, or 1.3%, to $4.3 million for the three
months ended September 30, 2005 from $4.4 million for the three months ended
September 30, 2004. Compensation and benefits expense decreased by $52,000, or
2.0%, and totaled $2.5 million for each of the three months ended September 30,
2005 and 2004. The number of full-time-equivalent employees decreased by 17, or
8.1%, to 193 at September 30, 2005 from 210 at September 30, 2004 primarily due
to the Company's smaller asset size. Annual salary increases, effective in
January 2005, partially offset the decrease in compensation and benefits expense
due to the reduced number of full-time-equivalent employees.
Income before income taxes decreased to $1.2 million for the three months ended
September 30, 2005 from $3.3 million for the three months ended September 30,
2004. Income tax expense totaled $344,000, or an effective tax rate of 29.4%,
and $1.1 million, or an effective tax rate of 34.5%, for the three months ended
September 30, 2005 and 2004, respectively. The effective tax rate decreased for
the current-year period primarily because tax-exempt income comprised a larger
percentage of pre-tax income for the three months ended September 30, 2005 than
for the three months ended September 30, 2004.
Other Information
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Assets totaled $577.9 million and $570.4 million, respectively, at September 30,
2005 and 2004. Book value per share increased to $19.95 at September 30, 2005
from $19.59 at September 30, 2004. Stockholders' equity to total assets was
12.25% and 12.71%, respectively, at September 30, 2005 and 2004. The Company had
3,549,195 shares outstanding at September 30, 2005.
The Company's common stock is traded on the NASDAQ National Market under the
symbol FFSX. The Company is headquartered in Sioux City, Iowa. The Bank operates
eight offices in northwest Iowa, an office in South Sioux City, Nebraska, and
six 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.
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FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, June 30, September 30,
2005 2005 2004
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ASSETS (Dollars in thousands)
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Cash and cash equivalents 15,110 31,336 20,031
Securities available-for-sale 47,242 49,978 57,870
Securities held-to-maturity 17,345 18,197 20,429
Loans receivable, net 444,079 433,634 416,799
Office property and equipment, net 12,978 13,109 13,055
Federal Home Loan Bank stock, at cost 5,668 5,762 6,861
Accrued interest receivable 2,583 2,293 2,428
Goodwill 18,417 18,417 18,417
Other assets 14,514 14,087 14,499
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Total assets $ 577,936 $ 586,813 $ 570,389
========= ========= =========
LIABILITIES
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Deposits 401,512 407,563 386,335
Advances from FHLB and other borrowings 101,829 104,564 106,555
Advance payments by borrowers for taxes and insurance 347 953 258
Accrued interest payable 1,603 1,312 1,287
Accrued expenses and other liabilities 1,829 2,126 3,483
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Total liabilities 507,120 516,518 497,918
STOCKHOLDERS' EQUITY
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Common stock, $.01 par value 50 50 50
Additional paid-in capital 37,848 37,761 37,471
Retained earnings, substantially restricted 55,509 55,029 54,033
Treasury stock, at cost - 1,430,534, 1,428,826 and
1,262,240 shares, respectively, at September 30, 2005,
June 30, 2005 and September 30, 2004 (21,781) (21,748) (18,106)
Accumulated other comprehensive income 77 159 251
Unearned ESOP (881) (914) (1,013)
Unearned RRP (6) (42) (215)
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Total stockholders' equity 70,816 70,295 72,471
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Total liabilities and stockholders' equity $ 577,936 $ 586,813 $ 570,389
========= ========= =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended
September 30,
----------------------
2005 2004
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(Dollars in thousands)
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Total interest income $7,584 $7,263
Total interest expense 3,409 2,886
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Net interest income 4,175 4,377
Less: provision for loan losses 240 760
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Net interest income after provision 3,935 3,617
Noninterest income 1,530 4,031
Noninterest expense 4,296 4,354
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Income before income taxes 1,169 3,294
Taxes on income 344 1,137
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Net income $ 825 $2,157
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FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
FINANCIAL HIGHLIGHTS (unaudited)
At or for the three months
ended September 30,
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Financial condition data: 2005 2004
- ------------------------ ----------- -----------
(Dollars in thousands,
except per share amounts)
Average interest-earning assets $ 526,783 $ 545,972
Average interest-bearing liabilities $ 463,107 $ 490,958
Average interest-earning assets to
average interest-bearing liabilities 113.75% 111.21%
Non-performing loans $ 5,507 $ 3,453
Non-performing loans to total loans 1.22% 0.82%
Non-performing assets $ 5,700 $ 4,024
Non-performing assets to total assets 0.99% 0.71%
Allowance for loan losses $ 6,723 $ 5,023
Allowance for loan losses to total loans 1.49% 1.19%
Shareholders' equity to assets 12.25% 12.71%
Selected operating data: (1)
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Return on average assets 0.57% 1.41%
Return on average equity (2) 4.62% 11.95%
Net interest rate spread 2.84% 2.99%
Net yield on average interest-earning
assets (3) 3.22% 3.25%
Efficiency ratio (4) 75.70% 68.22%
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(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, tax-effected, divided by average interest-earning
assets.
(4) Noninterest expense, excluding minority interest, 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:
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Earnings per share:
Basic $ 0.24 $ 0.60
Diluted $ 0.24 $ 0.58
Book value per share $ 19.95 $ 19.59
Market price per share:
High for the period $ 20.75 $ 23.60
Low for the period $ 19.25 $ 20.00
Close at end of period $ 19.25 $ 22.95
Cash dividends declared per share $ 0.10 $ 0.10
Weighted-average common shares outstanding:
Basic 3,447,124 3,608,397
Diluted 3,504,849 3,688,973
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