UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to __________
Commission File Number: 0-25509
First Federal Bankshares, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 42-1485449
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
329 Pierce Street, Sioux City, Iowa 51101
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(Address of principal executive offices) (Zip Code)
712-277-0200
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
|X| Yes |_| No
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).
|X| Yes |_| No
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934).
|_| Yes |X| No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 7, 2005
----- -------------------------------
(Common Stock, $.01 par value) 3,549,195
FIRST FEDERAL BANKSHARES, INC.
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements of First Federal Bankshares, Inc.
and Subsidiaries 1
Condensed Consolidated Balance Sheets at
September 30, 2005 and June 30, 2005 1
Condensed Consolidated Statements of Operations
for the three-month periods ended
September 30, 2005 and 2004 2
Condensed Consolidated Statements of Changes in
Stockholders' Equity for the three-month periods
ended September 30, 2005 and 2004 3
Condensed Consolidated Statements of Comprehensive
Income for the three-month periods ended
September 30, 2005 and 2004 4
Condensed Consolidated Statements of Cash Flows for the
three-month periods ended September 30, 2005 and 2004 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
Part II. Other Information 18
Item 1. Legal Proceedings 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits 19
Signatures 19
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, June 30,
2005 2005
------------- -------------
Assets
- ------
Cash and due from banks $ 14,923,102 $ 15,102,382
Interest-bearing deposits in other financial institutions 187,259 16,233,325
------------- -------------
Cash and cash equivalents 15,110,361 31,335,707
------------- -------------
Securities available-for-sale, at fair value (amortized cost
of $47,117,517 and $49,724,675, respectively) 47,241,617 49,978,244
Securities held-to-maturity, at amortized cost (fair value
of $17,607,393 and $18,611,291, respectively) 17,345,274 18,196,627
Loans receivable 450,802,185 440,351,738
Less allowance for loan losses 6,723,332 6,717,956
------------- -------------
Net loans 444,078,853 433,633,782
------------- -------------
Office property and equipment, net 12,978,492 13,108,654
Federal Home Loan Bank ("FHLB") stock, at cost 5,667,900 5,762,400
Accrued interest receivable 2,583,100 2,293,315
Goodwill 18,417,040 18,417,040
Other assets (note 5) 14,513,677 14,087,122
------------- -------------
Total assets $ 577,936,314 $ 586,812,891
============= =============
Liabilities
- -----------
Deposits $ 401,511,566 $ 407,562,405
Advances from FHLB and other borrowings 101,829,284 104,564,262
Advance payments by borrowers for taxes and insurance 347,232 953,281
Accrued interest payable 1,603,053 1,311,724
Accrued expenses and other liabilities 1,829,584 2,126,014
------------- -------------
Total liabilities 507,120,719 516,517,686
------------- -------------
Stockholders' equity
- --------------------
Common stock, $.01 par value, 12,000,000 shares authorized;
4,979,729 and 4,977,029 shares issued at September 30, 2005
and June 30, 2005, respectively 49,797 49,770
Additional paid-in capital 37,848,543 37,761,587
Retained earnings, substantially restricted 55,508,796 55,028,733
Treasury stock, at cost, 1,430,534 and 1,428,826 shares at
September 30, 2005 and June 30, 2005, respectively (21,781,049) (21,747,743)
Accumulated other comprehensive income 77,099 158,570
Unearned Employee Stock Ownership Plan ("ESOP") (881,430) (913,890)
Unearned Recognition and Retention Plan ("RRP") (6,161) (41,822)
------------- -------------
Total stockholders' equity 70,815,595 70,295,205
------------- -------------
Total liabilities and stockholders' equity $ 577,936,314 $ 586,812,891
============= =============
See notes to condensed consolidated financial statements.
1
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months
ended September 30,
--------------------------
2005 2004
----------- -----------
Interest income:
Loans receivable $ 6,861,446 $ 6,315,670
Investment securities 646,118 938,370
Other interest-earning assets 76,122 8,673
----------- -----------
Total interest income 7,583,686 7,262,713
----------- -----------
Interest expense:
Deposits 2,277,463 1,709,158
Advances from FHLB and other borrowings 1,131,694 1,177,083
----------- -----------
Total interest expense 3,409,157 2,886,241
----------- -----------
Net interest income 4,174,529 4,376,472
Provision for losses on loans 240,000 760,000
----------- -----------
Net interest income after provision for
losses on loans 3,934,529 3,616,472
----------- -----------
Noninterest income:
Service charges on deposit accounts 839,781 1,000,291
Service charges on loans 95,957 157,396
Gain on sale of bank branch offices -- 2,185,284
Loss on sale of real estate held for development (241,649) --
Net loss on sale of securities -- (121,209)
Gain on sale of loans 233,754 240,761
Real estate-related activities 175,058 185,864
Other income 427,924 382,474
----------- -----------
Total noninterest income 1,530,825 4,030,861
----------- -----------
Noninterest expense:
Compensation and benefits (note 7) 2,491,961 2,543,898
Office property and equipment 701,260 631,177
Data processing expense 123,005 125,256
Advertising 145,143 81,334
Other expense 834,847 971,942
----------- -----------
Total noninterest expense 4,296,216 4,353,607
----------- -----------
Income before income taxes 1,169,138 3,293,726
Income taxes 344,000 1,137,000
----------- -----------
Net income $ 825,138 $ 2,156,726
=========== ===========
Earnings per share: (note 4)
Basic earnings per share $ 0.24 $ 0.60
=========== ===========
Diluted earnings per share $ 0.24 $ 0.58
=========== ===========
Dividends declared per share $ 0.10 $ 0.10
=========== ===========
See notes to condensed consolidated financial statements.
2
FIRST FEDERAL BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
Three months ended September 30,
2005 2004
----------------------------
Capital Stock
Beginning of year balance $ 49,770 $ 49,393
Stock options exercised: 2,700 and 22,967 shares for the three
months ended September 30, 2005 and 2004, respectively 27 229
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End of period balance 49,797 49,622
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Additional paid-in capital
Beginning of year balance 37,761,587 37,086,235
Stock options exercised 54,592 212,215
RRP awarded -- 133,755
Stock appreciation of allocated ESOP shares 32,364 39,033
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End of period balance 37,848,543 37,471,238
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Retained earnings, substantially restricted
Beginning of year balance 55,028,733 52,240,273
Net earnings 825,138 2,156,726
Dividends paid on common stock (345,075) (363,160)
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End of period balance 55,508,796 54,033,839
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Treasury stock, at cost
Beginning of year balance (21,747,743) (16,519,093)
RRP awarded (forfeited), net -- 83,250
Treasury stock purchased (33,306) (1,670,050)
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End of period balance (21,781,049) (18,105,893)
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Accumulated other comprehensive income (loss)
Beginning of year balance 158,570 (329,644)
Net change in unrealized gains on securities available-for-sale,
net of tax expense (81,471) 504,264
Less: reclassification adjustment for net realized losses
included in net income, net of tax expense -- (75,998)
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End of period balance 77,099 250,618
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Unearned ESOP shares
Beginning of year balance (913,890) (1,044,710)
ESOP shares allocated 32,460 31,700
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End of period balance (881,430) (1,013,010)
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Unearned recognition and retention plan shares
Beginning of year balance (41,822) (24,732)
RRP forfeited (awarded), net -- (217,005)
Amortization of RRP expense 35,661 26,379
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End of period balance (6,161) (215,358)
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Total stockholders' equity $ 70,815,595 $ 72,471,056
==================================================================================================
See notes to condensed consolidated financial statements.
3
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (Unaudited)
Three months ended
September 30,
--------------------------
2005 2004
----------- -----------
Net earnings $ 825,138 $ 2,156,726
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during
the period, net of tax (81,471) 504,264
Less: reclassification adjustment for net realized
losses included in net income, net of tax expense -- (75,998)
----------- -----------
Other comprehensive income (loss), net of tax (81,471) 580,262
----------- -----------
Comprehensive income $ 743,667 $ 2,736,988
=========== ===========
4
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended September 30,
Cash flows from operating activities: 2005 2004
------------ ------------
Net earnings $ 825,138 $ 2,156,726
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Loans originated for sale to investors (14,882,000) (8,190,000)
Proceeds from sale of loans originated for sale 13,760,660 8,421,341
Provision for losses on loans 240,000 760,000
Depreciation and amortization 492,414 399,889
Net gain on sale of loans (233,754) (240,761)
Net loss on sale of securities available-for-sale -- 121,209
Net gain on sale of bank branch offices -- (2,185,284)
Net loss on sale of real estate held for development 241,649 --
Net loan fees deferred (53,762) (42,391)
Amortization of premiums and discounts on loans and securities (34,703) 133,798
(Increase) decrease in accrued interest receivable (289,785) (223,003)
(Increase) decrease in other assets (687,852) 414,461
Increase (decrease) in accrued interest payable 291,329 204,832
Increase (decrease) in accrued expenses and other liabilities (296,430) (243,488)
Increase (decrease) in accrued taxes on income (102,126) 1,134,255
------------ ------------
Net cash provided by (used in) operating activities (729,222) 2,621,584
------------ ------------
Cash flows from investing activities:
Proceeds from maturities of securities held-to-maturity 844,046 2,745,368
Proceeds from sale of securities available-for-sale -- 30,226,184
Purchase of securities available-for-sale -- (5,389,323)
Proceeds from maturities of securities available-for-sale 2,496,235 2,676,664
Redemption (purchase) of Federal Home Loan Bank Stock 94,500 (764,400)
Loans purchased (7,649,000) (4,505,000)
Cash effect of bank branch office sales -- (9,753,387)
(Increase) decrease in loans receivable (1,627,009) 1,655,265
Purchase of office property and equipment (173,553) (520,871)
Proceeds from sale of foreclosed real estate 142,098 222,405
Proceeds from sale of real estate held for development 487,249 314,145
Net expenditures on real estate held for development (395,062) (348,074)
------------ ------------
Net cash provided by (used in) investing activities (5,780,496) 16,558,976
------------ ------------
Cash flows from financing activities:
Decrease in deposits (6,050,839) (13,594,987)
Proceeds from FHLB advances and other borrowings 1,265,022 1,668,524
Repayment of FHLB advances and other borrowings (4,000,000) (5,000,000)
Net decrease in advances from borrowers for taxes and insurance (606,049) (861,474)
Issuance of common stock, net 54,619 212,445
Repurchase of common stock (33,306) (1,670,050)
Cash dividends paid (345,075) (363,160)
------------ ------------
Net cash used in financing activities (9,715,628) (19,608,702)
------------ ------------
Net decrease in cash and cash equivalents (16,225,346) (428,142)
Cash and cash equivalents at beginning of period 31,335,707 20,459,727
------------ ------------
Cash and cash equivalents at end of period $ 15,110,361 $ 20,031,585
============ ============
Supplemental disclosures:
Cash paid during the period for interest $ 3,117,828 $ 2,806,325
============ ============
Cash paid during the period for income taxes $ 3,039 $ 2,745
============ ============
See notes to condensed consolidated financial statements.
5
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation
---------------------
The condensed consolidated balance sheet information for June 30, 2005 was
derived from the audited Consolidated Balance Sheets of First Federal
Bankshares, Inc. (the "Company") at June 30, 2005. The condensed consolidated
financial statements as of and for the three months ended September 30, 2005 and
2004 are unaudited.
In the opinion of management of the Company these financial statements reflect
all adjustments, consisting only of normal recurring accruals necessary to
present fairly these condensed consolidated financial statements. The results of
operations for the interim periods are not necessarily indicative of results
that may be expected for an entire year. Certain information and footnote
disclosure normally included in year-end financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted.
Certain amounts previously reported have been reclassified to conform to the
presentation in these condensed consolidated financial statements. These
reclassifications did not affect previously reported net income or retained
earnings.
The Company's critical accounting policies relate to the allowance for loan
losses and goodwill. With regard to the Company's critical accounting policy
related to the allowance for loan losses, the Company has established a
systematic method of periodically reviewing the credit quality of the loan
portfolio in order to establish an allowance for losses on loans. The allowance
for losses on loans is based on management's current judgments about the credit
quality of individual loans and segments of the loan portfolio. The allowance
for losses on loans is established through a provision for loan losses based on
management's evaluation of the risk inherent in the loan portfolio, and
considers all known internal and external factors that affect loan
collectability as of the reporting date. Such evaluation, which includes a
review of all loans on which full collectability may not be reasonably assured,
considers among other matters, the estimated net realizable value or the fair
value of the underlying collateral, economic conditions, historical loan loss
experience, management's knowledge of inherent risks in the portfolio that are
probable and reasonably estimable and other factors that warrant recognition in
providing an appropriate loan loss allowance. This evaluation involves a high
degree of complexity and requires management to make subjective judgments that
often require assumptions or estimates about uncertain matters. With regard to
the Company's critical accounting policy relating to goodwill, goodwill is
evaluated by management for impairment at least annually and whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable.
A summary of significant accounting policies followed by the Company is set
forth in Note 1 of the Company's 2005 Annual Report to Stockholders and is
incorporated herein by reference. The Company's critical accounting policies and
their application are periodically reviewed by the Audit Committee and the full
Board of Directors.
2. Organization
------------
The Company is the holding company for First Federal Bank (the "Bank"). The
Company owns 100% of the Bank's common stock. Currently, the Company engages in
no other significant activities beyond its ownership of the Bank's common stock.
6
3. Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
4. Earnings per share
------------------
The following information was used in the computation of net earnings per common
share on both a basic and diluted basis for the periods presented.
Three months ended
September 30,
2005 2004
-------------------------
Basic EPS computation:
Net earnings $ 825,138 $2,156,726
Weighted average common shares outstanding 3,447,124 3,608,397
-------------------------
Basic EPS $ 0.24 $ 0.60
=========================
Diluted EPS computation:
Net earnings $ 825,138 $2,156,726
-------------------------
Weighted average common shares outstanding 3,447,124 3,608,397
Incremental option and RRP shares using
treasury stock method 57,725 80,576
-------------------------
Diluted shares outstanding 3,504,849 3,688,973
=========================
Diluted EPS $ 0.24 $ 0.58
=========================
7
5. Intangible assets
-----------------
The gross carrying amount of intangible assets subject to amortization and the
associated accumulated amortization at September 30, 2005, is presented in the
table below. These balances are included in the line item `Other assets' in the
Condensed Consolidated Balance Sheets. Amortization expense for intangible
assets was $26,232 and $17,863, respectively, for the three months ended
September 30, 2005 and 2004.
September 30, 2005
------------------------------------------
Gross Unamortized
Carrying Accumulated Intangible
Amount Amortization Assets
------------------------------------------
Intangible assets:
Core deposit premium $ 690,140 $ 532,591 $ 157,549
Mortgage servicing rights 268,379 65,852 202,527
------------------------------------------
$ 958,519 $ 598,443 $ 360,076
==========================================
June 30, 2005
------------------------------------------
Gross Unamortized
Carrying Accumulated Intangible
Amount Amortization Assets
------------------------------------------
Intangible assets:
Core deposit premium $ 690,140 $ 521,440 $ 168,700
Mortgage servicing rights 268,379 50,771 217,608
------------------------------------------
$ 958,519 $ 572,211 $ 386,308
==========================================
Projections of amortization expense are based on existing asset balances and the
existing interest rate environment as of September 30, 2005. What the Company
actually experiences may be significantly different depending upon changes in
market interest rates and market conditions. The following table shows the
estimated future amortization expense for amortizing intangible assets for the
periods indicated:
Core Deposit Mortgage
Premium Servicing Rights Total
------------------------------------------
Nine months ended June 30, 2006 $ 33,453 $ 49,759 $ 83,212
Year ended June 30, 2007 44,604 50,947 95,551
Year ended June 30, 2008 44,604 37,814 82,418
Year ended June 30, 2009 34,888 27,213 62,101
Year ended June 30, 2010 -- 18,828 18,828
Year ended June 30, 2011 -- 12,432 12,432
Thereafter -- 5,534 5,534
------------------------------------------
Total estimated amortization expense $ 157,549 $ 202,527 $ 360,076
===========================================
8
6. Dividends
---------
On July 21, 2005 the Company declared a cash dividend on its common stock,
payable on August 31, 2005 to stockholders of record as of August 17, 2005,
equal to $0.10 per share. Excluding dividends on unallocated Employee Stock
Ownership Plan ("ESOP") shares, dividends totaling $345,075 were paid to
stockholders on August 31, 2005.
On October 27, 2005 the Company declared a cash dividend on its common stock,
payable on November 30, 2005 to stockholders of record as of November 16, 2005
equal to $0.10 per share. Excluding dividends on unallocated ESOP shares, the
Company expects to pay dividends totaling approximately $345,000 to stockholders
on November 30, 2005.
7. Stock Options
-------------
At September 30, 2005, the Company had two stock-based employee compensation
plans, which are described more fully in Note 11 of the Company's 2005 Annual
Report to Stockholders. The Company adopted Statement No. 123 (Revised 2004),
Share-Based Payment ("SFAS123R") which replaces SFAS No. 123, Accounting for
Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees, effective July 1, 2005. SFAS123R requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair values. The pro forma
disclosures previously permitted under SFAS No. 123 are no longer an alternative
to financial statement recognition. Upon adoption, the Company used the
prospective transition method. The prospective method requires that compensation
expense be recorded for all non-vested stock options beginning with the first
quarter after adoption of SFAS123R. Stock-based compensation expense for the
three months ended September 30, 2005 totaled $18,644.
Previously, the Company applied Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for these plans. Accordingly, prior to July 1, 2005 no compensation
cost had been recognized for its stock options in the condensed consolidated
financial statements. Set forth below is a reconciliation of net income and
earnings per share information for the three months ended September 30, 2004, as
if the Company had applied the fair value recognition provisions of SFAS 123,
Accounting for Stock-based Compensation, to stock-based employee compensation
for that period.
Three months ended
September 30, 2004
------------------
Net income, as reported $ 2,156,726
Deduct:
Total stock-based compensation expense determined under the
fair value method for all awards, net of tax effects (9,154)
------------------
Pro forma net income $ 2,147,572
==================
Pro forma basic earnings per share $ 0.60
==================
Pro forma diluted earnings per share $ 0.58
==================
The fair value of each option grant has been estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants for the three months ended September 30, 2005 and 2004, respectively:
dividend yield of 2.22% and 2.44%; expected volatility of 24.54% and 24.26%;
risk free interest rate of 4.20% and 4.54%; and expected life of 7.5 years for
all periods presented.
9
8. Effect of New Accounting Standards
----------------------------------
The Accounting Standards Executive Committee has issued Statement of Position
03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer.
This Statement applies to all loans acquired in a transfer, including those
acquired in the acquisition of a bank or a branch, and provides that such loans
be accounted for at fair value with no allowance for loan losses, or other
valuation allowance, permitted at the time of acquisition. The difference
between cash flows expected at the acquisition date and the investment in the
loan should be recognized as interest income over the life of the loan. If
contractually required payments for principal and interest are more than
expected cash flows, this amount should not be recognized as a yield adjustment,
a loss accrual, or a valuation allowance. The Company adopted this Statement
effective July 1, 2005. The adoption did not have a material impact on the
Company's consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-looking statements
- --------------------------
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for the purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
Company's future activities and operating results include, but are not limited
to, changes in: interest rates, general economic conditions, legislative and
regulatory changes, U.S. monetary and fiscal policies, demand for products and
services, deposit flows, competition and accounting policies, principles and
guidelines. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements.
Overview
- --------
Increases in market interest rates as the Federal Reserve Board continued its
"measured pace" of interest rate increases resulted in increases in the yield on
interest-earning assets and, more significantly, in the cost of interest-bearing
liabilities. 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. The cost of interest-bearing liabilities
increased by 59 basis points to 2.92% for the three months ended September 30,
2005 from 2.33% for the three months ended September 30, 2004. During the three
months ended September 30, 2005, the Company increased rates on certain deposit
products and offered premium-rate certificates of deposit in order to attract
and retain deposit relationships in the generally higher market interest rate
environment. The Company's net yield on interest-earning assets was 3.22% and
3.25%, respectively, for the three months ended September 30, 2005 and 2004.
Noninterest income decreased by $2.5 million for the three months ended
September 30, 2005 as compared to the three months ended September 30, 2004
primarily due to a branch sale transaction in the prior-year period. In
September 2004 the Company sold two branch offices located in Sheldon, Iowa and
Orange City, Iowa to another local financial institution. The purchaser assumed
deposits of $27.1 million
10
and acquired loans totaling $17.0 million in addition to the branch office
buildings and certain furniture and equipment. A pre-tax gain of $2.2 million
was recorded as a result of the branch sale.
Financial condition
- -------------------
Total assets decreased by $8.9 million, or 1.5%, to $577.9 million at September
30, 2005 from $586.8 million at June 30, 2005. Cash and cash equivalents
decreased by $16.2 million and investment securities decreased by $3.6 million.
The decreases in cash and cash equivalents and investment securities were used
to fund an increase in loans that totaled $10.7 million and a decrease in
deposits and borrowings. Loans receivable increased to $450.9 million at
September 30, 2005 from $440.2 million at June 30, 2005 primarily due to an
increase of $18.6 million in the balances of commercial real estate and
commercial industry loans partially offset by decreases of $4.0 million and $3.9
million, respectively, in the balances of residential loans and consumer loans.
[See "Asset quality" for an analysis of the loan portfolio by loan type.]
Deposits decreased by $6.1 million, or 1.5%, to $401.5 million at September 30,
2005 from $407.6 million at June 30, 2005 primarily due to a decrease in the
balance of savings and money market accounts as competition for such transaction
accounts accelerated in the increasing market interest rate environment.
Total stockholders' equity increased by $520,000, or 0.7%, to $70.8 million at
September 30, 2005 from $70.3 million at June 30, 2005. The change in
stockholders' equity was primarily due to earnings of $825,000 for the three
months ended September 30, 2005 net of dividend payments. Excluding dividends on
unallocated Employee Stock Ownership Plan ("ESOP") shares, dividends declared
and paid during the three months ended September 30, 2005 totaled $345,000.
Asset quality
- -------------
Non-performing assets increased to $5.7 million, or 0.99% of total assets from
$1.8 million, or 0.30% of total assets, at June 30, 2005. The increase in
non-performing assets was primarily due to an increase in non-performing loans.
During the three months ended September 30, 2005, the Company placed the
previously classified loans of two commercial borrowers, with loan balances
totaling $4.3 million, on non-accrual status. Additional loss allowances of
$164,000 were established against the loans of these borrowers during the three
months ended September 30, 2005, resulting in total loss allowances of $2.3
million against the loans of these borrowers at September 30, 2005. A
significant portion of the total allowances on these loans had been provided in
the fourth quarter of fiscal 2005. The allowance for loan losses totaled $6.7
million, or 1.49% of total loans, at September 30, 2005 and $6.7 million, or
1.53% of total loans, at June 30, 2005.
The allowance for loan losses is increased by the provision for loan losses
charged to operations and reduced by net charge-offs. Management establishes the
allowance for loan losses through a process that begins with estimates of
probable loss inherent in the portfolio based on various statistical analyses.
These analyses consider historical and projected default rates and loss
severities; internal risk ratings; and geographic, industry and other
environmental factors. In establishing the allowance for loan losses, management
also considers the Company's current business strategy and credit processes,
including compliance with established guidelines for credit limits, credit
approvals, loan underwriting criteria and loan workout procedures. The policy of
the Company is to segment the allowance to correspond to the various types of
loans in the loan portfolio according to the underlying collateral, which
corresponds to the respective levels of quantified and inherent risk. The
initial assessment takes into consideration non-performing loans and the
valuation of the collateral supporting each loan. Non-performing loans are
risk-rated generally on a case-by-case basis based on qualitative and
quantitative factors that include, but are not limited to, collateral type and
estimated value, financial statement analysis, specific economic factors,
11
cash flow analysis, delinquency history and loan workout situations and
progress. Based upon this analysis, a quantified risk factor is assigned to each
non-performing loan. This results in an allocation to the overall allowance for
the corresponding type and severity of each non-performing loan.
Performing loans are also reviewed by collateral type, with similar risk factors
being assigned. These risk factors take into consideration, among other matters,
the borrower's ability to pay and the Company's past loan loss experience with
each type of loan. The assigned risk factors result in allocations to the
allowance corresponding to the risk-rated portfolio of performing loans.
In order to determine its overall adequacy, the allowance for loan losses is
reviewed by management on a monthly basis. While management uses available
information to recognize losses on loans, future additions to the allowance may
be necessary, based on changes in economic and local market conditions beyond
management's control. In addition, various regulatory agencies periodically
review the Company's loan loss allowance as an integral part of the examination
process. Accordingly, the Company may be required to take certain charge-offs
and/or recognize additions to the allowance based on the judgment of regulators
as determined by information provided to them during their examinations.
Based on relevant and presently available information, management believes that
the current allowance for loan losses is adequate. Following are tables
presenting (a) an analysis of the loan portfolio; (b) a summary of the allowance
for loan losses; and (c) non-performing asset balances.
(a) Analysis of the loan portfolio by loan type on the dates indicated
------------------------------------------------------------------
September 30, 2005 June 30, 2005
----------------------- ------------------------
Amount % Amount %
----------------------- ------------------------
(Dollars in Thousands)
One- to four-family residential (1) $ 140,223 31.58% $ 144,238 33.26%
Multi-family residential (2) 46,529 10.48% 46,070 10.62%
Commercial real estate (3) 145,753 32.82% 133,626 30.82%
Commercial business loans 43,470 9.79% 37,485 8.64%
Home equity & second mortgage loans 31,800 7.16% 32,134 7.41%
Other non-mortgage loans (4) 43,129 9.71% 46,649 10.76%
----------------------- ------------------------
Total loans $ 450,904 101.54% $ 440,202 101.51%
Less:
Allowance for loan losses 6,723 1.51% 6,718 1.55%
Unearned income net of unamortized premium 102 0.03% (150) -0.04%
----------------------- ------------------------
Total loans, net $ 444,079 100.00% $ 433,634 100.00%
======================= ========================
- ------------------------------------------------------------------------
(1) Includes construction loans on one- to four-family residential units.
(2) Includes construction loans on multi-family residential units.
(3) Includes construction loans on commercial real estate.
(4) Includes other secured and unsecured non-mortgage loans to consumers.
12
(b) Summary of the allowance for loan losses
----------------------------------------
For the three months ended
September 30,
2005 2004
------------------------------
Balance at beginning of period $ 6,717,956 $ 4,316,286
Provision for losses 240,000 760,000
Charge-offs (263,035) (82,581)
Recoveries 28,411 28,880
------------------------------
Balance at end of period $ 6,723,332 $ 5,022,585
==============================
(c) Non-performing assets.
---------------------
September 30, 2005 June 30, 2005
----------------------------------------
(Dollars in Thousands)
Loans accounted for on a non-accrual basis:
One- to four-family residential $ 433 $ 496
Commercial real estate 288 143
Commercial business 4,058 227
Consumer 106 301
----------------------------------------
Total 4,885 1,167
----------------------------------------
Loans accounted for on an accrual basis (1)(2):
One- to four-family residential 622 468
----------------------------------------
Total 622 468
----------------------------------------
Total non-performing loans 5,507 1,635
----------------------------------------
Other non-performing assets (3) (4) 193 142
----------------------------------------
Total non-performing assets $ 5,700 $ 1,777
========================================
Restructured loans not included in
other non-performing categories above $ 3,415 $ 7,517
========================================
Non-performing loans as a percentage of total loans 1.22% 0.37%
Non-performing loans as a percentage of total assets 0.95% 0.28%
Total non-performing assets as a percentage of total loans
and other non-performing assets 1.28% 0.41%
Non-performing assets as a percentage of total assets 0.99% 0.30%
- -------------------------------------------------------------
(1) Includes loans 90 days or more contractually delinquent.
(2) Delinquent FHA/VA guaranteed loans and delinquent loans with past due
interest that, in the opinion of management, is collectible, are not
placed on non-accrual status.
(3) Represents the net book value of real property acquired by the Company
through foreclosure or deed in lieu of foreclosure. Upon acquisition, this
property is carried at the lower of cost or fair market value less
estimated costs of disposition. The total carrying amount was $109,000 and
$69,000, respectively, at September 30 and June 30, 2005.
(4) Includes repossessed automobiles, boats and trailers carried at the lower
of cost or fair market value less estimated disposal costs. The total
carrying amount was $84,000 and $73,000, respectively, at September 30 and
June 30, 2005.
13
Capital
- -------
The Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum
tangible, leverage (core) and risk-based capital requirements. As of September
30, 2005 the Bank was in compliance with all regulatory capital requirements.
The Bank's actual and required capital amounts and ratios as of September 30,
2005 were as follows:
September 30, 2005
-----------------------------------------------------------------------
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
-------------------- ---------------------- ---------------------
Amount Ratio Amount Ratio Amount Ratio
-----------------------------------------------------------------------
Dollars in Thousands
Tangible capital $ 48,630 8.71% $ 8,376 1.50% $ -- - %
Tier 1 leverage (core) 48,630 8.71 22,335 4.00 27,919 5.00
Tier 1 risk-based capital 48,630 11.09 17,547 4.00 26,321 6.00
Risk-based capital 54,129 12.34 35,094 8.00 43,868 10.00
June 30, 2005
-----------------------------------------------------------------------
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
-------------------- ---------------------- ---------------------
Amount Ratio Amount Ratio Amount Ratio
-----------------------------------------------------------------------
Dollars in Thousands
Tangible capital $ 47,468 8.38% $ 8,501 1.50% $ -- - %
Tier 1 leverage (core) 47,468 8.38 22,670 4.00 28,338 5.00
Tier 1 risk-based capital 47,468 10.98 17,289 4.00 25,934 6.00
Risk-based capital 52,887 12.24 34,579 8.00 43,223 10.00
Liquidity
- ---------
The Company is required by OTS regulation to maintain sufficient liquidity to
assure its safe and sound operation. Liquid assets include cash, certain time
deposits, banker's acceptances and specified United States government, state or
federal agency obligations. The Company adjusts its liquid assets in order to
meet funding needs for deposit outflows, payment of real estate taxes from
escrowed funds, when applicable, loan commitments and capital strategies. The
Company also adjusts liquidity as appropriate to meet its asset/liability
objectives.
Comparison of the results of operations for the three months ended September 30,
- --------------------------------------------------------------------------------
2005 and 2004
- -------------
General. Net earnings for the three months ended September 30, 2005 totaled
- -------
$825,000, or basic and diluted earnings per share of $0.24 each. Net earnings
for the three months ended September 30, 2004 totaled $2.2 million, or basic and
diluted earnings per share of $0.60 and $0.58, respectively. The 2005 quarterly
earnings decreased primarily due to the prior-year gain of $1.4 million, net of
tax effect, on the sale of bank branch offices in September 2004.
Interest Income. Interest income increased by $321,000, or 4.4%, to $7.6 million
- ---------------
for the three months ended September 30, 2005 from $7.3 million for the three
months ended September 30, 2004 primarily due to an increase in the average
yield on interest-earning assets. The average yield on interest-earning assets
increased by 44 basis points to 5.76% for the three months ended September 30,
2005 from 5.32%
14
for the three months ended September 30, 2004 due to increases in market
interest rates resulting from the series of interest rate increases implemented
by the Federal Reserve Board since June 2004. Partially offsetting the increase
in interest income due to the increase in the average yield on interest-earning
assets was a decrease in the average balance of such assets. The average balance
of interest-earning assets decreased by $19.2 million, or 3.5%, to $526.8
million for the three months ended September 30, 2005 from $546.0 million for
the three months ended September 30, 2004 primarily due to the Company's sale of
two branch offices in September 2004 in which the purchaser acquired loans
totaling $17.0 million.
The increase in interest income was primarily due to an increase in interest
income on loans. Interest income on loans increased by $546,000, or 8.6%, to
$6.9 million for the three months ended September 30, 2005 from $6.3 million for
the three months ended September 30, 2004. The increase in interest income on
loans was primarily due to an increase in the average yield on loans. The
average yield on loans increased by 31 basis points to 6.11% for the three
months ended September 30, 2005 from 5.80% for the three months ended September
30, 2004 primarily due to new loan production and the repricing of adjustable
rate loans, particularly commercial loans tied to current rate indices, in the
higher market interest rate environment in 2005 as compared to 2004. In
addition, the average balance of loans increased by $13.4 million, or 3.0%, to
$445.2 million for the three months ended September 30, 2005 from $431.8 million
or the three months ended September 30, 2004. During the three months ended
September 30, 2005 loans to commercial borrowers with total outstanding balances
of $4.3 million were placed on non-accrual resulting in a decrease in interest
income that totaled approximately $128,000 for the quarter.
Partially offsetting the increase in interest income on loans was a decrease in
interest income on investment securities. Interest income on investment
securities decreased by $292,000, or 31.1%, to $646,000 for the three months
ended September 30, 2005 from $938,000 for the three months ended September 30,
2004. The decrease in interest income on investment securities was primarily due
to a decrease in the average balance of such securities. The average balance of
investment securities decreased by $38.8 million, or 34.9%, to $72.3 million for
the three months ended September 30, 2005 from $111.1 million for the three
months ended September 30, 2004 as the Company funded the decrease in deposit
liabilities due to the branch office sale with maturities, sales and principal
payments from its investment securities portfolio. The investment securities
liquidated to fund the transfer of branch office deposits in September 2004 were
primarily shorter-term lower-yielding securities. The average tax-equivalent
yield on investment securities increased by 34 basis points to 3.92% for the
three months ended September 30, 2005 from 3.58% for the three months ended
September 30, 2004.
Interest Expense. Interest expense increased by $523,000, or 18.1%, to $3.4
- ----------------
million for the three months ended September 30, 2005 from $2.9 million for the
three months ended September 30, 2004 primarily 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.
Interest on deposits increased by $568,000, or 33.3%, to $2.3 million for the
three months ended September 30, 2005 from $1.7 million for the three months
ended September 30, 2004 primarily due to an increase in the cost of deposits.
The average cost of 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 as the Company increased rates on certain deposit products and offered
premium-rate certificates of deposit in order to attract and retain deposits in
the increasing market interest rate environment.
The average balance of interest-bearing deposits decreased by $20.1 million, or
5.3%, to $360.4 million for the three months ended September 30, 2005 from
$380.5 million for the three months ended September 30, 2004 primarily due to
the branch office sale, previously mentioned, in which deposits totaling $27.1
million were transferred.
15
Interest on FHLB advances and other borrowings totaled $1.1 million and $1.2
million, respectively, for the three months ended September 30, 2005 and 2004
primarily due to a decrease in the average balance of borrowings. The average
balance of borrowings decreased by $7.7 million, or 7.0%, to $102.7 million for
the three months ended September 30, 2005 from $110.4 million for the three
months ended September 30, 2004. The average cost of borrowings increased to
4.37% for the three months ended September 30, 2005 from 4.23% for the three
months ended September 30, 2004.
Net Interest Income. Net interest income before provision for losses on loans
- -------------------
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 because the cost of interest-bearing liabilities increased more
significantly than the yield on interest-earning assets. In an increasing market
interest rate environment the Company's interest-bearing liabilities generally
reprice more quickly than its interest-earning assets. The Company's average net
yield on interest-earning assets decreased by only 3 basis points to 3.22% for
the three months ended September 30, 2005 from 3.25% for the three months ended
September 30, 2004 primarily due to the decrease in the average balance of
interest-earning assets for the three months ended September 30, 2005 as
compared to the three months ended September 30, 2004.
Provision for Losses on Loans. Provision for losses on loans decreased by
- -----------------------------
$520,000 to $240,000 for the three months ended September 30, 2005 from $760,000
for the three months ended September 30, 2004. For more information on asset
quality see "Asset quality" in Management's Discussion and Analysis of Financial
Condition.
Noninterest Income. 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 the prior-year pre-tax gain of $2.2 million on the sale of
two northwest Iowa branch offices that was completed in 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 largely due to the
Company's decreased number of deposit accounts after the branch office sale.
Service charges on loans decreased by $61,000 for the three months ended
September 30, 2005 as compared to the three months ended September 30, 2004
primarily due to a decrease in prepayment penalty fees as refinancing activity
slowed due to the increase in market interest rates. Non-interest income also
decreased due to a loss on real estate development. During the three months
ended September 30, 2005 the Company's real estate development subsidiary
completed a development project and recorded a loss of $242,000 for the
three-month period. No gain or loss on sale of real estate held for development
was recorded for the three months ended September 30, 2004. Partially offsetting
the decreases in noninterest income for the three months ended September 30,
2005 as compared to the three months ended September 30, 2004 was a favorable
comparison in the loss on sale of investments. A loss on sale of investment
securities totaling $121,000 was recorded for the three months ended September
30, 2004 while no investment securities losses were recorded for the three
months ended September 30, 2005.
Noninterest expense. 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 as the Company sought to right-size its staffing level to its
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. Other general and
administrative expenses decreased by $137,000, or 14.1%, for the three months
ended September 30, 2005 as compared to the prior-year period as the Company
implemented cost control measures in line with its business plan objectives. The
decreases in
16
other general and administrative expenses were largely offset by increases in
office property and equipment expense and advertising. Office property and
equipment expense increased by $70,000, or 11.1%, for the three months ended
September 30, 2005 as compared to the three months ended September 30, 2004
largely due to the addition of a new branch office in March 2005 and to an
increase in software expense for automation initiatives. Advertising expense
increased by $64,000, or 78.5%, for the three months ended September 30, 2005 as
compared to the three months ended September 30, 2004 due to increased marketing
activity promoting commercial and retail products in the current fiscal year
period.
Net earnings and income tax expense. Net earnings before income taxes decreased
- -----------------------------------
by $2.1 million, or 64.5%, 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%, respectively, for the three months
ended September 30, 2005 and 2004. The effective tax rate decreased for the
three months ended September 30, 2005 largely because tax-exempt income
comprised a larger percentage of pre-tax income for that period than for the
three months ended September 30, 2004.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market prices
and interest rates. The Company's market risk is primarily comprised of interest
rate risk resulting from its core banking activities of lending and deposit
taking. Interest rate risk is the risk that changes in market interest rates
might adversely affect the Company's net interest income or the economic value
of its portfolio of assets, liabilities and off-balance-sheet contracts.
Management continually develops and applies strategies to mitigate this risk.
The Company primarily relies on the OTS Net Portfolio Value Model (the "Model")
to measure its susceptibility to interest rate changes. For various assumed
hypothetical changes in market interest rates, the Model estimates the current
economic value of each type of asset, liability and off-balance-sheet contract.
The present value of expected net cash flows from existing assets minus the
present value of expected net cash flows from existing liabilities plus or minus
the present value of expected net cash flows from existing off-balance-sheet
contracts results in a net portfolio value ("NPV") estimate. An analysis of the
changes in NPV in the event of hypothetical changes in interest rates is
presented in the Company's 2005 Annual Report to Shareholders. The Company's NPV
ratio after a 200 basis point rate-shock was 8.86% at June 30, 2005, as measured
by the Model. As of that date, the Company's interest rate risk, as measured by
the Model, was within the Company's Asset Liability Policy guidelines and the
OTS "level of risk" was reported as "minimal". Management does not believe that
the Company's primary market risk exposures and how those exposures were managed
during the three months ended September 30, 2005 have changed significantly when
compared to the immediately preceding quarter ended June 30, 2005. However, the
Company's primary market risk exposure has not yet been quantified at September
30, 2005, and the complexity of the Model makes it difficult to accurately
predict results.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company's management,
including its Chief Executive Officer and Chief Financial Officer, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rules 13a-15(e)and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this report. Any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives. Based on such
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that, as of the end of the period covered by this report, the Company's
disclosure controls and procedures were effective to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
17
Under the supervision and with the participation of the Company's management,
including its Chief Executive Officer and Chief Financial Officer, the Company
also conducted an evaluation of the Company's internal control over financial
reporting to determine whether any changes occurred during the Company's first
fiscal quarter ended September 30, 2005 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting. Based on such evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that, as of the end of the period covered by
this report, there have been no significant changes in the Company's internal
control over financial reporting that occurred during the Company's first fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
There are various claims and lawsuits in which the Company is periodically
involved incidental to the Company's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- -------------------------------------------------------------------
There were no sales of unregistered securities during the three months
ended September 30, 2005.
The following table presents a summary of the Company's share repurchases
during the quarter ended September 30, 2005.
- ----------------------------------------------------------------------------------------------------------------
Total Number of Maximum
Shares Purchased Number of Shares
Total Number Average as Part of Publicly that May Yet be
of Shares Price Paid Announced Purchased Under
Period Purchased (1) Per Share Program (2) the Program (2)
- ----------------------------------------------------------------------------------------------------------------
July 1 through July 31, 2005 none -- none 81,000
August 1 through August 31, 2005 none -- none 81,000
September 1 through September 30, 2005 1,708 $19.50 none 81,000
- ----------------------------------------------------------------------------------------------------------------
(1) Includes shares withheld to satisfy tax liability on vesting of restricted
stock under the 1999 Recognition and Retention Plan: 1,708 shares in
September 2005.
(2) On August 21, 2003 the Company announced a share repurchase program
authorizing the repurchase of up to 377,000 shares (10% of the then-issued
and outstanding shares of common stock). The Board of Directors of the
Company re-authorized the repurchase program in September 2005 for shares
remaining to be purchased under the program and extended the expiration
date to September 14, 2006.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
No matters were submitted to a vote of security holders during the period
covered by this report.
18
Item 6. Exhibits
- ----------------
(a) Exhibits
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to
Section 302
Exhibit 31.2 Certification of Chief Financial Officer Pursuant to
Section 302
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
FIRST FEDERAL BANKSHARES, INC.
DATE: November 8, 2005 BY: /s/ Barry E. Backhaus
---------------------
Barry E. Backhaus
President and Chief Executive Officer
DATE: November 8, 2005 BY: /s/ Katherine A. Bousquet
-------------------------
Katherine A. Bousquet
Vice President, Treasurer and
Interim Chief Financial Officer
19