Exhibit 99.1
                          [HOLDING COMPANY LETTERHEAD]

FOR IMMEDIATE RELEASE                       FOR MORE INFORMATION, CONTACT:
                                                  George A. Rosenbaum, Jr.
July 1, 2005                              Executive Vice President and CFO
                                                            (505) 622-6201

                    FIRST FEDERAL BANC OF THE SOUTHWEST, INC.
                             DECLARES CASH DIVIDEND

Roswell, New Mexico - First Federal Banc of the Southwest, Inc. (the "Company")
(Nasdaq SmallCap: FFSW) has announced that the Company will pay a cash dividend
of $0.05 per share. The dividend will be payable on July 29, 2005, to
shareholders of record on July 15, 2005.
The Company operates 15 banking offices throughout the State of New Mexico and
in El Paso, Texas.

                           Forward-Looking Statements
                           --------------------------

Certain statements contained in this press release that are not historical
facts, including, but not limited to, statements that can be identified by the
use of forward-looking terminology such as "may," "expect," "anticipate,"
"predict," "believe," "plan," "estimate" or "continue" or the negative thereof
or other variations thereon or comparable terminology, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, and involve a number of risks and uncertainties. The actual results of the
future events described in such forward-looking statements in this press release
could differ materially from those stated in such forward-looking statements.
Among the factors that could cause actual results to differ materially are:
third party claims or actions in relation to ongoing or future litigation or
bankruptcy matters; interest rate fluctuations; level of delinquencies; defaults
and prepayments; general economic conditions; competition; government
regulation; unanticipated developments in connection with the bankruptcy actions
or litigation mentioned above, including judicial variation from existing legal
precedent and the decision by one or more parties to appeal decisions rendered;
the risks and uncertainties discussed elsewhere from time to time in the
Company's periodic reports filed with the Securities and Exchange Commission and
other public statements.

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