FSF Financial Corp. Contact: Donald A. Glas, Chief Executive Officer
George B. Loban, President
Richard H. Burgart, Chief Financial Officer
(320) 234-4500
For Immediate Release
July 21, 2003
FSF Financial Corp. Announces Third Quarter Operating Results
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Hutchinson, Minnesota (NASDAQ - "FFHH") --FSF Financial Corp., whose
direct subsidiaries include First Federal Bank and Insurance Planners, announced
operating results for the quarter ended June 30, 2003.
For the third quarter ended June 30, 2003, net income rose $200,000 to
$1,626,000, or $0.68 in diluted earnings per share, from $1,426,000 for the same
period in 2002, or $0.61 in diluted earnings per share. For the nine-month
period ended June 30, 2003, net income increased to $4.9 million from $4.3
million one year ago. Additionally, total assets increased to $543.4 million at
June 30, 2003, an increase of $11.3 million from September 30, 2002.
Non-interest income increased $741,000 for the third quarter of fiscal
2003, an increase of 36% over third quarter 2002. The gain on sale of
construction loans increased from $390,000 for the third quarter last year to
$987,000 for the same period this year, an increase of 153%. During the same
period the gain on sale of loans for the purchase or refinance of a residence
decreased from $497,000 last year to $282,000 this year. Non-interest income was
58.8% of non-interest expense for the first nine months and 60.8% for the
quarter ended June 30, 2003.
Donald A. Glas, Co-Chairman and Chief Executive Officer stated, "We
are very pleased with the continued levels of profitability which have allowed
us to increase basic earnings per share from $1.99 for the first nine months of
last year to $2.21 for the same period this year and to increase fully-diluted
earnings per share from $1.89 for the first nine months of last year to $2.09
for the same period this year. Residential construction lending continues to
help us mitigate interest rate decreases and margin compression. We believe that
our positioning within this specialized segment of the market provides us with a
sustainable non-interest income source."
FSF Financial Corp., a financial services company, has four affiliated
companies. First Federal Bank (the "Bank") is a federally chartered stock
savings bank headquartered in Hutchinson, Minnesota. The Bank has thirteen
offices located in Hutchinson (2), Hastings, Apple Valley, Buffalo, Glencoe,
Inver Grove Heights (2), Litchfield, Saint Cloud, Waconia, Waite Park and
Winthrop, Minnesota. The Federal Deposit Insurance Corporation federally insures
the Bank's deposits. The Bank is a community-oriented, full service retail bank
offering a variety of deposit and loan products. Homeowners Mortgage Corporation
originates residential mortgage loans from offices in Vadnais Heights and
Hastings, Minnesota. Firstate Investments provide non-insured financial products
in three locations. Insurance Planners of Hutchinson, Inc., is a property and
casualty insurance agency with two locations. FSF Financial Corp.'s common stock
is traded on the Nasdaq National Market under the symbol "FFHH".
This press release may contain forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. Any such forward-looking
statements are subject to various risks and uncertainties and are therefore
qualified by the Corporation's cautionary statements contained in its filings
with the Securities and Exchange Commission.
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
At At
June 30, September 30,
2003 2002
---------- -----------
(in thousands, except share data)
ASSETS
Cash and cash equivalents $ 53,799 $ 14,615
Securities available for sale, at fair value
Equity securities 12,059 12,046
Mortgage-backed and related securities 37,073 29,196
Debt securities 12,863 -
Securities held to maturity, at amortized cost:
Debt securities (fair value of $13,150) - 12,447
Mortgage-backed and related securities (fair value of $20,724) - 20,679
Restricted stock 5,925 5,925
Loans held for sale 33,261 29,242
Loans receivable, net 362,752 382,690
Foreclosed real estate 1,095 122
Accrued interest receivable 3,893 4,436
Premises and equipment 6,348 6,005
Other assets 9,418 9,690
Goodwill 3,883 3,883
Identifiable intangibles 1,056 1,184
--------- ---------
Total assets $ 543,425 $ 532,160
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 67,669 $ 62,687
Savings accounts 88,181 89,037
Certificates of deposit 238,224 230,200
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Total deposits 394,074 381,924
Federal Home Loan Bank borrowings 93,000 98,000
Advances from borrowers for taxes and insurance 202 352
Other liabilities 5,814 6,003
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Total liabilities 493,090 486,279
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Stockholders' equity:
Serial preferred stock, no par value 5,000,000 shares
authorized, no shares issued - -
Common stock, $.10 par value 10,000,000 shares authorized,
4,501,277 and 4,501,277 shares issued 450 450
Additional paid in capital 43,531 43,101
Retained earnings, substantially restricted 38,171 35,214
Treasury stock at cost (2,171,590 and 2,197,763 shares) (31,586) (31,621)
Unearned ESOP shares at cost (13,546 and 54,891 shares) (135) (549)
Unearned MSP stock grants at cost (42,164 and 42,164 shares) (448) (448)
Accumulated other comprehensive income (loss) 352 (266)
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Total stockholders' equity 50,335 45,881
--------- ---------
Total liabilities and stockholders' equity $ 543,425 $ 532,160
========= =========
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
At At
June 30, September 30,
Other Financial Condition Data: 2003 2002
------ ------
Tangible Net Worth $45,396 $40,814
Stockholder's equity to total assets 9.26% 8.62%
Book value per share $22.14 $20.79
Tangible book value per share $19.96 $18.50
Non-performing assets:
Non-accrual loans $5,165 $4,837
Real estate owned $1,095 $122
------ ------
Total non-performing assets $6,260 $4,959
====== ======
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months Nine Months
Ended June 30, Ended June 30,
------------------------ -------------------------
2003 2002 2003 2002
------------------------ -------------------------
(in thousands, except per share data)
Interest income:
Loans receivable $ 7,399 $ 7,698 $23,304 $23,331
Mortgage-backed and related securities 385 641 1,347 1,851
Investment securities 394 338 1,019 1,032
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Total interest income 8,178 8,677 25,670 26,214
Interest expense:
Deposits 2,293 2,710 7,485 8,820
Borrowed funds 1,256 1,379 3,818 4,378
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Total interest expense 3,549 4,089 11,303 13,198
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Net interest income 4,629 4,588 14,367 13,016
Provision for loan losses 305 203 786 628
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Net interest income after provision for loan losses 4,324 4,385 13,581 12,388
------------------------ -------------------------
Non-interest income:
Gain on sale of construction loans, net 987 390 2,227 992
Gain on sale of other loans, net 282 497 1,474 2,105
Other service charges and fees 461 344 1,275 1,006
Service charges on deposit accounts 663 444 1,873 1,297
Commission income 303 281 895 809
Other 102 101 265 310
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Total non-interest income 2,798 2,057 8,009 6,519
------------------------ -------------------------
Non-interest expense:
Compensation and benefits 2,923 2,363 8,500 6,989
Occupancy and equipment 449 374 1,256 1,096
Deposit insurance premiums 16 16 47 45
Data processing 254 241 744 665
Professional fees 186 157 466 354
Other 774 972 2,613 2,637
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Total non-interest expense 4,602 4,123 13,626 11,786
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Income before provision for income taxes 2,520 2,319 7,964 7,121
Income tax expense 894 893 3,022 2,790
------------------------ -------------------------
Net income $ 1,626 $ 1,426 $ 4,942 $ 4,331
======================== =========================
Basic earnings per share $ 0.72 $ 0.65 $ 2.21 $ 1.99
Diluted earnings per share $ 0.68 $ 0.61 $ 2.09 $ 1.89
Cash dividend declared per common share $ 0.30 $ 0.25 $ 0.90 $ 0.75
Comprehensive income $ 1,644 $ 1,641 $ 5,560 $ 4,349
======================== =========================
Weighted average number of shares outstanding 2,265 2,182 2,241 2,172
Financial ratios (annualized):
Return on average assets 1.19% 1.12% 1.21% 1.14%
Return on average equity 13.09% 13.02% 13.69% 13.39%
Net interest margin 3.59% 3.81% 3.72% 3.60%
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST AND DIVIDENDS
EARNED OR PAID AND RELATED INTEREST YIELDS AND RATES
(Dollars in thousands)
Three Months Ended June 30,
---------------------------------------------------------------------------
2003 2002
---------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
---------------------------------------------------------------------------
(dollars in thousands)
Assets:
Construction loans $ 161,332 $ 3,290 8.16 % $ 114,737 $ 2,443 8.52 %
Other loans receivable (2) 237,040 4,109 6.93 268,559 5,255 7.83
Mortgage-backed securities 39,795 385 3.87 51,522 641 4.98
Investment securities (3) 76,927 394 2.05 47,261 338 2.86
----------------------- -----------------------
Total interest-earning assets 515,094 8,178 6.35 482,079 8,677 7.20
--------------------- ----------------------
Other assets 29,232 27,108
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Total assets $ 544,326 $ 509,187
============= =============
Liabilities:
Interest-bearing deposits $ 394,890 $ 2,293 2.32 % $ 361,621 $ 2,710 3.00 %
Borrowings 93,000 1,256 5.40 98,000 1,379 5.63
----------------------- -----------------------
Total interest-bearing
liabilities 487,890 3,549 2.91 % 459,621 4,089 3.56 %
--------------------- ----------------------
Other liabilities 6,742 5,759
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Total liabilities 494,632 465,380
Stockholders' equity 49,694 43,807
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Total liabilities and stockholders'
equity $ 544,326 $ 509,187
============= =============
Net interest income $ 4,629 $ 4,588
Net spread (4) 3.44 % 3.64 %
Net margin (5) 3.59 % 3.81 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 1.06X 1.05X
1. Annualized.
2. Average balances include non-accrual loans and loans held for sale.
3. Includes interest-bearing deposits in other financial institutions.
4. Net spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
5. Net margin represents net interest income as a percentage of
interest-earning assets.
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST AND DIVIDENDS
EARNED OR PAID AND RELATED INTEREST YIELDS AND RATES
(Dollars in thousands)
Nine Months Ended June 30,
-------------------------------------------------------------------------------
2003 2002
-------------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
-------------------------------------------------------------------------------
(dollars in thousands)
Assets:
Construction loans $ 159,446 $ 9,830 8.22 % $ 101,409 $ 6,795 8.93 %
Other loans receivable (2) 249,971 13,474 7.19 278,259 16,536 7.92
Mortgage-backed securities 43,653 1,347 4.11 51,682 1,851 4.78
Investment securities (3) 61,912 1,019 2.19 50,580 1,032 2.72
------------------------ ------------------------
Total interest-earning assets 514,982 25,670 6.65 481,930 26,214 7.25
----------------------- -----------------------
Other assets 29,426 26,571
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Total assets $ 544,408 $ 508,501
============= =============
Liabilities:
Interest-bearing deposits $ 395,368 $ 7,485 2.52 % $ 358,215 $ 8,820 3.28 %
Borrowings 93,934 3,818 5.42 101,839 4,378 5.73
------------------------ ------------------------
Total interest-bearing
liabilities 489,302 11,303 3.08 % 460,054 13,198 3.83 %
----------------------- -----------------------
Other liabilities 6,988 5,320
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Total liabilities 496,290 465,374
Stockholders' equity 48,118 43,127
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Total liabilities and stockholders'
equity $ 544,408 $ 508,501
============= =============
Net interest income $ 14,367 $ 13,016
Net spread (4) 3.57 % 3.42 %
Net margin (5) 3.72 % 3.60 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 1.05X 1.05X
1. Annualized.
2. Average balances include non-accrual loans and loans held for sale.
3. Includes interest-bearing deposits in other financial institutions.
4. Net spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
5. Net margin represents net interest income as a percentage of
interest-earning assets.