FSF Financial Corp. Contact: Donald A. Glas, Chief Executive Officer
(320) 234-4501
George B. Loban, President
(651) 480-6020
Richard H. Burgart, Chief Financial Officer
(320) 234-4536
For Immediate Release
January 20, 2004
FSF Financial Corp. Announces Dividend and
Operating Results For First Quarter of Fiscal 2004
Hutchinson, Minnesota (NASDAQ - "FFHH") - FSF Financial Corp. (FSF)
today announced net income of $1,180,000 for the first quarter ended December
31, 2003, versus $1,696,000 for the same period in 2002. Diluted earnings per
share for the quarter were $0.48, a decrease of $0.25 from the first quarter
last year. The Company also announced a dividend of $0.35, an increase of $0.05,
to shareholders of record on January 30, 2004, payable on February 16, 2004.
"Net income for the first quarter of fiscal 2004 represents a decrease
of 30.4% over the same period last year," noted FSF Financial Corp.'s
Co-Chairman and Chief Executive Officer, Donald A. Glas. "The high levels of
refinancing, coupled with prepayments on mortgage-backed securities have
increased liquidity for many financial institutions. Even though the refinancing
activity has been reduced with the current economic slowdown, our liquidity
level continues to be higher than we would like it to be. With the current
levels of interest rates and the expectation of interest rates increasing, we
remain cautious about reinvestment alternatives. We reduced interest-bearing
deposits and Federal Home Loan Bank Advances, primarily during the month of
December, and anticipate these actions should have a positive impact on our
margin going forward. We continue developing and refining our construction
lending process. The gain on sale of modified construction loans decreased about
10% while the gain on sale of other real estate mortgages decreased by more than
43%." added Mr. Glas.
FSF Financial Corp., a financial services company, has four affiliated
companies. First Federal 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, St 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 operates 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.
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
December 31, September 30,
2003 2003
-----------------------------------
(in thousands, except share data)
ASSETS
------
Cash and cash equivalents:
Cash $ 3,206 $ 3,556
Interest-bearing deposits 56,383 77,045
----------------------
Total cash and cash equivalents 59,589 80,601
Securities available for sale, at fair value:
Equity securities 11,996 12,009
Mortgage-backed and related securities 35,107 29,923
Debt securities 12,650 12,178
Restricted stock 4,402 4,797
Loans held-for-sale 14,209 17,122
Loans receivable, net 356,109 358,708
Foreclosed real estate 1,005 1,152
Accrued interest receivable 3,977 3,960
Premises and equipment 6,357 6,331
Goodwill 3,883 3,883
Identifiable intangibles 979 1,014
Investment in life insurance 8,475 8,388
Other assets 1,368 1,086
----------------------
Total assets $ 520,106 $ 541,152
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits $ 76,033 $ 69,684
Savings accounts 83,356 86,666
Certificates of deposit 225,450 234,665
----------------------
Total deposits 384,839 391,015
Federal Home Loan Bank borrowings 78,000 93,000
Advances from borrowers for taxes and insurance 123 233
Other liabilities 4,842 5,717
----------------------
Total liabilities 467,804 489,965
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 44,138 43,925
Retained earnings, substantially restricted 39,105 38,643
Treasury stock at cost (2,119,879 and 2,156,540 shares) (30,978) (31,444)
Unearned ESOP shares at cost (-0- and 7,643 shares) - (76)
Unearned MSP stock grants at cost (481) (484)
Accumulated other comprehensive income 68 173
----------------------
Total stockholders' equity 52,302 51,187
----------------------
Total liabilities and stockholders' equity $ 520,106 $ 541,152
======================
2
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
At At
December 31, September 30,
2003 2003
-----------------------------------
Other Financial Condition Data:
Tangible Net Worth (1) $47,440 $46,290
Stockholder's equity to total assets 10.06% 9.46%
Book value per share $22.35 $22.30
Tangible book value per share (1) $20.28 $20.17
Non-performing assets:
Non-accrual loans $7,211 $6,039
Real estate owned $1,005 $1,152
--------------------------
Total non-performing assets $8,216 $7,191
==========================
(1) Tangible net worth is total stockholders' equity less goodwill and other
intangible assets.
3
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months
Ended December 31,
------------------
2003 2002
------------------
(in thousands, except per share data)
Interest income:
Loans receivable $6,851 $8,225
Mortgage-backed and related securities 363 495
Investment securities 366 215
----------------
Total interest income 7,580 8,935
Interest expense:
Deposits 1,879 2,696
Borrowed funds 1,229 1,323
----------------
Total interest expense 3,108 4,019
----------------
Net interest income 4,472 4,916
Provision for loan losses 259 288
----------------
Net interest income after provision for loan losses 4,213 4,628
----------------
Noninterest income:
Gain on sale of construction loans 303 337
Gain on sale of other loans- net 449 789
Other service charges and fees 364 421
Service charges on deposit accounts 661 614
Commission income 294 278
Other 104 57
----------------
Total noninterest income 2,175 2,496
----------------
Noninterest expense:
Compensation and benefits 2,757 2,778
Occupancy and equipment 472 392
Data processing 248 234
Professional fees 142 140
Other 820 794
----------------
Total noninterest expense 4,439 4,338
----------------
Income before provision for income taxes 1,949 2,786
Income tax expense 769 1,090
----------------
Net income $1,180 $1,696
================
Basic earnings per share $ 0.51 $ 0.77
Diluted earnings per share $ 0.48 $ 0.73
Cash dividend declared per common share $ 0.35 $ 0.30
Comprehensive income $1,075 $2,406
================
Weighted average number of shares outstanding 2,310 2,214
Financial ratios (annualized):
Return on average assets 0.88% 1.25%
Return on average equity 9.12% 14.44%
Net interest margin 3.53% 3.84%
4
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 December 31,
---------------------------------------------------------------------------
2003 2002
---------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
---------------------------------------------------------------------------
(dollars in thousands)
Assets:
Construction loans $ 164,940 $ 3,286 7.97 % $ 156,467 $ 3,260 8.33 %
Other loans receivable (2) 206,220 3,565 6.91 265,093 4,965 7.49
Mortgage-backed securities 32,530 363 4.46 47,669 495 4.15
Investment securities (3) 102,470 366 1.43 42,221 215 2.04
----------------------- -----------------------
Total interest-earning assets 506,160 7,580 5.99 511,450 8,935 6.99
--------------------- ----------------------
Other assets 30,207 29,768
------------- -------------
Total assets $ 536,367 $ 541,218
============= =============
Liabilities:
Interest-bearing deposits $ 388,623 $ 1,879 1.93 % $ 391,741 $ 2,696 2.75 %
Borrowings 90,228 1,229 5.45 95,772 1,323 5.53
----------------------- -----------------------
Total interest-bearing
liabilities 478,851 3,108 2.60 487,513 4,019 3.30
--------------------- ----------------------
Other liabilities 5,771 6,726
------------- -------------
Total liabilities 484,622 494,239
Stockholders' equity 51,745 46,979
------------- -------------
Total liabilities and stockholders'
equity $ 536,367 $ 541,218
============= =============
Net interest income $ 4,472 $ 4,916
========== ==========
Net spread (4) 3.39 % 3.69 %
Net margin (5) 3.53 % 3.84 %
Ratio of average interest-earning assets
to average interest-bearing 1.06X 1.05X
liabilities
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.
5