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
April 20, 2004
FSF Financial Corp. Announces Dividend and Operating Results for
Second Quarter of Fiscal 2004
Hutchinson, Minnesota (NASDAQ - "FFHH") - FSF Financial Corp. (FSF)
today announced net income of $1,013,000 for the second quarter ended March 31,
2004, versus $1,620,000 for the same period in 2003. Diluted earnings per share
for the quarter were $0.41, a decrease of $0.27 from $0.68 for the second
quarter last year. The Company also announced a dividend of $0.35 to
shareholders of record on April 30, 2004, payable on May 17, 2004.
"Net income for the second quarter of fiscal 2004 represents a
decrease of 37.5% over the same period last year," noted FSF Financial Corp.'s
Co-Chairman and Chief Executive Officer, Donald A. Glas. "We have reduced our
liquidity position to some extent; however, the current levels of interest rates
have an impact on reinvestment decisions that fit within our interest rate risk
profile. As a result, we remain cautious on investments and believe that some
reduction in short-term earnings outweighs the potential long-term earnings
impact should interest rates increase. We are encouraged by the improvement in
net interest margin over the previous quarter. Gains on sales of modified
construction loans continues to have a positive impact on noninterest income and
gains on sales of available for sale securities also benefited noninterest
income during the quarter," 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 provides
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.
1
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
At At
March 31, September 30,
2004 2003
---------------------------------
(in thousands, except share data)
ASSETS
------
Cash and cash equivalents:
Cash $ 3,260 $ 3,556
Interest-bearing deposits 55,752 77,045
----------------------
Total cash and cash equivalents 59,012 80,601
Securities available for sale, at fair value:
Equity securities - 12,009
Mortgage-backed and related securities 42,832 29,923
Debt securities 7,049 12,178
Restricted stock 3,912 4,797
Loans held-for-sale 12,690 17,122
Loans receivable, net 364,760 358,708
Foreclosed real estate 1,016 1,152
Accrued interest receivable 3,472 3,960
Premises and equipment 6,299 6,331
Goodwill 3,883 3,883
Identifiable intangibles 945 1,014
Investment in life insurance 8,564 8,388
Other assets 1,370 1,086
----------------------
Total assets $ 515,804 $ 541,152
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits $ 81,910 $ 69,684
Savings accounts 81,252 86,666
Certificates of deposit 222,448 234,665
----------------------
Total deposits 385,610 391,015
Federal Home Loan Bank borrowings 72,000 93,000
Advances from borrowers for taxes and insurance 226 233
Other liabilities 5,213 5,717
----------------------
Total liabilities 463,049 489,965
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 44,186 43,925
Retained earnings, substantially restricted 39,299 38,643
Treasury stock at cost (2,118,879 and 2,156,540 shares) (30,965) (31,444)
Unearned ESOP shares at cost (-0- and 7,643 shares) - (76)
Unearned MSP stock grants at cost (478) (484)
Accumulated other comprehensive income 263 173
----------------------
Total stockholders' equity 52,755 51,187
----------------------
Total liabilities and stockholders' equity $ 515,804 $ 541,152
======================
2
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
At At
March 31, September 30,
Other Financial Condition Data: 2004 2003
------------------------------------
Tangible Net Worth (1) $47,927 $46,290
Stockholder's equity to total assets 10.23% 9.46%
Book value per share $22.54 $22.30
Tangible book value per share (1) $20.48 $20.17
Non-performing assets:
Non-accrual loans $6,579 $6,039
Real estate owned $1,016 $1,152
------------------------------------
Total non-performing assets $7,595 $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 Six Months
Ended March 31, Ended March 31,
-------------------------- ---------------------------
2004 2003 2004 2003
-------------------------- ---------------------------
(in thousands, except per share data)
Interest income:
Loans receivable $ 6,574 $ 7,680 $ 13,425 $ 15,905
Mortgage-backed and related securities 358 467 721 962
Investment securities 339 410 705 625
-------------------------- ---------------------------
Total interest income 7,271 8,557 14,851 17,492
Interest expense:
Deposits 1,676 2,496 3,555 5,192
Borrowed funds 1,000 1,239 2,229 2,562
-------------------------- ---------------------------
Total interest expense 2,676 3,735 5,784 7,754
-------------------------- ---------------------------
Net interest income 4,595 4,822 9,067 9,738
Provision for loan losses 469 193 728 481
-------------------------- ---------------------------
Net interest income after provision for loan losses 4,126 4,629 8,339 9,257
-------------------------- ---------------------------
Noninterest income:
Gain on sale of construction loans 524 903 1,118 1,240
Gain on sale of other loans- net 121 403 279 1,192
Gain on sale of available for sale securities 284 - 284 -
Other service charges and fees 321 393 685 814
Service charges on deposit accounts 524 596 1,185 1,210
Commission income 331 314 625 592
Other 102 106 206 163
-------------------------- ---------------------------
Total noninterest income 2,207 2,715 4,382 5,211
-------------------------- ---------------------------
Noninterest expense:
Compensation and benefits 2,800 2,799 5,557 5,577
Occupancy and equipment 499 415 971 807
Data processing 250 256 498 490
Professional fees 149 140 291 280
Other 942 1,076 1,762 1,870
-------------------------- ---------------------------
Total noninterest expense 4,640 4,686 9,079 9,024
-------------------------- ---------------------------
Income before provision for income taxes 1,693 2,658 3,642 5,444
Income tax expense 680 1,038 1,449 2,128
-------------------------- ---------------------------
Net income $ 1,013 $ 1,620 $ 2,193 $ 3,316
========================== ===========================
Basic earnings per share $ 0.43 $ 0.72 $ 0.94 $ 1.49
Diluted earnings per share $ 0.41 $ 0.68 $ 0.89 $ 1.41
Cash dividend declared per common share $ 0.35 $ 0.30 $ 0.70 $ 0.60
Comprehensive income $ 1,208 $ 1,510 $ 2,283 $ 3,916
========================== ===========================
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 March 31,
---------------------------------------------------------------------------
2004 2003
---------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
---------------------------------------------------------------------------
(dollars in thousands)
Assets:
Construction loans $ 170,210 $ 3,310 7.78 % $ 160,861 $ 3,121 7.76 %
Other loans receivable (2) 198,361 3,264 6.58 $ 247,599 $ 4,559 7.37
Mortgage-backed securities 36,711 358 3.90 43,449 467 4.30
Investment securities (3) 78,278 339 1.73 66,857 410 2.45
----------------------- -----------------------
Total interest-earning assets 483,560 7,271 6.01 518,766 8,557 6.60
--------------------- ----------------------
Other assets
30,201 29,273
------------- -------------
Total assets $ 513,761 $ 548,039
============= =============
Liabilities:
Interest-bearing deposits $ 381,958 $ 1,676 1.76 % $ 399,560 $ 2,496 2.50 %
Borrowings 74,176 1,000 5.39 93,000 1,239 5.33
----------------------- -----------------------
Total interest-bearing
liabilities 456,134 2,676 2.35 492,560 3,735 3.03
--------------------- ----------------------
Other liabilities 5,073 6,914
------------- -------------
Total liabilities 461,207 499,474
Stockholders' equity 52,554 48,565
------------- -------------
Total liabilities and stockholders'
equity $ 513,761 $ 548,039
============= =============
Net interest income $ 4,595 $ 4,822
========== ==========
Net spread (4) 3.66 % 3.57 %
Net margin (5) 3.80 % 3.70 %
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.
5
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)
Six Months Ended March 31,
-----------------------------------------------------------------------------
2004 2003
-----------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
-----------------------------------------------------------------------------
(dollars in thousands)
Assets:
Construction loans $ 167,560 $ 6,596 7.87 % $ 158,640 $ 6,381 8.04 %
Other loans receivable (2) 202,312 6,829 6.75 256,442 9,524 7.43
Mortgage-backed securities 34,609 721 4.17 45,582 962 4.22
Investment securities (3) 90,440 705 1.56 54,404 625 2.30
----------------------- ------------------------
Total interest-earning assets 494,921 14,851 6.00 515,068 17,492 6.79
--------------------- -----------------------
Other assets 30,204 29,523
------------- -------------
Total assets $ 525,125 $ 544,591
============= =============
Liabilities:
Interest-bearing deposits $ 385,309 $ 3,555 1.84 % $ 395,608 $ 5,192 2.62 %
Borrowings 82,246 2,229 5.42 94,401 2,562 5.43
----------------------- ------------------------
Total interest-bearing
liabilities 467,555 5,784 2.47 490,009 7,754 3.16
---------- -----------------------
Other liabilities 5,421 7,115
------------- -------------
Total liabilities 472,976 497,124
Stockholders' equity 52,149 47,467
------------- -------------
Total liabilities and stockholders'
equity $ 525,125 $ 544,591
============= =============
Net interest income $ 9,667 $ 9,738
========== ===========
Net spread (4) 3.53 % 3.63 %
Net margin (5) 3.66 % 3.78 %
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.
6