[LOGO] GFSB
BANCORP, INC.
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FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
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May 13, 2005 Jerry R. Spurlin, Chief Financial Officer
(505) 726-6500
GFSB BANCORP, INC. ANNOUNCES EARNINGS
Gallup, New Mexico - GFSB Bancorp, Inc. (NASDAQ SmallCap: GUPB), parent holding
company of Gallup Federal Savings Bank, Gallup, New Mexico, today announced
earnings for the quarter ended March 31, 2005, of $528,000 ($0.44 per diluted
share) and for the nine months ended March 31, 2005, of $1,329,000 ($1.11 per
diluted share). Earnings for the same periods a year earlier were $324,000
($0.27 per diluted share) and $1,152,000 ($0.97 per diluted share).
The $177,000 increase in earnings for the nine months ended March 31, 2005 was
primarily the result of a $403,000 increase in net interest earnings, a $409,000
decrease in the provision for loan losses, and a $119,000 increase in
non-interest earnings, partially offset by a $387,000 increase in non-interest
expense and a $367,000 increase in income tax expense. The decrease in provision
for loan losses for the current nine-month period is primarily due to
improvement in loan quality and the fact that the Company's loan portfolio
decreased during the period.
The increase in net interest earnings was primarily due to a $642,000 decrease
in total interest expense partially offset by a $239,000 decrease in total
interest earnings. The increase in non-interest earnings is primarily
attributable to a $121,000 increase in service charge income, a $14,000 increase
in gains from sales of loans and securities, and an $8,000 increase in income
from real estate operations, partially offset by a $24,000 decrease in
miscellaneous income. The decrease in miscellaneous income is primarily
attributed to gains on the sale of other real estate owned in the year-ago
period.
The increase in non-interest expense is primarily attributable to significant
increases in legal and professional services fees associated with the Agreement
and Plan of Merger between the Company and First Federal Banc of the Southwest,
Inc. announced on August 25, 2004.
At March 31, 2005, the Company's capital to asset ratio was 9.3%, with assets
and stockholders' equity of $208.2 million and $19.3 million, respectively.
On August 25, 2004, the Company announced that it had signed a definitive merger
agreement with First Federal Banc of the Southwest, Inc. ("FFBSW"), the holding
company for First Federal Bank, Roswell, New Mexico, pursuant to which the
Company will merge with and into FFBSW.
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P.O. BOX 820 o 221 WEST AZTEC o GALLUP, NM 87301
Under the terms of the agreement, upon consummation of the merger of the Company
into FFBSW, each outstanding share of the Company's common stock will be
converted into the right to receive either $20.00 in cash or FFBSW common stock,
at the election of the holder, subject to an overall requirement that 51% of the
Company's total outstanding common stock be exchanged for stock. The transaction
is subject to various conditions, including stockholder approval of both the
Company and FFBSW, and approval by the applicable banking regulatory agencies.
Pursuant to the terms of the merger agreement, FFBSW has agreed to register
FFBSW's common stock under the Securities Exchange Act of 1934 and it will file
reports with the Securities and Exchange Commission. In addition, upon the
completion of the merger, its shares are expected to be listed on the NASDAQ.
At a meeting held May 11, 2005 stockholders of FFBSW approved the merger
agreement. Subject to approval of the merger agreement by the stockholders of
the Company at a meeting scheduled for May 18, 2005, the closing of the merger
is expected by June 1, 2005.
This release may contain forward-looking statements. We caution that such
statements may be subject to a number of uncertainties and actual results could
differ materially and, therefore, readers should not place undue reliance on any
forward-looking statements. The Company does not undertake, and specifically
disclaims, any obligation to publicly release the results of any revisions that
may be made to any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of such
statements.
* * * * *
This document may be deemed to be solicitation material with respect to the
proposed merger of First Federal Banc of the Southwest, Inc. and GFSB Bancorp,
Inc. FFBSW and GFSB have filed relevant documents concerning the merger with the
Securities and Exchange Commission, including a registration statement on Form
S-4 containing a joint proxy Statement/prospectus. We urge investors to read
these documents because they contain important information. Investors are able
to obtain these documents free of charge at the SEC's website, www.sec.gov. In
addition, these documents and any other documents filed with the SEC by FFBSW
are available free of charge from the Secretary of FFBSW (George A. Rosenbaum,
Jr.) at 300 North Pennsylvania, Roswell, New Mexico 88201, telephone (505)
622-6201 and any other documents filed with the SEC by GFSB are available free
of charge from the Chief Financial Officer of GFSB Bancorp, Inc. (Jerry R.
Spurlin) at 221 West Aztec Avenue, Gallup, New Mexico 87301, telephone (505)
726-6500. FFBSW and GFSB and their directors and executive officers may be
deemed to be participants in the solicitation of proxies to approve the merger.
Information about the directors and executive officers of FFBSW and their
ownership of FFBSW common stock and information about the directors and
executive officers of GFSB and their ownership of GFSB common stock is included
in the joint proxy statement/prospectus. Stockholders of FFBSW and GFSB should
read the joint proxy statement/prospectus and other documents to be filed with
the SEC carefully before making a decision concerning the merger.
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GFSB BANCORP, INC.
Selected Financial Information (Unaudited)
(dollars in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
At Period End
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03/31/05 03/31/04 06/30/04
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Cash and investments 32,934 40,167 39,625
Mortgage-backed securities 24,568 34,849 30,680
FHLB stock 3,394 4,393 4,409
Loans receivable, net 143,326 155,618 152,842
Premises and equipment 2,366 2,566 2,514
Prepaid and other assets 1,583 1,319 2,017
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TOTAL ASSETS 208,171 238,912 232,087
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Deposits 136,509 138,466 133,860
Advances from FHLB 46,630 74,535 73,652
Other secured borrowings 4,202 5,622 5,109
Accrued expenses and other liabilities 1,527 1,752 1,334
Stockholders' equity 19,303 18,537 18,132
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 208,171 238,912 232,087
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CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended Nine Months Ended
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03/31/05 03/31/04 03/31/05 03/31/04
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Interest earnings 2,975 3,066 8,920 9,160
Interest expense 1,144 1,326 3,560 4,203
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NET INTEREST EARNINGS 1,831 1,740 5,360 4,957
Provision for loan losses - 339 60 469
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NET INTEREST EARNINGS AFTER
PROVISION FOR LOAN LOSSES 1,831 1,401 5,300 4,488
Non-interest income 241 187 752 633
Non-interest expense 1,222 1,168 3,861 3,474
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EARNINGS BEFORE INCOME TAXES 850 420 2,191 1,647
Provision for income taxes 322 96 862 495
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NET EARNINGS 528 324 1,329 1,152
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Weighted average number of
shares outstanding- basic 1,144 1,127 1,140 1,125
Earnings per common share-basic 0.46 0.29 1.17 1.02
Weighted average number of
shares outstanding- diluted 1,204 1,183 1,200 1,181
Earnings per common share-diluted 0.44 0.27 1.11 0.97
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