EXHIBIT 99.1
FIRST FOR
FEDERAL IMMEDIATE
BANCSHARES RELEASE
1401 Highway 62-65 North
P. O. Box 550
Harrison, AR 72601 FOR FURTHER INFORMATION CONTACT:
Larry J. Brandt/President-CEO
Tommy Richardson/EVP-COO
Sherri Billings/EVP-CFO
870-741-7641
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
ANNOUNCES EARNINGS
Harrison, Arkansas - October 29, 2003 - (NASDAQ NMS:FFBH) First
Federal Bancshares of Arkansas, Inc. (the "Corporation"), a
unitary savings and loan holding company for First Federal Bank
of Arkansas, FA (the "Bank") announced today that the
Corporation's net income amounted to $1,872,000 or $0.73 basic
earnings per share and $0.69 diluted earnings per share during
the third quarter of 2003 compared to net income of $2,224,000
or $0.84 basic earnings per share and $0.81 diluted earnings per
share during the third quarter of 2002. Earnings for the nine
months ended September 30, 2003 amounted to $5,743,000 or $2.26
basic earnings per share and $2.15 diluted earnings per share
compared to earnings of $5,814,000 or $2.11 basic earnings per
share and $2.03 diluted earnings per share for the same period
ended September 30, 2002. Book value or stockholders' equity per
share, at September 30, 2003, was $27.61.
Larry J. Brandt, President/CEO for the Corporation said, "We are
pleased to report an increase in diluted earnings per share to
$2.15 for the nine months ended September 30, 2003 from $2.03 for
the nine months ended September 30, 2002. We also increased the
quarterly dividend to $.18 per share compared to $.16 per share
last quarter and $.14 per share the same quarter last year. This
equates to a dividend payout ratio for the nine months ended
September 30, 2003 of 23% compared to 19% for the same period in
2002. Book value per share has also increased compared to the
prior year, from $25.09 at September 30, 2002 to $27.61 at
September 30, 2003. During the third quarter, we opened our
fourth branch office in Benton County, one of the fastest growing
counties in the state."
Total assets at September 30, 2003 amounted to $695.8 million,
total liabilities were $622.2 million and stockholders' equity
totaled $73.6 million or 10.6% of total assets. This compares
with total assets of $679.9 million, total liabilities of $610.6
million and stockholders' equity of $69.3 million or 10.2% of
total assets at December 31, 2002. At September 30, 2003
compared to December 31, 2002, cash and cash equivalents
increased $29.0 million or 65.1%, investment securities held to
maturity decreased $25.0 million or 21.8% and net loans
receivable increased $7.4 million or 1.5%. At September 30,
2003, liabilities were $622.2 million compared to $610.6 million
at December 31, 2002. The $11.6 million or 1.9% increase was
primarily due to an increase of $4.1 million or 0.7% in deposits
and an increase in Federal Home Loan Bank ("FHLB") of Dallas
advances of $4.9 million
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or 12.7%. The funds available from the proceeds of matured or
called investment securities held to maturity and the increase
in deposits and FHLB advances were temporarily invested in cash
and cash equivalents and used to fund loan growth. Stockholders'
equity increased during the nine month period ended September 30,
2003, due to net income in the amount of $5.7 million resulting
from continued profitable operations, as well as the issuance of
55,284 shares of treasury stock totaling $1.1 million as a result
of the exercise of stock options. Such increase was partially
offset by the purchase of 83,700 shares of treasury stock totaling
$2.4 million in connection with the Corporation's stock repurchase
program and, to a lesser extent, the payment of quarterly cash
dividends in the amount of $1.3 million.
Non-performing assets, consisting of nonaccrual and restructured
loans and repossessed assets, amounted to $9.3 million or 1.34%
of total assets at September 30, 2003, compared to $7.3 million
or 1.07% of total assets at December 31, 2002. At September 30,
2003, nonaccrual loans, restructured loans, and repossessed
assets amounted to $4.5 million, $3.8 million, and $970,000,
respectively, compared to $2.7 million, $4.2 million, and
$361,000, respectively, at December 31, 2002. The increase in
nonaccrual loans is attributable to two unrelated borrowers with
loan balances totaling $1.8 million. The Bank does not expect to
incur losses on these loans based on the estimated value of the
collateral properties. The allowance for loan losses amounted to
$1.7 million at September 30, 2003 or .33% of total loans. The
allowance for loan losses amounted to $1.5 million at December
31, 2002 or .30% of total loans.
Net interest income, the primary component of net income,
decreased from $5.9 million for the three months ended September
30, 2002 to $5.7 million for the comparable period in 2003 and
increased from $16.5 million to $17.0 million for the nine months
ended September 30, 2002 and 2003, respectively. Net interest
margin for both the three months and nine months ended
September 30, 2003 was 3.50% compared to 3.73% and 3.43%,
respectively, for the same periods in 2002.
The provision for loan losses decreased $43,000 to $204,000 for
the three month period ended September 30, 2003 compared to
$247,000 for the three month period ended September 30, 2002 and
decreased $364,000 to $619,000 for the nine month period ended
September 30, 2003 compared to $983,000 for the nine month period
ended September 30, 2002. The decrease in the provision for loan
losses for the nine month period ended September 30, 2003 was due
to an estimated loss on a commercial real estate loan of
approximately $415,000 recorded in the nine months ended
September 30, 2002.
Noninterest income increased $538,000 or 40.7% to $1.9 million
for the three month period ended September 30, 2003 compared to
$1.3 million for the three months ended September 30, 2002
primarily due to an increase in profit on sale of mortgage loans
in the secondary market and the corresponding recognition of fees
related to such loans. Non-interest income increased $1.7
million or 43.4% to $5.5 million for the nine month period ended
September 30, 2003 compared to $3.9 million for the nine months
ended September 30, 2002 primarily due to an increase in profit
on sale of mortgage loans in the secondary market and the
corresponding recognition of fees related to such loans and the
appreciation in value recognized on the contribution of the
office building formerly occupied by the Bank's lending
operations.
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Noninterest expenses increased $930,000 or 25.7% between the 2002
and 2003 three month periods ended September 30 and increased
$3.0 million or 28.0% between the 2002 and 2003 nine month
periods ended September 30. Such increases were primarily due to
an increase in salaries and employee benefits and net occupancy
expense. In addition, the increase between the nine month
periods was due to an increase in contributions as a result of
the donation of the building discussed above.
During the third quarter of 2003, the Bank celebrated the GRAND
OPENING of its new Northtown Financial Center. This new 40,000
square foot office is a full service facility and also serves as
the Bank's corporate headquarters. The Bank promoted FREE Student
Checking and its First Money Visa Check Card. The Bank also
continued with its "You're Thinking/We're Thinking Campaign" with
emphasis on our Online Banking and Mortgages. For information on
all the products and services we offer, visit us at www.ffbh.com
or call our Account Information Center at (870) 365-8329 or (866)
AIC-FFBH toll free or by email at aic@ffbh.com. The Bank, in its
69th year, conducts business from 16 offices in Northcentral and
Northwest Arkansas.
Financial Tables Attached
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FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands of dollars)
(Unaudited)
September 30, December 31,
ASSETS 2003 2002
_____________ ____________
Cash and cash equivalents $ 73,449 $ 44,493
Investment securities held to maturity 89,473 114,471
Federal Home Loan Bank stock 5,153 5,064
Loans receivable, net of allowances 490,828 483,468
Accrued interest receivable 3,918 4,380
Real estate acquired in settlement of loans, net 924 320
Office properties and equipment, net 14,492 10,690
Prepaid expenses and other assets 17,573 17,010
------- -------
TOTAL ASSETS $695,810 $679,896
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $572,897 $568,762
Federal Home Loan Bank advances 43,522 38,610
Advance payments by borrowers for
taxes and insurance 513 760
Other liabilities 5,319 2,498
------- -------
Total liabilities 622,251 610,630
TOTAL STOCKHOLDERS' EQUITY 73,559 69,266
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $695,810 $679,896
======= =======
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FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RELATED SELECTED OPERATING DATA
(In thousands of dollars, except earnings per share)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
------------------ ------------------
Interest income $ 9,475 $ 11,070 $ 29,281 $ 33,415
Interest expense 3,799 5,122 12,305 16,875
----- ----- ------ ------
Net interest income 5,676 5,948 16,976 16,540
Provision for loan losses 204 247 619 983
----- ----- ------ ------
Net interest income after
provision for loan losses 5,472 5,701 16,357 15,557
Noninterest income 1,861 1,323 5,549 3,870
Noninterest expenses 4,547 3,617 13,574 10,603
----- ----- ------ ------
Income before income taxes 2,786 3,407 8,332 8,824
Income tax provision 914 1,183 2,589 3,010
----- ----- ------ ------
Net income $ 1,872 $ 2,224 $5,743 $5,814
===== ===== ===== =====
Earnings Per Share:
Basic $0.73 $0.84 $2.26 $2.11
===== ===== ===== =====
Diluted $0.69 $0.81 $2.15 $2.03
===== ===== ===== =====
Selected Operating Data (Annualized):
- -------------------------------------
Interest rate spread 3.39% 3.55% 3.38% 3.20%
Net interest margin 3.50% 3.73% 3.50% 3.43%
Return on average assets 1.08% 1.32% 1.11% 1.14%
Noninterest expenses to average assets 2.61% 2.14% 2.62% 2.08%
Return on average equity 10.19% 12.78% 10.63% 10.91%
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