EXHIBIT 99.1
[First Federal Bancshares of Arkansas, Inc. Logo] FOR
IMMEDIATE
RELEASE
1401 Highway 62/65 North FOR FURTHER INFORMATION CONTACT:
P. O. Box 550 Larry J. Brandt/President-CEO
Harrison, AR 72602 Tommy Richardson/EVP-COO
Sherri Billings/EVP-CFO
870-741-7641
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
ANNOUNCES EARNINGS
Harrison, Arkansas - October 26, 2004 - (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 $2,098,000 or $0.42 basic
earnings per share and $0.39 diluted earnings per share during
the third quarter of 2004 compared to net income of $1,872,000 or
$0.37 basic earnings per share and $0.35 diluted earnings per
share during the third quarter of 2003. Earnings for the nine
months ended September 30, 2004 amounted to $5,788,000 or $1.14
basic earnings per share and $1.07 diluted earnings per share
compared to earnings of $5,743,000 or $1.13 basic earnings per
share and $1.07 diluted earnings per share for the same period
ended September 30, 2003. Book value or stockholders' equity per
share, at September 30, 2004, was $14.58.
Larry J. Brandt, President/CEO for the Corporation said, "We are
pleased to report net income of $2.1 million for the quarter
ended September 30, 2004, which is a 12.1% increase compared to
the same quarter in 2003. Return on average equity improved to
11.2% for the third quarter of 2004. Loan production continues
to be strong, as evidenced by the increase in net loans
receivable since December 31, 2003 of approximately $91 million
representing annualized growth of 23.6%. The net interest margin
of 3.83% for the third quarter of 2004 improved compared to 3.50%
for the third quarter of 2003, primarily due to strong loan
growth. During the third quarter, the Corporation increased the
quarterly cash dividend by 10% to $0.11 per share compared to
$0.10 per share last quarter and $0.09 per share for the same
quarter in 2003, a 22% increase."
Total assets at September 30, 2004 amounted to $726.3 million,
total liabilities were $651.5 million and stockholders' equity
totaled $74.8 million or 10.3% of total assets. This compares
with total assets of $690.7 million, total liabilities of $615.6
million and stockholders' equity of $75.1 million or 10.9% of
total assets at December 31, 2003. At September 30, 2004
compared to December 31, 2003, cash and cash equivalents
decreased $43.2 million or 76.8%, investment securities held to
maturity decreased $12.0 million or 15.0% and net loans
receivable increased $90.9 million or 17.7%. At September 30,
2004, liabilities were $651.5 million compared to $615.6 million at
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December 31, 2003. The $35.9 million or 5.8% increase was
primarily due to an increase of $8.8 million or 1.5% in deposits
and an increase in Federal Home Loan Bank ("FHLB") of Dallas
advances of $25.7 million or 64.9%. Cash and cash equivalents,
funds available from the proceeds of matured or called investment
securities held to maturity, and the increases in deposits and
FHLB advances were used to fund loan growth. Stockholders'
equity decreased during the nine month period ended
September 30, 2004 primarily due to the purchase of 359,700
shares of treasury stock totaling $7.4 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
$1.6 million. Such decrease was partially offset by net income
in the amount of $5.8 million resulting from continued profitable
operations as well as the issuance of 153,418 shares of treasury
stock totaling $1.5 million as a result of the exercise of stock
options.
Nonperforming assets, consisting of nonaccrual loans,
nonperforming restructured loans and repossessed assets, amounted
to $3.5 million or 0.49% of total assets at September 30, 2004,
compared to $4.5 million or 0.65% of total assets at December 31,
2003. The allowance for loan losses amounted to $1.7 million or
0.26% of total loans at September 30, 2004 and $1.6 million or
0.29% of total loans at December 31, 2003.
Net interest income, the primary component of net income,
increased from $5.7 million and $17.0 million for the three and
nine months ended September 30, 2003, respectively, to $6.5
million and $18.6 million for the comparable periods in 2004.
Net interest margin for the three months and nine months ended
September 30, 2004 was 3.83% and 3.76%, respectively, compared to
3.50% for each of the same periods in 2003.
The provision for loan losses decreased $2,000 to $202,000 for
the three month period ended September 30, 2004 compared to
$204,000 for the three month period ended September 30, 2003 and
increased $44,000 to $663,000 for the nine month period ended
September 30, 2004 compared to $619,000 for the nine month period
ended September 30, 2003.
Noninterest income decreased $288,000 or 15.5% to $1.6 million
for the three month period ended September 30, 2004 compared to
$1.9 million for the three months ended September 30, 2003 and
decreased $961,000 or 17.3% to $4.6 million for the nine month
period ended September 30, 2004 compared to $5.5 million for the
nine months ended September 30, 2003. The decrease in
noninterest income for the three months and nine months ended
September 30, 2004 compared to the three months and nine months
ended September 30, 2003 was primarily due to a decrease in
profit on sale of mortgage loans in the secondary market and the
corresponding recognition of fees related to such loans. Also
contributing to the decrease in noninterest income for the nine
month comparable periods was the appreciation in value recognized
in the second quarter of 2003 on the contribution of the office
building formerly occupied by the Bank's lending operations.
These decreases were partially offset by an increase in deposit
fee income in both the three and nine month comparable periods.
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Noninterest expenses increased $187,000 or 4.1% between the 2003
and 2004 three month periods ended September 30 and increased
$457,000 or 3.4% between the 2003 and 2004 nine month periods
ended September 30. The increase for the three month period
ended September 30, 2004 was primarily due to increases in
salaries and employee benefits and advertising and public
relations. The increase in the nine month period ended September
30, 2004 was primarily due to an increase in salaries and
employment benefits, net occupancy expense, and advertising and
public relations. The increase for the nine month period in 2004
was partially offset by a decrease in contributions. The
decrease in contributions is a result of the donation of the
building discussed above.
First Federal Bank is a community bank serving consumers and
businesses with a full range of checking, savings, investment and
loan products and services. In the third quarter, the Bank
unveiled a new corporate logo. The new logo's precise and
streamlined design gives it a modern look reflecting our banking
practices. The Bank, in its 70th year, conducts business from 15
full-service branch locations, one stand-alone loan production
office, and 24 ATMs located in Northcentral and Northwest
Arkansas. For information on all the products and services we
offer, visit us at www.ffbh.com or contact our Account
Information Center at (870) 365-8329 or (866) AIC-FFBH toll free
or by email at aic@ffbh.com.
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 2004 2003
------------- ------------
Cash and cash equivalents $ 13,015 $ 56,201
Investment securities held to maturity 68,347 80,379
Federal Home Loan Bank stock 3,825 3,749
Loans receivable, net 603,613 512,756
Accrued interest receivable 4,376 4,089
Real estate acquired in settlement of loans, net 340 822
Office properties and equipment, net 14,511 14,238
Cash surrender value of life insurance 17,699 17,102
Prepaid expenses and other assets 612 1,317
-------- --------
TOTAL ASSETS $726,338 $690,653
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $582,394 $573,580
Federal Home Loan Bank advances 65,219 39,562
Advance payments by borrowers for 634 725
taxes and insurance
Other liabilities 3,248 1,708
-------- --------
Total liabilities 651,495 615,575
TOTAL STOCKHOLDERS' EQUITY 74,843 75,078
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $726,338 $690,653
======== ========
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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,
------------------ ------------------
2004 2003 2004 2003
-------- ------- -------- --------
Interest income $ 10,083 $ 9,475 $ 29,176 $ 29,281
Interest expense 3,620 3,799 10,559 12,305
-------- ------- -------- --------
Net interest income 6,463 5,676 18,617 16,976
Provision for loan losses 202 204 663 619
-------- ------- -------- --------
Net interest income after
provision for loan losses 6,261 5,472 17,954 16,357
Noninterest income 1,573 1,861 4,588 5,549
Noninterest expenses 4,734 4,547 14,031 13,574
-------- ------- -------- --------
Income before income taxes 3,100 2,786 8,511 8,332
Income tax provision 1,002 914 2,723 2,589
-------- ------- -------- --------
Net income $ 2,098 $ 1,872 $ 5,788 $ 5,743
======== ======= ======== ========
Earnings Per Share:
Basic $ 0.42 $ 0.37 $ 1.14 $ 1.13
======== ======= ======== ========
Diluted $ 0.39 $ 0.35 $ 1.07 $ 1.07
======== ======= ======== ========
Cash Dividends Declared $ 0.11 $ 0.09 $ 0.31 $ 0.25
======== ======= ======== ========
Selected Operating Data (Quarter Annualized):
--------------------------------------------
Interest rate spread 3.73% 3.39% 3.65% 3.38%
Net interest margin 3.83% 3.50% 3.76% 3.50%
Return on average assets 1.16% 1.08% 1.09% 1.11%
Noninterest expenses to
average assets 2.62% 2.61% 2.64% 2.62%
Return on average equity 11.20% 10.19% 10.24% 10.63%
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