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/CEO
Harrison, AR 72602 Tommy Richardson/COO
Sherri Billings/CFO
870.741.7641
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
ANNOUNCES EARNINGS
Harrison, Arkansas - July 25, 2006 - (NASDAQ GM:FFBH) First
Federal Bancshares of Arkansas, Inc. (the "Corporation"), a
unitary savings and loan holding company for First Federal Bank
(the "Bank") announced today that the Corporation's net income
amounted to $2,275,000 or $0.45 basic earnings per share and
$0.44 diluted earnings per share during the second quarter of
2006 compared to net income of $1,949,000 or $0.39 basic earnings
per share and $0.37 diluted earnings per share during the second
quarter of 2005. Earnings for the six months ended June 30, 2006
amounted to $4,260,000 or $0.85 basic earnings per share and
$0.83 diluted earnings per share compared to earnings of
$3,913,000 or $0.79 basic earnings per share and $0.75 diluted
earnings per share for the same period ended June 30, 2005. Book
value or stockholders' equity per share, at June 30, 2006, was
$15.73.
Larry J. Brandt, CEO for the Corporation said, "I am very pleased
to report that the quarter ended June 30, 2006 was the most
profitable quarter in our 72 year history. The $2.3 million
quarterly profit represents a return on average equity of 11.57%.
We were also recognized in this quarter by US Banker magazine as
one of the Top 200 Publicly Traded Community Banks for 2005 for
the third consecutive year. In June, First Federal was honored
as the Employer of the Year for 2005/2006 by the Arkansas
Business and Professional Women. Our record earnings performance
and the honors we have received this quarter are a reflection of
our outstanding team members plus continued loyalty from our
customers and stockholders."
Total assets at June 30, 2006 amounted to $883.1 million, total
liabilities were $804.1 million and stockholders' equity totaled
$79.0 million or 8.9% of total assets. This compares with total
assets of $852.4 million, total liabilities of $774.6 million and
stockholders' equity of $77.8 million or 9.1% of total assets at
December 31, 2005. At June 30, 2006 compared to December 31,
2005, cash and cash equivalents increased $4.7 million or 22.3%,
investment securities held to maturity increased $3.8 million or
6.8%, and net loans receivable increased $19.5 million or 2.7%.
The $29.5 million or 3.8% increase in total liabilities was
primarily due to an increase of $19.1 million or 3.1% in deposits
and an increase of $10.2 million or 6.5% in Federal Home Loan
Bank ("FHLB") of Dallas advances. The increases in deposits and
FHLB advances were primarily used to fund loan growth.
Stockholders' equity increased during the six month period ended
June 30, 2006, due to net income in the amount of $4.3 million
resulting from continued profitable operations, as well as the
issuance of 97,731 shares of treasury stock totaling $743,000 as
a result of the exercise of stock options.
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Such increases were partially offset by the purchase of 130,137
shares of treasury stock totaling $3.3 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 $1.4 million.
Nonperforming assets, consisting of certain classified loans and
repossessed assets, amounted to $14.2 million or 1.61% of total
assets at June 30, 2006, compared to $14.1 million or 1.65% of
total assets at December 31, 2005. At June 30, 2006,
nonperforming assets consisted primarily of $6.2 million of
nonaccrual loans and $6.2 million of restructured loans.
Restructured loans at such date consisted of commercial and
commercial real estate loans to two borrowers. The allowance for
loan losses amounted to $2.4 million at June 30, 2006 or 0.31% of
total loans and $2.1 million or .27% of total loans at December
31, 2005.
Net interest income, the primary component of net income,
increased to $7.0 million and $13.9 million for the three and six
months ended June 30, 2006 from $6.4 million and $12.9 million
for the comparable periods in 2005. Net interest margin for the
three months and six months ended June 30, 2006 was 3.46% and
3.44%, respectively, compared to 3.45% and 3.53%, respectively,
for the same periods in 2005.
The provision for loan losses increased $72,000 to $359,000 for
the three month period ended June 30, 2006 compared to $287,000
for the three month period ended June 30, 2005 and increased
$107,000 to $643,000 for the six month period ended June 30, 2006
compared to $536,000 for the six month period ended June 30,
2005.
Noninterest income increased $361,000 or 20.9% to $2.1 million
for the three month period ended June 30, 2006 compared to $1.7
million for the same period in 2005 and increased $1.1 million or
33.6% to $4.4 million for the six month period ended June 30,
2006 compared to $3.3 million for the same period in 2005. The
increase in the three month comparison period was primarily due
to an increase in deposit fee income. The increase in the six
month comparison period was also due to an increase in deposit
fee income as well as nonrecurring gains on sales of two
properties of approximately $528,000. These properties
represented excess land and a building adjacent to two existing
branches.
Noninterest expenses increased $399,000 or 8.0% to $5.4 million
for the three months ended June 30, 2006 compared to $5.0 million
for the same period in 2005 and increased $1.5 million or 15.4%
to $11.4 million for the six months ended June 30, 2006 compared
to $9.9 million for the same period in 2005. Such increases were
primarily due to increases in salaries and employee benefits.
First Federal Bank is a community bank serving consumers and
businesses with a full range of checking, savings, investment and
loan products and services. The Bank, in its 72nd year, conducts
business from 18 full-service branch locations, one stand-alone
loan production office, and 29 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)
ASSETS June 30, December 31,
2005 2006
------- -------
Cash and cash equivalents $ 25,812 $ 21,109
Investment securities held to maturity 60,534 56,695
Federal Home Loan Bank stock 8,228 8,412
Loans receivable, net of allowances 738,665 719,214
Accrued interest receivable 9,627 7,490
Real estate acquired in settlement of loans, net 569 892
Office properties and equipment, net 19,172 18,522
Cash surrender value of life insurance 19,023 18,654
Prepaid expenses and other assets 1,436 1,423
------- -------
TOTAL ASSETS $ 883,066 $ 852,411
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 630,790 $ 611,667
Federal Home Loan Bank advances 168,452 158,240
Advance payments by borrowers for
taxes and insurance 450 847
Other liabilities 4,404 3,815
------- -------
Total liabilities 804,096 774,569
TOTAL STOCKHOLDERS' EQUITY 78,970 77,842
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 883,066 $ 852,411
======= =======
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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 Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
------ ------ ------ ------
Interest income $ 13,737 $ 11,001 $ 26,826 $ 21,597
Interest expense 6,704 4,588 12,891 8,716
------ ------ ------ ------
Net interest income 7,033 6,413 13,935 12,881
Provision for loan losses 359 287 643 536
------ ------ ------ ------
Net interest income after
provision for loan losses 6,674 6,126 13,292 12,345
Noninterest income 2,085 1,724 4,402 3,294
Noninterest expenses 5,378 4,979 11,400 9,876
------ ------ ------ ------
Income before income taxes 3,381 2,871 6,294 5,763
Income tax provision 1,106 922 2,034 1,850
------ ------ ------ ------
Net income 2,275 1,949 4,260 3,913
====== ====== ====== ======
Earnings Per Share:
Basic $ 0.45 $ 0.39 $ 0.85 $ 0.79
==== ==== ==== ====
Diluted $ 0.44 $ 0.37 $ 0.83 $ 0.75
==== ==== ==== ====
Cash Dividends Declared $ 0.14 $ 0.12 $ 0.28 $ 0.24
==== ==== ==== ====
Selected Operating Data (Annualized):
Interest rate spread 3.36% 3.35% 3.35% 3.43%
Net interest margin 3.46% 3.45% 3.44% 3.53%
Return on average assets 1.04% 0.98% 0.98% 1.00%
Noninterest expenses to
average assets 2.46% 2.50% 2.62% 2.53%
Return on average equity 11.57% 10.27% 10.88% 10.34%
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