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 - May 4, 2007 - (NASDAQ NMS: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 $159,000 or $0.03 basic and diluted earnings per
share during the first quarter of 2007 compared to net income of
$1,985,000 or $0.39 basic earnings per share and $0.38 diluted
earnings per share during the first quarter of 2006. Book value
or stockholders' equity per share, at March 31, 2007, was $15.25.
Larry J. Brandt, Chief Executive Officer for the Corporation
said, "The decrease in our net income for the first quarter of
2007 was directly related to an increase in our loan loss
provision of $1.7 million. This increase was primarily due to one
large subdivision in Lowell, Arkansas. The oversupply of houses
and building lots in northwest Arkansas was a key factor
impacting the non-performance of this subdivision loan. In
addition, the compression of the net interest margin due to the
flat yield curve and competitive pressures, combined with an
increase in our nonaccrual loans, all had a negative impact on
our profits during our first quarter. Fortunately, we have
strong capital with a strong management team in place to meet
these challenges. As evidence of our strong capital base, we
continued to enhance shareholder value by increasing our cash
dividend to $0.16 per share during the first quarter of 2007, a
7% increase compared to $0.15 per share for the previous
quarter."
Total assets at March 31, 2007 amounted to $834.8 million, total
liabilities were $760.5 million and stockholders' equity totaled
$74.3 million or 8.9% of total assets. This compares with total
assets of $852.5 million, total liabilities of $776.9 million and
stockholders' equity of $75.6 million or 8.9% of total assets at
December 31, 2006. At March 31, 2007 compared to December 31,
2006, cash and cash equivalents increased $4.9 million or 13.8%,
investment securities held to maturity increased $2.0 million or
3.3%, and net loans receivable decreased $22.9 million or 3.3%.
The $16.4 million or 2.1% decrease in total liabilities was
primarily due to a decrease of $17.8 million or 14.8% in Federal
Home Loan Bank advances. The proceeds from loan repayments were
used to pay off maturing advances. Stockholders' equity
decreased by $1.3 million during the three month period ended
March 31, 2007, primarily due to the purchase of 55,526 shares of
treasury stock totaling $1.4 million in connection with the
Corporation's stock repurchase program.
Nonperforming assets amounted to $24.3 million or 2.91% of total
assets at March 31, 2007, compared to $23.5 million or 2.76% of
total assets at December 31, 2006. At March 31, 2007,
nonperforming assets consisted primarily of $19.8 million of
nonaccrual loans. The allowance for loan losses amounted to $4.3
million at March 31, 2007 or 0.60% of total loans and $2.6
million or 0.35% of total loans at December 31, 2006.
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Net interest income, the primary component of net income,
decreased from $6.9 million for the three months ended March 31,
2006 to $6.1 million for the comparable period in 2007. Net
interest margin for the three months ended March 31, 2007 was
3.19% compared to 3.43% for the three months ended
March 31, 2006.
Noninterest income decreased $455,000 or 19.6% to $1.9 million
for the three month period ended March 31, 2007 compared to $2.3
million for the three months ended March 31, 2006. Such decrease
was primarily due to gains on sales of two properties of
approximately $528,000 in the first quarter of 2006. These
properties represented excess land and a building adjacent to two
existing branches.
Noninterest expenses increased $48,000 or 0.8% between the 2006
and 2007 three month periods ended March 31. Such increase was
primarily due to an increase in real estate owned expenses, which
was attributable to the increase in the number of properties as
well as losses related to valuation provisions and disposition of
real estate owned. Such increase was offset by a decrease in
salaries and employee benefits due to the Company's Employee
Stock Ownership Plan ("ESOP") becoming fully allocated as of
March 31, 2006. Such decrease in ESOP expense of $508,000 was
partially offset by an increase in salaries and an increase in
401k expense related to employer matching contributions.
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, founded in 1934, 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)
March 31, December 31,
ASSETS 2007 2006
-------- -----------
Cash and cash equivalents $ 40,400 $ 35,518
Investment securities held to maturity 62,734 60,746
Federal Home Loan Bank stock 5,872 7,089
Loans receivable, net of allowances 670,146 693,095
Accrued interest receivable 10,285 9,999
Real estate acquired in settlement of loans, net 2,876 3,858
Office properties and equipment, net 20,677 20,384
Cash surrender value of life insurance 19,585 19,396
Prepaid expenses and other assets 2,197 2,390
------- -------
TOTAL ASSETS $834,772 $852,475
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $654,393 $652,265
Federal Home Loan Bank advances 102,554 120,305
Advance payments by borrowers for
taxes and insurance 868 666
Other liabilities 2,674 3,666
------- -------
Total liabilities 769,489 776,902
TOTAL STOCKHOLDERS' EQUITY 74,283 75,573
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $834,772 $852,475
======= =======
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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 March 31,
----------------------------
2007 2006
---------- -----------
Interest income $ 13,227 $ 13,091
Interest expense 7,108 6,188
------ ------
Net interest income 6,119 6,903
Provision for loan losses 1,961 285
------ ------
Net interest income after
provision for loan losses 4,158 6,618
Noninterest income 1,862 2,317
Noninterest expenses 6,070 6,022
------ ------
Income (loss) before income taxes (50) 2,913
Income tax provision (benefit) (209) 928
------ ------
Net income $ 159 $ 1,985
====== ======
Earnings Per Share:
Basic $ 0.03 $ 0.39
====== ======
Diluted $ 0.03 $ 0.38
====== ======
Selected Operating Data (Quarter Annualized):
--------------------------------------------
Interest rate spread 3.11% 3.34%
Net interest margin 3.19% 3.43%
Return on average assets 0.08% 0.92%
Noninterest expenses to average assets 2.91% 2.79%
Return on average equity 0.84% 10.19%
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