Exhibit 99.1
[FIRST FOR
FEDERAL IMMEDIATE
BANCSHARES OF ARKANSAS, INC. LOGO] 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 27, 2007 - (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 $1.5 million or $0.32 basic earnings per share and
$0.32 diluted earnings per share during the second quarter of
2007 compared to net income of $2.3 million or $0.45 basic
earnings per share and $0.44 diluted earnings per share during
the second quarter of 2006. Earnings for the six months ended
June 30, 2007 amounted to $1.7 million or $0.35 basic earnings
per share and $0.35 diluted earnings per share compared to
earnings of $4.3 million or $0.85 basic earnings per share and
$0.83 diluted earnings per share for the same period ended June
30, 2006. Book value or stockholders' equity per share at June
30, 2007, was $15.33.
Larry J. Brandt, CEO for the Corporation said, "Our $1.5 million
of net income for the second quarter of 2007 was a significant
improvement over our net income for the first quarter of 2007.
However, the oversupply of houses and building lots in northwest
Arkansas continues to have a negative impact on the economy for
the area. In addition, the compression of our net interest
margin due to the flat yield curve, competitive pressures and
nonaccrual loans has had a negative impact on this quarter's
performance. Fortunately, we continue to have strong capital
with a strong management team in place to meet these challenges
in the future. First Federal Bank was also recognized in the
second quarter by the Arkansas Business and Professional Women as
the Best Employer for the Year for the state. This is the second
year First Federal has received this prestigious honor."
Total assets at June 30, 2007 amounted to $820.5 million, total
liabilities were $746.0 million and stockholders' equity totaled
$74.5 million or 9.1% 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 June 30, 2007 compared to December 31,
2006, cash and cash equivalents increased $3.2 million or 9.0%,
investment securities held to maturity increased $13.5 million or
22.2%, real estate acquired in settlement of loans ("REO")
increased $3.5 million, or 90.5%, and accrued interest receivable
increased by $1.1 million or 10.6%. Accrued interest receivable
increased primarily due to the increase in the number of days
accrued as well as an increase in the loan yield. Net loans
receivable decreased by $50.7 million, or 7.3%, primarily due to
a decrease in construction loan originations. The decrease in
net loans receivable and the increase in REO are related to the
oversupply of lots and homes in the Northwest Arkansas market.
The $30.9 million or 4.0% decrease in total liabilities was
primarily due to a decrease of $28.5 million or 23.7% in Federal
Home Loan Bank ("FHLB") of Dallas advances. The funds available
from the decrease in net loans receivable were used to repay FHLB
advances, as well as purchase
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investment securities and increase our cash position. Stockholders'
equity decreased during the six months ended June 30, 2007 due to
the purchase of 80,526 shares of treasury stock totaling $2.0
million in connection with the Corporation's stock repurchase
program and the payment of quarterly cash dividends in the amount
of $1.6 million. Such decreases were partially offset by net income
in the amount of $1.7 million resulting from continued profitable
operations, as well as the issuance of 104,853 shares of treasury
stock totaling $324,000 as a result of the exercise of stock options.
Nonperforming assets amounted to $30.8 million or 3.8% of total
assets at June 30, 2007, compared to $23.5 million or 2.8% of
total assets at December 31, 2006. At June 30, 2007,
nonperforming assets consisted primarily of $22.2 million of
nonaccrual loans and $7.4 million in real estate owned. The
increases in nonaccrual loans and real estate owned were due
primarily to single-family speculative construction loans. This
increase in nonaccrual single-family speculative construction
loans reflects the general slowdown in housing and oversupply of
lots and speculative homes in the Bank's Northwest Arkansas
market. In turn, certain homebuilder customers of the Bank have
experienced extended marketing times for the sales of their
speculative homes and inadequate cash flow to service the
interest carry on their loans. The allowance for loan losses
amounted to $4.3 million at June 30, 2007 or 0.6% of total loans
and $2.4 million or 0.3% of total loans at December 31, 2006.
Net interest income, the primary component of net income,
decreased from $7.0 million for the three months ended June 30,
2006 to $6.0 million for the three months ended June 30, 2007.
Net interest income was $13.9 million for the six months ended
June 30, 2006 as compared to $12.2 million for the six months
ended June 30, 2007. Net interest margin for the three months
and six months ended June 30, 2007 was 3.19% compared to 3.46%
and 3.44%, respectively, for the same periods in 2006. The
decrease in the net interest margin was due to an increase in our
nonaccrual loans and the current interest rate environment and
competitive pressures on rates.
The provision for loan losses increased $11,000 to $370,000 for
the three month period ended June 30, 2007 compared to $359,000
for the three month period ended June 30, 2006 and increased $1.7
million to $2.3 million for the six month period ended June 30,
2007 compared to $643,000 for the six month period ended June 30,
2006. The increase in the provision for loan losses in the six
month comparison period was due primarily to an increase in
nonaccrual loans as discussed above and a $1.4 million specific
loss allowance on two phases of a subdivision recorded during the
first quarter of 2007.
Noninterest income decreased $110,000 or 5.3% to $2.0 million for
the three month period ended June 30, 2007 compared to $2.1
million for the same period in 2006 and decreased $563,000 or
12.8% to $3.8 million for the six month period ended June 30,
2007 compared to $4.4 million for the same period in 2006. The
decrease in the three month comparison period was primarily due
to a decrease in the gain on the sale of loans. The decrease in
the six month comparison period was also due to a decrease in the
gain on the sale of loans, as well as nonrecurring 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 $97,000 or 1.8% to $5.5 million
for the three months ended June 30, 2007 compared to $5.4 million
for the same period in 2006 and increased $144,000 or 1.3% to
$11.5 million for the six months ended June 30, 2007 compared to
$11.4 million for the same period in 2006. The increase in the
three and six month comparative periods was mainly due to an
increase in other expenses related to REO.
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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)
June 30, December 31,
ASSETS 2007 2006
____________ _____________
Cash and cash equivalents $ 38,720 $ 35,518
Investment securities held to maturity 74,217 60,746
Federal Home Loan Bank stock 4,864 7,089
Loans receivable, net of allowances 642,406 693,095
Accrued interest receivable 11,054 9,999
Real estate acquired in settlement of loans, net 7,350 3,858
Office properties and equipment, net 20,691 20,384
Cash surrender value of life insurance 19,769 19,396
Prepaid expenses and other assets 1,420 2,390
________ ________
TOTAL ASSETS $820,491 $852,475
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $648,192 $652,265
Federal Home Loan Bank advances 91,816 120,305
Advance payments by borrowers for
taxes and insurance 344 666
Other liabilities 5,608 3,666
________ ________
Total liabilities 745,960 776,902
TOTAL STOCKHOLDERS' EQUITY 74,531 75,573
________ ________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $820,491 $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 Six Months Ended
June 30, June 30,
____________________ ____________________
2007 2006 2007 2006
_________ _________ _________ _________
Interest income $13,196 $13,737 $26,421 $26,826
Interest expense 7,150 6,704 14,258 12,891
_________ _________ _________ _________
Net interest income 6,046 7,033 12,163 13,935
Provision for loan losses 370 359 2,332 643
_________ _________ _________ _________
Net interest income after
provision for loan losses 5,676 6,674 9,831 13,292
Noninterest income 1,975 2,085 3,839 4,402
Noninterest expenses 5,475 5,378 11,544 11,400
_________ _________ _________ _________
Income before income taxes 2,176 3,381 2,126 6,294
Income tax provision 642 1,106 433 2,034
_________ _________ _________ _________
Net income $ 1,534 $ 2,275 $ 1,693 $ 4,260
========= ========= ========= =========
Earnings Per Share:
Basic $ 0.32 $ 0.45 $ 0.35 $ 0.85
========= ========= ========= =========
Diluted $ 0.32 $ 0.44 $ 0.35 $ 0.83
========= ========= ========= =========
Cash Dividends Declared $ 0.16 $ 0.14 $ 0.32 $ 0.28
========= ========= ========= =========
Selected Operating Data (Quarter Annualized):
_____________________________________________
Interest rate spread 3.12% 3.36% 3.12% 3.35%
Net interest margin 3.19% 3.46% 3.19% 3.44%
Return on average assets 0.74% 1.04% 0.41% 0.98%
Noninterest expenses to average assets 2.65% 2.46% 2.78% 2.62%
Return on average equity 8.19% 11.57% 4.49% 10.88%
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