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 - October 31, 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 $301,000 or $0.06 basic earnings per share and $0.06
diluted earnings per share during the third quarter of 2007
compared to net income of $1.7 million or $0.34 basic earnings
per share and $0.33 diluted earnings per share during the third
quarter of 2006. Earnings for the nine months ended
September 30, 2007 amounted to $2.0 million or $0.41 basic
earnings per share and $0.41 diluted earnings per share compared
to earnings of $6.0 million or $1.19 basic earnings per share and
$1.16 diluted earnings per share for the same period ended
September 30, 2006. Book value or stockholders' equity per share
at September 30, 2007, was $15.23.
Larry J. Brandt, CEO for the Corporation said, "The downturn in
the housing market continues to have an impact on our earnings.
Our earnings for the third quarter of 2007 of $.3 million were
down from the same quarter last year primarily as a result of our
loan loss provision of $1.3 million. In addition, the
compression of our net interest margin due to competitive
pressures and nonaccrual loans continued to have a negative
impact on our profits during this quarter. First Federal is very
fortunate to have strong capital combined with dedicated and
experienced leadership to "weather" this downturn in the housing
market. We very much appreciate the loyalty and business of our
stockholders and customers during these challenging times."
Total assets at September 30, 2007 amounted to $797.8 million,
total liabilities were $723.7 million and stockholders' equity
totaled $74.1 million or 9.3% 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 September 30, 2007
compared to December 31, 2006, cash and cash equivalents
decreased $7.6 million or 21.5%, investment securities held to
maturity increased $24.3 million or 39.9%, and real estate
acquired in settlement of loans ("REO") increased $5.0 million,
or 129.3%. Net loans receivable decreased by $73.9 million, or
10.7%, 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 $53.2 million or 6.9%
decrease in total liabilities was primarily due to a decrease of
$40.6 million or 33.7% 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 investment securities. Stockholders' equity decreased
during the nine months ended September 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 $2.3
million. Such decreases were partially offset by net income in
the amount of $2.0 million resulting from continued profitable
operations, as well as the issuance of 106,965 shares of treasury
stock totaling $350,000 as a result of the exercise of stock
options.
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Nonperforming assets amounted to $36.7 million or 4.60% of total
assets at September 30, 2007, compared to $23.5 million or 2.76%
of total assets at December 31, 2006. At September 30, 2007,
nonperforming assets consisted primarily of $23.0 million of
nonaccrual loans and $8.8 million in real estate owned. The
increase in nonaccrual loans was primarily due to an acquisition
and development loan on a subdivision totaling $2.2 million and
commercial real estate loans on a shopping center totaling $2.6
million. The increase in real estate owned was due primarily to
single-family speculative construction loans. This increase in
nonaccrual 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 $5.0 million at September 30, 2007 or 0.76% of total
loans and $2.6 million or 0.35% of total loans at December 31,
2006.
Net interest income, the primary component of net income,
decreased from $6.4 million for the three months ended September
30, 2006 to $5.3 million for the three months ended September 30,
2007. Net interest income was $20.3 million for the nine months
ended September 30, 2006 as compared to $17.5 million for the
nine months ended September 30, 2007. Net interest margin for
the three months and nine months ended September 30, 2007 was
2.88% and 3.09% compared to 3.12% and 3.34%, respectively, for
the same periods in 2006. The decrease in net interest income
and the net interest margin was due to the decrease in loans
receivable, an increase in nonaccrual loans and the current
interest rate environment and competitive pressures on rates.
The provision for loan losses increased $846,000 to $1.3 million
for the three month period ended September 30, 2007 compared to
$484,000 for the three month period ended September 30, 2006 and
increased $2.5 million to $3.6 million for the nine month period
ended September 30, 2007 compared to $1.1 million for the nine
month period ended September 30, 2006. The increase in the
provision for loan losses in both comparison periods 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, as well as
a $865,000 specific loan loss allowance on a subdivision recorded
during the third quarter of 2007.
Noninterest income decreased $18,000 or 0.9% to $2.0 million for
the three month period ended September 30, 2007 compared to $2.0
million for the same period in 2006 and decreased $517,000 or
8.2% to $5.8 million for the nine month period ended September
30, 2007 compared to $6.3 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 sale of loans. The decrease in
the nine 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 $360,000 or 6.6% to $5.8 million
for the three months ended September 30, 2007 compared to $5.4
million for the same period in 2006 and increased $567,000 or
3.4% to $17.3 million for the nine months ended September 30,
2007 compared to $16.8 million for the same period in 2006. The
increase in the three and nine month comparative periods was
mainly due to an increase in other expenses related to REO.
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)
September 30, December 31,
ASSETS 2007 2006
______________ _____________
Cash and cash equivalents $ 27,869 $ 35,518
Investment securities held to maturity 84,998 60,746
Federal Home Loan Bank stock 4,376 7,089
Loans receivable, net of allowances 619,239 693,095
Accrued interest receivable 9,958 9,999
Real estate acquired in settlement of loans, net 8,848 3,858
Office properties and equipment, net 20,856 20,384
Cash surrender value of life insurance 19,962 19,396
Prepaid expenses and other assets 1,687 2,390
_______ _______
TOTAL ASSETS $797,793 $852,475
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $640,903 $652,265
Federal Home Loan Bank advances 79,749 120,305
Advance payments by borrowers for
taxes and insurance 525 666
Other liabilities 2,521 3,666
_______ _______
Total liabilities 723,698 776,902
TOTAL STOCKHOLDERS' EQUITY 74,095 75,573
_______ _______
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $797,793 $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 Nine Months Ended
September 30, September 30,
____________________ ___________________
2007 2006 2007 2006
__________ _________ _________ _________
Interest income $12,381 $13,681 $38,803 $40,507
Interest expense 7,086 7,307 21,344 20,197
______ ______ ______ ______
Net interest income 5,295 6,374 17,459 20,310
Provision for loan losses 1,330 484 3,662 1,128
______ ______ ______ ______
Net interest income after
provision for loan losses 3,965 5,890 13,797 19,182
Noninterest income 1,995 2,013 5,815 6,332
Noninterest expenses 5,809 5,449 17,334 16,767
______ ______ ______ ______
Income before income taxes 151 2,454 2,278 8,747
Income tax provision (150) 754 284 2,787
______ ______ ______ ______
Net income $ 301 $ 1,700 $ 1,994 $ 5,960
====== ====== ====== ======
Earnings Per Share:
Basic $ 0.06 $ 0.34 $ 0.41 $ 1.19
====== ====== ====== ======
Diluted $ 0.06 $ 0.33 $ 0.41 $ 1.16
====== ====== ====== ======
Cash Dividends Declared $ 0.16 $ 0.15 $ 0.48 $ 0.43
====== ====== ====== ======
Selected Operating Data (Quarter Annualized):
_____________________________________________
Interest rate spread 2.82% 3.02% 3.02% 3.24%
Net interest margin 2.88% 3.12% 3.09% 3.34%
Return on average assets 0.15% 0.77% 0.32% 0.91%
Noninterest expenses to average assets 2.88% 2.49% 2.81% 2.58%
Return on average equity 1.60% 8.54% 3.53% 10.09%
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