Exhibit 99.1
STATEFED FINANCIAL CORPORATION
13523 UNIVERSITY AVENUE
CLIVE, IOWA 50325
FOR IMMEDIATE RELEASE
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August 28, 2002
FOR MORE INFORMATION, CONTACT:
RANDALL C. BRAY, Chairman of the Board
515-252-0813
STATEFED FINANCIAL CORP. ANNOUNCES FISCAL-
YEAR 2002 AND FOURTH QUARTER RESULTS;
DIVIDEND DECLARED
DES MOINES, IOWA (NASDAQ: "SFFC") -- STATEFED FINANCIAL CORPORATION, the parent
company of STATE FEDERAL BANK, today reported fiscal year earnings and quarterly
results. Net income for the fiscal year ending June 30, 2002, totaled $530,820
yielding basic earnings per share of $0.42 compared with $0.45 for fiscal year
2001. Diluted earnings per share amounted to $0.41, compared with $0.44 for
fiscal 2001.
StateFed reported a loss of $56,470 for the fourth quarter of fiscal
year 2002 or a per share loss of $.04 on both a basic and diluted basis,
compared to a profit of $.05 per share for the same quarter of fiscal 2001. The
quarterly loss reflects several factors including substantially increasing the
provision for loan losses and a write-down in value associated with the
company's former downtown headquarters building. The increased loan loss
provision was made in response to three large commercial credits identified in
the third quarter as presenting probable losses. These credits are in the
hospitality industry, which has been impacted the events of Sept. 11, 2001, and
a decline in the economy. For fiscal year 2002, StateFed reserved $566,000, more
than three times the fiscal year 2001 provision of $151,000, and the Company's
reserves to total assets ratio was 0.96 percent at the close of the fiscal year
compared with one year earlier when it stood at 0.36 percent. Other factors
impacting fourth quarter operations were increases in salaries and benefits as
well as occupancy and equipment. The company's capital position remains strong
with the capacity for solid growth.
NEW STRATEGIC PLAN
Late in fiscal year 2001, StateFed's board of directors initiated the
formulation of a new strategic business plan intended to allow State Federal to
grow and perform in a manner consistent with the expectations of the company's
shareholders. In addition to electing RANDALL C. BRAY to the post of chairman,
the board approved a new structure for the executive team including the
recruitment of a senior sales and retailing officer, a senior lending officer
and a strategic planning and financial manager.
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"We've spent considerable time during the past year implementing a
strategic plan that called for the revamping and restructuring of every facet of
the bank," said Bray. "In the process, we re-engineered all of our lending
policies, procedures and functions. Such sweeping initiatives are not completed
overnight. We added core competencies in order to heighten our loan production,
update and improve our financial management systems, expand and enhance our
underwriting and increase our presence in the market."
INCREASING DEPOSITS, DECREASING INTEREST COST
The company made significant progress toward achieving key initiatives
including lowering interest expense and increasing deposits. Net interest income
trended higher in the fourth quarter of 2002, increasing 10 percent to $816,790
compared to $742,910 for the same period in fiscal year 2001. The improvement
stemmed primarily from lower interest expense. In fact, interest expense dropped
by 32 percent during the fourth quarter and by 19 percent during the fiscal
year, primarily as a result of lower cost deposits and a 52-percent decline in
advances from the Federal Home Loan Bank. From June 30, 2001 to June 30, 2002,
deposits increased by $3.9 million, or 6.2 percent from $63.0 million to $66.9
million.
Reflecting the lowest interest rate environment in 32 years as well as
State Federal's reduced level of loans, total interest income decreased for the
fiscal year and the quarter by 13 percent and 16 percent, respectively. From
June 30, 2001 to June 30, 2002, net loans receivable decreased by $3.1 million
or 3.5 percent from $87.9 million to $84.8 million. By the end of the fourth
fiscal quarter, however, the hiring of additional experienced lending and
underwriting personnel as well as the implementation of new policies and
procedures helped to reverse the company's yearlong trend of declining loan
balances. In order to expand its lending product lines, StateFed became an
approved lender for several national secondary markets, including Fannie Mae and
the Federal Home Loan Bank.
"Even though the industry is seeing record loan applications in
response to rates hovering at a three-decade low, we spent a good share of
fiscal 2002 addressing internal
mechanisms and issues," Bray explained. "We now have the right people, the right
systems and the right products in place to focus on loan production."
For the fiscal year non-interest income rose 112 percent to $1.2
million compared with $563,000 for 2001. The sale of the company's apartment
complexes, booked in the second quarter of fiscal 2002, constituted the largest
share of this increase. Total non-interest expenses increased as well, rising 39
percent to $926,000 for the quarter and up 14 percent for the fiscal year to
$3.0 million. The most significant increases were attributable to increased
expenses for occupancy and equipment, salaries and benefits, and data
processing. The company also took a charge of $158,000 to reflect the move from
a building owned by the company in downtown Des Moines to a leased space with
greater visibility and traffic flow in the EMC building. The company now
accounts for the former headquarters building as real estate held for sale and
is actively marketing the facility.
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MAXIMIZING CUSTOMER REACH
"As part of our strategic initiatives, we sought to maximize the
convenience, customer reach and appeal of our offices," Bray said. "Our former
downtown headquarters offered no opportunity for expansion or improvement. In
moving to a new location at the end of the third fiscal quarter, we heightened
the awareness of the bank for existing and potential customers, and experienced
a significant increase in new transaction account activity."
In fact, State Federal's new downtown office realized a 238 percent
increase in new transaction accounts during the fourth quarter fiscal year.
"It's a matter of being where the customers are," Bray said. "To
compete as a community bank, we need to be where our customers can access us. In
this effort, we are working with other businesses to see how we can work
together in complementary locations."
Total assets declined from fiscal year 2001 levels of $107.5 million to
$96.3 million at the end of fiscal year 2002, while stockholders' equity after
payment of dividends grew $108,000 from $14.1 million to $14.2 million.
In April 2002, StateFed announced a program to repurchase up to 5
percent of its outstanding common stock, or 64,000 shares. As of the end of
fiscal 2002, the company had repurchased 8,000 shares. The program has had no
material impact on earnings.
DIVIDEND DECLARED
The board of directors has declared a dividend of $0.10 (10 cents) per
share. The dividend will be payable on October 4, 2002 to shareholders of record
on September 30, 2002.
When used in this press release or other public shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "significantly" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, and to advise readers that
various factors including regional and national economic conditions, changes in
levels of market interest rates, credit risks of lending activities and
competitive and regulatory factors could affect the Bank's financial performance
and could cause the Company's actual results for future periods to differ
materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims, any
obligations to publicly release the result of any revisions that may be made to
any forward-looking statements to reflect the occurrence of events or
circumstances after the date of such statements.
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STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, 2002 AND JUNE 30, 2001
ASSETS (UNAUDITED)
JUNE 30, 2002 JUNE 30, 2001
Cash and amounts due from depository institutions $ 3,114,680 $ 7,278,550
Investments in certificates of deposit 99,000 297,270
Investment securities held-for-sale 1,323,920 1,924,860
Loans receivable, net 84,771,510 87,898,940
Real estate held for sale, net 540,500 2,106,440
Property acquired in settlement of loans 364,620 1,320,460
Office property and equipment, net 3,405,720 3,947,620
Federal Home Loan Bank stock, at cost 1,762,200 1,762,200
Accrued interest receivable 572,420 630,170
Other assets 308,630 382,930
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TOTAL ASSETS $ 96,263,200 $ 107,549,440
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 66,901,150 $ 62,987,500
Advances from Federal Home Loan Bank 14,000,000 29,185,150
Advances from borrowers for taxes and insurance 351,420 395,030
Accrued interest payable 174,920 170,860
Dividends payable 127,890 127,630
Income taxes:current and deferred 163,180 203,540
Other liabilities 349,060 392,060
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TOTAL LIABILITIES 82,067,620 93,461,770
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Stockholders' equity:
Common stock $ 17,810 $ 17,810
Additional paid-in capital 8,527,870 8,522,360
Unearned compensation - restricted stock awards (85,560) (143,870)
Unrealized gain on investments 27,520 25,350
Treasury stock (5,172,470) (5,195,830)
Retained earnings - substantially restricted 10,880,410 10,861,850
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TOTAL STOCKHOLDERS' EQUITY 14,195,580 14,087,670
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 96,263,200 $ 107,549,440
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STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE AND TWELVE MONTH PERIODS ENDING JUNE 30, 2002 AND JUNE 30, 2001
THREE MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30 JUNE 30
(UNAUDITED) (UNAUDITED)
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2002 2001 2002 2001
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Interest Income:
Loans $ 1,646,010 $ 1,902,660 $ 6,937,020 $ 7,842,290
Investments 32,900 53,140 172,870 226,710
Other 1,560 49,450 65,300 162,060
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Total interest income 1,680,470 2,005,250 7,175,190 8,231,060
Interest Expense:
Deposits 668,530 825,050 3,059,880 3,055,790
Borrowings 195,150 437,290 976,760 1,905,470
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Total interest expense 863,680 1,262,340 4,036,640 4,961,260
Net interest Income 816,790 742,910 3,138,550 3,269,800
Provision for loan losses 180,160 118,000 565,660 151,000
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Net interest income after
provision for loan losses 636,630 624,910 2,572,890 3,118,800
Non-interest Income:
Real estate operations 5,270 127,550 247,000 518,720
Gain (Loss) on sale of investments 106,740 (5,200) 112,890 (95,880)
Gain on sale of real estate, net (3,780) 18,380 634,660 26,230
Other 59,350 26,850 196,350 113,800
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Total non-interest income 167,580 167,580 1,190,900 562,870
Non-interest expense:
Salaries and benefits 362,710 293,410 1,369,300 1,287,060
Real estate operations 19,320 97,400 183,740 321,670
Occupancy and equipment 168,360 108,520 429,380 245,830
FDIC Premiums 11,200 9,980 44,390 38,570
Data processing 40,720 36,180 144,750 128,430
Provision for loss on assets held for sale 157,890 - 157,890 -
Other 165,690 120,630 714,210 640,330
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Total non-interest expense 925,890 666,120 3,043,660 2,661,890
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Income before income taxes (121,680) 126,370 720,130 1,019,780
Income tax expense (benefit) (65,210) 59,240 189,310 356,460
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Net income $ (56,470) $ 67,130 $ 530,820 $ 663,320
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Basic earnings per share $ (0.04) $ 0.05 $ 0.42 $ 0.45
Diluted earnings per share $ (0.04) $ 0.05 $ 0.41 $ 0.44