Exhibit 99.1
STATEFED FINANCIAL CORPORATION
13523 University Avenue
Clive, Iowa 50325
FOR IMMEDIATE RELEASE
STATEFED FINANCIAL CORP. ANNOUNCES FIRST QUARTER EARNINGS
DES MOINES, Iowa (November 14, 2002) -- StateFed Financial Corporation (NASDAQ:
"SFFC"), the parent company of State Federal Bank, today reported net income of
$4,100 for the quarter ended September 30, 2002, the first quarter of the
company's fiscal-year 2003. The results total 0 cents per share compared to 11
cents per share for the same quarter a year earlier.
The first-quarter of fiscal 2003 marked the accomplishment of several
significant benchmarks, while State Federal continued to wrestle with the impact
of two non-performing commercial credits. In ameliorating this issue--limited to
two hospitality-oriented loans originated in 1995 and 1998--company management
increased the bank's provision for loans losses by 329 percent for the quarter
to $103,100 from $24,000 the same quarter in fiscal 2002.
"We made significant progress during the quarter as we realized
dramatically higher loan production, a 10-percent increase in deposits and
significant improvement in areas such as net interest income and fee income,"
said Randall C. Bray, chairman of the board. "The increase in the provision for
loan losses, however, tempered significantly the progress we made during the
quarter. Still, our core business is improving and we continue to work
diligently to resolve the extraordinary issues affecting financial performance."
Bray emphasized that the company's new loan origination strategy
centers on more sophisticated, standardized underwriting with a limited number
of commercial credit participations and no loans related to the hospitality
industry, which has struggled since the September 11, 2001, terrorist attacks.
Net interest income increased 9 percent for the quarter as cost of
funds declined by 28 percent. After the provision for loan losses, net interest
income decreased 1 percent. Improvements in loan production also contributed to
net interest income. During the quarter, loan production rose 83 percent from
the same quarter a year earlier.
"Strong lending operations remain central to our business plan, and
we've taken action to better position State Federal as a community bank with a
product lineup that responds to the needs of our customers and the market,
coupled with superior personal service," Bray said. "As part of the bank's
strategic plan, we refocused resources into lending and expanded the department
with new leadership as well as enhanced production and processing capabilities
and capacity. The increase in production demonstrates the trend line is going in
the right direction."
-more-
Much of the expansion in the loan department took place during the
fourth quarter of fiscal-year 2002, and it included expenses associated with
hiring lending and processing personnel as well as equipment, training,
marketing and occupancy.
During fiscal-year 2002, StateFed made a strategic decision to exit the
property management business where it lacked size and volume. In sharpening the
focus on the core financial services business, State Federal sold its real
estate operations consisting of two apartment complexes. In previous quarters,
these properties accounted for the majority of the bank's non-interest income as
well as significant non-interest expense. During the quarter ended September 30,
2002, the majority of the company's non-interest income emanated from product
and service fees, increasing to $58,000 from $28,700 a year earlier. New
checking accounts represented a significant source of this higher fee income,
and in fact, approximately $31,000 of the current quarter's fee income resulted
from the 179-percent increase in service fees for checking accounts.
"State Federal has long lagged well behind its peers in fee income and
product diversity. During the past four quarters, we've overhauled all of our
offerings with a competitive pricing structure and developed several new
products," Bray explained. "During the past year, we seen continuous improvement
in fee income associated with growth in core deposits as well as with the
distribution of financial products including insurance and investments."
As of September 30, 2002, the company's overall deposits had increased
10 percent from the previous quarter to $73.5 million from $66.9 million. Assets
also increased 6 percent to $102 million from $96.4 million.
The Corporation's stock is traded on the NASDAQ Small-Cap Market under
the symbol "SFFC". 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.
-2-
For information, contact: RANDALL C. BRAY, Chairman, President & CEO,
515-252-0813
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2002 and June 30, 2002
(Unaudited)
ASSETS
SEPTEMBER 30, 2002 JUNE 30, 2002
Cash and amounts due from depository institutions $ 7,288,300 $ 3,114,700
Investments in certificates of deposit 99,000 99,000
Investment securities available for sale 1,259,300 1,323,900
Loans receivable, net 85,993,800 84,771,500
Real estate held for sale, net 540,500 540,500
Property acquired in settlement of loans 572,600 364,600
Office property and equipment, net 3,448,800 3,405,700
Federal Home Loan Bank stock, at cost 1,762,200 1,762,200
Accrued interest receivable 563,500 572,400
Deferred income taxes 142,100 142,100
Other assets 324,700 308,600
------------------ ----------------
TOTAL ASSETS $ 101,994,800 96,405,200
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 73,511,300 $ 66,901,100
Advances from Federal Home Loan Bank 14,000,000 14,000,000
Advances from borrowers for taxes and insurance - 351,400
Accrued interest payable 1,700 174,900
Dividends payable 127,900 127,900
Income taxes:current and deferred 68,100 305,200
Other liabilities 216,700 349,100
------------------ ----------------
TOTAL LIABILITIES 87,925,700 82,209,600
------------------ ----------------
Stockholders' equity:
Common stock 17,800 17,800
Additional paid-in capital 8,540,700 8,527,900
Unearned compensation - Employee Stock Ownership Plan (71,500) (85,500)
Accumulated other comprehensive income - unrealized gains (losses)
on investment securities available for sale, net of deferred taxes (2,000) 27,500
Treasury stock (5,172,500) (5,172,500)
Retained earnings - substantially restricted 10,756,600 10,880,400
------------------ ----------------
TOTAL STOCKHOLDERS' EQUITY 14,069,100 14,195,600
------------------ ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,994,800 $ 96,405,200
================== ================
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30,
2002 AND SEPTEMBER 30, 2001
(Unaudited)
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2002 2001
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Interest Income:
Loans $ 1,648,500 $ 1,846,000
Investments & other 35,200 104,303
------------- -------------
Total interest income 1,683,700 1,950,300
Interest Expense:
Deposits 675,400 853,500
Borrowings 197,300 355,800
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Total interest expense 872,700 1,209,300
Net interest income 811,000 741,000
Provision for loan losses 103,100 24,000
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Net interest income after
provision for loan losses 707,900 717,000
Non-interest Income:
Real estate operations 12,700 127,800
Other 58,100 28,700
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Total non-interest income 70,800 156,500
Non-interest Expense:
Salaries and benefits 373,900 325,800
Real estate operations - 81,000
Occupancy and equipment 170,000 74,600
FDIC premiums and OTS assessments 10,900 9,400
Data processing 42,600 33,100
Other 201,000 139,000
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Total non-interest expense 798,400 662,900
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Income before income taxes (19,700) 210,600
Income tax expense (benefit) (23,800) 67,200
------------- -------------
Net income $ 4,100 $ 143,400
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Basic earnings per share $ - $ 0.11
Diluted earnings per share - 0.11
Dividends declared per common share $ 0.10 $ 0.10