SIOUX CITY, Iowa, Nov. 14 IA-First-Federal-Bank
SIOUX CITY, Iowa, Nov. 14 /PRNewswire-FirstCall/ -- First Federal
Bankshares, Inc. (the "Company") (Nasdaq: FFSX), the parent company of Vantus
Bank (the "Bank"), reported a net loss for the three months ended September
30, 2008, of $798,000, or $0.24 per diluted share, compared to net income of
$415,000, or $0.13 per diluted share for the three months ended September 30,
2007. During the most recent quarter, the Company recognized "other than
temporary," also known as "mark-to-market" or "fair value accounting" write
downs totaling $1.8 million on the Company's trust-preferred pooled securities
portfolio. Excluding this write down, management estimates the Company would
have reported net income of $330,000 or $0.10 per diluted share.
Net interest income for three-month period ended September 30, 2008 was
$4.5 million compared to $4.1 million for the three-month period ended
September 30, 2007. The net interest margin improved 72 basis points to 3.62%
for the three months ended September 30, 2008, from 2.90% for the three months
ended September 30, 2007. The increase in margin was due to a generally lower
interest rate environment that decreased the cost of the Company's
interest-bearing liabilities faster than the yields on interest-earning
assets. The margin improvement was partially offset by a decrease in the
Company's average interest-earning assets. Average earning assets for the
three months ended September 30, 2008, decreased $67.4 million to $501.7
million as compared to the same period last year. Barry Backhaus, President
and Chief Executive Officer, commented, "We are pleased that the Company has
experienced increased net interest margins." Backhaus continued, "The Company
benefited from the decrease in the Federal Funds rate that has occurred over
the last year. Further declines in this key rate should continue to be
favorable for the Company's net interest margin."
Excluding "other than temporary" write downs, non-interest income totaled
$1.5 million for the three months ended September 30, 2008 and 2007. Service
charges on deposit accounts increased 32% or $249,000 over the same period
last year. Backhaus stated, "We have seen a significant increase in new
checking accounts as a result of our name change and brand development
initiatives, and additional accounts mean additional revenue through service
charges, debit card activity and more." Backhaus continued, "We believe this
is proof that those initiatives are beginning to show positive results." The
increase in non-interest income from service charges on deposit accounts was
partially offset by declines in mortgage banking revenue and income derived
from the sale of mutual funds and annuities.
Non-interest expense for the three months ended September 30, 2008,
decreased $149,000 to $4.9 million as compared to the same period last year.
Compensation and benefit expense decreased to $2.6 million for the three
months ended September 30, 2008 from $2.8 million for the three months ended
September 30, 2007. The decrease in compensation and benefit expense was
attributed to a decline in costs associated with the Company's defined benefit
pension plan. In addition, advertising, donations and public relations
expense declined to $222,000 for the three months ended September 30, 2008, as
compared to $464,000 for the same period last year. The decrease was
attributed to one-time costs associated with the Bank's name change, brand and
image marketing that occurred in the previous year. These decreases in costs
were partially offset by an increase in data processing, ATM and debit card
transaction costs and an increase in professional, insurance, and regulatory
expenses. Data processing, ATM and debit card transaction costs increased to
$482,000 for the three months ended September 30, 2008, from $370,000 for the
three months ended September 30, 2007. This increase was partially due to the
increased number of new checking accounts opened during the last twelve months
as compared to the previous year. In addition, the Company has been
successful at increasing the number of internet and mobile banking users and
the number of debit card transactions has increased. As a result, processing
costs to service these channels have increased as compared to the previous
year. Professional, insurance, and regulatory expense increased $96,000 to
$351,000 for the three months ended September 30, 2008, as compared to the
three months ended September 30, 2007. The recent clarifications of the
"mark-to-market" or "fair value" accounting rules resulted in the Company
incurring additional accounting and consulting costs.
The provision for loan losses for the three months ended September 30,
2008, was $713,000. This compared to $21,000 for the quarter ended September
30, 2007. The Company recognized a specific allowance of $700,000 on a loan
for the development of commercial properties in Des Moines, Iowa. The project
is behind schedule and a recent appraisal revealed a significant decrease in
the value of the project. As a result, a specific allowance was warranted.
Although the level of non-performing assets has increased to $18.6 million
at September 30, 2008 from $6.1 million at September 30, 2007, there was no
change when compared to non-performing assets at June 30, 2008. Non-
performing assets have increased over the past year as a result of the well-
publicized difficulties in the overall markets for commercial and residential
real estate.
Total assets decreased by $81.2 million, or 13%, to $549.4 million at
September 30, 2008, from $630.6 million at September 30, 2007. Deposits
totaled $435.8 million, a decrease of $31.4 million, or 7% over the previous
year.
The Company's tangible book value per share was $8.54 at September 30,
2008, compared to $9.68 at June 30, 2008. The decline in tangible book value
per share was attributable to the Company's net loss from operations for three
months ended September 30, 2008, as well as an increase in accumulated other
comprehensive loss, which is a component of stockholders' equity. This
increase was caused by a decline in the fair value of the Company's available-
for-sale securities, most notably its portfolio of trust-preferred pooled
securities. The Company's capital level exceeds all minimum regulatory
capital requirements.
Other Matters
The Company previously announced that it had received a Nasdaq Staff
Determination letter notifying the Company that it was late in filing its 10-K
in a timely manner. On November 13, 2008, the Company filed its form 10-K and
the Company has received notification from Nasdaq that the Company is now in
compliance with Nasdaq market rules.
About Vantus Bank
The Company's banking subsidiary, Vantus Bank, is headquartered in Sioux
City, Iowa. Founded in 1923, Vantus Bank is a community bank serving
businesses and consumers in seven full-service offices in northwest Iowa, a
full-service office in South Sioux City, Nebraska, and seven full-service
offices in central Iowa, including four in the Des Moines market area.
Certain matters in the press release are "forward-looking statements"
intended to qualify for the safe harbor from liability as established by the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include words and phrases such as "believes" "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
"intends to," or similar expressions. Similarly statements that describe the
Company's future plans, objectives, or goals are forward-looking statements.
The Company wishes to caution the readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date of the press
release, and to advise readers that various factors could affect the Company's
financial performance and could cause results for future periods to differ
materially from those anticipated or projected. Such factors include, but are
not limited to: (i) general market interest rates, (ii) general economic
conditions, (iii) legislative/regulatory changes, (iv) monetary and fiscal
policies of the U.S. Treasury and Federal Reserve, (v) changes in the quality
or composition of Company's loan and investment portfolios, (vi) demand for
loan products, (vii) deposit flow, (viii) competition, (ix) demand for
financial services in Company's markets and (x) changes in accounting
principles, policies, or guidelines.
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except per September 30 June 30 September 30
share amounts) 200820082007
ASSETS
Cash and cash equivalents $10,109$12,491$12,134
Securities available-for-sale, at
fair value 76,953 84,229113,442
Securities held-to-maturity, at cost 6,660 7,000 9,225
Mortgage loans held for sale 803 1,102 1,597
Loans receivable, net 391,940407,819432,215
Office property and equipment, net 18,516 18,762 17,877
Federal Home Loan Bank stock, at cost3,760 4,283 4,911
Accrued interest receivable 2,675 2,535 3,171
Goodwill - - 18,417
Foreclosed and repossessed assets9,883873 2,251
Deferred tax asset 11,311 9,870 1,064
Other assets16,798 16,042 14,257
Total assets $549,408 $565,006 $630,561
LIABILITIES
Deposits $435,847 $446,568 $467,280
Advances from FHLB and other
borrowings 80,506 81,637 90,381
Advance payments by borrowers for
taxes and insurance 382884308
Accrued interest payable 1,937 1,801 2,796
Accrued expenses and other
liabilities 2,524 2,124 1,999
Total liabilities 521,196533,014562,764
STOCKHOLDERS' EQUITY
Common stock, $.01 par value51 51 51
Additional paid-in capital 39,535 39,505 39,314
Retained earnings, substantially
restricted 31,073 32,581 59,035
Treasury stock, at cost(28,536) (28,536) (28,536)
Accumulated other comprehensive loss (13,390) (11,062)(1,432)
Unearned ESOP (521) (549) (635)
Total stockholders' equity 28,212 31,990 67,797
Total liabilities and
stockholders' equity$549,408 $565,004 $630,561
Actual number of shares outstanding
at end of period, net of treasury
stock 3,304,471 3,304,471 3,302,971
Average shares outstanding used to
compute:
Basic earnings (loss) per share3,304,471 3,244,570 3,263,662
Diluted earnings (loss) per share 3,304,471 3,244,570 3,277,349
Shareholders' equity to total assets 5.13% 5.66% 10.75%
Book value per share $8.54 $9.68 $20.53
Tangible book value per share$8.54 $9.68 $14.95
FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended
(Dollars in thousands, except perSeptember 30
share amounts)20082007
Interest on loans $6,212 $7,430
Interest on investment securities 1,470 2,025
Interest on cash and cash equivalents 1 51
Total interest income 7,683 9,506
Interest on deposit liabilities2,539 4,562
Interest on borrowings 639 864
Total interest expense 3,178 5,426
Net interest income4,505 4,080
Provision for loan losses713 21
Net interest income after provision 3,792 4,059
Service charges on deposit accounts1,032 783
Fees on commercial and consumer loans 38 98
Other-than-temporary impairment of
investment securities(1,800) -
Mortgage banking revenue 80 194
Earnings from bank owned life insurance 146 137
Other income 220 309
Total non-interest income (284) 1,521
Compensation and benefits 2,649 2,806
Office property and equipment709 701
Data processing, ATM and debit card
transaction costs, and other item
processing expense 482 370
Professional, insurance, and
regulatory expense 351 255
Advertising, donations, and public relations 222 464
Communications, postage, and office supplies 202 211
Other expense286 243
Total non-interest expense 4,901 5,050
Income (loss) before income taxes (1,393)530
Income tax expense (benefit)(595)115
Net income (loss) ($798) $415
Per share information:
Basic earnings (loss) per share ($0.24) $0.13
Diluted earnings (loss) per share ($0.24) $0.13
Cash dividends declared per share - $0.105
FIRST FEDERAL BANKSHARES, INC and
SUBSIDIARIES
SELECTED FINANCIAL DATA (unaudited)
At or for the
three months ended
(Dollars in thousands, except per September 30
share amounts) 2008 2007
Average total assets $555,717 $631,520
Average interest-earning assets 501,663 569,097
Average interest-bearing liabilities473,130 514,897
Average interest-earning assets to
average interest-bearing liabilities106.03% 110.53%
Activity in the allowance for loan
losses during the period:
Balance at beginning of period $5,894 $1,797
Provision for loan losses 713 21
Charge-offs:
Single-family mortgage loans--
Commercial real estate loans (221) -
Commercial business loans(860) (56)
Consumer loans(62) (46)
Total loans charged-off (1,143)(102)
Recoveries 23 27
Charge-offs net of recoveries (1,120) (75)
Balance at end of period $5,487 $1,743
Non-performing loans receivable $8,755 $3,839
Other non-performing assets 9,8832,251
Total non-performing assets $18,638 $6,090
Non-performing loans as a percentage
of total loans receivable2.23%0.88%
Total non-performing assets as a
percentage of total assets 3.39%0.97%
Allowance for loan losses to
non-performing loans62.67% 45.40%
Ratio of allowance for loan losses to
total loans
held for investment at end of period 0.01%0.40%
Selected operating data: (1)
Return on average assets -0.57%0.26%
Return on average equity -9.85%2.39%
Net interest rate spread 3.44%2.48%
Net yield on average interest-earning
assets (2) 3.62%2.90%
Efficiency ratio (3) 81.41% 90.23%
(1) Annualized except for efficiency ratio.
(2) Net interest income, tax-effected, divided by average
interest-earning assets.
(3) Non-interest expense divided by net interest income plus non-interest
income, less gain (loss) on sale of other real estate owned,
investments, and fixed assets.
FIRST FEDERAL BANKSHARES, INC and
SUBSIDIARIES
SELECTED FINANCIAL DATA (unaudited)
Weighted
(Dollars in thousands, except per September 30Average
share amounts)2008 Rate
Time deposits maturing within
Three months$51,386 2.95%
Four to six months 56,825 3.58%
Seven to twelve months 39,536 3.32%
More than twelve months 93,027 3.84%
Total time deposits $240,774 3.50%
FHLB advances and all other borrowings
maturing within
Three months$63,756 1.97%
Four to six months4,000 4.74%
Seven to twelve months 500 5.28%
More than twelve months 12,250 5.04%
Total FHLB advances and all other borrowings $80,506 2.60%
Three months ended
September 30
2008 2007
Market price per share:
High for the period $7.95 $19.00
Low for the period$1.85 $17.30
Close at end of period$4.52 $17.40
SOURCE First Federal Bankshares, Inc.
