8-K 1 pr0603.txt EARNINGS RELEASE JUNE 30, 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 24, 2003 FIRSTFED FINANCIAL CORP. (Exact name of registrant as specified in its charter) Delaware 1-9566 95-4087449 (State of Incorporation) (Commission File No.) (IRS Employer Identification No.) 401 Wilshire Boulevard, Santa Monica, California, 90401-1490 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (310) 319-6000 ITEM 5. Other Events. On July 24, 2003, the registrant, FirstFed Financial Corp., issued a press release. A copy of this press release is attached and incorporated herein as Exhibit 99. Item 99. Press release dated July 24, 2003. S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRSTFED FINANCIAL CORP. Dated: July 24, 2003 By:/s/ Douglas J. Goddard ---------------------- Douglas J. Goddard Chief Financial Officer FIRSTFED REPORTS RESULTS FOR THE SECOND QUARTER OF 2003 Santa Monica, California, July 24, 2003 -- FirstFed Financial Corp. (NYSE-FED), parent company of First Federal Bank of California, today announced net earnings of $15.6 million or $0.90 per diluted common share for the second quarter of 2003 compared to net earnings of $12.3 million or $0.70 per diluted common share for the second quarter of 2002. Net earnings for the first six months of 2003 were $31.1 million or $1.80 per diluted common share compared to $24.7 million or $1.40 per diluted common share for the first six months of 2002. Net earnings increased during the second quarter and first six months of 2003 compared to the same periods last year primarily as a result of increased interest rate spreads. The interest rate spread increased to 3.25% and 3.30%, respectively, for the second quarter and first six months of 2003 compared to 2.81% and 2.77%, respectively, for the second quarter and first six months of 2002. The cost of interest-bearing liabilities decreased more quickly than the yields on interest-earning assets. As a result, net interest income for the second quarter of 2003 increased by $4.1 million or 12% over the second quarter of 2002. Net interest income for the first six months of 2003 increased by $7.6 million or 11% over the first six months of 2002. Net earnings for the second quarter and first six months of 2003 were also favorably impacted by increased loan fee income and reductions in other operating expenses compared to the prior year. Loan fees increased during the second quarter and first six months of 2003 compared to the same periods last year due primarily to higher levels of prepayment fees as borrowers continued to refinance into lower rate loans. Other operating expense decreased during the second quarter and first six months of 2003 compared to the same periods last year as a result of reductions in legal and advertising expenses. Advertising expenses have been delayed due to development of new marketing programs that are scheduled for later in the year. Allowances for loan losses (including general valuation allowances and valuation allowances for impaired loans) totaled $75.7 million or 1.84% of the portfolio at June 30, 2003 compared to $75.7 million or 1.96% at December 31, 2002 and $76.3 million or 1.93% at June 30, 2002. Non-performing assets were 0.09% of total assets as of June 30, 2003 compared to 0.17% as of December 31, 2002 and 0.11% as of June 30, 2002. The Company did not record a provision for loan losses during the first six months of 2003 or for any period during 2002. The Company recorded net loan charge-offs of $22 thousand for the second quarter of 2003 and had net loan recoveries of $25 thousand during the first six months of 2003. For the comparable periods last year, the Company recorded net loan recoveries of $1.4 million and $1.2 million during the second quarter and first six months of 2002, respectively. During the first six months of 2003, the Company repurchased 33,800 shares of common stock at an average market price of $28.53 per share. During 2002, the Company repurchased 353,000 shares of common stock at an average market price of $25.02 per share. There remain 1,348,677 shares eligible for repurchase under the Company's stock repurchase program as of July 24, 2003. 1 As of June 30, 2003, the Company had assets totaling $4.5 billion and consolidated stockholders' equity of $402.6 million. First Federal Bank of California operates 29 full-service retail banking offices and 4 loan production offices in Southern California. This news release contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to various factors, many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. Such factors include, but are not limited to, the general business environment, interest rate fluctuations that may affect operating margin, the California real estate market, branch openings, competitive conditions in the business and geographic areas in which the Company conducts its business and regulatory actions. In addition, these forward-looking statements are subject to assumptions as to future business strategies and decisions that are subject to change. The Company makes no guarantees or promises regarding future results and assumes no responsibility to update such forward-looking statements. Contact: Douglas Goddard, Executive Vice President (310) 319-6014 KEY FINANCIAL RESULTS FOLLOW 2 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except share data) (Unaudited) June 30, December 31, June 30, 2003 2002 2002 ------------------ -------------------- ------------------ ASSETS Cash and cash equivalents $ 34,388 $ 45,199 $ 58,747 Investment securities, available-for-sale (at fair value) 80,221 103,055 115,441 Mortgage-backed securities, available-for-sale (at fair value) 168,937 200,585 235,148 Loans receivable, held-for-sale (fair value of $2,797, $2,300 and $250) 2,775 2,293 250 Loans receivable, net 4,037,893 3,766,942 3,856,073 Accrued interest and dividends receivable 17,700 17,752 19,389 Real estate, net -- 347 606 Office properties and equipment, net 10,315 10,342 10,399 Investment in Federal Home Loan Bank (FHLB) stock, at cost 76,078 78,728 85,634 Other assets 32,820 28,486 26,585 ------------------ -------------------- ------------------ $ 4,461,127 $ 4,253,729 $ 4,408,272 ================== ==================== ================== LIABILITIES Deposits $ 2,462,508 $ 2,527,026 $ 2,493,389 FHLB advances 1,424,000 1,167,000 1,342,000 Securities sold under agreements to repurchase 139,725 155,273 176,131 Accrued expenses and other liabilities 32,319 32,789 46,486 ------------------ -------------------- ------------------ 4,058,552 3,882,088 4,058,006 ------------------ -------------------- ------------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; authorized 100,000,000 shares; issued 23,489,532, 23,395,202 and 23,381,165 shares, outstanding 16,991,836, 16,931,306 and 17,270,269 shares 235 234 234 Additional paid-in capital 36,775 35,680 34,858 Retained earnings - substantially restricted 449,995 418,885 388,368 Unreleased shares to employee stock ownership plan (559) (597) -- Treasury stock, at cost, 6,497,696, 6,463,896 and 6,110,896 shares (85,727) (84,762) (75,930) Accumulated other comprehensive earnings, net of taxes 1,856 2,201 2,736 ------------------ -------------------- ------------------ 402,575 371,641 350,266 ------------------ -------------------- ------------------ $ 4,461,127 $ 4,253,729 $ 4,408,272 ================== ==================== ==================
3 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS (Dollars in thousands, except per share data) (Unaudited) Three months ended June 30, Six months ended June 30, ------------------------------------- ------------------------------------ 2003 2002 2003 2002 ---------------- ---------------- --------------- ---------------- Interest income: Interest on loans $ 56,882 $ 60,701 $ 113,951 $ 125,664 Interest on mortgage-backed securities 1,385 2,267 3,055 5,237 Interest and dividends on investments 1,145 2,955 3,245 5,799 ---------------- ---------------- -------------- ---------------- Total interest income 59,412 65,923 120,251 136,700 ---------------- ---------------- -------------- ---------------- Interest expense: Interest on deposits 9,886 15,638 21,253 32,997 Interest on borrowings 12,464 17,305 24,420 36,734 ---------------- ---------------- -------------- ---------------- Total interest expense 22,350 32,943 45,673 69,731 ---------------- ---------------- -------------- ---------------- Net interest income 37,062 32,980 74,578 66,969 Provision for loan losses -- -- -- -- ---------------- ---------------- -------------- ---------------- Net interest income after provision for loan losses 37,062 32,980 74,578 66,969 ---------------- ---------------- -------------- ---------------- Other income: Loan servicing and other fees 1,511 838 3,121 1,890 Retail office fees 1,150 1,135 2,296 2,176 Gain on sale of loans 220 184 693 369 Real estate operations, net 349 31 363 192 Other operating income 163 306 265 566 ---------------- ---------------- -------------- ---------------- Total other income 3,393 2,494 6,738 5,193 ---------------- ---------------- -------------- ---------------- Non-interest expense: Salaries and employee benefits 8,247 8,269 17,029 16,466 Occupancy 1,962 2,099 3,969 4,150 Amortization of core deposit intangible 499 464 997 965 Other expense 2,721 3,401 5,549 7,963 ---------------- ---------------- -------------- ---------------- Total non-interest expense 13,429 14,233 27,544 29,544 ---------------- ---------------- -------------- ---------------- Earnings before income taxes 27,026 21,241 53,772 42,618 Income tax provision 11,393 8,954 22,662 17,963 ---------------- ---------------- -------------- ---------------- Net earnings $ 15,633 $ 12,287 $ 31,110 $ 24,655 ================ ================ ============== ================ Other comprehensive earnings (loss), net of taxes (435) 533 $ (345) $ (255) ---------------- ---------------- -------------- ---------------- Comprehensive earnings $ 15,198 $ 12,820 $ 30,765 $ 24,400 ================ ================ ============== ================ Earnings per share: Basic $ 0.92 $ 0.71 $ 1.84 $ 1.43 ================ ================ ============== ================ Diluted $ 0.90 $ 0.70 $ 1.80 $ 1.40 ================ ================ ============== ================ Weighted average shares outstanding: Basic 16,968,389 17,264,461 16,947,280 17,259,638 ================ ================ ============== ================ Diluted 17,342,336 17,644,145 17,310,139 17,625,541 ================ ================ ============== ================
4 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS Quarter ended June 30, 2003 2002 ----------------- -------------- (Dollars in thousands, except per share data) End of period: Total assets $ 4,461,127 $ 4,408,272 Cash and securities $ 114,609 $ 174,188 Mortgage-backed securities $ 168,937 $ 235,148 Loans $ 4,040,668 $ 3,856,323 Core deposit intangible asset $ 8,325 $ 10,322 Deposits $ 2,462,508 $ 2,493,389 Borrowings $ 1,563,725 $ 1,518,131 Stockholders' equity $ 402,575 $ 350,266 Book value per share $ 23.69 $ 20.28 Tangible book value per share $ 23.20 $ 19.68 Stock price (period-end) $ 35.29 $ 29.00 Total loan servicing portfolio $ 4,320,547 $ 4,262,297 Loans serviced for others $ 167,730 $ 229,141 % of Adjustable mortgages 72.87 % 69.47 % Other data: Employees (full-time equivalent) 527 508 Branches 29 29 Loan Offices 4 4 Asset quality: Real estate (foreclosed) $ -- $ 577 Non-accrual loans $ 3,871 $ 4,186 Non-performing assets $ 3,871 $ 4,763 Non-performing assets to total assets 0.09 % 0.11 % General valuation allowance (GVA) $ 75,248 $ 74,136 Allowances for impaired loans 496 2,154 ----------------- -------------- Allowances for loan losses $ 75,744 76,290 Allowances for loan losses as a percent of gross loans receivable 1.84 % 1.93 % Loans sold with recourse $ 99,760 $ 112,468 GVA for loans sold with recourse $ 6,900 $ 12,824 GVA to loans sold with recourse 6.92 % 11.40 % Modified loans (not impaired) $ 2,243 $ 2,362 Impaired loans, net $ 2,960 $ 3,111 Allowance for impaired loans $ 496 $ 2,154 Capital ratios: Tangible capital ratio 8.40 % 7.51 % Core capital ratio 8.40 7.51 Risk-based capital ratio 14.91 13.77 Net worth to assets ratio 9.02 7.95
5 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (continued) Three months ended June 30, Six months ended June 30, ------------------------------------- ----------------------------------- 2003 2002 2003 2002 ---------------- ----------------- ---------------- --------------- (Dollars in thousands) Selected ratios: Expense ratios: Efficiency ratio 33.38% 40.33% 34.16% 41.15% Expense-to-average-assets ratio 1.21 1.27 1.26 1.29 Return on average assets 1.41 1.10 1.42 1.08 Return on average equity 15.84 14.30 16.07 14.60 Yields earned and rates paid: Average yield on loans and mortgage-backed securities 5.61% 6.13% 5.72% 6.29% Average yield on investment portfolio (1) 1.64 4.35 2.70 3.30 Average yield on all interest-earning assets (1) 5.49 6.06 5.63 6.15 Average rate paid on deposits 1.61 2.50 1.72 2.64 Average rate paid on borrowings 3.25 4.48 3.38 4.54 Average rate paid on all interest-bearing liabilities 2.24 3.25 2.33 3.39 Interest rate spread 3.25 2.81 3.30 2.77 Effective net spread 3.40 2.98 3.45 2.93 Average balances: Average loans and mortgage-backed securities $ 4,153,331 $ 4,118,647 $ 4,092,189 $ 4,169,092 Average investments (2) 128,383 161,045 122,503 194,340 ---------------- ----------------- ---------------- ---------------- Average interest-earning assets (2) 4,281,714 4,279,692 4,214,692 4,363,432 ---------------- ----------------- ---------------- ---------------- Average deposits 2,468,641 2,513,306 2,491,320 2,519,687 Average borrowings 1,538,505 1,546,013 1,457,813 1,630,550 ---------------- ----------------- ---------------- ---------------- Average interest-bearing liabilities 4,007,146 4,059,319 3,949,133 4,150,237 ---------------- ----------------- ---------------- ---------------- Excess of interest-earning assets over interest-bearing liabilities $ 274,568 $ 220,373 $ 265,559 $ 213,195 ================ ================= ================ ================ Loan originations and purchases $ 508,145 $ 287,793 $ 1,047,074 $ 587,564
(1) Excludes FHLB stock dividends and other miscellaneous items. (2) Excludes FHLB stock. 6