8-K 1 pr0604.txt EARNINGS RELEASE JUNE 30, 2004 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 23, 2004 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 7. Financial Statements and Exhibits (a) Financial Statements Not Applicable. (b) Pro Forma Financial Information Not Applicable. (c) Exhibits: 99. Press Release dated July 23, 2004, regarding results for the second quarter of 2004. ITEM 12. Results of Operations and Financial Condition On July 23, 2004, the registrant, FirstFed Financial Corp., issued a press release setting forth the Company's second quarter 2004 earnings. A copy of this press release is attached and incorporated herein as Exhibit 99. 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 23, 2004 By: /s/ Douglas J. Goddard ---------------------- Douglas J. Goddard Chief Financial Officer Exhibit 99 FIRSTFED REPORTS RESULTS FOR THE SECOND QUARTER OF 2004 Santa Monica, California, July 23, 2004 -- FirstFed Financial Corp. (NYSE-FED), parent company of First Federal Bank of California, today announced net earnings of $16.6 million or $0.96 per diluted share of common stock for the second quarter of 2004 compared to net earnings of $15.6 million or $0.90 per diluted share for the second quarter of 2003. Net earnings for the first six months of 2004 were $31.5 million or $1.82 per diluted common share compared to $31.1 million or $1.80 per diluted common share for the first six months of 2003. Net earnings for the second quarter and first six months of 2004 include $1.6 million in interest received from the California Franchise Tax Board. The interest resulted from the recent settlement of amended returns for tax years 1993 to 1998. On July 22, 2004, the Board of Directors authorized the repurchase of 820,302 additional shares, which represents 5% of the Company's shares outstanding on that date. Combined with amounts previously authorized, shares available for repurchase total 1,472,079, or 9% of shares outstanding as of July 22, 2004. The Company repurchased 696,900 shares of common stock during the first six months of 2004, all of which were purchased in the second quarter at an average market price of $40.25 per share. In addition to the interest received on tax settlements, net interest income increased by 4% and 2% during the second quarter and first six months of 2004 compared to the previous periods due to 20% and 18% growth in interest-earning assets, respectively. The growth in interest-earning assets compensated for decreased interest rate spreads which dropped to 2.81% and 2.89%, respectively, for the second quarter and first six months of 2004 from 3.25% and 3.30%, respectively, for the second quarter and first six months of 2003. The reduced spreads resulted from downward interest rate adjustments on the Bank's adjustable loan portfolio, which exceeded decreases in the Bank's cost of funds. Loan originations were $682.6 million and $1.3 billion for the second quarter and first six months of 2004 compared to $508.1 million and $1.0 billion for the same periods last year. Loan prepayments and amortization totaled $399.1 million and $730.1 million for the second quarter and first six months of 2004 compared to $399.0 million and $789.4 million for the second quarter and first six months of last year. Loan servicing and other fees increased to $2.5 million and $4.5 million for the second quarter and first six months of 2004, respectively, compared to $1.5 million and $3.1 million for the same periods of the prior year. The amount of loan servicing and other fees varies based on the total dollar amount and types of loans paid off. Loan prepayment fees were $2.0 million and $3.6 million for the second quarter and first six months of 2004 compared to $873 thousand and $2.0 million for the same periods last year. Other operating expense increased during the second quarter and first six months of 2004 primarily due to increases in compensation and legal costs compared to the same periods last year. Also, other operating expense for the first six months of 2004 includes a $395 thousand loss due to a vendor defalcation. However, non-interest expense as a percentage of average assets decreased to 1.15% and 1.18%, respectively, for the second quarter and first six months of 2004 from 1.21% and 1.26%, respectively, for the second quarter and first six months of 2003 due to asset growth. 1 Total assets increased to $5.5 billion as of June 30, 2004 from $4.5 billion as of June 30, 2003 due to growth in loan originations. Consolidated stockholders' equity was $439.5 million as of June 30, 2004 compared to $402.6 million as of June 30, 2003. The Company did not record a provision for loan losses during first six months of 2004 or for any period in 2003. Net loan recoveries totaled $154 thousand and $212 thousand during the second quarter and first six months of 2004, respectively. For the comparable periods last year, the Company recorded net loan charge-offs of $22 thousand during the second quarter and net loan recoveries of $25 thousand during the first six months. First Federal Bank of California operates 29 full-service retail banking 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, and 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, 2004 2003 2003 ------------- --------------- -------------- ASSETS Cash and cash equivalents $ 40,268 $ 54,318 $ 34,388 Investment securities, available-for-sale (at fair value) 275,894 116,411 80,221 Mortgage-backed securities, available-for-sale (at fair value) 116,378 135,176 168,937 Loans receivable, held-for-sale (fair value $283, $494 and $2,797) 280 492 2,775 Loans receivable, net 4,927,767 4,373,620 4,037,893 Accrued interest and dividends receivable 18,695 16,941 17,700 Real estate, net -- 1,324 -- Office properties and equipment, net 10,773 10,568 10,315 Investment in Federal Home Loan Bank (FHLB) stock, at cost 104,575 87,775 76,078 Other assets 30,296 28,397 32,820 ------------- --------------- -------------- $ 5,524,926 $ 4,825,022 $ 4,461,127 ============= =============== ============== LIABILITIES Deposits $ 2,758,676 $ 2,538,398 $ 2,462,508 FHLB advances 2,169,000 1,694,000 1,424,000 Securities sold under agreements to repurchase 125,224 122,622 139,725 Accrued expenses and other liabilities 32,508 33,435 32,319 ------------- --------------- -------------- 5,085,408 4,388,455 4,058,552 ------------- --------------- -------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; authorized 100,000,000 shares; issued 23,600,644, 23,543,339 and 23,489,532 shares; outstanding 16,406,048, 17,045,643 and 16,991,836 shares 236 235 235 Additional paid-in capital 38,552 37,733 36,775 Retained earnings - substantially restricted 514,890 483,360 449,995 Unreleased shares to employee stock ownership plan (964) (125) (559) Treasury stock, at cost, 7,194,596, 6,497,696 and 6,497,696 shares (113,776) (85,727) (85,727) Accumulated other comprehensive earnings, net of taxes 580 1,091 1,856 ------------- --------------- -------------- 439,518 436,567 402,575 ------------- --------------- -------------- $ 5,524,926 $ 4,825,022 $ 4,461,127 ============= =============== ==============
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, ------------------------------ ------------------------------ 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Interest income: Interest on loans $ 57,854 $ 56,882 $ 113,514 $ 113,951 Interest on mortgage-backed securities 867 1,385 1,806 3,055 Interest and dividends on investments 2,639 1,145 4,557 3,245 ------------- ------------- ------------- ------------- Total interest income 61,360 59,412 119,877 120,251 ------------- ------------- ------------- ------------- Interest expense: Interest on deposits 8,645 9,886 17,129 21,253 Interest on borrowings 12,728 12,464 25,048 24,420 ------------- ------------- ------------- ------------- Total interest expense 21,373 22,350 42,177 45,673 ------------- ------------- ------------- ------------- Net interest income 39,987 37,062 77,700 74,578 Provision for loan losses -- -- -- -- ------------- ------------- ------------- ------------- Net interest income after provision for loan losses 39,987 37,062 77,700 74,578 ------------- ------------- ------------- ------------- Other income: Loan servicing and other fees 2,464 1,511 4,465 3,121 Retail office fees 1,396 1,150 2,716 2,296 Gain on sale of loans 18 220 31 693 Real estate operations, net 81 349 130 363 Other operating income 81 163 159 265 ------------- ------------- ------------- ------------- Total other income 4,040 3,393 7,501 6,738 ------------- ------------- ------------- ------------- Non-interest expense: Salaries and employee benefits 9,421 8,247 18,615 17,029 Occupancy 2,022 1,962 4,079 3,969 Advertising expense 140 54 359 111 Amortization of core deposit intangible 499 499 998 997 Federal deposit insurance 95 101 190 204 Legal 443 137 732 218 Other expense 2,731 2,429 5,660 5,016 ------------- ------------- ------------- ------------- Total non-interest expense 15,351 13,429 30,633 27,544 ------------- ------------- ------------- ------------- Earnings before income taxes 28,676 27,026 54,568 53,772 Income tax provision 12,123 11,393 23,038 22,662 ------------- ------------- ------------- ------------- Net earnings $ 16,553 $ 15,633 $ 31,530 $ 31,110 ============= ============= ============= ============= Other comprehensive loss, net of taxes (465) (435) (511) (345) ------------- ------------- ------------- ------------- Comprehensive earnings $ 16,088 $ 15,198 $ 31,019 $ 30,765 ============= ============= ============= ============= Earnings per share: Basic $ 0.99 $ 0.92 $ 1.86 $ 1.84 ============= ============= ============= ============= Diluted $ 0.96 $ 0.90 $ 1.82 $ 1.80 ============= ============= ============= ============= Weighted average shares outstanding: Basic 16,773,686 16,968,389 16,921,062 16,947,280 ============= ============= ============= ============= Diluted 17,159,248 17,342,336 17,327,753 17,310,139 ============= ============= ============= =============
4 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS Quarter ended June 30, 2004 2003 -------------- ----------- (Dollars in thousands, except per share data) End of period: Total assets $ 5,524,926 $ 4,461,127 Cash and securities $ 316,162 $ 114,609 Mortgage-backed securities $ 116,378 $ 168,937 Loans $ 4,928,047 $ 4,040,668 Core deposit intangible asset $ 6,330 $ 8,325 Deposits $ 2,758,676 $ 2,462,508 Borrowings $ 2,294,224 $ 1,563,725 Stockholders' equity $ 439,518 $ 402,575 Book value per share $ 26.79 $ 23.69 Tangible book value per share $ 26.40 $ 23.20 Stock price (period-end) $ 41.60 $ 35.29 Total loan servicing portfolio $ 5,088,711 $ 4,320,547 Loans serviced for others $ 129,033 $ 167,730 % of Adjustable mortgages 83.60 % 72.87 % Other data: Employees (full-time equivalent) 606 527 Branches 29 29 Asset quality: Real estate (foreclosed) $ -- $ -- Non-accrual loans $ 1,331 $ 3,871 Non-performing assets $ 1,331 $ 3,871 Non-performing assets to total assets 0.02 % 0.09 % General valuation allowance (GVA) $ 75,450 $ 75,248 Allowances for impaired loans 496 496 -------------- ----------- Allowances for loan losses $ 75,946 75,744 Allowances for loan losses as a percent of gross loans receivable 1.52 % 1.84 % Loans sold with recourse $ 85,044 $ 99,760 GVA for loans sold with recourse $ 5,400 $ 6,900 GVA to loans sold with recourse 6.35 % 6.92 % Modified loans (not impaired) $ 2,416 $ 2,243 Impaired loans, net $ -- $ 2,960 Allowance for impaired loans $ 496 $ 496 Capital ratios: Tangible capital ratio 7.44 % 8.40 % Core capital ratio 7.44 8.40 Risk-based capital ratio 14.56 14.91 Net worth to assets ratio 7.96 9.02
5 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (continued) Three months ended June 30, Six months ended June 30, ------------------------------ ----------------------------- 2004 2003 2004 2003 ------------ -------------- ------------- ------------ (Dollars in thousands) Selected ratios: Expense ratios: Efficiency ratio 34.85 % 33.38 % 35.94 % 34.16 % Expense-to-average-assets ratio 1.15 1.21 1.18 1.26 Return on average assets 1.24 1.41 1.22 1.42 Return on average equity 14.85 15.84 14.24 16.07 Yields earned and rates paid: Average yield on loans and mortgage-backed securities 4.70 % 5.61 % 4.80 % 5.72 % Average yield on investment portfolio (1) 2.61 1.64 2.58 2.70 Average yield on all interest-earning assets (1) 4.59 5.49 4.70 5.63 Average rate paid on deposits 1.28 1.61 1.28 1.72 Average rate paid on borrowings 2.43 3.25 2.55 3.38 Average rate paid on all interest-bearing liabilities 1.78 2.24 1.81 2.33 Interest rate spread 2.81 3.25 2.89 3.30 Effective net spread 2.91 3.40 2.99 3.45 Average balances: Average loans and mortgage-backed securities $ 4,866,407 $ 4,153,331 $ 4,742,861 $ 4,092,189 Average investments (2) 256,672 128,383 213,177 122,503 ------------ -------------- ------------- ------------ Average interest-earning assets (2) 5,123,079 4,281,714 4,956,038 4,214,692 ------------ -------------- ------------- ------------ Average deposits 2,719,624 2,468,641 2,697,892 2,491,320 Average borrowings 2,108,350 1,538,505 1,974,023 1,457,813 ------------ -------------- ------------- ------------ Average interest-bearing liabilities 4,827,974 4,007,146 4,671,915 3,949,133 ------------ -------------- ------------- ------------ Excess of interest-earning assets over interest-bearing liabilities $ 295,105 $ 274,568 $ 284,123 $ 265,559 ============ ============== ============= ============ Loan originations and purchases $ 682,629 $ 508,145 $ 1,276,167 $ 1,047,074 (1) Excludes FHLB stock dividends and other miscellaneous items. (2) Excludes FHLB stock.
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