-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VPjFcEC8SyV4zbyEiIMMI4luzTaL9gcZ3bsvvQc1JyIxl2aCpIxExgwUQser3Q0S bnfRij2EPfkwCsSzRl8G5A== 0000810536-06-000053.txt : 20060727 0000810536-06-000053.hdr.sgml : 20060727 20060727151920 ACCESSION NUMBER: 0000810536-06-000053 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060727 DATE AS OF CHANGE: 20060727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTFED FINANCIAL CORP CENTRAL INDEX KEY: 0000810536 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 954087449 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09566 FILM NUMBER: 06984362 BUSINESS ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD CITY: SANTA MONICA STATE: CA ZIP: 90401-1490 BUSINESS PHONE: 3103196000 MAIL ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD CITY: SANTA MONICA STATE: CA ZIP: 90401 8-K 1 er0606.txt EARNINGS RELEASE, 2ND QTR 2006 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 27, 2006 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 Results of Operations and Financial Condition. On July 27, 2006, the registrant, FirstFed Financial Corp., issued a press release setting forth the Company's second quarter 2006 earnings. A copy of this press release is attached and incorporated herein as Exhibit 99.1. ITEM 9.01 Financial Statements and Exhibits. (d) Exhibits: Exhibit 99.1 - Press Release dated July 27, 2006, regarding results for the second quarter 2006. 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 27, 2006 By: /s/ Douglas J. Goddard ---------------------- Douglas J. Goddard Chief Financial Officer Exhibit 99.1 FIRSTFED REPORTS RESULTS FOR THE SECOND QUARTER OF 2006 Santa Monica, California, July 27, 2006 -- FirstFed Financial Corp. (NYSE-FED), parent company of First Federal Bank of California, today announced net income of $32.5 million or $1.92 per diluted share of common stock for the second quarter of 2006 compared to net income of $31.0 million or $1.83 per diluted share of common stock for the first quarter of 2006. Net income for the second quarter of 2005 was $21.7 million or $1.29 per diluted share of common stock. The increased earnings primarily resulted from higher net interest income, lower provisions for loan losses and gain on the sale of loans. Net interest income increased to $73.9 million during the second quarter of 2006 from $67.1 million during the first quarter of 2006 and $58.4 million during the second quarter of 2005. Although average interest-earning assets decreased slightly from the first quarter of 2006 to the second quarter of 2006, the yield on average interest-earning assets for the second quarter increased by 67 basis points due to upward rate adjustments on the Bank's adjustable loan and investment portfolios. The cost of funds increased by 46 basis points during the second quarter, and the interest rate spread increased by 21 basis points to 2.62% for the second quarter of 2006 from 2.41% for the first quarter of 2006. In comparison, the interest rate spread for the second quarter of 2005 was 2.52%. Loan prepayment fees, included as part of the loan yield, were $7.7 million during the second quarter of 2006 compared to $7.4 million during the first quarter of 2006 and $4.1 million during the second quarter of 2005. Net income for the first six months of 2006 increased to $63.5 million or $3.75 per diluted share of common stock from $40.2 million or $2.38 per diluted share for the first six months of 2005. The increase in earnings during the first six months of 2006 compared to the same period of 2005 is attributable to higher net interest income, increased loan prepayment fees, lower provisions for loan losses and gain on the sale of loans. Net interest income increased to $148.7 million for the first six months of 2006 from $111.2 million during the first six months of 2005 due to a 24% increase in average interest-earning assets and a 10 basis point increase in the interest rate spread. Loan prepayment fees were $15.1 million for the first six months of 2006 compared to $6.7 million for the first six months of 2005. Gain on the sale of loans reached $1.9 million for the second quarter of 2006 and $2.1 million for the first six months of 2006 due to loan sales of $170.2 million during the second quarter and $185.3 million during the first six months. There were no loan sales during the first six months of 2005. The Company's total assets decreased to $10.3 billion at June 30, 2006 from $10.6 billion at March 31, 2006 because loan sales and prepayments exceeded loan originations during the second quarter. Due to modifications to our lending programs and a cooling in the California housing market, loan originations decreased to $598.5 million during the second quarter of 2006 from $725.8 million during the first quarter of 2006 and $1.3 billion during the second quarter of 2005. Single family loans comprised 86% of loan originations during the second quarter of 2006, the same percentage as the second quarter of 2005. Loan prepayments and principal reductions totaled $699.8 million for the second quarter of 2006 compared to $624.8 million during the first quarter of 2006 and $441.7 million for the second quarter of 2005. Total assets decreased by $205.3 million during the first six months of 2006, primarily due to loan sales of $185.3 million. Loan originations of $1.3 billion during the first six months of 2006 were offset by loan prepayments and principal reductions of the same amount. Negative amortization, which results when unpaid interest earned by the Bank is added to borrowers' loan balances, totaled $136.4 million at June 30, 2006, $62.6 million at December 31, 2005 and $20.4 million at June 30, 2005. Negative amortization increased by $37.9 million and $73.8 million during the second quarter and first six months of 2006. This compares to increases of $10.0 million and $14.9 million during the second quarter and first six months of 2005. Negative amortization has increased over the last few quarters primarily due to rising interest rates. The portfolio of single family loans with a one-year fixed payment period totaled $4.9 billion at June 30, 2006, $4.6 billion at December 31, 2005 and $3.7 billion at June 30, 2005. The portfolio of single family loans with three-to-five year fixed payment periods totaled $2.3 billion at June 30, 2006 and $2.7 billion at December 31, 2005, and $2.6 billion at June 30, 2005. Negative amortization was 1.89% of all single family loans with fixed payment periods in the Bank's portfolio as of June 30, 2006. This compares to 0.86% at December 31, 2005 and 0.32% at June 30, 2005. A $2.5 million loan loss provision was recorded during the second quarter of 2006. This compares to provisions of $3.9 million during the first quarter of 2006 and $4.0 million during the second quarter of 2005. Net loan charge-offs of $58 thousand and $83 thousand were recorded during the second quarter and first six months of 2006. This compares to net loan charge-offs of $486 thousand and $327 thousand during the second quarter and first six months of 2005. Non-performing assets as a percentage of total assets were 0.07%, 0.05% and 0.07% as of June 30, 2006, December 31, 2005 and June 30, 2005. Non-interest expense was $19.4 million and $39.3 million during the second quarter and first six months of 2006 compared to $18.7 million and $37.6 million during the second quarter and first six months of 2005. Non-interest expense as a percentage of average total assets was 0.75% for both the second quarter and the first six months of 2006. This compares with percentages of 0.84% and 0.90% for the second quarter and the first six months of 2005. Expenses increased during the second quarter and first six months of 2006 due to higher compensation costs, advertising costs for internet deposits and costs associated with implementing Statement of Financial Accounting Standards No. 123R (SFAS No. 123R). Starting with the first quarter of 2006, SFAS No. 123R requires the expensing of the value of stock options granted and vested during the period. Stock-based employee compensation expense totaled $403 thousand, net of tax, for the second quarter of 2006 and $806 thousand, net of tax, for the first six months of 2006. Prior to the adoption of SFAS No. 123R, stock-based employee compensation was reported as a footnote to the financial statements. The amounts reported were $366 thousand for the second quarter of 2005 and $561 thousand for the first six months of 2005. There were no repurchases of common stock during 2006 or 2005. Shares eligible for repurchase under the Company's stock repurchase program totaled 1,472,079 as of July 26, 2006. First Federal Bank of California operates 32 retail banking offices in Southern California. In keeping with the Bank's retail branch expansion plan, one new retail branch was opened in December of 2005, one was opened in February of 2006 and another was opened in June of 2006. The Bank plans to open at least two additional retail branches, which are under various stages of construction, during late 2006 or early 2007. The Bank operates 6 lending offices in both Southern and Northern 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 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except share data) (Unaudited) June 30, December 31, 2006 2005 ------------- ------------ ASSETS Cash and cash equivalents $ 77,690 $ 93,192 Investment securities, available-for-sale (at fair value) 313,878 294,017 Mortgage-backed securities, available-for-sale (at fair value) 64,791 74,254 Loans receivable, held-for-sale (fair value of $50,469 and $2,893) 49,926 2,873 Loans receivable, net 9,413,935 9,678,260 Accrued interest and dividends receivable 55,232 48,973 Office properties and equipment, net 16,429 15,759 Investment in Federal Home Loan Bank (FHLB) stock, at cost 206,649 205,696 Other assets 56,139 43,925 ------------- ------------ $ 10,254,669 $ 10, 456,949 ============= ============ LIABILITIES Deposits $ 5,517,702 $ 4,371,657 FHLB advances 2,909,000 4,155,500 Securities sold under agreements to repurchase 1,000,000 1,163,684 Senior debenture 100,000 100,000 Accrued expenses and other liabilities 92,119 95,269 ------------- ------------ 9,618,821 9,886,110 ------------- ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; authorized 100,000,000 shares; issued 23,799,999 and 23,761,825 shares; outstanding 16,605,403 and 16,567,229 shares 238 238 Additional paid-in capital 46,860 44,147 Retained earnings 704,362 640,900 Unreleased shares to employee stock ownership plan (594) (1,104) Treasury stock, at cost 7,194,596 shares (113,776) (113,776) Accumulated other comprehensive (loss) income, net of taxes (1,242) 434 ------------- ------------ 635,848 570,839 ------------- ------------ $ 10,254,669 $ 10,456,949 ============= ============
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, -------------------------- -------------------------- 2006 2005 2006 2005 ------------ ------------ ----------- ------------ Interest and dividend income: Interest on loans (1) $ 170,914 $ 108,983 $ 333,502 $ 198,840 Interest on mortgage-backed securities 717 698 1,423 1,426 Interest and dividends on investments 6,934 3,742 13,440 7,558 ------------ ------------ ----------- ------------ Total interest income 178,565 113,423 348,365 207,824 ------------ ------------ ----------- ------------ Interest expense: Interest on deposits 51,026 20,667 89,940 38,021 Interest on borrowings 53,623 34,360 109,691 58,586 ------------ ------------ ----------- ------------ Total interest expense 104,649 55,027 199,631 96,607 ------------ ------------ ----------- ------------ Net interest income 73,916 58,396 148,734 111,217 Provision for loan losses 2,500 4,000 6,400 7,750 ------------ ------------ ----------- ------------ Net interest income after provision for loan losses 71,416 54,396 142,334 103,467 ------------ ------------ ----------- ------------ Other income: Loan servicing and other fees (1) 619 178 1,329 262 Banking service fees 1,625 1,445 3,200 2,768 Gain on sale of loans 1,938 -- 2,083 -- Real estate operations, net 245 27 137 275 Other operating income 195 110 356 207 ------------ ------------ ----------- ------------ Total other income 4,622 1,760 7,105 3,512 ------------ ------------ ----------- ------------ Non-interest expense: Salaries and employee benefits 11,798 11,582 24,092 23,755 Occupancy 2,591 2,480 5,229 4,775 Advertising 635 260 799 352 Amortization of core deposit intangible 498 499 997 998 Federal deposit insurance 138 131 282 247 Legal 265 557 733 1,073 Other operating expense 3,491 3,177 7,200 6,353 ------------ ------------ ----------- ------------ Total non-interest expense 19,416 18,686 39,332 37,553 ------------ ------------ ----------- ------------ Income before income taxes 56,622 37,470 110,107 69,426 Income taxes 24,113 15,785 46,645 29,249 ------------ ------------ ----------- ------------ Net income $ 32,509 $ 21,685 $ 63,462 $ 40,177 ============ ============ =========== ============ Net income $ 32,509 $ 21,685 $ 63,462 $ 40,177 Other comprehensive (loss) income, net of taxes (491) 562 (1,676) 238 ------------ ------------ ----------- ------------ Comprehensive income $ 32,018 $ 22,247 $ 61,786 $ 40,415 ============ ============ =========== ============ Earnings per share: Basic $ 1.96 $ 1.31 $ 3.83 $ 2.44 ============ ============ =========== ============ Diluted $ 1.92 $ 1.29 $ 3.75 $ 2.38 ============ ============ =========== ============ Weighted average shares outstanding: Basic 16,594,058 16,510,774 16,586,062 16,496,890 ============ ============ =========== ============ Diluted 16,904,414 16,871,374 16,902,458 16,868,365 ============ ============ =========== ============
(1) Reflects the reclassification of prepayment fees and late payment charges to interest income from non-interest income. FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (Unaudited) Quarter ended June 30, ------------------------------ 2006 2005 ------------ ------------ (Dollars in thousands, except per share data) End of period: Total assets $ 10,254,669 $ 9,278,669 Cash and securities $ 391,568 $ 245,008 Mortgage-backed securities $ 64,791 $ 85,351 Loans $ 9,463,861 $ 8,689,738 Core deposit intangible asset $ 2,340 $ 4,335 Deposits $ 5,517,702 $ 3,980,714 Borrowings $ 4,009,000 $ 4,707,891 Stockholders' equity $ 635,848 $ 516,250 Book value per share $ 38.29 $ 31.21 Tangible book value per share $ 38.15 $ 30.94 Stock price (period-end) $ 57.67 $ 59.61 Total loan servicing portfolio $ 9,703,674 $ 8,750,378 Loans serviced for others $ 83,114 $ 105,533 % of adjustable mortgages 96.68% 94.77% Other data: Employees (full-time equivalent) 605 634 Branches 32 29 Asset quality: Real estate owned (foreclosed) $ -- $ -- Non-accrual loans $ 6,829 $ 6,065 Non-performing assets $ 6,829 $ 6,065 Non-performing assets to total assets 0.07% 0.07% General valuation allowance (GVA) $ 103,875 $ 86,594 Allowance for impaired loans -- -- ------------ ---------- Allowance for loan losses $ 103,875 $ 86,594 Allowance for loan losses as a percentage of gross loans receivable 1.09% 0.99% Loans sold with recourse $ 55,555 $ 70,248 Modified loans (not impaired) $ 1,932 $ 2,035 Impaired loans, net $ 7,213 $ 1,400 Allowance for impaired loans $ -- $ -- Capital ratios: Tangible capital ratio 7.01% 5.75% Core capital ratio 7.01 5.75 Risk-based capital ratio 14.66 11.77 Net worth to assets ratio 6.20 5.56
FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (continued) (Unaudited) Three months ended June 30, Six months ended June 30, --------------------------- -------------------------- 2006 2005 2006 2005 ------------ ------------- ------------ ------------ (Dollars in thousands) Selected ratios: Expense ratios: Efficiency ratio 24.72% 31.06% 25.24% 32.73% Expense to average assets 0.75 0.84 0.75 0.90 ratio Return on average assets 1.25 0.98 1.25 0.96 Return on average equity 20.99 17.15 21.55 16.19 Yields earned and rates paid: Average yield on loans (1) 7.07% 5.25% 6.87% 5.09% Average yield on investment portfolio (2) 4.94 3.77 4.94 3.72 Average yield on all interest-earning assets 6.94 5.17 6.75 5.01 Average rate paid on deposits 3.88 2.11 3.65 1.98 Average rate paid on borrowings 4.85 3.13 4.60 2.96 Average rate paid on all interest-bearing liabilities 4.32 2.65 4.12 2.48 Interest rate spread 2.62 2.52 2.63 2.53 Effective net spread 2.87 2.66 2.88 2.68 Average balances: Average loans (1) $ 9,665,235 $ 8,308,633 $ 9,714,149 $ 7,812,139 Average investments (2) 619,306 471,325 602,103 482,739 ------------ ------------- ------------ ------------ Average interest-earning assets 10,284,541 8,779,958 10,316,252 8,294,878 ------------ ------------- ------------ ------------ Average deposits 5,277,929 3,926,550 4,967,767 3,868,336 Average borrowings 4,437,397 4,405,577 4,807,607 3,992,055 ------------ ------------- ------------ ------------ Average interest-bearing liabilities 9,715,326 8,332,127 9,775,374 7,860,391 ------------ ------------- ------------ ------------ Excess of interest-earning assets over interest-bearing liabilities $ 569,215 $ 447,831 $ 540,878 $ 434,487 ============ ============= ============ ============ Loan originations and purchases $ 598,461 $ 1,300,887 $ 1,324,227 $ 2,617,792
(1) The loan yield includes the reclassification of prepayment fees and late payment charges to interest income from non-interest income. (2) The investment yield includes FHLB stock and dividends thereon. -----END PRIVACY-ENHANCED MESSAGE-----