-----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, AtP/EaTQXutsCGg4zYFjhLizDBF250O7qMsel6a0dOlHd8DCZs5JZrcz4PjArWYB FOufp45QRbh3ivbLofUNGg== 0000810536-07-000036.txt : 20070726 0000810536-07-000036.hdr.sgml : 20070726 20070726154935 ACCESSION NUMBER: 0000810536-07-000036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20070630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070726 DATE AS OF CHANGE: 20070726 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: 071003013 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 pr2q07ef.txt EARNINGS RELEASE, SECOND QUARTER 2007 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 26, 2007 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 26, 2007, the registrant, FirstFed Financial Corp., issued a press release setting forth the Company's second quarter 2007 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 26, 2007, regarding results for the second quarter 2007. 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 26, 2007 By: /s/ Douglas J. Goddard ------------------ Douglas J. Goddard Chief Financial Officer 2 Exhibit 99.1 FIRSTFED REPORTS RESULTS FOR THE SECOND QUARTER OF 2007 Santa Monica, California, July 26, 2007 -- FirstFed Financial Corp. (NYSE-FED), parent company of First Federal Bank of California, today announced net income of $29.1 million or $1.74 per diluted share of common stock for the second quarter of 2007 compared to net income of $32.4 million or $1.92 per diluted share for the first quarter of 2007 and $32.5 million or $1.92 per diluted share of common stock for the second quarter of 2006. Net income decreased in the second quarter of 2007 compared to the first quarter of 2007 primarily due to lower net interest income and decreased gain on sale of loans. Net interest income decreased by $5.5 million during the second quarter of 2007 compared to the first quarter of 2007 and $4.2 million compared to the second quarter of 2006 due to decreases in average interest-earning assets. Due to loan payoffs, average interest-earning assets during the second quarter of 2007 decreased 10% compared to the first quarter of 2007 and 24% compared to the second quarter of 2006. The interest rate spread increased to 3.16% during the second quarter of 2007 from 3.01% during the first quarter of 2007 and 2.62% during the second quarter of 2006 due to upward rate adjustments on adjustable rate loans. Early payoff fees and late charges on loans decreased to $6.1 million for the second quarter of 2007 from $6.8 million for the first quarter of 2007 and $8.0 million during the second quarter of 2006. Net income for the first six months of 2007 was $61.5 million or $3.66 per diluted share of common stock compared to $63.5 million or $3.75 per diluted share of common stock for the first six months of 2006. The decrease in earnings is due to lower net interest income, higher occupancy costs and higher deposit insurance costs. Net interest income was $144.9 million during the first six months of 2007 compared to $148.7 million during the first six months of 2006. Average interest-earning assets decreased 20% during the first six months of 2007 compared to the first six months of 2006 while the interest rate spread increased to 3.08% from 2.63% during the same period. Gain on the sale of loans was $1.5 million and $4.4 million for the second quarter and first six months of 2007 compared to gains of $1.9 million and $2.1 million for the second quarter and first six months of 2006. The volume of loans sold totaled $155.1 million and $341.3 million during the second quarter and first six months of 2007 compared to $170.2 million and $185.3 million during the second quarter and first six months of 2006. Loan originations were $180.4 million and $439.9 million for the second quarter and first six months of 2007. This compares with originations of $598.5 million and $1.3 billion in the second quarter and first six months of 2006. Single family loans comprised 73% and 80% of loan originations during the second quarter and first six months of 2007 compared with 86% and 87% during the second quarter and first six months of 2006. Loan payoffs and principal reductions totaled $806.0 million and $1.6 billion during the second quarter and the first six months of 2007. This compares with $736.5 million and $1.4 billion during the second quarter and first six months of 2006. Due to continued loan payoffs and increased loan sales, the Company's total assets decreased to $7.7 billion at June 30, 2007 from $9.3 billion at December 31, 2006 and $10.3 billion at June 30, 2006. Negative amortization, included in the balance of loans receivable, totaled $267.5 million at June 30, 2007 compared to $215.8 million at December 31, 2006 and $136.4 million at June 30, 2006. Negative amortization represents unpaid interest earned by the Bank that is added to the principal balance of the loan. Negative amortization increased by $19.0 million and $51.7 million during the second quarter and first six months of 2007 compared to increases of $37.9 million and $73.7 million during the second quarter and first six months of 2006. Negative amortization has increased over the last two years primarily due to increases in short-term interest rates. Negative amortization as a percentage of all single family loans in the Bank's portfolio totaled 5.19% at the end of the second quarter of 2007 compared to 3.44% at December 31, 2006 and 1.89% at June 30, 2006. 3 The portfolio of single family loans with a one-year fixed monthly payment totaled $3.6 billion at June 30, 2007 compared to $4.6 billion at December 31, 2006 and $4.9 billion at June 30, 2006. The portfolio of single family loans with three-to-five year fixed monthly payments totaled $1.3 billion at June 30, 2007 compared to $1.8 billion at December 31, 2006 and $2.3 billion at June 30, 2006. A $3.1 million loan loss provision was recorded during the second quarter of 2007, compared to a $3.8 million provision for the first quarter of 2007 and a $2.5 million provision for the second quarter of 2006. Net loan charge-offs totaled $1.1 million and $1.8 million during the second quarter and first six months of 2007 compared to $58 thousand and $83 thousand during the second quarter and first six months of 2006. Loan charge-offs and non-performing assets have increased over the last year due to increased loan delinquencies and weakness in single family home prices. The Bank's non-performing assets to total assets ratio increased to 0.85% at June 30, 2007 from 0.21% at December 31, 2006 and 0.07% at of June 30, 2006. Non-performing assets are primarily due to defaults on single-family loans and have been disproportionately located in those geographic areas where rapid development of housing has caused supply to outpace demand. Recently the Bank has experienced an increase in non-performing assets throughout the state of California. It is expected that non-performing assets will continue to increase until real estate prices stabilize. Real estate operations resulted in net losses of $472 thousand and $744 thousand for the second quarter and the first six months of 2007. For the second quarter and first six months of 2006, real estate operations resulted in net gains of $245 thousand and $137 thousand, respectively. Real estate operations during the second quarter of 2007 and first six months of 2007 included write-downs of $24 thousand and $109 thousand. Non-interest expense was $20.6 million and $41.2million during the second quarter and first six months of 2007 compared to $19.4 million and $39.3 million during the second quarter and first six months of 2006.The increase in operating expenses during 2007 compared to 2006 was primarily due to normal salary increases, higher deposit insurance costs, increased assessments by the Office of Thrift Supervision, and higher salary and occupancy costs associated with new branch openings. As a result of the increased expenses and a decrease in average total assets, the ratio of non-interest expense to average total assets increased to 1.02% and 0.97% during the second quarter and first six months of 2007 compared to 0.75% during both the second quarter and the first six months of 2006. The Bank's risk-based capital ratio was 21.88% at June 30, 2007 and its core and tangible capital ratios were 10.84%. The Company repurchased 623,654 shares of its common stock at an average price of $59.98 during the second quarter of 2007. During the first six months of 2007, shares repurchased totaled 767,954 at an average price of $60.57. As of July 26, 2007, shares eligible for repurchase under the Company's stock repurchase program totaled 710,425. First Federal Bank of California operates 33 retail banking offices in Southern California. In keeping with the Bank's retail branch expansion plan, one new retail branch was opened in March of 2007 and the Bank plans to open three additional branches during the remainder of 2007. The Bank operates 6 lending offices in 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, changes in laws and regulations affecting the Company's business, the California real estate market, 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 4 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except share data) (Unaudited) June 30, December 31, 2007 2006 ------------------ ------------------ ASSETS Cash and cash equivalents $ 89,896 $ 151,090 Investment securities, available-for-sale (at fair value) 296,046 311,850 Mortgage-backed securities, available-for-sale (at fair value) 50,569 57,197 Loans receivable, held-for-sale (fair value of $62,030 and $143,141) 61,312 140,860 Loans receivable, net of general allowance for loan losses of $114,894 and $109,768 6,933,114 8,376,592 Accrued interest and dividends receivable 46,083 54,812 Real estate owned 11,774 1,094 Office properties and equipment, net 16,480 16,569 Investment in Federal Home Loan Bank (FHLB) stock, at cost 84,431 118,979 Other assets 79,581 66,544 ------------------ ------------------ $ 7,669,286 $ 9,295,587 ================== ================== LIABILITIES Deposits $ 4,848,040 $ 5,889,881 FHLB advances 945,000 1,490,000 Securities sold under agreements to repurchase 900,900 978,448 Senior debentures 150,000 100,000 Accrued expenses and other liabilities 101,012 132,543 ------------------ ------------------ 6,944,952 8,590,872 ------------------ ------------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; authorized 100,000,000 shares; issued 23,966,227 and 23,842,934 shares; outstanding 16,009,977 and 16,648,338 shares 240 238 Additional paid-in capital 54,313 49,610 Retained earnings 833,992 772,537 Unreleased shares to employee stock ownership plan (1,365) (2,050) Treasury stock, at cost 7,956,250 shares and 7,194,596 (160,291) (113,776) Accumulated other comprehensive loss, net of taxes (2,555) (1,844) ------------------ ------------------ 724,334 704,715 ------------------ ------------------ $ 7,669,286 $ 9,295,587 ================== ==================
5 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, ------------------------------------- ------------------------------------ 2007 2006 2007 2006 ---------------- ---------------- --------------- ---------------- Interest and dividend income: Interest on loans $ 148,512 $ 170,914 $ 311,833 $ 333,502 Interest on mortgage-backed securities 681 717 1,390 1,423 Interest and dividends on investments 5,543 6,934 11,930 13,440 ---------------- ---------------- --------------- ---------------- Total interest income 154,736 178,565 325,153 348,365 ---------------- ---------------- --------------- ---------------- Interest expense: Interest on deposits 54,053 51,026 115,118 89,940 Interest on borrowings 30,991 53,623 65,125 109,691 ---------------- ---------------- --------------- ---------------- Total interest expense 85,044 104,649 180,243 199,631 ---------------- ---------------- --------------- ---------------- Net interest income 69,692 73,916 144,910 148,734 Provision for loan losses 3,100 2,500 6,900 6,400 ---------------- ---------------- --------------- ---------------- Net interest income after provision for loan losses 66,592 71,416 138,010 142,334 ---------------- ---------------- --------------- ---------------- Other income: Loan servicing and other fees 854 619 1,814 1,329 Banking service fees 1,686 1,625 3,372 3,200 Gain on sale of loans 1,482 1,938 4,438 2,083 Real estate operations, net (472) 245 (744) 137 Other operating income 423 195 759 356 ---------------- ---------------- --------------- ---------------- Total other income 3,973 4,622 9,639 7,105 ---------------- ---------------- --------------- ---------------- Non-interest expense: Salaries and employee benefits 12,044 11,798 24,753 24,092 Occupancy 2,997 2,591 5,800 5,229 Advertising 208 635 442 799 Amortization of core deposit intangible 126 498 625 997 Federal deposit insurance 924 138 1,552 282 Legal 522 265 993 733 Other operating expense 3,750 3,491 7,067 7,200 ---------------- ---------------- --------------- ---------------- Total non-interest expense 20,571 19,416 41,232 39,332 ---------------- ---------------- --------------- ---------------- Income before income taxes 49,994 56,622 106,417 110,107 Income taxes 20,923 24,113 44,962 46,645 ---------------- ---------------- --------------- ---------------- Net income $ 29,071 $ 32,509 $ 61,455 $ 63,462 ================ ================ =============== ================ Net income $ 29,071 $ 32,509 $ 61,455 $ 63,462 Other comprehensive loss, net of taxes (656) (491) (711) (1,676) ---------------- ---------------- --------------- ---------------- Comprehensive income $ 28,415 $ 32,018 $ 60,744 $ 61,786 ================ ================ =============== ================ Earnings per share: Basic $ 1.77 $ 1.96 $ 3.72 $ 3.83 ================ ================ =============== ================ Diluted $ 1.74 $ 1.92 $ 3.66 $ 3.75 ================ ================ =============== ================ Weighted average shares outstanding: Basic 16,458,283 16,594,058 16,539,440 16,586,062 ================ ================ =============== ================ Diluted 16,671,906 16,904,414 16,774,898 16,902,458 ================ ================ =============== ================
6 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (Unaudited) Quarter ended June 30, 2007 2006 ----------------- -------------- (Dollars in thousands, except per share data) End of period: Total assets $ 7,669,286 $ 10,254,669 Cash and securities $ 385,942 $ 391,568 Mortgage-backed securities $ 50,569 $ 64,791 Loans $ 6,994,426 $ 9,463,861 Core deposit intangible asset $ 717 $ 2,340 Deposits $ 4,848,040 $ 5,517,702 Borrowings $ 1,995,900 $ 4,009,000 Stockholders' equity $ 724,334 $ 635,848 Book value per share $ 45.24 $ 38.29 Tangible book value per share $ 45.20 $ 38.15 Stock price (period-end) $ 56.73 $ 57.67 Total loan servicing portfolio $ 7,230,806 $ 9,703,674 Loans serviced for others $ 68,637 $ 83,114 % of adjustable mortgages 96.84% 96.68% Other data: Employees (full-time equivalent) 583 605 Branches 33 32 Asset quality: Real estate owned (foreclosed) $ 11,774 $ -- Non-accrual loans $ 53,344 $ 6,829 Non-performing assets $ 65,118 $ 6,829 Non-performing assets to total assets 0.85% 0.07% General valuation allowance (GVA) $ 114,894 $ 103,875 Allowance for impaired loans -- -- ----------------- -------------- Allowance for loan losses $ 114,894 $ 103,875 Allowance for loan losses as a percentage of gross loans receivable 1.62% 1.09% Loans sold with recourse $ 47,038 $ 55,555 Modified loans (not impaired) $ -- $ 1,932 Impaired loans, net $ 15,486 $ 7,213 Allowance for impaired loans $ -- $ -- Capital ratios: Tangible capital ratio 10.84% 7.01% Core capital ratio 10.84 7.01 Risk-based capital ratio 21.88 14.66 Net worth to assets ratio 9.44 6.20
7 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL RESULTS (continued) (Unaudited) Three months ended June 30, Six months ended June 30, ------------------------------------- ------------------------------------ 2007 2006 2007 2006 ---------------- ----------------- ---------------- ---------------- (Dollars in thousands) Selected ratios: Expense ratios: Efficiency ratio 27.93% 24.72% 26.68% 25.24% Expense to average assets ratio 1.02 0.75 0.97 0.75 Return on average assets 1.44 1.25 1.45 1.25 Return on average equity 15.98 20.99 17.07 21.55 Yields earned and rates paid: Average yield on loans 8.02% 7.07% 7.99% 6.87% Average yield on loans Average yield on investment portfolio 5.40 4.94 5.46 4.94 Average yield on all interest-earning assets 7.87 6.94 7.84 6.75 Average rate paid on deposits 4.40 3.88 4.46 3.65 Average rate paid on borrowings 5.38 4.85 5.39 4.60 Average rate paid on all interest-bearing liabilities 4.71 4.32 4.76 4.12 Interest rate spread 3.16 2.62 3.08 2.63 Effective net spread 3.55 2.87 3.49 2.88 Average balances: Average loans $ 7,402,560 $ 9,665,235 $ 7,806,242 $ 9,714,149 Average investments 460,789 619,306 487,832 602,103 ---------------- ----------------- ---------------- ---------------- Average interest-earning assets 7,863,349 10,284,541 8,294,074 10,316,252 ---------------- ----------------- ---------------- ---------------- Average deposits 4,931,418 5,277,929 5,201,614 4,967,767 Average borrowings 2,309,362 4,437,397 2,436,988 4,807,607 ---------------- ----------------- ---------------- ---------------- Average interest-bearing liabilities 7,240,779 9,715,326 7,638,602 9,775,374 ---------------- ----------------- ---------------- ---------------- Excess of interest-earning assets over interest-bearing liabilities $ 622,570 $ 569,215 $ 655,472 $ 540,878 ================ ================= ================ ================ Loan originations and purchases $ 180,376 $ 598,461 $ 439,885 $ 1,324,227
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