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) January 27, 2005
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 917 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On January 27, 2005, the registrant, FirstFed Financial Corp., issued a press
release setting forth the Company's third quarter 2004 earnings. A copy of this
press release is attached and incorporated herein as Exhibit 99.
ITEM 9.01 Financial Statements and Exhibits
(a) Financial Statements
Not Applicable.
(b) Pro Forma Financial Information
Not Applicable.
(c) Exhibits:
Exhibit 99 - Press Release dated January 27, 2005, regarding results
for the fourth quarter of 2004.
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: January 27, 2005 By: /s/ Douglas J. Goddard
----------------------
Douglas J. Goddard
Chief Financial Officer
Exhibit 99
FIRSTFED REPORTS RESULTS FOR THE FOURTH QUARTER OF 2004
Santa Monica, California, January 27, 2005 -- FirstFed Financial Corp.
(NYSE-FED), parent company of First Federal Bank of California, today announced
net earnings of $16.4 million or $0.97 per diluted share of common stock for the
fourth quarter of 2004 compared to net earnings of $15.2 million or $0.87 per
diluted share of common stock for the fourth quarter of 2003. Net earnings for
the fourth quarter included increased net interest income due to growth in the
loan portfolio. The additional earnings were offset by higher operating costs
associated with loan production.
Net earnings for the year ended December 31, 2004 increased to $65.8
million or $3.85 per diluted share from $64.5 million or $3.70 per diluted share
for the year ended December 31, 2003. The increase in earnings for the year is
primarily attributable to growth in the loan portfolio. Additionally, 2004 net
earnings included an after tax adjustment of $3.1 million or $0.19 per diluted
share due to the elimination of the Bank's repurchase liability for loans sold
with recourse. 2003 net earnings included a similar after tax adjustment of $870
thousand or $0.05 per diluted share for a reduction in the same liability. 2004
net earnings also included $907 thousand after tax or $0.05 per diluted share
for interest received from the California Franchise Tax Board after settlement
of open tax years. 2003 net earnings included a $1.6 million or $0.09 per
diluted share reduction in income tax expense resulting from a change in the
California tax method of accounting for bad debts.
The Company's total assets reached $7.5 billion at the end of 2004 as a
result of record loan production throughout the year. Loan originations grew to
$1.4 billion during the fourth quarter of 2004 from $660 million during the
fourth quarter of the prior year and $1.2 billion during the third quarter of
2004. Loan originations for the year increased to $3.9 billion during 2004
compared to $2.3 billion for 2003. Single-family loans comprised 80% of
originations during the year 2004 compared to 75% during 2003.
Net interest income increased by 23% and 9% during the fourth quarter
and twelve months of 2004 compared to the same periods of the prior year.
Average interest-earning assets increased by 50% and 29% during the fourth
quarter and twelve months of 2004 over the comparable periods of 2003 due to
record loan originations. However, because the Bank's cost of funds responds to
changes in rates faster than its loan portfolio, interest rate spreads dropped
to 2.51% and 2.68% for the fourth quarter and twelve months of 2004 from 3.09%
and 3.22% during the comparable periods of 2003 due to the increasing rate
environment during the fourth quarter and throughout 2004.
The Company recorded a $3.0 million provision for loan losses during the
fourth quarter of 2004 due to the significant loan growth during the quarter.
Loans held for investment at December 31, 2004 were $6.8 billion compared to
$4.4 billion at December 31, 2003. Net loan charge-offs during the fourth
quarter of 2004 were $6 thousand compared to loan charge-offs of $10 thousand
during the fourth quarter of 2003. Recoveries totaling $437 thousand were
recorded during the twelve months of 2004 compared to recoveries totaling $15
thousand during the twelve months of 2003.
1
Loan servicing and other fees were $2.6 million and $9.5 million for
the fourth quarter and twelve months ended December 31, 2004, respectively,
compared to $2.4 million and $8.0 million for the same periods of the prior
year. Because a greater number of loans subject to prepayment fees paid off,
loan prepayment fees grew to $2.2 million and $8.0 million for the fourth
quarter and twelve months ended 2004 compared to $2.0 million and $6.0 million
for the same periods of the prior year. Loan payoffs and principal reductions
were $361.5 million and $1.4 billion for the fourth quarter and twelve months
ended 2004 compared to $398.6 million and $1.7 billion for the same periods last
year.
Non-interest expense increased during the fourth quarter of 2004 due to
higher incentive-based compensation and other operating costs associated with
increased loan production. For 2004, non-interest expense included higher legal
costs, in addition to incentive-based compensation and other operating costs
associated with loan production. However, due to growth in total assets, the
ratio of non-interest expense to average total assets fell to 1.04% and 1.13%
for the fourth quarter and twelve months of 2004 compared to 1.24% for both the
fourth quarter and the twelve months of 2003.
During 2004, the Company repurchased 696,900 shares of common stock at
an average market price of $40.25 per share. All share repurchases occurred
during the second quarter of 2004. During 2003, the Company repurchased 33,800
shares of common stock at an average market price of $28.53 per share. There
remain 1,472,079 shares eligible for repurchase under the Company's stock
repurchase program as of January 27, 2005.
First Federal Bank of California operates 29 full-service retail banking
offices in Southern California and 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
2
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
(Unaudited)
December 31, December 31,
2004 2003
--------------- --------------
ASSETS
Cash and cash equivalents $ 68,343 $ 54,318
Investment securities, available-for-sale (at fair value) 250,586 116,411
Mortgage-backed securities, available-for-sale (at fair value) 97,059 135,176
Loans receivable, held-for-sale (fair value $0 and $494) -- 492
Loans receivable, net 6,837,945 4,373,620
Accrued interest and dividends receivable 24,115 16,941
Real estate owned, net -- 1,324
Real estate held for investment 986 --
Office properties and equipment, net 15,881 10,568
Investment in Federal Home Loan Bank (FHLB) stock, at cost 143,425 87,775
Other assets 30,643 28,397
--------------- --------------
$ 7,468,983 $ 4,825,022
=============== ==============
LIABILITIES
Deposits $ 3,761,165 $ 2,538,398
FHLB advances 3,004,600 1,694,000
Securities sold under agreements to repurchase 187,000 122,622
Accrued expenses and other liabilities 38,744 33,435
--------------- --------------
6,991,509 4,388,455
--------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
authorized 100,000,000 shares;
issued 23,693,350 and 23,543,339 shares;
outstanding 16,498,754 and 17,045,643 shares 237 235
Additional paid-in capital 40,977 37,733
Retained earnings - substantially restricted 549,202 483,360
Unreleased shares to employee stock ownership plan (53) (125)
Treasury stock, at cost 7,194,596 and 6,497,696 shares (113,776) (85,727)
Accumulated other comprehensive earnings, net of taxes 887 1,091
--------------- --------------
477,474 436,567
--------------- --------------
$ 7,468,983 $ 4,825,022
=============== ==============
3
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
EARNINGS (Dollars in thousands, except per
share data)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
Interest income:
Interest on loans $ 73,557 $ 55,054 $ 247,892 $ 224,779
Interest on mortgage-backed
securities 729 1,051 3,312 5,328
Interest and dividends on investments 3,560 1,181 11,518 5,774
------------- ------------- ------------- -------------
Total interest income 77,846 57,286 262,722 235,881
------------- ------------- ------------- -------------
Interest expense:
Interest on deposits 14,545 8,671 42,159 39,104
Interest on borrowings 18,335 12,183 59,031 49,238
------------- ------------- ------------- -------------
Total interest expense 32,880 20,854 101,190 88,342
------------- ------------- ------------- -------------
Net interest income 44,966 36,432 161,532 147,539
Provision for loan losses 3,000 -- 3,000 --
------------- ------------- ------------- -------------
Net interest income after provision for
loan losses 41,966 36,432 158,532 147,539
------------- ------------- ------------- -------------
Other income:
Loan servicing and other fees 2,617 2,377 9,545 7,990
Retail office fees 1,512 1,432 5,639 5,095
Gain on sale of loans -- 62 5,434 2,444
Real estate operations, net 202 465 308 780
Other operating income 138 74 370 432
------------- ------------- ------------- -------------
Total other income 4,469 4,410 21,296 16,741
------------- ------------- ------------- -------------
Non-interest expense:
Salaries and employee benefits 11,226 8,458 40,907 33,484
Occupancy 2,253 2,114 8,691 8,171
Advertising expense 277 135 705 315
Amortization of core deposit
intangible 499 500 1,995 1,995
Federal deposit insurance 99 92 388 394
Legal 398 648 1,686 1,103
Other expense 3,293 2,575 12,000 10,127
------------- ------------- ------------- -------------
Total non-interest expense 18,045 14,522 66,372 55,589
------------- ------------- ------------- -------------
Earnings before income taxes 28,390 26,320 113,456 108,691
Income tax provision 11,950 11,159 47,614 44,216
------------- ------------- ------------- -------------
Net earnings $ 16,440 $ 15,161 $ 65,842 $ 64,475
============= ============= ============= =============
Net earnings $ 16,440 $ 15,161 $ 65,842 $ 64,475
Other comprehensive loss, net of taxes (224) 52 (204) (1,110)
------------- ------------- ------------- -------------
Comprehensive earnings $ 16,216 $ 15,213 $ 65,638 $ 63,365
============= ============= ============= =============
Earnings per share:
Basic $ 1.00 $ 0.89 $ 3.95 $ 3.80
============= ============= ============= =============
Diluted $ 0.97 $ 0.87 $ 3.85 $ 3.70
============= ============= ============= =============
Weighted average shares outstanding:
Basic 16,461,945 17,027,977 16,679,927 16,986,725
============= ============= ============= =============
Diluted 16,879,903 17,505,446 17,090,227 17,407,459
============= ============= ============= =============
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FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS
(Unaudited)
Quarter ended December 31,
2004 2003
-------------- -----------
(Dollars in thousands, except per share data)
End of period:
Total assets $ 7,468,983 $ 4,825,022
Cash and securities $ 318,929 $ 170,729
Mortgage-backed securities $ 97,059 $ 135,176
Loans $ 6,837,945 $ 4,374,112
Core deposit intangible asset $ 5,333 $ 7,328
Deposits $ 3,761,165 $ 2,538,398
Borrowings $ 3,191,600 $ 1,816,622
Stockholders' equity $ 477,474 $ 436,567
Book value per share $ 28.94 $ 25.61
Tangible book value per share $ 28.62 $ 25.18
Stock price (period-end) $ 51.87 $ 43.50
Total loan servicing portfolio $ 6,985,282 $ 4,601,240
Loans serviced for others $ 102,546 $ 145,475
% of adjustable mortgages 91.44 % 79.03 %
Other data:
Employees (full-time equivalent) 604 574
Branches 29 29
Asset quality:
Real estate owned (foreclosed) $ -- $ 1,324
Non-accrual loans $ 4,985 $ 3,342
Non-performing assets $ 4,985 $ 4,666
Non-performing assets to total assets 0.07 % 0.10 %
General valuation allowance (GVA) $ 78,675 $ 75,238
Allowances for impaired loans 496 496
-------------- -----------
Allowances for loan losses $ 79,171 75,734
Allowances for loan losses as a percent of gross
loans receivable 1.16 % 1.70 %
Loans sold with recourse $ 76,338 $ 91,003
GVA for loans sold with recourse $ -- $ 5,400
GVA to loans sold with recourse -- % 5.93 %
Modified loans (not impaired) $ 2,086 $ 2,472
Impaired loans, net $ 1,360 $ 3,270
Allowance for impaired loans $ 496 $ 496
Capital ratios:
Tangible capital ratio 5.99 % 8.48 %
Core capital ratio 5.99 8.48
Risk-based capital ratio 11.96 15.92
Net worth to assets ratio 6.39 9.05
5
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS (continued)
(Unaudited)
Three months ended December Twelve months ended
31, December 31,
------------------------------ -----------------------------
2004 2003 2004 2003
------------ -------------- ------------- ------------
(Dollars in thousands)
Selected ratios:
Expense ratios:
Efficiency ratio 36.50 % 35.61 % 37.42 % 34.35 %
Expense-to-average-assets ratio 1.04 1.24 1.13 1.24
Return on average assets 0.95 1.30 1.12 1.43
Return on average equity 14.06 14.15 14.54 15.97
Yields earned and rates paid:
Average yield on loans and
mortgage-backed securities 4.61 % 5.14 % 4.68 % 5.49 %
Average yield on investment portfolio 3.16 1.70 2.79 2.20
(1)
Average yield on all interest-earning
assets (1) 4.55 5.08 4.59 5.40
Average rate paid on deposits 1.63 1.36 1.42 1.55
Average rate paid on borrowings 2.54 2.99 2.53 3.21
Average rate paid on all
interest-bearing liabilities 2.04 1.99 1.91 2.18
Interest rate spread 2.51 3.09 2.68 3.22
Effective net spread 2.60 3.22 2.78 3.35
Average balances:
Average loans and mortgage-backed
securities $ 6,398,547 $ 4,363,905 $ 5,325,910 $ 4,194,404
Average investments (2) 283,797 84,967 252,708 113,624
------------ -------------- ------------- ------------
Average interest-earning assets (2) 6,682,344 4,448,872 5,578,618 4,308,028
------------ -------------- ------------- ------------
Average deposits 3,539,945 2,535,615 2,968,757 2,515,471
Average borrowings 2,861,681 1,616,091 2,317,518 1,529,630
------------ -------------- ------------- ------------
Average interest-bearing liabilities 6,401,626 4,151,706 5,286,275 4,045,101
------------ -------------- ------------- ------------
Excess of interest-earning assets
over interest-bearing liabilities $ 280,718 $ 297,166 $ 292,343 $ 262,927
============ ============== ============= ============
Loan originations $ 1,359,502 $ 659,806 $ 3,880,809 $ 2,275,530
(1) Excludes FHLB stock dividends and other miscellaneous items.
(2) Excludes FHLB stock.
6