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): April 25, 2007
FIRSTFED FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 1-9566 95-4087449
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(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
401 Wilshire Boulevard, Santa Monica, California, 90401-1490
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(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 April 25, 2007, the registrant, FirstFed Financial Corp., issued a press
release setting forth the Company's first 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 April 25, 2007, regarding
results for the first 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: April 25, 2007 By: /s/ Douglas J. Goddard
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Douglas J. Goddard
Chief Financial Officer
Exhibit 99.1
FIRSTFED REPORTS RESULTS FOR THE FIRST QUARTER OF 2007
Santa Monica, California, April 25, 2007 -- FirstFed Financial Corp.
(NYSE-FED), parent company of First Federal Bank of California, today announced
net income of $32.4 million or $1.92 per diluted share of common stock for the
first quarter of 2007 compared to net income of $33.4 million or $1.97 per
diluted share for the fourth quarter of 2006 and $30.8 million or $1.82 per
diluted share of common stock for the first quarter of 2006. Net income
decreased in the first quarter of 2007 compared to the fourth quarter of 2006
primarily due to a decrease in loan prepayment fees.
Although average interest-earning assets for the first quarter of 2007
decreased 7% compared to the fourth quarter of 2006 and 16% compared to the
first quarter of 2006, net interest income for the first quarter of 2007 was
approximately the same as the fourth quarter of 2006 and the first quarter of
2006. The interest rate spread increased to 3.01% during the first quarter of
2007 from 2.90% during the fourth quarter of 2006 and 2.63% during the first
quarter of 2006. Loan prepayment fees, included as part of the yield on loans,
decreased to $6.4 million during the first quarter of 2007 from $7.9 million
during the fourth quarter of 2006 and $7.4 million during the first quarter of
2006.
Gain on sale of loans increased to $3.0 million during the first quarter of
2007 from $2.4 million during the fourth quarter of 2006 and $145 thousand
during the first quarter of 2006. Loans sold increased to $180.5 million during
the first quarter of 2007 compared to $161.8 million during the fourth quarter
of 2006 and $15.1 million during the first quarter of 2006.
Loan originations were $259.5 million for the first quarter of 2007
compared with originations of $365.1 million in the fourth quarter of 2006 and
$725.8 million in the first quarter of 2006. Single family loans comprised 85%
of loan originations during the first quarter of 2007 compared to 89% during
both the first and fourth quarters of 2006.
Loan payoffs and principal reductions totaled $772.5 million in the first
quarter of 2007 compared to $831.8 million in the fourth quarter of 2006 and
$624.8 million in the first quarter of 2006. Due to continued loan payoffs and
increased loan sales, the Company's total assets decreased to $8.5 billion at
March 31, 2007 from $9.3 billion at the end of 2006 and $10.6 billion at March
31, 2006.
At March 31, 2007, negative amortization, included in the balance of loans
receivable, totaled $248.5 million compared to $215.8 million at December 31,
2006 and $98.5 million at March 31, 2006. Negative amortization represents
unpaid interest earned by the Bank that is added to the principal balance of the
loan. Negative amortization increased by $32.7 million during the first quarter
of 2007 and $150.0 million from one year ago. 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 4.36% at the end of the first quarter of 2007
compared to 3.44% at December 31, 2006 and 1.32% at March 31, 2006.
The portfolio of single family loans with a one-year fixed monthly payment
totaled $4.4 billion at March 31, 2007 compared to $4.6 billion at December 31,
2006 and $4.7 billion at March 31, 2006. The portfolio of single family loans
with three-to-five year fixed monthly payments totaled $1.5 billion at March 31,
2007 compared to $1.8 billion at December 31, 2006 and $2.5 billion at March 31,
2006.
A $3.8 million loan loss provision was recorded during the first quarter of
2007, compared to a $3.0 million provision recorded in the fourth quarter of
2006 and a $3.9 million provision recorded in the first quarter of 2006. Net
loan charge-offs totaled $628 thousand for the first quarter of 2007 compared to
$90 thousand in the fourth quarter of 2006 and $25 thousand in the first quarter
of 2006. The ratio of non-performing assets to total assets was 0.46% at March
31, 2007 compared to 0.21% at the end of 2006 and 0.07% at March 31, 2006.
Non-performing assets have been very low over the past few years due to
increases in single family home prices. The recent increase in non-performing
assets results primarily from the flattening of single family real estate prices
overall in California. Areas such as Sacramento or San Diego that have
experienced rapid growth in housing development in the past few years have seen
recent declines in single family home prices. To date, the Bank's non-performing
assets are due to defaults on single-family loans and are located principally in
those geographic areas where rapid development of housing has caused supply to
outpace demand. It is expected that non-performing assets will continue to
increase until the real estate prices in these areas reach an equilibrium
between buyers and sellers.
Real estate operations resulted in a loss of $272 thousand for the first
quarter of 2007 compared to a loss of $81 thousand for the fourth quarter of
2006 and a loss of $108 thousand for the first quarter of 2006. Real estate
operations during the first quarter of 2007 include an $85 thousand write down
of real estate owned.
Non-interest expense was $20.7 million in the first quarter of 2007
compared to $19.8 million in the fourth quarter of 2006 and $19.9 million in
last year's first quarter. The increase in operating expenses during the first
quarter of 2007 was primarily due to normal salary increases, higher deposit
insurance costs and increased assessments by the Office of Thrift Supervision.
As a result of these expense increases and a decrease in average total assets,
the ratio of non-interest expense to average total assets increased to 0.93%
during the first quarter of 2007 compared to 0.82% during the fourth quarter of
2006 and 0.76% during the first quarter of 2006.
The Bank's risk-based capital ratio was 19.69% at March 31, 2007 and its
core and tangible capital ratios were 9.68%.
The Bank purchased 144,300 shares of its common stock during the first
quarter of 2007 at an average price of $63.10. Shares eligible for repurchase
under the Company's stock repurchase program totaled 1,327,779 as of April 24,
2007.
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
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
(Unaudited)
March 31, December 31,
2007 2006
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ASSETS
Cash and cash equivalents $ 135,011 $ 151,090
Investment securities, available-for-sale (at fair value) 294,620 311,850
Mortgage-backed securities, available-for-sale (at fair value) 52,846 57,197
Loans receivable, held-for-sale (fair value of $143,762 and $143,141) 141,867 140,860
Loans receivable, net of general allowance for loan losses of
$112,940 and $109,768 7,669,153 8,376,592
Accrued interest and dividends receivable 48,971 54,812
Real estate owned 5,195 1,094
Office properties and equipment, net 16,683 16,569
Investment in Federal Home Loan Bank (FHLB) stock, at cost 89,560 118,979
Other assets 79,490 66,544
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$ 8,533,396 $ 9,295,587
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LIABILITIES
Deposits $ 5,124,181 $ 5,889,881
FHLB advances 1,540,000 1,490,000
Securities sold under agreements to repurchase 898,448 978,448
Senior debentures 100,000 100,000
Accrued expenses and other liabilities 139,891 132,543
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7,802,520 8,590,872
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
authorized 100,000,000 shares;
issued 23,925,596 and 23,842,934 shares;
outstanding 16,593,000 and 16,648,338 shares 239 238
Additional paid-in capital 52,654 49,610
Retained earnings 804,921 772,537
Unreleased shares to employee stock ownership plan (2,154) (2,050)
Treasury stock, at cost 7,332,596 shares and 7,194,596 (122,885) (113,776)
Accumulated other comprehensive loss, net of taxes (1,899) (1,844)
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730,876 704,715
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$ 8,533,396 $ 9,295,587
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FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
March 31,
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2007 2006
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Interest income and dividend income:
Interest on loans $ 163,321 $ 162,588
Interest on mortgage-backed securities 709 706
Interest and dividends on investments 6,387 6,199
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Total interest income 170,417 169,493
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Interest expense:
Interest on deposits 61,065 38,914
Interest on borrowings 34,134 56,068
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Total interest expense 95,199 94,982
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Net interest income 75,218 74,511
Provision for loan losses 3,800 3,900
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Net interest income after provision for loan losses 71,418 70,611
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Other income:
Loan servicing and other fees 960 710
Retail office fees 1,686 1,575
Gain on sale of loans 2,956 145
Real estate operations, net (272) (108)
Other operating income 336 161
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Total other income 5,666 2,483
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Non-interest expense:
Salaries and employee benefits 12,709 12,294
Occupancy 2,803 2,638
Advertising 234 164
Amortization of core deposit intangible 499 499
Federal deposit insurance 628 144
Legal 471 468
Other expense 3,317 3,709
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Total non-interest expense 20,661 19,916
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Income before income taxes 56,423 53,178
Provision for income taxes 24,039 22,404
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Net income $ 32,384 $ 30,774
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Net income $ 32,384 $ 30,774
Other comprehensive loss, net of taxes (55) (1,185)
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Comprehensive income $ 32,329 $ 29,589
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Earnings per share:
Basic $ 1.95 $ 1.86
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Diluted $ 1.92 $ 1.82
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Weighted average shares outstanding:
Basic 16,604,435 16,572,844
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Diluted 16,862,226 16,895,022
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FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS
(Dollars in thousands)
(Unaudited)
Quarter ended March 31,
2007 2006
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End of period:
Total assets $ 8,533,396 $ 10,567,693
Cash and securities $ 135,011 $ 396,042
Mortgage-backed securities $ 52,846 $ 69,296
Loans $ 7,811,020 $ 9,776,444
Core deposit intangible asset $ 844 $ 2,839
Deposits $ 5,124,181 $ 5,046,661
Borrowings $ 2,538,448 $ 4,821,000
Stockholders' equity $ 730,876 $ 605,617
Book value per share $ 44.05 $ 36.48
Tangible book value per share $ 44.00 $ 36.31
Stock price (period-end) $ 56.83 $ 59.81
Total loan servicing portfolio $ 8,082,199 $ 9,968,279
Loans serviced for others $ 123,275 $ 85,431
% of adjustable mortgages 97.08 % 96.37 %
Other data:
Employees (full-time equivalent) 568 610
Branches 33 31
Asset quality:
Non-accrual loans $ 33,945 $ 7,420
Non-performing assets $ 39,140 $ 7,420
Non-performing assets to total assets 0.46 % 0.07 %
General valuation allowance (GVA) $ 112,940 $ 101,433
Allowances for impaired loans -- --
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Allowances for loan losses $ 112,940 101,433
Allowances for loan losses as a percentage of gross
loans receivable 1.43 % 1.03 %
Loans sold with recourse $ 50,849 $ 57,815
Modified loans (not impaired) $ 617 $ 1,959
Impaired loans, net $ 7,764 $ 4,315
Capital ratios:
Tangible capital ratio 9.68 % 6.48 %
Core capital ratio 9.68 % 6.48 %
Risk-based capital ratio 19.69 % 13.62 %
Net worth to assets ratio 8.56 % 5.73 %
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS (continued)
(Dollars in thousands)
(Unaudited)
Three months ended
March 31,
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2007 2006
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Selected ratios:
Expense ratios:
Efficiency ratio 25.54 % 25.87 %
Expense-to-average-assets ratio 0.93 0.76
Return on average assets 1.45 1.17
Return on average equity 18.05 20.93
Yields earned and rates paid:
Average yield on loans 7.96 % 6.66 %
Average yield on securities portfolio 5.51 4.72
Average yield on all interest-earning assets 7.81 6.55
Average rate paid on deposits 4.53 3.39
Average rate paid on borrowings 5.40 4.39
Average rate paid on all interest-bearing liabilities 4.80 3.92
Interest rate spread 3.01 2.63
Effective net spread 3.45 2.88
Average balances:
Average loans $ 8,209,924 $ 9,763,063
Average securities 514,875 584,985
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Average interest-earning assets 8,724,799 10,348,048
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Average deposits 5,471,811 4,657,604
Average borrowings 2,564,615 5,177,816
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Average interest-bearing liabilities 8,036,426 9,835,420
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Excess of interest-earning assets over interest-bearing
liabilities $ 688,373 $ 512,628
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Loan originations and purchases $ 259,509 $ 725,766