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) October 29, 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
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 October 29, 2004, 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 October 29, 2004, regarding results for the
third 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: October 29, 2004 By: /s/ Douglas J. Goddard
-----------------------
Douglas J. Goddard
Chief Financial Officer
Exhibit 99
FIRSTFED REPORTS RESULTS FOR THE THIRD QUARTER OF 2004
Santa Monica, California, October 29, 2004 -- FirstFed Financial Corp.
(NYSE-FED), parent company of First Federal Bank of California, today announced
net earnings of $17.9 million or $1.06 per diluted share of common stock for the
third quarter of 2004 compared to net earnings of $18.2 million or $1.04 per
diluted share for the third quarter of 2003. Net earnings for the third quarter
of 2004 included income of $3.1 million or $0.19 per diluted share which
represents the elimination of the Bank's repurchase liability for loans sold
with recourse. Net earnings for the third quarter of 2003 included $870 thousand
or $0.05 per diluted share for a reduction in the same liability. Additionally,
income tax expense for the third quarter of 2003 was reduced by $1.6 million or
$0.09 per diluted share due to a change in the California tax method of
accounting for bad debts.
Net earnings for the first nine months of 2004 were $49.4 million or $2.88
per diluted common share compared to $49.3 million or $2.84 per diluted common
share for the first nine months of 2003. Net earnings for the first nine months
of 2004 include $907 thousand or $0.05 per diluted share for interest received
from the California Franchise Tax Board in settlement of amended returns for tax
years 1993 to 1998.
The Bank eliminated its repurchase liability for loans sold with recourse
because it does not expect to incur any future losses on this portfolio. No
charge-offs have occurred on these loans since 1997, and the loan balances have
declined since they were originated in the late 1980's.
Net interest income increased by 6% during the third quarter of 2004
compared to the third quarter of 2003, but decreased by 3% compared to the
second quarter of 2004. Although the interest rate spread dropped to 2.55%
during the third quarter of 2004 from 3.17% during the third quarter of 2003,
net interest income increased due to a 31% growth in average interest-earning
assets. However, net interest income fell compared to the second quarter of 2004
because the 12% growth in average interest-earning assets was not sufficient to
compensate for a 26 basis point decrease in interest spread. The average earning
assets yield dropped 14 basis points primarily due to the time-lag inherent in
adjustable rate loans. The cost of funds increased by 12 basis points due to
higher short-term interest rates.
Loan originations were $1.2 billion and $2.5 billion, respectively for the
third quarter and first nine months of 2004 compared to $568.7 million and $1.6
billion, respectively for the same periods last year. Loan prepayments and
amortization totaled $358.3 million and $1.1 billion, respectively for the third
quarter and first nine months of 2004 compared to $497.1 million and $1.3
billion, respectively, for the third quarter and first nine months of last year.
Loan servicing and other fees were $2.5 million and $6.9 million for the
third quarter and first nine months of 2004, respectively, compared to $2.5
million and $5.6 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 $5.8 million for the third quarter and first nine
months of 2004 compared to $2.0 million and $4.0 million for the same periods
last year.
Other operating expense increased during the third quarter and first nine
months of 2004 compared to the same periods of the prior year primarily due to
increased legal costs, and higher incentive-based compensation related to loan
volume. However, due to growth in total assets, the ratio of non-interest
expense to average total assets fell to 1.18% during the third quarter of 2004
from 1.20% for the third quarter of 2003. On a year-to-date basis, the ratio of
non-interest expense to total assets fell to 1.17% for the first nine months of
2004 from 1.24% for the first nine months of 2003, also due to asset growth.
Total assets increased to $6.4 billion as of September 30, 2004 from $4.5
billion as of September 30, 2003 due to increased loan originations.
Consolidated stockholders' equity was $458.2 million as of September 30, 2004
compared to $420.3 million as of September 30, 2003.
The Company did not record a provision for loan losses during the first
nine months of 2004 or for any period in 2003. Net loan recoveries totaled $231
thousand and $443 thousand during the third quarter and first nine months of
2004, respectively. During the comparable periods last year, the Company
recorded no loan charge-offs during the third quarter and had net loan
recoveries of $25 thousand during the first nine months.
During the first nine months of 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 the first nine
months of 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 October 28,
2004.
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
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
(Unaudited)
September 30, December 31, September 30,
2004 2003 2003
--------------- -------------- ----------------
ASSETS
Cash and cash equivalents $ 40,346 $ 54,318 $ 62,144
Investment securities, available-for-sale (at fair 274,419 116,411 63,559
value)
Mortgage-backed securities, available-for-sale (at fair 105,811 135,176 151,130
value)
Loans receivable, held-for-sale (fair value $0, $494
and $1,517) -- 492 1,515
Loans receivable, net 5,825,939 4,373,620 4,106,131
Accrued interest and dividends receivable 20,847 16,941 17,205
Real estate owned, net -- 1,324 --
Real estate held for investment 1,606 -- --
Office properties and equipment, net 15,339 10,568 10,418
Investment in Federal Home Loan Bank (FHLB) stock, at
cost 123,525 87,775 80,243
Other assets 30,707 28,397 32,782
--------------- -------------- ----------------
$ 6,438,539 $ 4,825,022 $ 4,525,127
=============== ============== ================
LIABILITIES
Deposits $ 3,251,892 $ 2,538,398 $ 2,504,692
FHLB advances 2,576,200 1,694,000 1,429,000
Securities sold under agreements to repurchase 111,224 122,622 129,220
Accrued expenses and other liabilities 41,044 33,435 41,917
--------------- -------------- ----------------
5,980,360 4,388,455 4,104,829
--------------- -------------- ----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
authorized 100,000,000 shares;
issued 23,627,644, 23,543,339 and 23,509,436 shares;
outstanding 16,433,048, 17,045,643 and 17,011,740
shares 236 235 235
Additional paid-in capital 38,815 37,733 37,113
Retained earnings - substantially restricted 532,762 483,360 468,199
Unreleased shares to employee stock ownership plan (969) (125) (561)
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 1,111 1,091 1,039
--------------- -------------- ----------------
458,179 436,567 420,298
--------------- -------------- ----------------
$ 6,438,539 $ 4,825,022 $ 4,525,127
=============== ============== ================
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
Interest income:
Interest on loans $ 60,821 $ 55,774 $ 174,335 $ 169,725
Interest on mortgage-backed
securities 777 1,221 2,583 4,277
Interest and dividends on investments 3,401 1,349 7,958 4,593
------------- ------------- ------------- -------------
Total interest income 64,999 58,344 184,876 178,595
------------- ------------- ------------- -------------
Interest expense:
Interest on deposits 10,485 9,179 27,614 30,433
Interest on borrowings 15,648 12,635 40,696 37,055
------------- ------------- ------------- -------------
Total interest expense 26,133 21,814 68,310 67,488
------------- ------------- ------------- -------------
Net interest income 38,866 36,530 116,566 111,107
Provision for loan losses -- -- -- --
------------- ------------- ------------- -------------
Net interest income after provision for
loan losses 38,866 36,530 116,566 111,107
------------- ------------- ------------- -------------
Other income:
Loan servicing and other fees 2,463 2,492 6,928 5,613
Retail office fees 1,411 1,366 4,127 3,663
Gain on sale of loans 5,403 1,689 5,434 2,382
Real estate operations, net (24) (49) 106 315
Other operating income 73 92 232 358
------------- ------------- ------------- -------------
Total other income 9,326 5,590 16,827 12,331
------------- ------------- ------------- -------------
Non-interest expense:
Salaries and employee benefits 11,066 7,997 29,681 25,026
Occupancy 2,359 2,087 6,438 6,057
Advertising expense 69 68 428 180
Amortization of core deposit
intangible 498 499 1,496 1,495
Federal deposit insurance 99 98 289 302
Legal 556 237 1,288 455
Other expense 3,047 2,536 8,707 7,552
------------- ------------- ------------- -------------
Total non-interest expense 17,694 13,522 48,327 41,067
------------- ------------- ------------- -------------
Earnings before income taxes 30,498 28,598 85,066 82,371
Income tax provision 12,626 10,395 35,664 33,057
------------- ------------- ------------- -------------
Net earnings $ 17,872 $ 18,203 $ 49,402 $ 49,314
============= ============= ============= =============
Net earnings $ 17,872 $ 18,203 $ 49,402 $ 49,314
Other comprehensive loss, net of taxes 531 (817) 20 (1,162)
------------- ------------- ------------- -------------
Comprehensive earnings $ 18,403 $ 17,386 $ 49,422 $ 48,152
============= ============= ============= =============
Earnings per share:
Basic $ 1.09 $ 1.07 $ 2.95 $ 2.91
============= ============= ============= =============
Diluted $ 1.06 $ 1.04 $ 2.88 $ 2.84
============= ============= ============= =============
Weighted average shares outstanding:
Basic 16,416,629 16,994,566 16,752,261 16,967,043
============= ============= ============= =============
Diluted 16,825,386 17,432,285 17,158,980 17,359,014
============= ============= ============= =============
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS
Quarter ended September 30,
2004 2003
-------------- -----------
(Dollars in thousands, except per share data)
End of period:
Total assets $ 6,438,539 $ 4,525,127
Cash and securities $ 314,765 $ 125,703
Mortgage-backed securities $ 105,811 $ 151,130
Loans $ 5,825,939 $ 4,107,646
Core deposit intangible asset $ 5,832 $ 7,827
Deposits $ 3,251,892 $ 2,504,692
Borrowings $ 2,687,424 $ 1,558,220
Stockholders' equity $ 458,179 $ 420,298
Book value per share $ 27.88 $ 24.71
Tangible book value per share $ 27.53 $ 24.25
Stock price (period-end) $ 48.88 $ 39.50
Total loan servicing portfolio $ 5,956,768 $ 4,336,771
Loans serviced for others $ 122,847 $ 151,634
% of adjustable mortgages 89.06 % 75.50 %
Other data:
Employees (full-time equivalent) 604 558
Branches 29 29
Asset quality:
Real estate owned (foreclosed) $ -- $ --
Non-accrual loans $ 1,370 $ 5,236
Non-performing assets $ 1,370 $ 5,236
Non-performing assets to total assets 0.02 % 0.12 %
General valuation allowance (GVA) $ 75,681 $ 75,248
Allowances for impaired loans 496 496
-------------- -----------
Allowances for loan losses $ 76,177 75,744
Allowances for loan losses as a percent of gross
loans receivable 1.29 % 1.81 %
Loans sold with recourse $ 80,754 $ 94,325
GVA for loans sold with recourse $ -- $ 5,400
GVA to loans sold with recourse -- % 5.72 %
Modified loans (not impaired) $ 2,388 $ 2,502
Impaired loans, net $ -- $ 2,820
Allowance for impaired loans $ 496 $ 496
Capital ratios:
Tangible capital ratio 6.68 % 8.70 %
Core capital ratio 6.68 8.70
Risk-based capital ratio 13.33 15.57
Net worth to assets ratio 7.12 9.29
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL RESULTS (continued)
Three months ended September 30, Nine months ended September 30,
------------------------------ -----------------------------
2004 2003 2004 2003
------------ -------------- ------------- ------------
(Dollars in thousands)
Selected ratios:
Expense ratios:
Efficiency ratio 37.77 % 33.44 % 41.35 % 33.92 %
Expense-to-average-assets ratio 1.18 1.20 1.17 1.24
Return on average assets 1.20 1.62 1.20 1.49
Return on average equity 15.93 17.70 14.75 16.63
Yields earned and rates paid:
Average yield on loans and
mortgage-backed securities 4.55 % 5.39 % 4.71 % 5.61 %
Average yield on investment portfolio (1) 2.72 1.58 2.64 2.32
Average yield on all interest-earning
assets (1) 4.45 5.28 4.61 5.51
Average rate paid on deposits 1.40 1.46 1.32 1.63
Average rate paid on borrowings 2.50 3.12 2.53 3.29
Average rate paid on all
interest-bearing liabilities 1.90 2.11 1.84 2.25
Interest rate spread 2.55 3.17 2.77 3.26
Effective net spread 2.65 3.31 2.86 3.40
Average balances:
Average loans and mortgage-backed
securities $ 5,419,374 $ 4,229,335 $ 4,968,365 $ 4,137,904
Average investments (2) 300,681 124,522 242,345 123,176
------------ -------------- ------------- ------------
Average interest-earning assets (2) 5,720,055 4,353,857 5,210,710 4,261,080
------------ -------------- ------------- ------------
Average deposits 2,975,972 2,489,811 2,798,348 2,502,758
Average borrowings 2,460,343 1,586,806 2,136,130 1,500,810
------------ -------------- ------------- ------------
Average interest-bearing liabilities 5,436,315 4,076,617 4,934,478 4,003,568
------------ -------------- ------------- ------------
Excess of interest-earning assets
over interest-bearing liabilities $ 283,740 $ 277,240 $ 276,232 $ 257,512
============ ============== ============= ============
Loan originations and purchases $ 1,244,349 $ 568,650 $ 2,521,307 $ 1,615,724
(1) Excludes FHLB stock dividends and
other miscellaneous items.
(2) Excludes FHLB stock.