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 25, 2002
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
ITEM 5. Other Events.
On October 24, 2002, the registrant, FirstFed Financial Corp., issued a press
release. A copy of this press release is attached and incorporated herein as
Exhibit 99.
Item 99. Press release dated October 24, 2002.
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 25, 2002 By:/s/ Douglas J. Goddard
Douglas J. Goddard
Chief Financial Officer
Contact: Douglas Goddard, Executive Vice President
(310) 319-6014
FIRSTFED REPORTS RESULTS FOR THE THIRD QUARTER OF 2002
Santa Monica, California, October 24, 2002 -- FirstFed
Financial Corp. (NYSE-FED), parent company of First Federal Bank of
California, today announced net earnings of $16.2 million or $0.92
per diluted common share for the third quarter of 2002, compared to
net earnings of $12.3 million or $0.70 per diluted common share for
the second quarter of 2002 and $12.4 million or $0.70 per diluted
common share for the third quarter of September 2001. Net earnings
for the first nine months of 2002 were $40.9 million or $2.32 per
diluted common share, compared to $37.4 million or $2.12 per diluted
common share for the first nine months of 2001.
Net earnings for the third quarter and first nine months of
2002 include a $5.9 million gain resulting from a revised estimate
of the Bank's repurchase liability for loans sold with recourse. The
Bank revised its estimate of repurchase liability because its
portfolio of loans sold with recourse has been experiencing greater
payoffs and better credit performance than previously estimated.
After tax, quarterly and year-to-date earnings were increased by
$3.4 million or $0.19 per diluted common share during 2002 due to
this adjustment.
Net interest income increased by 3% and 2% during the third
quarter and first nine months of 2002 compared to the prior year
periods due to increased interest rate spreads. The interest rate
spreads increased to 2.95% and 2.83% for the third quarter and first
nine months of 2002 from 2.70% and 2.67% during the same periods
last year as the cost of interest-bearing liabilities re-priced at
reduced rates more quickly than the yield on interest-earning
assets. The increased spreads compensated for declines in average
earning assets. Due to continued high levels of loan payoffs,
average interest-earning assets decreased to $4.2 billion for the
third quarter and $4.3 billion for the first nine months of 2002
compared to $4.4 billion for both the third quarter and first nine
months of the prior year. Loan originations were $283.5 million and
$871.1 million for the third quarter and first nine months of 2002
compared to $415.9 million and $1.2 billion for the same periods
last year.
Allowances for loan losses (including general valuation
allowances and valuation allowances for impaired loans) totaled
$75.7 million or 1.94% of the loan portfolio as of September 30,
2002. This compares with $74.4 million or 1.82% as of December 31,
2001 and $72.4 million or 1.80% as of September 30, 2001.
Non-performing assets were 0.11% of total assets as of September 30,
2002 compared with 0.17% as of December 31, 2001 and 0.23% as of
September 30, 2001.
The Bank did not record a provision for loan losses during the
first nine months of 2002 or for any period during 2001. Net loan
charge-offs totaling $271 thousand were recorded during the third
quarter of 2002, however, net loan recoveries totaling $900 thousand
were recorded during the first nine months of 2002. For the
comparable periods last year, the Bank recorded net loan recoveries
of $55 thousand and net loan charge-offs of $170 thousand for the
third quarter and first nine months of 2001, respectively.
1
The Company had assets totaling $4.3 billion as of September 30,
2002. First Federal Bank of California operates 29 full-service
retail banking offices and 4 loan production offices in Southern
California. At September 30, 2002, the consolidated stockholders'
equity of the Company was $358.8 million. The Company repurchased
233,400 shares during the third quarter of 2002 and an additional
119,600 shares through October 17, 2002. There remain 536,016
shares eligible for repurchase under the Company's stock repurchase
program as of October 17, 2002.
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, 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 guarantee or promises regarding future results and assumes
no responsibility to update such forward-looking statements.
KEY FINANCIAL RESULTS FOLLOW
2
FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
(Unaudited)
September 30, December 31, September 30,
2002 2001 2001
------------ ----------- ------------
ASSETS
Cash and cash equivalents $ 43,122 $ 174,171 $ 69,050
Investment securities,
available-for-sale (at fair
value) 109,858 110,444 120,679
Mortgage-backed securities,
available-for-sale (at fair
value) 218,424 284,079 311,342
Loans receivable, held-for-sale
(fair value of $2,861, $5,250
and $3,939) 2,848 5,246 3,920
Loans receivable, net 3,804,495 3,999,643 3,941,950
Accrued interest and dividends
receivable 18,567 22,076 25,201
Real estate 506 1,515 819
Office properties and equipment, 10,461 10,822 9,615
net
Investment in Federal Home Loan
Bank (FHLB) stock, at cost 79,666 91,713 88,891
Other assets 29,335 26,580 22,993
--------- -------- ---------
$ 4,317,282 $ 4,726,289 $ 4,594,460
========= ========= =========
LIABILITIES
Deposits $ 2,508,768 $ 2,546,647 $ 2,354,058
FHLB advances 1,247,000 1,597,000 1,639,000
Securities sold under agreements
to repurchase 166,567 211,040 228,716
Accrued expenses and other
liabilities 36,163 45,924 60,463
--------- --------- ---------
3,958,498 4,400,611 4,282,237
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per
share; Authorized 100,000,000
shares; issued 23,390,742,
23,362,196 and 23,359,272
shares, outstanding 17,046,446,
17,251,300 and 17,291,782 shares 234 234 233
Additional paid-in capital 34,797 34,670 33,588
Retained earnings -
substantially restricted 404,594 363,713 350,803
Unreleased shares to employee
stock ownership plan (1,748) -- (210)
Treasury stock, at cost,
6,344,296, 6,110,896 and
6,067,490 shares (81,684) (75,930) (75,743)
Accumulated other comprehensive
gain, net of taxes 2,591 2,991 3,552
--------- --------- ---------
358,784 325,678 312,223
--------- --------- ---------
$ 4,317,282 $ 4,726,289 $ 4,594,460
========= ========= =========
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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 Nine months ended
September 30, September 30,
-------------------- -------------------
2002 2001 2002 2001
-------- ---------- -------- --------
Interest income:
Interest on loans $ 59,941 $ 73,457 $ 185,605 $ 229,328
Interest on mortgage-
backed securities 2,026 4,585 7,263 16,086
Interest and dividends on
investments 2,774 3,795 8,573 11,883
-------- --------- -------- --------
Total interest income 64,741 81,837 201,441 257,297
-------- --------- -------- --------
Interest expense:
Interest on deposits 14,645 22,889 47,642 74,690
Interest on borrowings 16,667 26,508 53,401 84,453
-------- --------- ------- --------
Total interest expense 31,312 49,397 101,043 159,143
-------- --------- ------- --------
Net interest income 33,429 32,440 100,398 98,154
Provision for loan losses -- -- -- --
-------- --------- ------- --------
Net interest income after
provision for loan losses 33,429 32,440 100,398 98,154
-------- --------- ------- --------
Other income:
Loan servicing and other
fees 1,172 1,003 3,062 2,478
Retail office fees 1,173 952 3,348 2,640
Gain on sale of loans 6,195 291 6,564 501
Real estate operations,
net (60) 609 133 383
Other operating income 231 164 797 665
-------- -------- ------- --------
Total other income 8,711 3,019 13,904 6,667
-------- -------- ------- --------
Non-interest expense:
Compensation 8,008 7,595 24,475 22,325
Occupancy 2,249 2,201 6,399 6,180
Amortization of core
deposit intangible 499 372 1,464 1,116
Other expenses 3,351 3,570 11,313 9,845
-------- -------- ------- --------
Total non-interest
expense 14,107 13,738 43,651 39,466
-------- -------- ------- --------
Earnings before income taxes 28,033 21,721 70,651 65,355
Income tax provision 11,807 9,294 29,770 27,963
-------- --------- ------- --------
Net earnings $ 16,226 $ 12,427 $ 40,881 $ 37,392
======== ========= ======= ========
Other comprehensive earnings
(loss), net of taxes (145) 2,826 (400) 5,710
-------- --------- ------- --------
Comprehensive earnings $ 16,081 $ 15,253 $ 40,481 $ 43,102
======== ========= ======= ========
Earnings per share:
Basic $ 0.94 $ 0.72 $ 2.37 $ 2.17
======== ========= ======= ========
Diluted $ 0.92 $ 0.70 $ 2.32 $ 2.12
======== ========= ======= ========
Weighted average shares
outstanding:
Basic 17,257,643 17,253,063 17,258,970 17,218,177
========== ========== ========== ==========
Diluted 17,555,150 17,677,749 17,602,324 17,651,674
========== ========== ========== ==========
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FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL HIGHLIGHTS
Quarter ended September 30,
2002 2001
--------- --------
(Dollars in thousands,
except per share data)
End of period:
Total assets $ 4,317,282 $ 4,594,460
Cash and securities $ 152,980 $ 189,729
Mortgage-backed securities $ 218,424 $ 311,342
Loans $ 3,807,343 $ 3,945,870
Core deposit intangible asset $ 9,813 $ 8,187
Deposits $ 2,508,768 $ 2,354,058
Borrowings $ 1,413,567 $ 1,867,716
Stockholders' equity $ 358,784 $ 312,223
Book value per share $ 21.05 $ 18.06
Tangible book value per share $ 20.47 $ 17.58
Stock price (period-end) $ 25.75 $ 26.00
Total loan servicing portfolio $ 4,189,654 $ 4,449,599
Loans serviced for others $ 213,701 $ 269,726
% of Adjustable mortgages 70.57% 74.69%
Other data:
Employees (full-time equivalent) 515 462
Branches 29 25
Loan production offices 4 3
Asset quality:
Real estate (foreclosed) $ 477 $ 790
Non-accrual loans $ 4,470 $ 9,997
Non-performing assets $ 4,947 $ 10,787
Non-performing assets to total assets 0.11% 0.23%
General valuation allowance (GVA) $ 73,515 $ 70,581
Allowance for impaired loans $ 2,154 $ 1,850
-------- --------
Allowances for loan losses $ 75,669 $ 72,431
Allowances for loan losses to gross
loans receivable 1.94% 1.80%
Loans sold with recourse $ 115,115 $ 132,424
GVA for loans sold with recourse $ 6,900 $ 12,824
GVA to loans sold with recourse 5.99% 9.68%
Modified loans (not impaired) $ 2,479 $ 934
Impaired loans, net $ 3,043 $ 10,081
Capital ratios:
Tangible capital ratio 8.00% 6.41%
Core capital ratio 8.00 6.41
Risk-based capital ratio 14.63 12.71
Net worth to assets ratio 8.31 6.80
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FIRSTFED FINANCIAL CORP.
AND SUBSIDIARY
KEY FINANCIAL HIGHLIGHTS (continued)
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
2002 2001 2002 2001
--------- ----------- --------- ----------
(Dollars in thousands)
Selected ratios:
Expense ratios:
Efficiency ratio 39.05% 39.06% 40.38% 37.83%
Expense-to-average-assets
ratio 1.26 1.20 1.27 1.17
Return on average assets 1.45 1.08 1.19 1.10
Return on average equity 18.88 16.34 16.14 17.20
Yields earned and rates paid:
Average yield on loans and
mortgage-backed securities 6.09% 7.38% 6.22% 7.85%
Average yield on investment
portfolio (1) 4.36 5.85 3.60 5.64
Average yield on all
interest-earning assets (1) 6.03 7.32 6.11 7.75
Average rate paid on deposits 2.30 3.89 2.53 4.38
Average rate paid on
borrowings 4.42 5.54 4.50 5.92
Average rate paid on all
interest-bearing liabilities 3.08 4.63 3.28 5.08
Interest rate spread 2.95 2.70 2.83 2.67
Effective net spread 3.12 2.89 3.00 2.88
Average balances:
Average loans and
mortgage-backed securities $4,067,612 $4,237,617 $4,135,266 $4,166,834
Average investments (2) 152,573 174,266 180,418 191,132
--------- --------- --------- ---------
Average interest-earning
assets (2) 4,220,185 4,411,883 4,315,684 4,357,966
--------- --------- --------- ---------
Average deposits 2,521,587 2,335,125 2,520,321 2,279,646
Average borrowings (3) 1,461,129 1,895,224 1,574,076 1,903,414
--------- --------- --------- ---------
Average interest-bearing
liabilities 3,982,716 4,230,349 4,094,397 4,183,060
--------- --------- --------- ---------
Excess of interest-earning
assets over interest-
bearing liabilities $ 237,469 $ 181,534 $ 221,287 $ 174,906
========= ========= ======== =========
Loan originations and purchases $ 283,495 $ 415,862 $ 871,059 $1,230,597
(1) Excludes FHLB stock dividends and other miscellaneous items.
(2) Excludes FHLB stock.
(3) Excludes accrued interest on tax assessment.
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