EX-99.1 3 firstfedexhibit997-21.txt 1 Contact: Philip G. Campbell, VP-Investor Relations (508) 679-8181 ext. 1361 Edward A. Hjerpe, EVP/COO and CFO (508) 679-8181 ext. 1505 FIRSTFED AMERICA BANCORP, INC. Announces Record First Quarter EPS and 30% Increase in Dividend Swansea, Mass. (July 22, 2003): FIRSTFED AMERICA BANCORP, INC. (Amex: FAB) (the "Company"), today announced record diluted earnings per share ("EPS") of $0.36 for the first quarter of fiscal year 2004, an increase of 33% from $0.27 per share for the comparable quarter of fiscal year 2003. Net income was a record $6.3 million for the first quarter of fiscal year 2004, an increase of $1.8 million, or 41%, from net income of $4.4 million for the first quarter of fiscal year 2003. The Company also announced that its Board of Directors declared a quarterly cash dividend to shareholders of $0.13 per share, an increase of 30% from the $0.10 per share paid last quarter. The new dividend is payable on August 19, 2003 to all shareholders of record as of August 5, 2003. On June 26, 2003, the Company's Board of Directors declared a 2-for-1 common stock split distributed on July 17, 2003 to shareholders of record as of July 7, 2003. The numbers of shares and per share amounts of the Company's common stock have been retroactively restated to reflect the increased number of common shares outstanding. The Company's Chairman, President and Chief Executive Officer, Robert F. Stoico stated, "We are extremely proud to announce record first quarter earnings and an increase in cash dividends to our shareholders for the third consecutive quarter. In view of the Company's outstanding financial performance and strong capital position, as well as the recent reduction of the Federal tax rate on dividend income, the Board of Directors voted to increase the quarterly dividend to our shareholders by 30% to further enhance shareholder value." Net interest income before provision for loan losses increased $1.3 million, or 9%, to $14.9 million for the first quarter of fiscal year 2004 from $13.6 million for the first quarter of fiscal year 2003. The net interest rate spread and net interest margin were 2.31% and 2.60%, respectively, for the first quarter of fiscal year 2004, compared to 2.45% and 2.66%, respectively, for the first quarter of fiscal year 2003. The increase in net interest income was due primarily to growth in all categories of loans receivable, net, and mortgage loans held for sale. The Company's provision for loan losses was $250,000 for the first quarter of fiscal year 2004 compared to $100,000 for the first quarter of fiscal year 2003. This increase was based primarily on management's assessment of portfolio growth and composition changes, internal loan review classifications, and current economic conditions. The allowance for loan losses was $19.5 million, or 1.40% of loans receivable at June 30, 2003, compared to $19.3 million, or 1.53% of loans receivable, at March 31, 2003. Non-performing loans decreased to $1.9 million, or 0.14% of loans receivable, at June 30, 2003, from $3.3 million, or 0.26% of loans receivable, at March 31, 2003. Non-performing assets decreased to $2.1 million, or 0.08% of total assets, at June 30, 2003, from $3.5 million, or 0.14% of total assets, at March 31, 2003. Non-interest income increased $5.2 million, or 63%, to $13.4 million for the first quarter of fiscal year 2004 from $8.2 million for the first quarter of fiscal year 2003. This increase was due primarily to increases of $5.4 million in gain on sale of mortgage loans, $181,000 in gain on sale of securities available for sale, $185,000 in service charges on deposit accounts and $442,000 in other non-interest income, partially offset by a decrease of $1.2 million in loan servicing income. The increase in gain on sale of mortgage loans was due primarily to a higher volume of loans originated for sale during the first quarter of fiscal year 2004. In addition, changes in fair value of derivative instruments utilized in secondary market hedging activities, as required by Statement of Financial Accounting Standards No. 133, resulted in an addition to gain on sale of mortgage loans of $833,000 for the first quarter of fiscal year 2004 compared to a reduction of $107,000 for the first quarter of fiscal year 2003. The increase in service charges on deposit accounts was due primarily to growth in deposits. The increase in other non-interest income was due primarily to a net increase in investment portfolio values of certain employee benefit plans, which is offset by a related increase in other non-interest expense. 2 The decrease in loan servicing income was due primarily to additions to the valuation allowance for mortgage servicing rights of $1.4 million during the first quarter of fiscal year 2004, compared to $212,000 during the first quarter of fiscal year 2003. The additions to the valuation allowance were based on estimated impairment due to a combination of faster than previously expected actual payoff experience and faster prepayment forecasts for the applicable periods. Non-interest expense increased $3.1 million, or 21%, to $17.6 million for the first quarter of fiscal year 2004 from $14.5 million for the first quarter of fiscal year 2003. This increase was due primarily to increases of $2.3 million in compensation and benefits, $231,000 in advertising and promotion, $228,000 in office occupancy and equipment expenses, and $673,000 in other non-interest expenses, partially offset by a decrease of $328,000 in data processing costs. The increase in compensation and benefits was due primarily to higher costs related to growth in mortgage originations, the net accounting impact of market price increases of FAB stock held by certain employee benefit plans, and higher employee health plan costs. Income tax expense increased $1.4 million, or 51%, to $4.2 million for the first quarter of fiscal year 2004 from $2.8 million for the first quarter of fiscal year 2003, due primarily to increased income before income tax expense. The Company's effective tax rate increased to 40.0% for the first quarter of fiscal year 2004, from 38.4% for the first quarter of fiscal year 2003. Total assets increased $266.0 million, or 11%, to a record $2.681 billion at June 30, 2003 from $2.414 billion at March 31, 2003. This growth was due primarily to increases of $137.5 million in loans receivable, net, $63.5 million in mortgage loans held for sale, and $59.1 million in mortgage-backed securities available for sale. The 11% increase in loans receivable, net, to a record $1.379 billion at June 30, 2003, included increases of $93.4 million, or 14%, in the mortgage portfolio due primarily to the retention of certain adjustable-rate and fixed-rate mortgage loans with terms of 15 years or less, $27.1 million, or 6%, in the commercial portfolio and $17.2 million, or 9%, in the consumer portfolio. Balance sheet growth during the first quarter of fiscal year 2004 was primarily funded by increases of $160.8 million in FHLB advances and other borrowings and $101.4 million in deposit balances. The 7% increase in deposits, to a record $1.529 billion at June 30, 2003, included increases in demand deposits of $82.9 million, or 14%, and savings deposits of $26.9 million, or 9%, partially offset by a decrease in time deposits of $8.4 million, or 1%. The Company's demand and savings accounts, or core deposits, were 63.5% of total deposits at June 30, 2003, compared to 60.3% at March 31, 2003. For the first quarter of fiscal year 2004, mortgage originations were a record $1.148 billion, including $800.5 million by PMC. During this time, $842.2 million of mortgage loans were sold in the secondary market, including $678.1 million sold servicing released by PMC. Total loans serviced for others decreased $120.5 million, or 9%, to $1.292 billion at June 30, 2003 from $1.412 billion at March 31, 2003. Mortgage servicing rights, net of the valuation allowance, decreased $793,000, or 13%, to $5.2 million at June 30, 2003, from $6.0 million at March 31, 2003. The valuation allowance related to the impairment of mortgage servicing rights increased $168,000 to $3.3 million at June 30, 2003, from $3.1 million at March 31, 2003, due to additions of $1.4 million for estimated impairment, less write-downs of $1.2 million for permanent impairment during the first quarter of fiscal year 2004. Mortgage servicing rights were 0.40% of loans serviced for others at June 30, 2003, compared to 0.42% at March 31, 2003. Mr. Stoico noted, "Continued growth in consumer and commercial loans, growth in low cost core deposits, and high levels of loans held for sale have contributed strength to net interest income. It was particularly gratifying to see deposits go over the $1.5 billion mark during the quarter, and for consumer loans to exceed $200 million for the first time. Simultaneously, record mortgage loan originations and effective secondary marketing activities have led to record gains on sale of mortgage loans that are significantly in excess of mortgage servicing impairment. And asset quality remains strong." Total stockholders' equity increased $6.3 million, or 3%, to $199.4 million at June 30, 2003, from $193.1 million at March 31, 2003. The increase was due primarily to $6.3 million in net income and a $2.3 million increase from common shares issued for stock options exercised, partially offset by $1.7 million in dividends paid to stockholders and a $909,000 decrease in the fair market value of available for sale securities, net of tax. Stockholders' equity to assets was 7.44% at June 30, 2003, compared to 8.00% at March 31, 2003. Book value per share increased to $11.80 at June 30, 2002 from $11.63 at March 31, 2003. Tangible book value per share increased to $8.66 at June 30, 2003 from $8.40 at March 31, 2003. Market price per share increased $3.25, or 23%, to $17.25 at June 30, 2003 from $14.00 at March 31, 2003. 2 3 As of June 30, 2003, the Company had repurchased 360,616 shares of Company stock at an average price of $7.09 per share, or 56% of the 640,056 shares authorized for repurchase under the Company's seventh stock repurchase program announced on September 29, 2000. There was no stock repurchase activity during the first quarter of fiscal year 2004. The Company has repurchased 4,973,806 shares since May 15, 1998. At June 30, 2003, the Company's subsidiary, First Federal Savings Bank of America, continued to exceed all regulatory capital requirements. Regulatory capital, which is comprised of core capital, risk-based capital, and Tier I risk-based capital, amounted to approximately $147.7 million, $160.2 million, and $147.7 million, respectively. The core capital, risk-based capital, and Tier I risk-based capital ratios were 5.66%, 10.58%, and 9.41%, respectively, compared to the minimum ratios required to be deemed adequately capitalized of 4.0%, 8.0%, and 4.0%, respectively, and the minimum ratios required to be deemed well capitalized of 5.0%, 10.0%, and 6.0%, respectively. FIRSTFED AMERICA BANCORP, INC. is a $2.7 billion financial services company offering a wide range of financial products through its subsidiaries. FIRST FEDERAL SAVINGS BANK OF AMERICA has 26 banking offices throughout Southeastern Massachusetts and Rhode Island, offers online banking through FIRSTFEDonline at www.firstfedamerica.com and has five loan origination centers serving Massachusetts, Rhode Island and Connecticut. PEOPLE'S MORTGAGE CORPORATION, a subsidiary of FIRST FEDERAL SAVINGS BANK OF AMERICA, provides mortgage and consumer loans through nine locations in New England and the Mid-Atlantic Region. Through FIRSTFED INSURANCE AGENCY, LLC, which is licensed in Massachusetts, Rhode Island and Connecticut, the Company also sells insurance products at all of its locations and via www.firstfedinsurance.com. FIRSTFED TRUST COMPANY, N.A. offers comprehensive trust, estate, and investment management products and services. For additional information about the Company and its products, as well as previous press releases and historical financial data, visit the FIRSTFED Web site at www.firstfedamerica.com. Statements contained in this news release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. Subject to applicable laws and regulations, the Company does not undertake - and specifically disclaims any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. # # # 3 4 Please note: Certain amounts previously reported have been reclassified to conform to the presentation in the following financial statements. The numbers of shares and per share amounts have been retroactively restated to reflect the 2-for-1 stock split.

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(1) Loans include loans receivable, net, excluding allowance for loan losses. (2A) Based upon total shares issued at IPO (17,414,304) plus shares issued for the People's merger (3,791,288) and stock options exercised (684,972), less unearned ESOP shares (232,972), unreleased 1997 Stock-based Incentive Plan shares (3,600), shares repurchased (4,568,946), and shares held in certain employee benefit plans (186,964). (2B) Based upon total shares issued at IPO (17,414,304) plus shares issued for the People's merger (3,791,288) and stock options exercised (432,088), less unearned ESOP shares (271,588), unreleased 1997 Stock-based Incentive Plan shares (10,676), shares repurchased (4,568,946), and shares held in certain employee benefit plans (181,568). (2C) Based upon total shares issued at IPO (17,414,304) plus shares issued for the People's merger (3,791,288) and stock options exercised (107,832), less unearned ESOP shares (426,480), unreleased 1997 Stock-based Incentive Plan shares (142,516), shares repurchased (4,973,806), and shares held in certain employee benefit plans (142,952).

FIRSTFED AMERICA BANCORP INC 8-K