UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended September 30, 2009

o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-25509

FIRST FEDERAL BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

Delaware	42-1485449
(State or other jurisdiction of	(I.R.S. employer
incorporation or organization)	identification number)

423 Sixth Street, Suite 400 Sioux City, Iowa	51101
(Address of principal executive offices)	Zip code

(888) 859-5424

(Registrant’s telephone number)

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

Title of class

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES þ. NO o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES þ. NO o.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller reporting company þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). YES o. NO þ.

As of November 30, 2009, there were 3,304,471 outstanding shares of the Registrant’s Common Stock.

FORWARD-LOOKING STATEMENTS

This report may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. When used in this report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company’s management and are subject to a number of risks and uncertainties, including but not limited to economic, competitive, regulatory, and other factors affecting the Company’s operations, markets, products and services, as well as strategies and other factors discussed elsewhere in this report. Many of these factors are beyond the Company’s control.

PART I – FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
Consolidated Statements of Financial Condition
September 30, 2009 and June 30, 2009 (Unaudited)


	September 30,			June 30,
	2009			2009

Assets
Cash and cash equivalents	$	609,075		$	856,787
Other assets		156,656			15,000
Assets of discontinued operations		-			491,490,840
Total assets	$	765,731		$	492,362,627

Liabilities
Accrued expenses and other liabilities	$	28,505		$	81,899
Liabilities of discontinued operations		-			501,653,388
Total liabilities		28,505			501,735,287

Stockholders' equity (deficit)
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued		-			-
Common stock, $.01 par value, 12,000,000 shares
authorized; 5,068,726 shares issued		50,651			50,651
Additional paid-in-capital		39,121,483			39,121,483
Retained earnings (deficit)		(9,899,245	)		(20,009,131	)
Treasury stock, at cost, 1,764,255 shares		(28,535,663	)		(28,535,663	)
Total stockholders' equity (deficit)		737,226			(9,372,660	)

Total liabilities and stockholders' equity (deficit)	$	765,731		$	492,362,627

See Notes to Consolidated Financial Statements.

FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
Consolidated Statements of Operations
Three-Months Ended September 30, 2009 and 2008 (Unaudited)

	Three-Months Ended
	September 30,
	2009			2008

Interest income:
Loan receivable	$	-		$	12,231
Other interest-earning assets		1,590			4,217
Total interest income		1,590			16,448
Noninterest expense:
Professional, insurance and regulatory expense		47,170			6,720
Other expense		7,082			27,308
Total noninterest expense		54,252			34,028
Loss from continuing operations before income
taxes and discontinued operations		(52,662	)		(17,580	)
Income tax benefit		-			6,000
Loss from continuing operations		(52,662	)		(11,580	)

Discontinued operations:
Loss from operations of Vantus Bank		(52,589	)		(1,375,743	)
Gain on disposal		10,215,137			-
Discontinued operations		10,162,548			(1,375,743	)
Income tax benefit		-			589,000
Income (loss) from discontinued opertations		10,162,548			(786,743	)
Net income (loss)	$	10,109,886		$	(798,323	)

Per share information
Basic earnings (loss) per share from:
Continuing operations	$	(0.02	)	$	0.00
Discontinued operations		3.08			(0.24	)
Earnings (loss) per share	$	3.06		$	(0.24	)
Diluted earnings (loss) per share from:
Continuing operations	$	(0.02	)	$	0.00
Discontinued operations		3.08			(0.24	)
Earnings (loss) per share	$	3.06		$	(0.24	)

Dividends per share	$	0.00		$	0.00

See Notes to Consolidated Financial Statements.

First Federal Bankshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three-Months Ended September 30, 2009 and 2008 (Unaudited)

	Three-Months Ended
	September 30,
	2009			2008

Cash flows from continuing operating activities:
Net income (loss)	$	10,109,886		$	(798,323	)
(Income) loss from discontinued operations, net of tax		(10,162,548	)		786,743
Adjustments to reconcile net income (loss) from
continuing operations to net cash provided by
continuing operating activities:
Decrease (increase) in other assets		(141,656	)		47,201
Increase (decrease) in accrued expenses and other liabilities		(53,394	)		68,358
Increase (decrease) in accrued taxes payable		-			66,037
Net cash provided by (used in) continuing operating activities		(247,712	)		170,016
Net cash provided by (used in) discontinued operating activities		-			2,803,248
Net cash provided by (used in) operating activities		(247,712	)		2,973,264

Cash flows from continuing investing activities:
Net cash provided by (used in) discontinued investing activities		-			9,383,399
Net cash provided by (used in) investing activities		-			9,383,399

Cash flows from continuing financing activities:
Net cash provided by (used in) discontinued financing activities		-			(12,354,767	)
Net cash provided by (used in) financing activities		-			(12,354,767	)

Net increase (decrease) in cash and cash equivalents		(247,712	)		1,896

Cash and cash equivalents:
Beginning of period		856,787			833,315
End of period	$	609,075		$	835,211

See Notes to Consolidated Financial Statements.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for :
Continuing operations - Interest	$	0		$	0
Continuing operations - Income taxes		-			-
Discontinued operations - Interest		*			3,042,053
Discontinued operations - Income taxes		*			-

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Continuing operations - Charge off of ESOP loan		-			-
Continuing operations - Charge-off of building lot held for sale		-			-
Discontinued operations - Property acquired in settlement of loans		*			10,095,425

* Information is not available due to closure of Vantus Bank.

First Federal Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies and Practices

Organization: First Federal Bankshares, Inc. (the “Company”) was the holding company for Vantus Bank (the “Bank”) until September 4, 2009 when the Federal Deposit Insurance Corporations (“FDIC”) was appointed receiver for the Bank. See Note 2 of Notes to Consolidated Financial Statements for a more detailed discussion of recent developments and the Company’s Plan of Liquidation.

Prior to September 4, 2007, the Bank was known as First Federal Bank. The Company’s primary activity was its ownership of 100% of the Bank’s common stock. The Company’s net income (loss) was derived primarily from the Bank. The Bank was organized as a federally-chartered stock savings bank engaging in retail and commercial banking and related financial services in northwest and central Iowa and contiguous portions of Nebraska and South Dakota.

Principles of presentation: The accompanying consolidated financial statements include the accounts of First Federal Bankshares, Inc., and its former wholly-owned subsidiaries, Equity Services Inc. (“ESI”), a real estate development company, and the Bank and its wholly-owned subsidiary, First Financial Corporation of Sioux City (“FFC”). ESI was dissolved effective March 31, 2008. FFC is a majority owner of United Escrow, Inc. which serves as an escrow agent in Woodbury County, Iowa. FFC formerly operated a title search and abstract continuation business through its subsidiary, Sioux Financial Company (“SFC”). Substantially all the assets of SFC were sold in March 2007, and the Company is no longer involved in the title search and abstract continuation business. The results of operations of all former wholly-owned subsidiaries are presented as discontinued operations in the accompanying consolidated financial statements. All significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of management the consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company at September 30, 2009 and June 30, 2009 and the results of operations and cash flows for each of the three month periods ended September 30, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.

Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other assets: Other assets consist primarily of prepaid professional fees.

Cash flow statement and cash and cash equivalents: For purposes of reporting cash flows, the Company includes cash interest-bearing deposits with original maturities of three months or less in cash and cash equivalents. At September 30, 2009, deposits in excess of $250,000 are not insured by the FDIC.

Earnings (loss) per share: Basic and diluted earnings (losses) per share for the three months ended September 30, 2009 and 2008 and the years ended June 30, 2009, 2008 and 2007 were determined by dividing the net income (loss) by the weighted average number of common shares outstanding during the periods then ended. Diluted earnings (loss) per common share amounts are computed by dividing net income (loss) by the weighted average number of common shares and all dilutive potential common shares outstanding during the period. Shares owned by the ESOP that were not been committed to be released are not considered to be outstanding for the purposes of computing earnings (loss) per share.

First Federal Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The following information was used in the computation of net income (loss) per common share on both a basic and diluted basis for the periods indicated:

	Three-Months Ended
	September 30,
	2009			2008
	(Unaudited)

Loss from continuing operations	$	(52,662	)	$	(11,580	)
Income (loss) from discontinued operations,
net of tax		10,162,548			(786,743	)

Net income (loss)	$	10,109,886		$	(798,323	)

Per share information
Basic earnings (loss) per share from:
Continuing operations	$	(0.02	)	$	0.00
Discontinued operations		3.08			(0.24	)
Earnings (loss) per share	$	3.06		$	(0.24	)
Diluted earnings (loss) per share from:
Continuing operations	$	(0.02	)	$	0.00
Discontinued operations		3.08			(0.24	)
Earnings (loss) per share	$	3.06		$	(0.24	)
Weighted average common shares outstanding:
Basic		3,301,401			3,304,471
Incremental option and RRP shares using
treasury stock method		-			-
Diluted shares outstanding		3,301,401			3,304,471
Anti-dilutive options not included in
diluted shares outstanding		164,297			164,297

Subsequent Events

Subsequent events have been evaluated for potential recognition and disclosures through December 10, 2009, which is the date we filed this Form 10-Q with the Securities and Exchange Commission.

Recent accounting pronouncements

The following paragraphs summarize recent accounting guidance and references to the FASB ASC:

Effective for all interim and annual periods ending after September 15, 2009, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) became the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by FASB to be applied to nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.

First Federal Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

FASB ASC 855-10, “Subsequent Events,” establishes principles for accounting for and disclosures for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The recent accounting guidance in this ASC was adopted June 30, 2009 and did not have a material impact on the Company’s financial position or results of operation.

Comprehensive loss: Comprehensive loss includes net income (loss), as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. The Company’s only element of other comprehensive loss is unrealized gains and losses on available-for-sale investment securities.

Income Taxes: The Company has historically filed a consolidated Federal income tax return. Federal income taxes are allocated based on taxable income or loss included on the consolidated return. For state tax purposes, the Bank files a franchise tax return, while the Company, its other subsidiaries and the Bank’s subsidiaries file a consolidated corporate income tax return. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

The Company utilizes the asset and liability method for taxes on income, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Stock option plan: The Company records all share-based payments to employees, including grants of employee stock options, in the financial statements based on their fair values in accordance with the measurement provisions of FASB ASC 718-10-30 and FASB 718-10-35, “Compensation – Stock Compensation”.

Reclassifications: Certain amounts previously reported have been reclassified to conform to the presentation in these

consolidated financial statements. These reclassifications did not affect previously reported net income or stockholders’ equity.

Fair value of financial instruments: The Company’s sole financial instrument at June 30, 2009 (other than assets and liabilities of discontinued operations) consists of cash and cash equivalents. The recorded amount of cash and cash equivalents approximates fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

Note 2. Going Concern

On September 4, 2009, the Company’s operating subsidiary, Vantus Bank was closed by the Office of Thrift Supervision and all assets and liabilities of Vantus Bank were transferred to the Federal Deposit Insurance Corporation in its capacity as receiver for Vantus Bank. After the closure, Vantus Bank, the Company has no substantive operations or productive assets. The Company’s Board of Directors approved a Plan of Dissolution on September 29, 2009 and intends to submit the plan for shareholder approval. The principal terms of the Plan of Dissolution provide for:

the voluntary dissolution of the Company and the winding up of its business and affairs in accordance with Delaware law; and

· the distribution to the Company’s stockholders of the Company’s remaining assets.

First Federal Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The closure of the Bank and the Board’s intent to pursue a Plan of Dissolution gives rise to substantial doubt about the Company’s ability to continue as a going concern.

Note 3. Discontinued Operations

On September 4, 2009, Vantus Bank was closed and the FDIC appointed receiver. The operations of Vantus Bank have been accounted for as discontinued operations as follows:

VANTUS BANK
ASSETS AND LIABILITIES OF
DISCONTINUED OPERATIONS	June 30,
	2009


Assets:
Cash and cash equivalents	$	55,510,269
Securities and mortgage-backed securities		53,586,216
Loans receivable		335,095,430
Office properties and equipment		16,081,936
Other assets		31,216,989
Assets of discontinued operations	$	491,490,840

Liabilities:
Deposits	$	393,802,114
Advances from FHLB and other borrowings
Other liabilities		5,959,348
Liabilities of discontinued operations	$	501,653,388

First Federal Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

VANTUS BANK
DISCONTINUED OPERATIONS
	Three-Months
	Ended
	September 30,
	2008
	(Unaudited)

Net interest income	$	4,488,067
Provision for loan losses		(712,857	)
Net interest income after provision for loan losses		3,775,210
Noninterest income		1,525,185
Noninterest expense		(4,876,419	)
Other discontinued operations		-
Impairment on securities recognized in operations		(1,799,719	)
Income (loss) from discontinued operations before
income tax benefit (expense)	$	(1,375,743	)

Net loss from discontinued operations before income tax benefit for the period July 1, 2009 through August 31, 2009 amounted to $52,589. Components of such loss and results of discontinued operations for the period September 1, 2009 through September 4, 2009 are not available. Upon closure of the Bank, assets of approximately $491.5 million and liabilities of approximately $501.7 million were transferred to the FDIC, resulting in a gain of $10.2 million.

Note 4. Income Taxes

Legislation was enacted November 6, 2009 which permits corporate taxpayers to elect to carryback net operating losses up to five years. At June 30, 2009 the Company had a net operating loss carryforward for income tax purposes of approximately $8,900,000. The Company has not yet determined whether it will be entitled to a refund under the recently enacted legislation.

Note 5. Contingencies

The Company is involved with various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results of its operations.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis in this section should be read in conjunction with Part I, Item 8, “Financial Statements”, as well as Part I, Item 3, “Quantitative and Qualitative Disclosures about Market Risk”, and Part II, Item 5, “Other Information.” All information in this section related to September 30, 2009 and September 30, 2008 is unaudited.

Overview

First Federal Bankshares, Inc. (the “Company”) is a Delaware corporation that previously served as the holding company for Vantus Bank (formerly known as “First Federal Bank”), a federally-chartered stock savings bank headquartered in Sioux City, Iowa (the “Bank”).

The Company’s principal executive office is located at 423 Sixth Street, Suite 400, Sioux City, Iowa, 51101, and its telephone number at that address is (888) 859-5424. The Company has no website. The Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act are filed with the Securities and Exchange Commission (“SEC”) and available on the SEC website (www.sec.gov).

On September 4, 2009, the Company’s operating subsidiary, Vantus Bank, was closed by the Office of Thrift Supervision (“OTS”) and all assets and liabilities of Vantus Bank were transferred to the Federal Deposit Insurance Corporation (“FDIC”) in its capacity as receiver for Vantus Bank. Subsequently, Great Southern Bank assumed all of the deposits of the Bank and purchased certain of the Bank’s assets in a transaction facilitated by the FDIC. The Company did not receive any proceeds from the transaction with Great Southern Bank. Since the closure of Vantus Bank, the Company has had no substantive operations or productive assets.

As of September 30, 2009, the Company engaged in no substantial activities. At September 30, 2009, the Company had total assets of $766,000, consisting of approximately $609,000 of cash and approximately $157,000 of prepaid expenses consisting of prepaid professional fees. Stockholders’ equity (deficit) at September 30, 2009 was $737,000.

Results of Operations

The operations of Vantus Bank have been presented as discontinued operations. See Note 4 of Notes to Consolidated Financial Statements for more information. The Company has no ongoing operations. Total assets of the Company at September 30, 2009 were $766,000, consisting of approximately $609,000 of cash and approximately $157,000 of other assets consisting primarily of prepaid professional fees.

The Company recorded net income of $10.1 million for the three-months ended September 30, 2009 compared to a net loss of $798,000 for the three months ended September 30, 2008. The income for the 2009 period includes a non-cash gain of $10.2 million. Upon closure of Vantus Bank, assets of approximately $491.5 million and liabilities of approximately $501.7 million were transferred to the FDIC, resulting in a gain of $10.2 million. Since the Company’s sole source of income at present is interest on a money market account, it is likely that company will incur operating losses due to costs associated with winding up of the affairs of the Company. Legislation was enacted November 6, 2009 which permits corporate taxpayers to elect to carryback net operating losses up to five years, rather than two years under prior tax law. The Company has not yet determined whether it will be entitled to a refund under the recently enacted legislation. Refunds, if any, may be an additional source of income for the Company.

Net income for the three months ended September 30, 2009 was $10.1 million, compared to net loss of $798,000 for the three months ended September 30, 2008. The net income was due to the gain resulting from the transfer of assets and liabilities to the FDIC in connection with the closure of Vantus Bank, offset by an increase in professional fees, insurance and regulatory expenses and by lower average balances and interest rates on interest earning assets. Without that gain, the Company would have had a net loss of $52,000 of the three months ended September 30, 2009.

Three-months ended September 30, 2009 (Unaudited) compared to September 30, 2008 (Unaudited)

Income from discontinued operations was $10.2 million for the three months ended September 30, 2009. Upon closure of Vantus Bank, assets of approximately $491.5 million and liabilities of approximately $501.7 million were transferred to the FDIC, resulting in a gain of $10.2 million. This gain compared to a loss of $786,000 for the three months ended September 30, 2008, which represents equity in loss for the Bank. Net loss from continuing operations amounted to $52,000 compared to $12,000 for the three months ended September 30, 2009 and 2008, respectively.

Interest income declined to $1,600 for the three-months ended September 30, 2009 from $16,400 for the three-months ended September 30, 2008 due primarily to the charge-off of the loan originated by the Company to the Vantus Bank’s Employee Stock Ownership Plan (“ESOP”) of $570,558 as of June 30, 2009, and to the closure of Vantus Bank.

Professional, insurance and regulatory expenses increased from $7,000 for the three months ended September 30, 2008 to $47,000 for the three months ended September 30, 2009 due to fees incurred in efforts to restructure the financial position of the Company and the Bank, as well as winding up the affairs of the Company.

Income tax benefit decreased from $6,000 for the three months ended September 30, 2008 to $0 for the three months ended September 30, 2009. During the year ended June 30, 2009, the Company determined that certain deferred tax assets were non-recoverable and recorded a full valuation allowance. No adjustments have been made for refunds, if any, to which the Company may be entitled under recent tax legislation increasing the number years for carryback of tax net operating losses from two years to five years.

Financial Condition

September 30, 2009 Compared to June 30, 2009

Overview. Total assets decreased from $492.4 million at June 30, 2009 to $766,000 at September 30, 2009. The primary reason for the decline in assets was the closure of the Bank by the FDIC on September 4, 2009. See Note 4 of Notes to Consolidated Financial Statements for more information.

Cash and Cash Equivalents. Cash and cash equivalents decreased from $857,000 at June 30, 2009 to $609,000 at September 30, 2009 due to higher professional, insurance and regulatory expenses related to regulatory issues and other matters.

Assets and Liabilities of Discontinued Operations. As a result of the closure of Vantus Bank on September 4, 2009, the Company had no assets or liabilities of discontinued operations. Discontinued operations of $491.5 million and $501.7 million represent the assets and liabilities, respectively, of the Bank as of June 30, 2009.

Stockholders’ Equity (Deficit). Total stockholders’ equity (deficit) increased from a deficit of $9.4 million at June 30, 2009 to $737,000 at September 30, 2009. The increase in stockholders’ equity (deficit) is related to recognition of a non-cash gain of $10.2 million upon closure of the Bank.

Liquidity and Capital Resources

At September 30, 2009 the Company’s source of funds consisted of checking and money market funds totaling $609,000. See Note 2 on Notes to Consolidated Financial Statements regarding the Company’s future plans. Sources of income for previous periods included interest on the ESOP loan and investment securities.

Legislation was enacted November 6, 2009 which permits corporate taxpayers to elect to carryback net operating losses up to five years. The Company has not yet determined whether it will be entitled to a refund for previous tax years under the recently enacted legislation.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no ongoing operations. Because the Company is no longer engaged in commercial banking activities, it is no longer subject to its primary risks, interest rate risk, credit risk and market risk. At September 30, 2009 the Company has cash and cash equivalents of $609,000 in checking and money market accounts. Because deposits in excess of $250,000 are not insured by the FDIC, the Company is subject to a remote risk that the institution in which the Company deposits its cash funds may fail.

ITEM 4T

CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Interim Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) at the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Interim Chief Financial Officer, the Company also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the Company’s fiscal quarter ended September 30, 2009, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on such evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this report, there were the following significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting: the accounting function has been outsourced to a third party service provider, subject to the oversight of the Chief Executive Officer and Interim Chief Financial Officer and the audit committee, because the Company currently has, and as of September 30, 2009 had, no employees.

PART II – OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

There are various claims and lawsuits in which the Company is periodically involved incident to the Company’s business. In the opinion of management, no material loss is expected from any of such pending claims or lawsuits.

ITEM 1A

RISK FACTORS

There were no material changes during the period covered by this quarterly report to the risk factors previously disclosed in the Company’s annual report on Form 10-K for the year ended June 30, 2009.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

No matters were submitted during the fiscal quarter ended September 30, 2009 to a vote of security holders. Stockholders will vote on the Plan of Dissolution and Liquidation at a special meeting to be held on December 18, 2009.

ITEM 5

OTHER INFORMATION

Plan of Dissolution and Liquidation

The Company’s Board of Directors approved a Plan of Dissolution and Liquidation on September 29, 2009. The Company’s Board of Directors has submitted the Plan of Dissolution and Liquidation to the stockholders for approval at a special meeting of stockholders to be held on December 18, 2009. The principal terms of the Plan of Dissolution provide for:

the voluntary dissolution of the Company and the winding up of its business and affairs in accordance with Delaware law; and

the distribution to the Company’s stockholders of the Company’s remaining assets.

The Company has no ongoing operations. The closure of the Bank and the Board’s intent to pursue a Plan of Dissolution gives rise to substantial doubt about the Company’s ability to continue as a going concern.

Winding up of the Company

In accordance with Delaware law (assuming that the stockholders approve the Plan of Dissolution), the Company’s business and affairs will be wound up under the direction of the Board of Directors. We expect that some of the directors and officers will continue to serve for a period of time after the approval of the Plan of Dissolution, but will then resign and that any vacancies resulting from their resignations will be eliminated by action of the Board of Directors, in accordance with the Bylaws. Depending on the length of time taken to wind up the affairs of the Company, other individuals (who may be former officers or directors of the Company) may be elected by the remaining directors to oversee completion of the winding up. Delaware law also permits the Board of Directors, any creditor or any stockholder to apply to the Delaware courts at any time during the winding up proceedings to have such proceedings continued under the law and the supervision of the court.

In the event the Company’s winding up takes materially longer than anticipated, the Company’s Board of Directors may establish a liquidating trust to administer the remaining tasks involved in winding up the Company’s affairs. In such event, the remaining assets of the Company would be transferred to the liquidating trust and the Company’s stockholders would become the beneficiaries of the trust. Beneficial interests in the trust likely would not be transferable (except by operation of law).

No federal or state regulatory approvals are required in order for the Company to effectuate the Plan of Dissolution, other than compliance with the applicable laws of Delaware governing the winding up of corporations, with which the Company expects to be able to comply in the ordinary course.

We presently believe that the Company has no material liabilities. Barring unforeseen events, we anticipate that we will be able to complete the Company’s winding up and make a distribution to stockholders as soon as the fourth calendar quarter of 2009 or the first calendar quarter of 2010. However, there is no assurance that the winding up of the Company will not take longer than anticipated. It may take longer than currently anticipated to complete the necessary proceedings and unanticipated claims may be raised against the Company, the resolution of which may delay completion of the Company’s winding up. It may also be necessary for the Company to use its assets as security for asserted claims. In addition, if there are valid claims against the Company, it may be necessary for the Company to satisfy these claims out of its assets. Accordingly, there is no assurance that we will be able to distribute all, or any, of the assets to stockholders as anticipated.

ITEM 6

EXHIBITS

Regulation S-K
Exhibit Number	Document

3(i)	Articles of Incorporation (1)

3(ii)	Bylaws (2)

10.1	Plan of Dissolution and Liquidation (3)

10.2	First Federal Bankshares, Inc. 2006 Stock Incentive Plan (4)

10.3	2005 Deferred Compensation Plan for Directors (5)

31	Certification of Chief Executive Officer and Interim Chief Financial Officer Pursuant to Section 302

32	Certification Pursuant to Section 906

(1)	Filed as an exhibit to the Company’s Registration Statement on Form S-1, and any amendments thereto, with the Securities and Exchange Commission on December 18, 1998. (Registration No. 333-69245).

(2)	Filed as an exhibit to Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 13, 2008. (File No. 000-25509).

(3)	Filed as an exhibit to the Company’s Proxy Statement on Form DEF14A Stockholders filed with the Securities and Exchange Commission on November 17, 2009. (File No. 000-25509).

(4)	Filed as an exhibit to the Company’s Proxy Statement for the 2006 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on September 21, 2006. (File No. 000-025509).

(5)	Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2004. (File No. 000-025509).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST FEDERAL BANKSHARES, INC.


Date: December 10, 2009	By:	/s/ Barry E. Backhaus
		Barry E. Backhaus President, Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

By:	/s/ Barry E. Backhaus	By:	/s/ Jon G. Cleghorn
	Barry E. Backhaus President, Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board		Jon G. Cleghorn Vice President, Secretary and Director

Date:	December 10, 2009	Date:	December 10, 2009

By:	/s/ Arlene T. Curry	By:	/s/ Charles D. Terlouw
	Arlene T. Curry Director		Charles D. Terlouw Director

Date:	December 10, 2009	Date:	December 10, 2009

By:	/s/ Gary L. Evans	By:	/s/ Allen J. Johnson
	Gary L. Evans Director		Allen J. Johnson Director

Date:	December 10, 2009	Date:	December 10, 2009

By:	/s/ David Roederer	By:	/s/ Ronald A. Jorgensen
	David Roederer Director		Ronald A. Jorgensen Director

Date:	December 10, 2009	Date:	December 10, 2009

FIRST FEDERAL BANKSHARES INC 10-Q