UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly Period Ended June 30, 2008
OR
*
TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission
File Number: 1-9566
FIRSTFED FINANCIAL
CORP
.
(Exact
name of registrant as specified in its charter)
Delaware
|
95-4087449
|
(State or
other jurisdiction of incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
12555
W. Jefferson Boulevard, Los Angeles, California
|
90066
|
(Address of
principal executive offices)
|
(Zip
Code)
|
(310)
302-5600
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, $0.01 par value
Title of
Class
Securities
registered pursuant to section 12(g) of the Act:
None
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 12 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
R
No
*
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated
filer
*
Accelerated
filer
R
Non-accelerated filer
*
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
*
No
R
As
of August 1, 2008, 13,684,553 shares of the Registrant's $0.01 par value
common stock were outstanding.
|
FirstFed
Financial Corp.
|
|
Index
|
|
Report
on Form 10-Q
|
|
For
the Quarterly Period Ended June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
Part
I.
|
Financial
Information
|
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets as of June 30, 2008, December 31, 2007 and June 30,
2007
|
3
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations for the three and six months ended June 30, 2008
and 2007
|
4
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the six months ended June 30, 2008 and
2007
|
5
|
|
|
|
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
6
|
|
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Consolidated Balance Sheets and Consolidated
Statements of Operations
|
16
|
|
|
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
33
|
|
|
|
|
|
|
|
Item
4.
|
Controls
and Procedures
|
33
|
|
|
|
|
|
|
Part
II.
|
Other
Information
|
(omitted
items are inapplicable)
|
|
|
|
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
34
|
|
|
|
|
|
|
|
Item
6.
|
Exhibits
|
34
|
|
|
|
|
|
|
Signatures
|
|
|
35
|
|
|
|
|
|
|
Exhibits
|
|
|
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
36
|
|
|
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
37
|
|
|
|
|
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 USC Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
38
|
|
|
|
|
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 USC Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
39
|
|
PART
I - FINANCIAL STATEMENTS
Item
1. Financial Statements
FirstFed
Financial Corp. and Subsidiary
Consolidated
Balance Sheets
(Dollars
in thousands, except share data)
(Unaudited)
|
|
June
30,
2008
|
|
|
December
31, 2007
|
|
|
June
30,
2007
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
49,869
|
|
|
$
|
53,974
|
|
|
$
|
89,896
|
|
Investment
securities, available-for-sale
(at
fair value)
|
|
|
340,586
|
|
|
|
316,788
|
|
|
|
296,046
|
|
Mortgage-backed
securities, available-for-sale (at fair value)
|
|
|
43,233
|
|
|
|
46,435
|
|
|
|
50,569
|
|
Loans
receivable, held for sale (fair value $0, $0 and
$63,056)
|
|
|
—
|
|
|
|
—
|
|
|
|
62,338
|
|
Loans
receivable, net of allowances for loan losses of $259,695, $128,058
and $114,894
|
|
|
6,299,039
|
|
|
|
6,518,214
|
|
|
|
6,932,088
|
|
Accrued
interest and dividends receivable
|
|
|
35,409
|
|
|
|
45,492
|
|
|
|
46,083
|
|
Real
estate owned, net (REO)
|
|
|
96,665
|
|
|
|
21,090
|
|
|
|
11,774
|
|
Office
properties and equipment, net
|
|
|
20,197
|
|
|
|
17,785
|
|
|
|
16,480
|
|
Investment
in Federal Home Loan Bank (FHLB) stock, at cost
|
|
|
121,307
|
|
|
|
104,387
|
|
|
|
84,431
|
|
Other
assets
|
|
|
171,831
|
|
|
|
98,816
|
|
|
|
79,581
|
|
|
|
$
|
7,178,136
|
|
|
$
|
7,222,981
|
|
|
$
|
7,669,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
3,850,828
|
|
|
$
|
4,156,692
|
|
|
$
|
4,848,040
|
|
FHLB
advances
|
|
|
2,199,000
|
|
|
|
2,084,000
|
|
|
|
945,000
|
|
Securities
sold under agreements to repurchase
|
|
|
370,000
|
|
|
|
120,000
|
|
|
|
900,900
|
|
Senior
debentures
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
150,000
|
|
Accrued
expenses and other liabilities
|
|
|
57,411
|
|
|
|
57,790
|
|
|
|
101,012
|
|
|
|
|
6,627,239
|
|
|
|
6,568,482
|
|
|
|
6,944,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, par value $.01 per share; authorized 100,000,000
shares;
|
|
|
|
|
|
|
|
|
|
|
|
|
issued 24,002,093,
23,970,227 and 23,966,227 shares; outstanding 13,684,553, 13,640,997, and
16,009,977 shares
|
|
|
240
|
|
|
|
240
|
|
|
|
240
|
|
Additional
paid-in capital
|
|
|
56,504
|
|
|
|
55,232
|
|
|
|
54,313
|
|
Retained
earnings
|
|
|
760,118
|
|
|
|
865,411
|
|
|
|
833,992
|
|
Unreleased
shares to employee stock ownership plan
|
|
|
—
|
|
|
|
(339
|
)
|
|
|
(1,365
|
)
|
Treasury
stock, at cost, 10,317,540, 10,329,230, and 7,956,250
shares
|
|
|
(266,040
|
)
|
|
|
(266,040
|
)
|
|
|
(160,291
|
)
|
Accumulated
other comprehensive income (loss),
net
of taxes
|
|
|
75
|
|
|
|
(5
|
)
|
|
|
(2,555
|
)
|
|
|
|
550,897
|
|
|
|
654,499
|
|
|
|
724,334
|
|
|
|
$
|
7,178,136
|
|
|
$
|
7,222,981
|
|
|
$
|
7,669,286
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
FirstFed
Financial Corp. and Subsidiary
Consolidated
Statements of Operations
(Dollars
in thousands, except per share data)
(Unaudited)
|
|
Three
months ended June 30,
|
|
|
Six
months ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Interest
and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on loans
|
|
$
|
95,193
|
|
|
$
|
148,512
|
|
|
$
|
204,666
|
|
|
$
|
311,833
|
|
Interest
on mortgage-backed securities
|
|
|
523
|
|
|
|
681
|
|
|
|
1,116
|
|
|
|
1,390
|
|
Interest
and dividends on investments
|
|
|
5,876
|
|
|
|
5,543
|
|
|
|
11,398
|
|
|
|
11,930
|
|
Total
interest income
|
|
|
101,592
|
|
|
|
154,736
|
|
|
|
217,180
|
|
|
|
325,153
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
33,122
|
|
|
|
54,053
|
|
|
|
73,458
|
|
|
|
115,118
|
|
Interest
on borrowings
|
|
|
23,766
|
|
|
|
30,991
|
|
|
|
49,677
|
|
|
|
65,125
|
|
Total
interest expense
|
|
|
56,888
|
|
|
|
85,044
|
|
|
|
123,135
|
|
|
|
180,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
44,704
|
|
|
|
69,692
|
|
|
|
94,045
|
|
|
|
144,910
|
|
Provision
for loan losses
|
|
|
90,200
|
|
|
|
3,100
|
|
|
|
240,500
|
|
|
|
6,900
|
|
Net
interest (loss) income after provision for loan losses
|
|
|
(45,496
|
)
|
|
|
66,592
|
|
|
|
(146,455
|
)
|
|
|
138,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
servicing and other fees
|
|
|
2,785
|
|
|
|
854
|
|
|
|
3,258
|
|
|
|
1,814
|
|
Banking
service fees
|
|
|
1,752
|
|
|
|
1,686
|
|
|
|
3,458
|
|
|
|
3,372
|
|
Gain
on sale of loans
|
|
|
7
|
|
|
|
1,482
|
|
|
|
20
|
|
|
|
4,438
|
|
Net
gain (loss) on real estate owned
|
|
|
3,371
|
|
|
|
(103
|
)
|
|
|
3,187
|
|
|
|
(189
|
)
|
Other
operating income
|
|
|
1,706
|
|
|
|
423
|
|
|
|
2,724
|
|
|
|
759
|
|
Total
other income
|
|
|
9,621
|
|
|
|
4,342
|
|
|
|
12,647
|
|
|
|
10,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
13,143
|
|
|
|
12,044
|
|
|
|
24,351
|
|
|
|
24,753
|
|
Occupancy
|
|
|
2,849
|
|
|
|
2,997
|
|
|
|
7,903
|
|
|
|
5,800
|
|
Advertising
|
|
|
300
|
|
|
|
208
|
|
|
|
335
|
|
|
|
442
|
|
Amortization
of core deposit intangible
|
|
|
126
|
|
|
|
126
|
|
|
|
253
|
|
|
|
625
|
|
Federal
deposit insurance
|
|
|
1,352
|
|
|
|
924
|
|
|
|
1,896
|
|
|
|
1,552
|
|
Data
processing
|
|
|
571
|
|
|
|
582
|
|
|
|
1,108
|
|
|
|
1,203
|
|
OTS
assessment
|
|
|
454
|
|
|
|
577
|
|
|
|
908
|
|
|
|
1,153
|
|
Legal
|
|
|
494
|
|
|
|
522
|
|
|
|
1,183
|
|
|
|
993
|
|
Real
estate owned operations
|
|
|
3,153
|
|
|
|
369
|
|
|
|
4,389
|
|
|
|
555
|
|
Other
operating expense
|
|
|
2,632
|
|
|
|
2,591
|
|
|
|
4,866
|
|
|
|
4,711
|
|
Total
non-interest expense
|
|
|
25,074
|
|
|
|
20,940
|
|
|
|
47,192
|
|
|
|
41,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income before income taxes
|
|
|
(60,949
|
)
|
|
|
49,994
|
|
|
|
(181,000
|
)
|
|
|
106,417
|
|
Income
taxes (benefit) expenses
|
|
|
(25,437
|
)
|
|
|
20,923
|
|
|
|
(75,707
|
)
|
|
|
44,962
|
|
Net
(loss) income
|
|
$
|
(35,512
|
)
|
|
$
|
29,071
|
|
|
$
|
(105,293
|
)
|
|
$
|
61,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
$
|
(35,512
|
)
|
|
$
|
29,071
|
|
|
$
|
(105,293
|
)
|
|
$
|
61,455
|
|
Other
comprehensive (loss) income, net of taxes (benefits)
|
|
|
(1,052
|
)
|
|
|
(656
|
)
|
|
|
80
|
|
|
|
(711
|
)
|
Comprehensive
(loss) income
|
|
$
|
(36,564
|
)
|
|
$
|
28,415
|
|
|
$
|
(105,213
|
)
|
|
$
|
60,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.60
|
)
|
|
$
|
1.77
|
|
|
$
|
(7.71
|
)
|
|
$
|
3.72
|
|
Diluted
|
|
$
|
(2.60
|
)
|
|
$
|
1.74
|
|
|
$
|
(7.71
|
)
|
|
$
|
3.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,668,097
|
|
|
|
16,458,283
|
|
|
|
13,661,856
|
|
|
|
16,539,440
|
|
Diluted
|
|
|
13,668,097
|
|
|
|
16,671,802
|
|
|
|
13,661,856
|
|
|
|
16,774,887
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
FirstFed
Financial Corp. and Subsidiary
Consolidated
Statements of Cash Flows
(Dollars
in thousands)
(Unaudited)
|
|
Six
months ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
(loss) income
|
|
$
|
(105,293
|
)
|
|
$
|
61,455
|
|
Adjustments
to reconcile net income to
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Net
change in loans held for sale
|
|
|
—
|
|
|
|
79,548
|
|
Stock
option compensation
|
|
|
1,082
|
|
|
|
912
|
|
Excess
tax benefits related to stock option awards
|
|
|
(29
|
)
|
|
|
(794
|
)
|
Depreciation
and amortization
|
|
|
1,239
|
|
|
|
1,233
|
|
Provision
for loan losses
|
|
|
240,500
|
|
|
|
6,900
|
|
Amortization
of fees and premiums/discounts
|
|
|
7,830
|
|
|
|
20,601
|
|
Increase
in interest income accrued in excess of borrower payments
|
|
|
(586
|
)
|
|
|
(51,679
|
)
|
Gain
on sale of real estate owned, net
|
|
|
(9,705
|
)
|
|
|
80
|
|
REO
write down
|
|
|
6,518
|
|
|
|
109
|
|
Gain
on sale of loans
|
|
|
(20
|
)
|
|
|
(4,438
|
)
|
FHLB
stock dividends
|
|
|
(2,755
|
)
|
|
|
(2,933
|
)
|
Change
in deferred taxes
|
|
|
(54,496
|
)
|
|
|
(15,210
|
)
|
Change
in current taxes
|
|
|
(20,315
|
)
|
|
|
1,412
|
|
Decrease
in interest and dividends receivable
|
|
|
10,083
|
|
|
|
8,729
|
|
Decrease
in interest payable
|
|
|
(4,451
|
)
|
|
|
(28,771
|
)
|
Amortization
of core deposit intangible asset
|
|
|
253
|
|
|
|
625
|
|
Decrease
in other assets
|
|
|
1,468
|
|
|
|
2,064
|
|
Increase
(decrease) in accrued expenses and other liabilities
|
|
|
4,071
|
|
|
|
(251
|
)
|
Total
adjustments
|
|
|
180,705
|
|
|
|
18,137
|
|
Net
cash provided by operating activities
|
|
|
75,412
|
|
|
|
79,592
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Loans
made to customers and principal collections on loans, net
|
|
|
(154,344
|
)
|
|
|
1,456,973
|
|
Loans
purchased
|
|
|
(5,935
|
)
|
|
|
—
|
|
Proceeds
from sale of real estate
|
|
|
59,100
|
|
|
|
4,343
|
|
Proceeds
from maturities and principal payments of investment securities, available
for sale
|
|
|
26,715
|
|
|
|
34,630
|
|
Principal
reductions on mortgage-backed securities, available for
sale
|
|
|
3,198
|
|
|
|
6,485
|
|
Purchase
of investment securities, available for sale
|
|
|
(50,129
|
)
|
|
|
(20,000
|
)
|
(Purchase)
redemption of FHLB stock, net
|
|
|
(14,165
|
)
|
|
|
37,481
|
|
Purchases
of premises and equipment
|
|
|
(3,651
|
)
|
|
|
(1,144
|
)
|
Net
cash (used in) provided by investing activities
|
|
|
(139,211
|
)
|
|
|
1,518,768
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
increase in retail and commercial deposits
|
|
|
17,649
|
|
|
|
158,061
|
|
Net
decrease in brokered deposits
|
|
|
(323,513
|
)
|
|
|
(1,199,902
|
)
|
Net
increase (decrease) in short term borrowings
|
|
|
70,000
|
|
|
|
(622,548
|
)
|
Net
increase in long term borrowings
|
|
|
295,000
|
|
|
|
50,000
|
|
Proceeds
from stock options exercised
|
|
|
529
|
|
|
|
2,473
|
|
Purchases
of treasury stock
|
|
|
—
|
|
|
|
(46,515
|
)
|
Excess
tax benefits related to stock option awards
|
|
|
29
|
|
|
|
794
|
|
Other
|
|
|
—
|
|
|
|
(1,917
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
59,694
|
|
|
|
(1,659,554
|
)
|
Net
decrease in cash and cash equivalents
|
|
|
(4,105
|
)
|
|
|
(61,194
|
)
|
Cash
and cash equivalents at beginning of period
|
|
|
53,974
|
|
|
|
151,090
|
|
Cash
and cash equivalents at end of period
|
|
$
|
$49,869
|
|
|
$
|
89,896
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
FirstFed
Financial Corp. and Subsidiary
Notes
to Consolidated Financial Statements
(Unaudited)
1.
Basis of Presentation
The
unaudited consolidated financial statements included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission and in accordance with accounting principles generally
accepted in the United States. In the opinion of the Company, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the results of operations for the periods covered have been made. Certain
information and note disclosures normally included in financial statements
presented in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules
and regulations. The Company believes that the disclosures are adequate to make
the information presented not misleading.
It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company’s latest
annual report on Form 10-K, which contains the latest available audited
consolidated financial statements and notes thereto, which are as of and for the
year ended December 31, 2007. The results for the periods covered hereby are not
necessarily indicative of the operating results for a full
year.
2.
(Loss) Earnings per Share
Basic
(loss) earnings per share were computed by dividing net (loss) income by the
weighted average number of shares of common stock outstanding for the period.
Additionally diluted earnings per share include the effect of stock options and
non-vested restricted stock, if dilutive. (Loss) earnings per common share have
been computed based on the following:
|
|
Three
months ended
June
30,
|
|
2008
|
|
2007
|
|
|
(Dollars
in thousands, except share data)
|
Net
(loss) income
|
$
|
(35,512)
|
$
|
29,071
|
|
|
|
|
|
Average
number of common shares outstanding
|
|
13,668,097
|
|
16,458,283
|
Effect
of dilutive stock
options
|
|
—
|
|
213,519
|
Average
number of common shares outstanding used to
calculate (loss)
earnings per common share
|
|
13,668,097
|
|
16,671,802
|
There was
no dilutive effect during the second quarter of 2008, since the Company was in a
net loss position. There were 866,747 and 248,944 anti-dilutive shares excluded
from the weighted average shares outstanding calculation during the second
quarter of 2008 and 2007.
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands, except share data)
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
$
|
(105,293
|
)
|
|
$
|
61,455
|
|
|
|
|
|
|
|
|
|
|
Average
number of common shares outstanding
|
|
|
13,661,856
|
|
|
|
16,539,440
|
|
Effect
of dilutive stock
options
|
|
|
—
|
|
|
|
235,447
|
|
Average
number of common shares outstanding used to calculate
diluted (loss) earnings per common share
|
|
|
13,661,856
|
|
|
|
16,774,887
|
|
There was
no dilutive effect during the first six months of 2008, since the Company was in
a net loss position. There were 866,747 and 248,944 anti-dilutive shares
excluded from the weighted average shares outstanding calculation during the six
months of 2008 and 2007.
3.
Cash and Cash Equivalents
For
purposes of reporting cash flows on the Consolidated Statements of Cash Flows,
cash and cash equivalents include cash, overnight investments and securities
purchased under agreements to resell which mature within 90 days of the date of
purchase.
4.
Loan Loss Allowances
Listed
below is a summary of activity in the general valuation allowance and the
valuation allowance for impaired loans during the periods
indicated.
|
|
General
Valuation Allowance
|
|
|
Valuation
Allowances
For
Impaired
Loans
|
|
|
Total
|
|
|
|
(Dollars
in thousands)
|
|
Balance
at December 31, 2007
|
|
$
|
127,503
|
|
|
$
|
555
|
|
|
$
|
128,058
|
|
Provision
for loan losses
|
|
|
204,648
|
|
|
|
35,852
|
|
|
|
240,500
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single
family
|
|
|
(109,472
|
)
|
|
|
—
|
|
|
|
(109,472
|
)
|
Total
charge-offs
|
|
|
(109,472
|
)
|
|
|
—
|
|
|
|
(109,472
|
)
|
Recoveries
|
|
|
609
|
|
|
|
—
|
|
|
|
609
|
|
Net
(charge-offs)/recoveries
|
|
|
(108,863
|
)
|
|
|
—
|
|
|
|
(108,863
|
)
|
Transfers
|
|
|
3,589
|
|
|
|
(3,589
|
)
|
|
|
—
|
|
Balance
at June 30, 2008
|
|
$
|
226,877
|
|
|
$
|
32,818
|
|
|
$
|
259,695
|
|
|
|
General
Valuation Allowance
|
|
|
Valuation
Allowances
For
Impaired
Loans
|
|
|
Total
|
|
|
|
(Dollars
in thousands)
|
|
Balance
at December 31, 2006:
|
|
$
|
109,768
|
|
|
$
|
—
|
|
|
$
|
109,768
|
|
Provision
for loan losses
|
|
|
6,900
|
|
|
|
—
|
|
|
|
6,900
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single
family
|
|
|
(1,801
|
)
|
|
|
—
|
|
|
|
(1,801
|
)
|
Consumer
loans
|
|
|
(50
|
)
|
|
|
—
|
|
|
|
(50
|
)
|
Total
charge-offs
|
|
|
(1,851
|
)
|
|
|
—
|
|
|
|
(1,851
|
)
|
Recoveries
|
|
|
77
|
|
|
|
—
|
|
|
|
77
|
|
Net
(charge-offs)/recoveries
|
|
|
(1,774
|
)
|
|
|
—
|
|
|
|
(1,774
|
)
|
Balance
at June 30, 2007:
|
|
$
|
114,894
|
|
|
$
|
—
|
|
|
$
|
114,894
|
|
5.
Impaired Loans and Troubled Debt Restructurings
The
Company considers a loan impaired when management believes that it is probable
that the Company willnot be able to collect all amounts due under the
contractual terms of
the loan agreement.
Estimatedimpairment losses are recorded as separate valuation allowances and may
be subsequently adjusted based upon changes in the measurement of impairment.
Impaired loans, disclosed net of valuation allowances, include non-accrual major
loans (commercial business loans with an outstanding principal amount greater
than or equal to $500 thousand, single family loans greater than or equal to
$1.0 million, and income property loans with an outstanding principal amount
greater than or equal to $1.5 million), modified loans which are considered
troubled debt restructurings because they do not meet the Company’s current
product offerings and underwriting standards, and major loans less than 90 days
delinquent for which full payment of principal and interest is not expected to
be received.
The
following is a summary of impaired loans, net of valuation allowances for
impairment, at the datesindicated:
|
|
June
30, 2008
|
|
December
31, 2007
|
|
June
30, 2007
|
|
|
(Dollars
in thousands)
|
Troubled
debt
restructurings
|
$
|
308,700
|
$
|
1,799
|
$
|
—
|
Non-accrual
loans
|
|
29,910
|
|
20,112
|
|
11,489
|
Other
impaired loans
|
|
744
|
|
1,625
|
|
3,997
|
|
$
|
339,354
|
$
|
23,536
|
$
|
15,486
|
When a
loan is considered impaired, the Company measures impairment based on the
present value of expected future cash flows discounted at the loan's effective
interest rate. However, if the loan is "collateral-dependent" or foreclosure is
probable, impairment is measured based on the fair value of the collateral. When
the measure of an impaired loan is less than the recorded investment in the
loan, the Company records an impairment allowance equal to the excess of the
recorded investment in the loan over its measured value.
The
following is a summary of information pertaining to impaired loans at the dates
indicated:
|
|
June
30,
2008
|
|
|
December
31,
2007
|
|
|
June
30,
2007
|
|
|
(Dollars in
thousands)
|
|
Impaired
loans without valuation allowances
|
|
$
|
12,941
|
|
|
$
|
16,606
|
|
|
$
|
15,486
|
|
Impaired
loans with valuation allowances
|
|
|
359,231
|
|
|
|
7,485
|
|
|
|
—
|
|
Valuation
allowances on impaired loans
|
|
|
(32,818
|
)
|
|
|
(555
|
)
|
|
|
—
|
|
|
|
Six
months ended
|
|
|
|
June
30,
2008
|
|
|
June
30,
2007
|
|
|
|
(Dollars
in thousands)
|
|
Average
investment in impaired loans
|
|
$
|
260,386
|
|
|
$
|
11,431
|
|
Interest
recognized on impaired loans using the accrual basis of income
recognition
|
|
|
1,952
|
|
|
|
83
|
|
Interest recognized on impaired loans using the cash basis of income
recognition
|
|
|
1,954
|
|
|
|
82
|
|
6.
Real Estate Owned Activity
The
following table shows activity in real estate owned (REO) during the periods
indicated:
|
|
Six
months ended
|
|
|
|
June
30, 2008
|
|
|
June
30,
2007
|
|
|
|
(Dollars
in thousands)
|
|
Beginning
Balance
|
|
$
|
21,090
|
|
|
$
|
1,094
|
|
Acquisitions
|
|
|
131,488
|
|
|
|
15,212
|
|
Write-downs
|
|
|
(6,518
|
)
|
|
|
(109
|
)
|
Sales
of REO
|
|
|
(49,395
|
)
|
|
|
(4,423
|
)
|
Ending
Balance
|
|
$
|
96,665
|
|
|
$
|
11,774
|
|
Net gain
(loss) on real estate owned is comprised of the following items for the periods
indicated:
|
|
Three
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Gain
on sale of REO
|
|
$
|
7,359
|
|
|
$
|
101
|
|
Loss
on sale of REO
|
|
|
(234
|
)
|
|
|
(180
|
)
|
Write
downs on REO
|
|
|
(3,754
|
)
|
|
|
(24
|
)
|
|
|
$
|
3,371
|
|
|
$
|
(103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Gain
on sale of REO
|
|
$
|
10,007
|
|
|
$
|
101
|
|
Loss
on sale of REO
|
|
|
(302
|
)
|
|
|
(181
|
)
|
Write
downs on REO
|
|
|
(6,518
|
)
|
|
|
(109
|
)
|
|
|
$
|
3,187
|
|
|
$
|
(189
|
)
|
|
|
|
|
|
|
|
|
|
The
following items are included in real estate owned operations for the periods
indicated:
|
|
Three
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Single
family expense
|
|
$
|
3,098
|
|
|
$
|
277
|
|
Single
family income
|
|
|
(23
|
)
|
|
|
—
|
|
Multi-family
expense
|
|
|
78
|
|
|
|
92
|
|
|
|
$
|
3,153
|
|
|
$
|
369
|
|
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Single
family expense
|
|
$
|
4,309
|
|
|
$
|
362
|
|
Single
family income
|
|
|
(32
|
)
|
|
|
—
|
|
Multi-family
expense
|
|
|
112
|
|
|
|
193
|
|
|
|
$
|
4,389
|
|
|
$
|
555
|
|
7.
Income Taxes
|
Statement
of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income
Taxes
, requires that, when determining the need for a
valuationallowance against a deferred tax asset, management must asses
both positive and negative evidencewith regard to the realizability of the
tax losses represented by that asset. To the extent that available sources
of taxable income are insufficient to absorb tax losses, a valuation
allowance is necessary. Sources of taxable income for this analysis
include prior years’ tax returns, the expected reversals of taxable
temporary differences between book and tax income, prudent and feasible
tax planning strategies and future taxable income. The Company’s tax asset
has increased substantially during the first six months of 2008 due to a
significant increase in its loan loss allowances. The deferred tax asset
related to loan loss allowances will be realized when actual charge-offs
are made against the loan loss allowances. Based on the availability of
loss carry-backs and projected taxable income during the periods for which
loss carry-forwards are available, management believes that no valuation
allowance is necessary at this
time.
|
|
The
deferred tax asset increased to $135.2 million at June 30, 2008 compared
to $80.7 million at December 31, 2007 and $71.4 million at June 30, 2007.
Income taxes receivable increased to $29.4 million at June 30, 2008 from
$9.1 million at December 31, 2007. At June 30, 2007, income taxes payable
were $559 thousand.
|
8.
Fair Value Measurements
SFAS
No. 157,
Fair Value
Measurements
, defines fair value, establishes a framework for measuring
fair value, establishes a three-level valuation hierarchy for disclosure of fair
value measurement and enhances disclosure requirements for fair value
measurements. The valuation hierarchy is based upon the transparency of inputs
to the valuation of an asset or liability as of the measurement date. The three
levels are defined as follow:
|
|
|
|
|
•
|
|
Level 1
|
|
inputs
to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets.
|
|
|
|
•
|
|
Level 2
|
|
inputs
to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the
full term of the financial instrument.
|
|
|
|
•
|
|
Level 3
|
|
inputs
to the valuation methodology are unobservable and significant to the fair
value
measurement.
|
The
following is a description of the valuation methodologies used for instruments
measured at fair value, as well as the general classification of such
instruments pursuant to the valuation hierarchy:
Assets
Securities
Where
quoted prices are available in an active market, securities are classified
within level 1 of the valuation hierarchy. Level 1 includes securities that have
quoted prices in active markets for identical assets. If quoted market prices
are not available, then fair values are estimated by using pricing models,
quoted prices of securities with similar characteristics, or discounted cash
flow. Examples of such instruments, which would generally be classified within
level 2 of the valuation hierarchy, include certain collateralized mortgage and
debt obligations and certain high-yield debt securities. In certain cases where
there is limited activity or less transparency around inputs to the valuation,
securities are classified within level 3 of the valuation hierarchy. The Company
did not have any level 1 or level 3 securities as of June 30, 2008.
Loans held for
sale
Loans
held for sale are required to be measured based on the lower of cost or fair
value. Under SFAS No. 157, market value is used to represent fair value.
When management has loans held for sale, it obtains quotes or bids on all or
part of these loans directly from the purchasing financial institutions. At June
30, 2008, the Company had no loans held for sale.
Impaired loan
s
SFAS No.
157 applies to loans measured for impairment using the practical expedients
permitted by SFAS No. 114,
Accounting by Creditors for
Impairment of a Loan
, including impaired loans measured at an observable
market price (if available), or at the fair value of the loan’s collateral (if
the loan is collateral dependent). When a modified loan is considered impaired,
the Company measures impairment based on the present value of expected future
cash flows discounted at the loan's effective interest rate. The effective
interest rate of the loan is the interest rate of the loan prior to
restructuring, including adjustment for deferred loan fees or costs. However, if
the loan is "collateral-dependent" or a probable foreclosure, impairment is
measured based on the fair value of the collateral. Fair value of the loan’s
collateral, when the loan is dependent on collateral, is determined by
appraisals or independent valuation which is then adjusted for the cost related
to liquidation of the collateral. When the measure of an impaired loan is less
than the recorded investment in the loan, the Company records an impairment
allowance equal to the excess of our recorded investment in the loan over its
measured value.
Real estate
owned
Certain
assets such as real estate owned (REO) are measured at fair value less the
estimated cost to sell. The Company believes that using fair value as a basis
for measuring REO follows the provisions of SFAS No. 157. The fair value of REO
at June 30, 2008 was determined either by appraisals or independent valuations
which are then adjusted for the cost related to liquidation of the subject
property, or by sales agreement.
Assets
measured at fair value at June 30, 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
Description
|
Total
|
|
Quoted Prices in
Active Markets for
Identical
Assets
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
|
(Dollars
in thousands)
|
Recurring
Items:
|
|
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
Collateralized
mortgage
obligations
|
$
|
340,586
|
|
—
|
|
$
|
340,586
|
|
—
|
Mortgage-backed
securities
|
|
43,233
|
|
—
|
|
|
43,233
|
|
—
|
Total
available-for-sale securities
|
$
|
383,819
|
|
—
|
|
$
|
383,819
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
Description
|
Total
|
|
Quoted Prices in
Active Markets for
Identical
Assets
(Level
1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
|
(Dollars
in thousands)
|
Non-Recurring
Items:
|
|
|
|
|
Impaired
loans
|
$
|
339,354
|
|
—
|
|
$
|
339,354
|
|
—
|
Real estate owned
|
|
96,665
|
|
—
|
|
|
96,665
|
|
—
|
|
$
|
436,019
|
|
—
|
|
$
|
436,019
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Liabilities
The Bank
did not identify any liabilities to be presented at fair value as of June 30,
2008.
9.
Stock Options and Restricted Stock
The
Company recorded stock-based compensation expense of $482 thousand and $968
thousand, net of tax, for the second quarter and the first six months of 2008,
respectively. For the second quarter and the first six months of 2007, the
Company recorded stock-based compensation expense of $363 thousand and $1.0
million, net of tax, respectively.
At June
30, 2008, the Company had options outstanding issued under two share-based
compensation programs, the 1994 Stock Option and Appreciation Rights Plan (“1994
Plan”) and the 1997 Non-employee Directors Stock Incentive Plan (“Directors 1997
Plan”). At June 30, 2008, the number of shares available to be granted for
option awards under the 1994 Plan totaled 1,666,215. The Directors 1997 Plan was
terminated in connection with the implementation of a new restricted stock plan
during 2007. No new grants were made in 2008 under the Directors 1997
Plan.
Options
granted under the 1994 Plan are vested over a six year period and have a maximum
contractual term of 10 years. Options previously granted to non-employee
directors under the Directors 1997 Plan vest in one year and have a maximum
contractual term of 10 years.
Options
under all of the share-based compensation programs are granted with an exercise
price equal to the market price of the Company’s stock at the date of grant. The
fair value of each grant has been estimated as of the grant date using the
Black-Scholes option valuation model. The expected life is estimated based on
the actual weighted average life of historical exercise activity of the grantee
population. The volatility factors are based on the historical volatilities of
the Company’s stock, and these are used to estimate volatilities over the
expected life of the options. The risk-free interest rate is the implied yield
available on zero coupons (U.S. Treasury Rate) at the grant date with a
remaining term equal to the expected life of the options. Estimates of fair
value are not intended to predict actual future events or the value ultimately
realized by employees who receive stock incentive awards, and subsequent events
are not indicative of the reasonableness of the original estimates of fair value
calculated by the Company.
The
weighted average fair value of options granted under the 1994 Plan during the
first quarter of 2008 was $10.91 per share using the following assumptions:
expected volatility of 24%; risk-free interest rate of 3.15%; and an expected
average life of 5.9 years. The weighted average fair value of options granted
under the 1994 Plan during the first quarter of 2007 was $25.30 per share using
the following assumptions; expected volatility of 27%; risk-free interest rate
of 4.87%; and an expected average life of 6.0 years.
The
following is a summary of the Company’s stock option activity for the six months
ended June 30, 2008:
Stock
Options:
|
|
Number
of Shares
|
|
|
Weighted
Average
Exercise Price ($)
|
|
|
Weighted
Average
Remaining Contractual Term (years)
|
|
|
Aggregate
Intrinsic Value
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2008
|
|
|
781,787
|
|
|
$
|
42.67
|
|
|
|
|
|
|
|
Granted
|
|
|
160,800
|
|
|
|
36.07
|
|
|
|
|
|
|
|
Exercised
|
|
|
(31,866
|
)
|
|
|
16.59
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(58,364
|
)
|
|
|
42.54
|
|
|
|
|
|
|
|
Outstanding
at June 30, 2008
|
|
|
852,357
|
|
|
$
|
42.41
|
|
|
|
6.16
|
|
|
$
|
—
|
|
Exercisable
at June 30, 2008
|
|
|
388,145
|
|
|
$
|
29.27
|
|
|
|
5.55
|
|
|
$
|
—
|
|
The total
intrinsic value of options exercised during the second quarter and the first six
months of 2008 was $6 and $445 thousand, respectively. This compares to $1.2
million and $5.2 million during the second quarter and the first six months of
2007, respectively. Cash received from options exercised during the second
quarter and the first six months of 2008 was $117 thousand and $529 thousand,
respectively. Cash received from options exercised during the second quarter and
the first six months of 2007 was $1.2 million and $2.5 million,
respectively.
As of
June 30, 2008, the unearned compensation cost related to non-vested stock
options totaled $3.4 million to be recognized over a weighted average period of
4.27 years.
Restricted
Stock
On April
26, 2007, the stockholders of the Company adopted the 2007 Non-employee
Directors Restricted Stock Plan (“2007 Plan”). Under the 2007 Plan, the Company
may grant up to 200,000 shares to non-employee directors of the Company. 50% of
the restricted shares will vest on the first anniversary date of the issuance
and the remaining 50% will vest on the second anniversary date of the issuance.
The Company issued 1,670 shares of restricted stock to each of the seven
non-employee directors during the first quarter of 2008 compared to 900 shares
during the first quarter of 2007. Upon retirement of a non-employee director,
any non-vested shares of stock shall automatically vest.
The
following is a summary of the Company’s non-vested restricted stock as of June
30, 2008.
Non-vested
Stock:
|
|
Number
of Shares
|
|
|
Weighted
Average
Grant
Date
Fair
Value
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2008
|
|
|
5,400
|
|
|
$
|
67.26
|
|
Granted
|
|
|
11,690
|
|
|
$
|
36.07
|
|
Vested
|
|
|
(2,700
|
)
|
|
$
|
67.26
|
|
Forfeited
|
|
|
—
|
|
|
|
|
|
Outstanding
at June 30, 2008
|
|
|
14,390
|
|
|
$
|
41.92
|
|
The total
fair value of the restricted stock awards that vested during the six months
ended June 30, 2008 was $97 thousand compared to $54 thousand during the same
period in prior year.
Stock-based
compensation expense recorded in connection with the 2007 Plan totaled $118
thousand, net of tax, during the six months ended June 30, 2008. As of June 30,
2008, the total unrecognized compensation cost related to non-vested restricted
awards totaled $309 thousand to be recognized over a weighted average period of
1.35 years.
10.
Supplementary Executive Retirement Plan
The
following table sets forth the net periodic benefit cost attributable to the
Company’s Supplementary Executive Retirement Plan:
|
|
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
June
30,
|
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
|
86
|
|
|
$
|
76
|
|
|
$
|
172
|
|
|
$
|
152
|
|
Interest
cost
|
|
|
257
|
|
|
|
216
|
|
|
|
514
|
|
|
|
432
|
|
Amortization
of net loss
|
|
|
190
|
|
|
|
96
|
|
|
|
380
|
|
|
|
192
|
|
Amortization
of prior service cost
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
periodic benefit cost
|
|
$
|
533
|
|
|
$
|
388
|
|
|
$
|
1,066
|
|
|
$
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
|
|
6.25
|
%
|
|
|
5.75
|
%
|
|
|
6.25
|
%
|
|
|
5.75
|
%
|
Rate
of compensation increase
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
Expected
return on plan assets
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
The
Company does not expect any significant changes to the amounts previously
disclosed as contributions for benefit payments. The quarterly expense has
increased compared to the prior period mainly due to an increase in covered pay
for the participants in 2007.
11.
Recent Accounting Pronouncements
In March 2008, the FASB issued
SFAS No. 161,
Disclosures
about Derivative Instruments and Hedging Activities
. This standard is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity’s financial position, financial
performance, and cash flows. This statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The Company has no derivative
instruments or hedging activities.
In
December 2007, the FASB issued two new statements: (a) SFAS No. 141(revised
2007),
Business
Combinations
, and (b) SFAS No. 160,
Noncontrolling Interests in
Consolidated Financial Statements.
These statements are effective for
fiscal years beginning after December 15, 2008 and the application of these
standards will improve, simplify and converge internationally the accounting for
business combinations and the reporting of noncontrolling interests in financial
statements. The Company is in the process of evaluating the impact, if any, on
SFAS 141 (R) and SFAS 160 and does not anticipate that the adoption of these
standards will have any impact on its financial statements.
(a) SFAS
No. 141 (R) requires an acquiring entity in a business combination to: (i)
recognize all (and only) the assets acquired and the liabilities assumed in the
transaction, (ii) establish an acquisition-date fair value as the measurement
objective for all assets acquired and the liabilities assumed, and (iii)
disclose to investors and other users all of the information they will need to
evaluate and understand the nature of, and the financial effect of, the business
combination, and (iv) recognize and measure the goodwill acquired in the
business combination or a gain from a bargain purchase.
(b) SFAS
No. 160 will improve the relevance, comparability and transparency of financial
information provided to investors by requiring all entities to: (i) report
noncontrolling (minority) interests in subsidiaries in the same manner, as
equity but separate from the parent’s equity, in financial statements, (ii) net
income attributable to the parent and to the non-controlling interest must be
clearly identified and presented on the face of the statement of income, and
(iii) any changes in the parent’s ownership interest while the parent retains
the controlling financial interest in its subsidiary be accounted for
consistently. The Company has no minority interest in subsidiaries at the
present time.
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110,
Share-Based Payment
, which
amends SAB No. 107,
Share-Based Payment,
to
permit public companies, under certain circumstances, to continue to use the
simplified method in SAB No. 107, to estimate the expected term of their
plain vanilla
employee
options. Although the Company’s stock options fit the definition of
plain vanilla
according to
SAB 110, because it has sufficient relevant historical option exercise data to
provide a reasonable basis to estimate an option’s expected term, SAB No. 110
does not apply to the Company.
In
November 2007, the SEC issued SAB No. 109,
Written Loan Commitments Recorded at
Fair Value Through Earnings.
SAB No. 109 was effective for fiscal
quarters beginning after December 15, 2007. SAB 109 was issued to clarify the
SEC staff position that internally developed intangible assets should not be
included in the fair value of derivative loan commitments and other written loan
commitments that are accounted for at fair value through earnings. The Company
did not have any derivative loan commitments or written loan commitments that
were accounted for at fair value through earnings as of June 30, 2008.
Therefore, this bulletin did not have any impact on the Company’s financial
results.
In
February 2007, SFAS No. 159,
The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No.
115,
was issued. This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. The objective
is to improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This statement was effective for financial statements issued for
fiscal years beginning after November 15, 2007. The Company has not chosen to
measure additional financial instruments at fair value. Therefore, the adoption
of this statement on January 1, 2008 did not have any impact on the Company’s
financial results.
Item
2.
Management’s
Discussion and Analysis of Consolidated Balance Sheets and Consolidated
Statements of Operations
The
following narrative is written with the presumption that the users have read or
have access to our 2007 Annual Report on Form 10-K, which contains the latest
audited financial statements and notes thereto, together with Management's
Discussion and Analysis of Financial Condition and Results of Operations, as of
December 31, 2007, and for the year then ended. Therefore, only material changes
in the consolidated balance sheets and consolidated statements of operations are
discussed herein.
The
Securities and Exchange Commission (“SEC”) maintains a web site which contains
reports, proxy statements, and other information pertaining to registrants that
file electronically with the SEC, including the Company. The internet address
is: www.sec.gov. In addition, our periodic and current reports are available
free of charge on our website at
www.firstfedca.com
as
soon as reasonably practicable after such material is electronically filed with,
or furnished to, the SEC.
Note regarding forward-looking
statements:
This quarterly report contains 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
and Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other
than statements of historical facts, included in this quarterly report that
address activities, events or developments that we expect, believe or anticipate
will or may occur in the future, are forward-looking statements. These
statements are based on certain assumptions and analyses made by us in light of
our experience and perception of historical trends, current conditions, expected
future developments and other factors the Company believe are appropriate in the
circumstances. These forward-looking statements are subject to various factors,
many of which are beyond our 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 margins, the California real estate market, branch openings,
regulatory actions, and competitive conditions in the business and geographic
areas in which the Company conducts business. 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, except to the extent that it is required to do so
under applicable law.
Consolidated
Balance Sheets
At June
30, 2008, FirstFed Financial Corp. ("Company"), the holding company for First
Federal Bank of California and its subsidiaries ("Bank"), had consolidated
stockholders’ equity of $550.9 million compared to $654.5 million at December
31, 2007 and $724.3 million at June 30, 2007. Stockholders’ equity decreased
from December 31, 2007 to June 30, 2008 due to a $105.3 million loss recorded
during the first six months of 2008. Stockholders’ equity decreased from June
30, 2007 to December 31, 2007 due primarily to stock repurchases, which totaled
$105.7 million during the last six months of 2007. Total assets decreased to
$7.2 billion at June 30, 2008 from $7.7 billion at June 30, 2007 due to
decreased loan originations and continued loan payoffs. The slight decrease from
$7.2 billion at December 31, 2007 was due primarily to an increase in the
allowance for loan losses.
The loss
during the second quarter of 2008 was due primarily to the provision for loan
losses relating to the Bank’s single family loan portfolio. The provision was
necessary due to the level of charge-offs recorded in the second quarter and
increases in non-performing assets. During the second quarter of 2008, the Bank
was successful in modifying loan terms for borrowers with aggregate loan
balances of approximately $226.4 million that were close to their payment reset
date. During the first six months of 2008, the Bank modified loans of
approximately $348.1 million.
Non-performing
assets as a percentage of total assets increased to 8.20% at June 30, 2008
compared to 2.79% at December 31, 2007 and 0.85% at June 30, 2007. Recently
published reports indicate that most financial institutions that have originated
single family loans over the past few years have experienced increased loan
defaults and foreclosures. The increase in loan defaults and foreclosures is due
to: (1) the inability of borrowers to afford their loan payments after recast,
(2) the inability of borrowers to sell their homes in the current real estate
market, (3) the inability of borrowers to refinance their loans due to tighter
credit, more stringent underwriting standards by mortgage lenders and home
values which may be less than the mortgage indebtedness. Foreclosed properties
have significantly added to the inventory of homes for sale as well as the time
required to sell a single family home in California.
In a
press release dated July 25, 2008, the California Association of Realtors
(“CAR”) reported that the median price of an existing home in the State of
California fell 37.7% compared with the same period one year ago. However, due
to increased affordability as a result of recent price declines, the rate of
home sales has actually started to increase over the last two months. According
to CAR, “With lower prices and favorable interest rates, affordability also has
improved significantly in recent months, paving the way for many buyers to
purchase their first home.” CAR further reported that statewide home resale
activity increased 17.5% from the pace recorded in 2007 and their June 2008
Unsold Inventory Index (the number of months needed to sell the existing
inventory of homes for sale at the current sales rate) was 7.7 months, compared
with 10.2 months for the same period of 2007.
However,
most economists agree that the real estate market will remain weak through 2008
and possibly into 2009.
Due to
the current weakness in the California real estate market, the Bank’s single
family non-accrual loans (loans greater than 90 days delinquent or in
foreclosure) increased to $491.7 million as of June 30, 2008 from $393.6 million
at March 31, 2008 and $179.7 million as of December 31, 2007. Non-accrual loans
were $53.3 million as of June 30, 2007. However, the rate of increase in the
Bank’s non-performing loans has slowed in recent months. After having reached
$273.3 million as of March 31, 2008, single family loans delinquent less than 90
days decreased to $207.7 million as of June 30, 2008. In comparison, single
family loans delinquent less than 90 days were $236.7 million as of December 31,
2007 and $35.2 million as of June 30, 2007.
A
contributing factor to the increase in foreclosures is the high volume of
adjustable rate loans originated by mortgage lenders over the last few years
that give borrowers the option of making less than a fully amortizing loan
payment for initial periods ranging from one to five years. Borrowers who choose
to make less than the fully amortizing loan payment experience high levels of
negative amortization, which causes a large payment increase at the end of the
initial period. Defaults may occur because, very often, the minimum required
payment significantly increases when the payment adjusts to an amount that will
fully amortize the loan. While the Bank did not originate sub prime loans, we
did originate adjustable rate loans with lower payment options that allowed for
negative amortization.
Because
substantially all of our loans are collateralized by properties located in
California, the Company continuously monitors the California real estate market
and the sufficiency of the collateral supporting our real estate loan portfolio.
The Company considers several factors when evaluating the underlying collateral
of the real estate loan portfolio, including the property location, the date of
loan origination, the original loan-to-value ratio and the current loan-to-value
ratio.
Lending
Activities
The
following table shows the components of our loan portfolio (including loans held
for sale) by type at the dates indicated:
|
|
June
30,
2008
|
|
|
December
31,
2007
|
|
|
June
30,
2007
|
|
|
|
(Dollars
in thousands)
|
|
REAL
ESTATE LOANS:
|
|
|
|
|
|
|
|
|
|
First
trust deed residential loans
|
|
|
|
|
|
|
|
|
|
One-to-four
units
|
|
$
|
4,495,508
|
|
|
$
|
4,652,876
|
|
|
$
|
5,151,530
|
|
Five
or more units
|
|
|
1,787,336
|
|
|
|
1,709,815
|
|
|
|
1,649,551
|
|
Residential
loans
|
|
|
6,282,844
|
|
|
|
6,362,691
|
|
|
|
6,801,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
REAL ESTATE LOANS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial
|
|
|
148,998
|
|
|
|
159,052
|
|
|
|
162,799
|
|
Second
trust deeds
|
|
|
2,021
|
|
|
|
2,159
|
|
|
|
2,965
|
|
Other
|
|
|
4,226
|
|
|
|
4,242
|
|
|
|
4,270
|
|
Real
estate loans
|
|
|
6,438,089
|
|
|
|
6,528,144
|
|
|
|
6,971,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-REAL
ESTATE LOANS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit
accounts
|
|
|
1,364
|
|
|
|
2,061
|
|
|
|
1,123
|
|
Commercial
business loans
|
|
|
86,927
|
|
|
|
75,848
|
|
|
|
78,949
|
|
Consumer
loans
|
|
|
33,230
|
|
|
|
33,136
|
|
|
|
37,799
|
|
Loans
receivable
|
|
|
6,559,610
|
|
|
|
6,639,189
|
|
|
|
7,088,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS:
|
|
|
|
|
|
|
|
|
|
|
|
|
General
valuation allowances
|
|
|
226,877
|
|
|
|
127,503
|
|
|
|
114,894
|
|
Valuation
allowances for impaired loans
|
|
|
32,818
|
|
|
|
555
|
|
|
|
—
|
|
Deferred loan origination costs, net
|
|
|
876
|
|
|
|
(7,083
|
)
|
|
|
(20,334
|
)
|
Net
loans receivable
|
|
$
|
6,299,039
|
|
|
$
|
6,518,214
|
|
|
$
|
6,994,426
|
|
Loan
originations increased by 77% during the first six months of 2008 compared to
the first six months of 2007 due to higher originations of both single family
and multi-family real estate loans. However, the balance of single family loans
decreased by $157.4 million during the first six months of the year because loan
originations were offset by $228.9 million in loans transferred to real estate
owned. Current loan originations are fully-documented, within our credit
standards and contain no negative amortization provisions. Originations of
multi-family mortgage loans increased due to the popularity of the Bank’s
standard income property lending programs. Also, unlike the single family loans,
the Bank's multi-family loans have shown no sign of weakness.
Therefore, the Bank grew multi-family and commercial mortgage loans to 41% of
total loan originations during the first six months of 2008 from 17% of total
loan originations during the first six months of 2007.
The
following table summarizes total loan funding by type:
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Single
family real estate
|
|
$
|
431,714
|
|
|
$
|
351,405
|
|
Single
family loans purchased
|
|
|
5,935
|
|
|
|
—
|
|
Multi-family
and commercial real estate
|
|
|
314,744
|
|
|
|
76,947
|
|
Other
|
|
|
24,562
|
|
|
|
11,533
|
|
Total
|
|
$
|
776,955
|
|
|
$
|
439,885
|
|
From
time-to-time the Bank originates loans for other mortgage lenders. These loans
are not funded by the Bank, but are brokered to another mortgage lender for a
fee. Loan originations funded by other mortgage lenders totaled only $3.9
million during the first six months of 2008 compared to $78.6 million for the
first six months of 2007. The fees received on brokered loans totaled $61
thousand during the first six months of 2008 compared to $750 thousand for the
same period in 2007. Brokered loans decreased due to the Bank’s focus on
originating loans for its own portfolio.
The
following table summarizes single family loan funding by borrower documentation
type for the periods indicated:
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Verified
Income/Verified Asset
|
|
$
|
426,345
|
|
|
$
|
57,097
|
|
Stated
Income/Verified Asset
|
|
|
5,369
|
|
|
|
178,803
|
|
Stated
Income/Stated Asset
|
|
|
—
|
|
|
|
59,897
|
|
No
Income/No Asset
|
|
|
—
|
|
|
|
55,608
|
|
Total
|
|
$
|
431,714
|
|
|
$
|
351,405
|
|
On
Verified Income/Verified Asset loans (VIVA), the borrower includes information
on his/her income and assets, which is then verified. Loans that allow for a
reduced level of documentation at origination are becoming a less significant
percentage of single family loans originated in our market areas. On Stated
Income/Stated Assets (SISA) loans, the borrower includes information on his/her
level of income and assets that is not subject to verification. On Stated
Income/Verified Assets (SIVA) loans, the borrower includes information on
his/her level of income and that information is not subject to verification,
although information provided by the borrower on his/her assets is verified. For
No Income/No Assets (NINA) loans, the borrower is not required to submit
information on his/her level of income or assets. However, all single family
loans, including NINA loans, require credit reports and appraisals. The Bank
required higher credit scores, higher rates and lower loan to values on NINA
loans.
The Bank
stopped originating NINA and SISA loans in 2007 and ceased originating SIVA
loans in February 2008. All multi-family loans and other real estate loans have
consistently required complete and customary documentation from the
borrowers.
The
creditworthiness of the borrower is based on the borrower’s credit score
(“FICO”), prior use and repayment of credit, job history and stability. The
average borrower FICO score and average loan-to-value ratio on single family
loan originations were 755 and 67.5%, respectively, for the first six months of
2008, compared to 719 and 70.0% for the first six months of 2007.
At June
30, 2008, 79.7% of our loan portfolio was invested in adjustable rate products.
Loans with interest rates that adjust monthly based on the Federal Home Loan
Bank (“FHLB”).Eleventh District Cost of Funds Index (“COFI”) comprised 31.5% of
the loan portfolio. Loans with interest rates that adjust monthly based on the
3-Month Certificate of Deposit Index (“CODI”) comprised 31.4% of the loan
portfolio. Loans with interest rates that adjust monthly based on the 12-month
average U.S. Treasury Security rate (“12MAT”) comprised 14.7% of the loan
portfolio. Loans with interest rates that adjust monthly based on the London
Inter-Bank Offering Rate (“LIBOR”) and other indices comprised 2.1% of the loan
portfolio.
The
following table summarizes total loan funding by type of index for the periods
indicated:
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
CODI
|
|
$
|
—
|
|
|
$
|
4,275
|
|
12MAT
|
|
|
5,701
|
|
|
|
62,479
|
|
COFI
|
|
|
38,346
|
|
|
|
131,296
|
|
Other
|
|
|
30,497
|
|
|
|
18,774
|
|
Hybrid
and Fixed
|
|
|
702,411
|
|
|
|
223,061
|
|
Total
|
|
$
|
776,955
|
|
|
$
|
439,885
|
|
Only 10%
of loan originations were in adjustable rate products during the first six
months of 2008 compared to 49% of originations during the first six months of
2007.
The
following table shows the composition of our single family loan portfolio by
borrower documentation type at the dates indicated:
Documentation
Type:
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
|
June
30, 2007
|
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verified
Income/Verified Asset
|
|
$
|
1,460,341
|
|
|
$
|
1,135,358
|
|
|
$
|
1,094,518
|
|
Stated
Income/Verified Asset
|
|
|
1,275,025
|
|
|
|
1,468,686
|
|
|
|
1,676,326
|
|
Stated
Income/Stated Asset
|
|
|
1,314,207
|
|
|
|
1,506,627
|
|
|
|
1,770,105
|
|
No
Income/No Asset
|
|
|
445,935
|
|
|
|
542,205
|
|
|
|
610,581
|
|
Total
|
|
$
|
4,495,508
|
|
|
$
|
4,652,876
|
|
|
$
|
5,151,530
|
|
While the
Bank originated reduced documentation loans in the past, we attempted to
mitigate the inherent risk of making these loans by evaluating the other
characteristics of the loan, such as the creditworthiness of the borrower and
the loan-to-value ratio (“LTV”) based on the collateral’s appraised value at the
origination date. The underwriting of these loans was based on the borrower’s
credit score and credit history, intended occupancy, reasonableness of stated
income and the value of the collateral.
The
following table shows the composition of our single family loan portfolio by
borrower documentation type at the dates indicated with weighted average LTV
Ratio and FICO Score at origination. Due to changes in the real estate market
and in borrower creditworthiness, the average LTV and FICO score at origination
are subject to change.
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
|
June
30, 2007
|
|
|
|
LTV Ratio
|
|
|
FICO Score
|
|
|
LTV Ratio
|
|
|
FICO Score
|
|
|
LTV Ratio
|
|
|
FICO Score
|
|
Verified
Income/Verified Asset
|
|
|
71.9
|
%
|
|
|
690
|
|
|
|
73.3
|
%
|
|
|
709
|
|
|
|
73.7
|
%
|
|
|
705
|
|
Stated
Income/Verified Asset
|
|
|
74.1
|
|
|
|
713
|
|
|
|
74.0
|
|
|
|
715
|
|
|
|
73.9
|
|
|
|
715
|
|
Stated
Income/Stated Asset
|
|
|
75.0
|
|
|
|
712
|
|
|
|
74.6
|
|
|
|
714
|
|
|
|
74.1
|
|
|
|
715
|
|
No
Income/No Asset
|
|
|
71.1
|
|
|
|
726
|
|
|
|
70.8
|
|
|
|
728
|
|
|
|
70.4
|
|
|
|
729
|
|
Total
Weighted Average
|
|
|
73.3
|
%
|
|
|
706
|
|
|
|
73.6
|
%
|
|
|
715
|
|
|
|
73.5
|
%
|
|
|
714
|
|
The
following table shows the composition of our single family loan portfolio at the
dates indicated by the
FICO
score of the borrower at origination:
FICO
Score at Origination:
|
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
|
June
30, 2007
|
|
|
|
|
(Dollars In
thousands
)
|
|
|
<620
|
|
|
$
|
26,411
|
|
|
$
|
27,667
|
|
|
$
|
31,037
|
|
|
620-659
|
|
|
|
378,378
|
|
|
|
431,307
|
|
|
|
483,340
|
|
|
660-719
|
|
|
|
2,042,924
|
|
|
|
2,162,687
|
|
|
|
2,390,860
|
|
|
>720
|
|
|
|
1,989,698
|
|
|
|
1,982,220
|
|
|
|
2,201,498
|
|
|
Not
Available
|
|
|
|
58,097
|
|
|
|
48,995
|
|
|
|
44,795
|
|
|
Total
|
|
|
$
|
4,495,508
|
|
|
$
|
4,652,876
|
|
|
$
|
5,151,530
|
|
The
following table shows the composition of our single family loan portfolio at the
dates indicated by original loan-to-value ratio:
Original
LTV Ratio:
|
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
|
June
30, 2007
|
|
|
|
|
(Dollars
in thousands)
|
|
|
<65%
|
|
|
$
|
816,910
|
|
|
$
|
817,580
|
|
|
$
|
930,601
|
|
|
65-70
%
|
|
|
512,392
|
|
|
|
505,320
|
|
|
|
559,165
|
|
|
70-75
%
|
|
|
608,860
|
|
|
|
593,386
|
|
|
|
638,813
|
|
|
75-80
%
|
|
|
2,236,273
|
|
|
|
2,348,772
|
|
|
|
2,581,858
|
|
|
80-85
%
|
|
|
63,043
|
|
|
|
73,564
|
|
|
|
82,049
|
|
|
85-90
%
|
|
|
210,132
|
|
|
|
262,719
|
|
|
|
303,047
|
|
>90%
|
|
|
|
47,898
|
|
|
|
51,535
|
|
|
|
55,997
|
|
Total
|
|
|
$
|
4,495,508
|
|
|
$
|
4,652,876
|
|
|
$
|
5,151,530
|
|
The
following table shows the composition of our single family loan portfolio at
June 30, 2008 by estimated current LTV ratio:
Current
LTV Ratio
Price
Adjusted
(1)
:
|
|
|
Loan
Balance
|
|
|
%
of Portfolio
|
|
|
Average
Current LTV Ratio
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
<70%
|
|
|
$
|
1,163,215
|
|
|
|
25.9
|
%
|
|
|
51.8
|
%
|
|
70-80
%
|
|
|
894,098
|
|
|
|
19.9
|
|
|
|
75.5
|
|
|
80-90
%
|
|
|
1,076,694
|
|
|
|
24.0
|
|
|
|
85.0
|
|
|
90-100
%
|
|
|
963,230
|
|
|
|
21.4
|
|
|
|
95.0
|
|
|
100-110
%
|
|
|
277,624
|
|
|
|
6.2
|
|
|
|
103.9
|
|
|
110-120
%
|
|
|
61,959
|
|
|
|
1.3
|
|
|
|
114.6
|
|
Not
in MSAs
|
|
|
|
58,688
|
|
|
|
1.3
|
|
|
|
N/A
|
|
Total
|
|
|
$
|
4,495,508
|
|
|
|
100.0
|
%
|
|
|
78.1
|
%
|
(1) The
current estimated loan to value ratio is based on Office of Federal Housing
Enterprise Oversight (“OFHEO”) March 2008 data. The OFHEO housing price index
provides a broad measure of the housing price movements by Metropolitan
Statistical Area (MSA). In evaluating the potential for loan losses within the
bank’s portfolio, the Bank considers both the fact that OFHEO data cannot
reflect price movements for the most recent three months, and that individual
areas within an MSA will perform worse than the average for the larger area. The
Bank therefore also looks at sales data that is available by zip code, as well
as the Bank’s experience with marketing foreclosed properties in estimating the
loan loss allowance that is required.
The Bank
generally requires that borrowers obtain private mortgage insurance on loans in
excess of 80% of the appraised property value. Prior to April 2006, on certain
loans originated for the portfolio, the Bank charged premium rates and/or fees
in exchange for waiving the insurance requirement. Management believes that the
additional rates and fees that the Bank received for these loans compensated for
the additional risk associated with this type of loan. In certain of these cases
when the Bank waived the insurance requirement, the Bank purchased private
mortgage insurance with its own funds. At June 30, 2008, 71% of loans with
mortgage insurance were insured by the Republic Mortgage Insurance Company
(RMIC), and 27% were insured by the Mortgage Guaranty Insurance Corporation
(MGIC). Under certain mortgage insurance programs, the Bank continues to act as
co-insurer and participate with the insurer in absorbing any future
loss.
As of
June 30, 2008, December 31, 2007 and June 30, 2007, loans with co-insurance
totaled $167.5 million, $212.0 million, and $225.5 million, respectively. Loans
with initial loan-to-value ratios greater than 80% with no private mortgage
insurance totaled $153.9 million at June 30, 2008, $175.9 million at December
31, 2007, and $215.6 million at June 30, 2007.
The
following table shows the composition of our single family loan portfolio by
geographic distribution at the date indicated:
|
|
June
30,
|
|
|
December
31,
|
|
|
June
30,
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
Los
Angeles County
|
$
|
1,185,376
|
|
26.4%
|
$
|
1,148,942
|
|
24.7%
|
$
|
1,228,812
|
|
23.8%
|
Bay
Area
|
|
756,335
|
|
16.8
|
|
775,303
|
|
16.7
|
|
884,443
|
|
17.2
|
Central
California Coast
|
|
584,317
|
|
13.0
|
|
592,547
|
|
12.7
|
|
672,711
|
|
13.0
|
San
Diego Area
|
|
501,929
|
|
11.2
|
|
558,452
|
|
12.0
|
|
610,765
|
|
11.9
|
Orange
County
|
|
444,080
|
|
9.9
|
|
428,667
|
|
9.2
|
|
475,324
|
|
9.2
|
San
Bernardino/ Riverside
|
|
336,630
|
|
7.5
|
|
374,303
|
|
8.1
|
|
426,772
|
|
8.3
|
San
Joaquin Valley
|
|
259,053
|
|
5.8
|
|
298,788
|
|
6.4
|
|
329,712
|
|
6.4
|
Sacramento
Valley
|
|
242,384
|
|
5.4
|
|
275,313
|
|
5.9
|
|
302,458
|
|
5.9
|
Other
|
|
185,404
|
|
4.0
|
|
200,561
|
|
4.3
|
|
220,533
|
|
4.3
|
Total
|
$
|
4,495,508
|
|
100.0%
|
$
|
4,652,876
|
|
100.0%
|
$
|
5,151,530
|
|
100.0%
|
The
following table shows the composition of our single family loan portfolio by
year of origination as of June 30, 2008
(dollars in
thousands)
:
2003
and Prior
|
|
$
|
346,289
|
|
|
|
7.7
|
%
|
2004
|
|
|
630,690
|
|
|
|
14.0
|
|
2005
|
|
|
1,748,128
|
|
|
|
38.9
|
|
2006
|
|
|
984,204
|
|
|
|
21.9
|
|
2007
|
|
|
357,479
|
|
|
|
8.0
|
|
2008
|
|
|
428,718
|
|
|
|
9.5
|
|
Total
|
|
$
|
4,495,508
|
|
|
|
100.0
|
%
|
Substantially
all adjustable single family loans in the Bank’s loan portfolio allow for
negative amortization when a scheduled monthly payment is not sufficient to pay
the monthly interest accruing on the loan. Adjustable loans comprised 83.8% of
the single family loan portfolio as of June 30, 2008. Negative amortization,
which results when interest earned by the Bank is added to borrowers’ loan
balances, was $302.3 million at June 30, 2008, $301.7 million at December 31,
2007 and $267.5 million at June 30, 2007. Negative amortization as a percentage
of single family loans that have negative amortization in the Bank’s loan
portfolio was 8.89% at June 30, 2008 compared to 7.68% at December 31, 2007 and
5.19% at June 30, 2007. Negative amortization increased by $586 thousand during
the first six months of 2008 compared to an increase of $51.7 million during the
first six months of 2007. Negative amortization is increasing at a slower rate
due to loan payoffs, loan foreclosures, declines in the underlying indices on
adjustable rate loans, and payment increases required under the terms of our
adjustable rate loan notes. During the first six months of 2008, hybrid loans
with initial fixed interest rates comprised 90.4% of originations compared to
50.7% of origination during the same period in the prior year.
The
portfolio of single family loans with a one-year fixed payment period totaled
$2.8 billion at June 30, 2008, compared to $3.2 billion at December 31, 2007 and
$3.6
billion at
June 30, 2007. The portfolio of single family loans with a three-to-five year
fixed payment period totaled $901.3 million at June 30, 2008 compared to $1.1
billion at December 31, 2007 and $1.3 billion at June 30, 2007.
The
amount of negative amortization that may occur in the loan portfolio is
uncertain and is influenced by a number of factors outside of our control,
including changes in the underlying index, the amount and timing of borrowers’
monthly payments, and unscheduled principal payments. If the applicable index
were to increase and remain at relatively high levels, the amount of negative
amortization occurring in the loan portfolio would be expected to trend higher,
absent other mitigating factors such as increased prepayments or borrowers
making monthly payments that meet or exceed the amount of interest then accruing
on their mortgage loans. Similarly, if the index were to decline and remain at
relatively low levels, the amount of negative amortization occurring in the loan
portfolio would be expected to trend lower.
The
“recast” of adjustable loans to a higher payment amount appears to have been a
substantial factor in the higher delinquency levels experienced by the Bank
during 2007 and the first six months of 2008 because many borrowers appear to be
unable to afford the higher payments. The percentage increase in the payment
amount and the loan-to-value ratios are important considerations in the future
collectability of the loans.
The
following tables show the number and dollar amount of performing loans expected
to recast by current estimated loan-to-value ratios for the periods indicated
(updated for both current loan balance and current estimated market
value):
|
|
|
2008
|
|
|
2009
|
|
|
Thereafter
|
|
Current
LTV Ratio
Price
Adjusted
(1)
:
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
|
|
(Dollars
in thousands)
|
|
<
70%
|
|
|
$
|
47,474
|
|
|
|
129
|
|
|
$
|
210,541
|
|
|
|
527
|
|
|
$
|
292,818
|
|
|
|
738
|
|
70-80
%
|
|
|
52,077
|
|
|
|
122
|
|
|
|
146,540
|
|
|
|
324
|
|
|
|
295,094
|
|
|
|
586
|
|
80-90
%
|
|
|
66,589
|
|
|
|
131
|
|
|
|
129,443
|
|
|
|
247
|
|
|
|
432,734
|
|
|
|
794
|
|
90-100
%
|
|
|
76,315
|
|
|
|
156
|
|
|
|
139,506
|
|
|
|
266
|
|
|
|
403,100
|
|
|
|
760
|
|
100-110
%
|
|
|
17,509
|
|
|
|
40
|
|
|
|
21,305
|
|
|
|
45
|
|
|
|
108,386
|
|
|
|
224
|
|
>110%
|
|
|
|
6,298
|
|
|
|
16
|
|
|
|
5,650
|
|
|
|
13
|
|
|
|
16,756
|
|
|
|
40
|
|
Grand
total
|
|
|
$
|
266,262
|
|
|
|
594
|
|
|
$
|
652,985
|
|
|
|
1,422
|
|
|
$
|
1,548,888
|
|
|
|
3,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
current estimated loan to value ratio is based on OFHEO March 2008 data. The
OFHEO housing price index provides a broad measure of the housing price
movements by Metropolitan Statistical Area (MSA). In evaluating the potential
for loan losses within the bank’s portfolio, the Bank considers both the fact
that OFHEO data cannot reflect price movements for the most recent three months,
and that individual areas within an MSA will perform worse than the average for
the larger area. The Bank therefore also looks at sales data that is available
by zip code, as well as the Bank’s experience with marketing foreclosed
properties in estimating the loan loss allowance that is required.
The
following tables show the number and dollar amount of loans expected to recast
by projected payment increase for the periods indicated:
|
|
|
2008
|
|
|
2009
|
|
|
Thereafter
|
|
Projected
Payment Increase
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
Recast
Balance
|
|
|
Number
of Loans
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
<
50%
|
|
|
$
|
15,748
|
|
|
|
40
|
|
|
$
|
88,554
|
|
|
|
214
|
|
|
$
|
225,851
|
|
|
|
492
|
|
50-100%
|
|
|
|
148,399
|
|
|
|
339
|
|
|
|
354,841
|
|
|
|
755
|
|
|
|
826,146
|
|
|
|
1,643
|
|
100-125%
|
|
|
|
67,593
|
|
|
|
140
|
|
|
|
150,695
|
|
|
|
345
|
|
|
|
236,748
|
|
|
|
496
|
|
125-150%
|
|
|
|
60,542
|
|
|
|
66
|
|
|
|
47,173
|
|
|
|
85
|
|
|
|
212,594
|
|
|
|
416
|
|
>150%
|
|
|
|
3,980
|
|
|
|
9
|
|
|
|
11,722
|
|
|
|
23
|
|
|
|
47,549
|
|
|
|
95
|
|
Grand
total
|
|
|
$
|
266,262
|
|
|
|
594
|
|
|
$
|
652,985
|
|
|
|
1,422
|
|
|
$
|
1,548,888
|
|
|
|
3,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
Loss Allowances
Listed
below is a summary of activity in the general valuation allowance and valuation
allowance for impaired loans during the periods indicated.
|
|
General
Valuation Allowance
|
|
|
Valuation
Allowances
For
Impaired
Loans
|
|
|
Total
|
|
|
|
(Dollars
in thousands)
|
|
Balance
at December 31, 2007
|
|
$
|
127,503
|
|
|
$
|
555
|
|
|
$
|
128,058
|
|
Provision
for loan losses
|
|
|
204,648
|
|
|
|
35,852
|
|
|
|
240,500
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single
family
|
|
|
(109,472
|
)
|
|
|
—
|
|
|
|
(109,472
|
)
|
Total
charge-offs
|
|
|
(109,472
|
)
|
|
|
—
|
|
|
|
(109,472
|
)
|
Recoveries
|
|
|
609
|
|
|
|
—
|
|
|
|
609
|
|
Net
(charge-offs)/recoveries
|
|
|
(108,863
|
)
|
|
|
—
|
|
|
|
(108,863
|
)
|
Transfers
|
|
|
3,589
|
|
|
|
(3,589
|
)
|
|
|
—
|
|
Balance
at June 30, 2008
|
|
$
|
226,877
|
|
|
$
|
32,818
|
|
|
$
|
259,695
|
|
|
|
General
Valuation Allowance
|
|
|
Valuation
Allowances
For
Impaired
Loans
|
|
|
Total
|
|
|
|
(Dollars
in thousands)
|
|
Balance
at December 31, 2006
|
|
$
|
109,768
|
|
|
$
|
—
|
|
|
$
|
109,768
|
|
Provision
for loan losses
|
|
|
6,900
|
|
|
|
—
|
|
|
|
6,900
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single
family
|
|
|
(1,801
|
)
|
|
|
—
|
|
|
|
(1,801
|
)
|
Consumer
loans
|
|
|
(50
|
)
|
|
|
—
|
|
|
|
(50
|
)
|
Total
charge-offs
|
|
|
(1,851
|
)
|
|
|
—
|
|
|
|
(1,851
|
)
|
Recoveries
|
|
|
77
|
|
|
|
—
|
|
|
|
77
|
|
Net
(charge-offs)/recoveries
|
|
|
(1,774
|
)
|
|
|
—
|
|
|
|
(1,774
|
)
|
Balance
at June 30, 2007
|
|
$
|
114,894
|
|
|
$
|
—
|
|
|
$
|
114,894
|
|
The Bank
recorded total net loan charge-offs of $80.4 million and $108.9 million for the
second quarter and the first six months of 2008, respectively. This compares to
net loan charge-offs of $1.1 million and $1.8 million for the second quarter and
the first six months of 2007, respectively. The allowance for loan losses
totaled $259.7 million or 3.96% of gross loans outstanding at June 30,
2008. This compares with $114.9 million or 1.62% at June 30,
2007.
All of
the charge-offs recorded during the first six months of 2008 were for single
family loans. The total valuation allowance associated with single family loans
totaled $247.9 million or 5.5% of single family loans outstanding at June 30,
2008. This compares with $94.0 million or 1.83% at June 30, 2007.
Management
is unable to predict future levels of loan loss provisions. Among other things,
loan loss provisions are based on the level of loan charge-offs, foreclosure
activity, other risks inherent in the loan portfolio, and the California
economy.
Investment
Securities
The
mortgage-backed securities portfolio, classified as available-for-sale, was
recorded at fair value as of June 30, 2008. An unrealized gain of $31 thousand,
net of taxes, was reflected in stockholders’ equity as of June 30, 2008. This
compares to net unrealized gains of $34 thousand at December 31, 2007. There was
no unrealized gain or loss at June 30, 2007.
The
investment securities portfolio, classified as available-for-sale, was recorded
at fair value as of June 30, 2008. An unrealized gain of $2.1 million, net of
taxes, was reflected in stockholders' equity as of June 30, 2008. This compares
to a net unrealized gain of $2.0 million at December 31, 2007 and a net
unrealized loss of $406 thousand at June 30, 2007.
Asset/Liability
Management
Market
risk is the risk of loss from adverse changes in market prices and interest
rates. Our market risk arises primarily from the interest rate risk inherent in
our lending and liability funding activities.
Our
interest rate spread typically decreases during periods of increasing interest
rates. There is a three-month time lag before changes in COFI, and a two-month
time lag before changes in 12MAT, CODI and LIBOR, can be implemented with
respect to our adjustable rate loans. Therefore, during periods immediately
following interest rate increases, our cost of funds tends to increase faster
than the yield earned on our adjustable rate loan portfolio. The reverse is true
during periods immediately following interest rate decreases. The composition of
our financial instruments that are subject to market risk has not changed
materially since December 31, 2007.
The one
year GAP, the difference between rate-sensitive assets and liabilities repricing
within one year or less, was a negative $786.4 million or 11.01% of total assets
at June 30, 2008. In comparison, the one year GAP was a positive $119.3 million
or 1.65% of total assets at December 31, 2007 and a positive $465.5 million or
6.07% of total assets at June 30, 2007. The change from a positive GAP at the
end of the year to a negative GAP at June 30, 2008 was due to the fact that we
increased our originations of loans with fixed interest rates for five years.
These originations were partially matched with longer term FHLB advances.
Generally, a negative GAP benefits a company during periods of decreasing
interest rates (because liabilities reprice faster than assets). The reverse is
true during periods of increasing interest rates.
Capital
Quantitative
measures established by regulations to ensure capital adequacy require the
Company to maintain minimum amounts and percentages of total capital to assets.
The Company meets the standards necessary to be deemed “well–capitalized” under
the applicable regulatory requirements.
The
following table summarizes our actual capital and required capital at June 30,
2008:
|
|
Tangible
Capital
|
|
|
Core
Capital
|
|
|
Tier
1
Risk-based
Capital
|
|
|
Risk-based
Capital
|
|
|
|
(Dollars
in thousands)
|
|
Actual
Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
$
|
677,003
|
|
|
$
|
677,003
|
|
|
$
|
677,003
|
|
|
$
|
730,818
|
|
Ratio
|
|
|
9.45
|
%
|
|
|
9.45
|
%
|
|
|
16.52
|
%
|
|
|
17.83
|
%
|
FDICIA
minimum required capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
$
|
107,405
|
|
|
$
|
286,413
|
|
|
$
|
—
|
|
|
$
|
327,943
|
|
Ratio
|
|
|
1.50
|
%
|
|
|
4.00
|
%
|
|
|
—
|
|
|
|
8.00
|
%
|
FDICIA
“well-capitalized” required capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
$
|
—
|
|
|
$
|
358,017
|
|
|
$
|
245,958
|
|
|
$
|
409,929
|
|
Ratio
|
|
|
—
|
|
|
|
5.00
|
%
|
|
|
6.00
|
%
|
|
|
10.00
|
%
|
During
2007, the Company repurchased 3,140,934 shares at an average price of $48.48 per
share. The Company did not repurchase any shares during the first six months of
2008. The shares eligible for repurchase remained at 1,181,145 shares as of June
30, 2008. Any share repurchase would require a dividend from the Bank. A
dividend from the Bank would require approval from the Office of Thrift
Supervision (OTS).
The
Company had $150.0 million in unsecured fixed/floating rate senior debentures as
of June 30, 2008. The first $50.0 million transaction was completed in June 2005
and is due in 2015. The debentures have a fixed rate of 5.65% for the first five
years and are adjustable afterwards based on a rate of 1.55% over the
three-month LIBOR. The second $50.0 million transaction was completed in
December 2005 and is due in 2016. The debentures have a fixed rate of 6.23% for
the first five years and are adjustable afterwards based on a rate of 1.55% over
the three-month LIBOR. The third $50.0 million transaction was completed in
April 2007 and is due in 2017. The debentures have a fixed rate of 6.585% for
the first five years and are adjustable afterwards based on a rate of 1.60% over
the three-month LIBOR. The debentures in each transaction are redeemable at par
after the first five years.
Negative
covenants contained in the indentures governing the terms of these debentures
generally prohibit us from selling or otherwise disposing of shares of voting
stock of the Company or permitting liens on the Company’s stock other than
certain permitted liens. The indentures also impose certain affirmative
covenants on the Company, none of which is believed to have a material adverse
effect on our ability to operate our business.
Consolidated
Statements of Operations
The
Company reported a consolidated net loss of $35.5 million or $2.60 per diluted
share of common stock during the second quarter of 2008, compared to
consolidated net income of $29.1 million or $1.74 per diluted share of common
stock during the second quarter of 2007.
The
second quarter loss resulted primarily from a $90.2 million provision for loan
losses due to increased delinquencies and charge-offs on single family loans and
declines in the value of single family loan collateral throughout California. In
comparison, the provision for loan losses was $3.1 million during the second
quarter of 2007.
The
Company reported a consolidated net loss of $105.3 million or $7.71 per diluted
share of common stock during the first six months of 2008, compared to
consolidated net income of $61.5 million or $3.66 per diluted share of common
stock during the first six months of 2007.
The loss
during the first six months of 2008 resulted primarily from a $240.5 million
provision for loan losses due to increased delinquencies and charge-offs on
single family loans and declines in the value of single family loan collateral
throughout California. In comparison, the provision for loan losses was $6.9
million during the first six months of 2007. Also, net interest income decreased
35% during the first six months of 2008 compared to the first six months of
2007.
Net
Interest Income
Net
interest income decreased by $25.0 million or 36% to $44.7 million for the
second quarter of 2008 from $69.7 million for the second quarter of 2007 due to
a 13% decrease in average interest-earning assets during the second quarter of
2008 compared to the second quarter of 2007. The interest rate spread decreased
by 71 basis points to 2.45% during the second quarter of 2008 from 3.16% during
the second quarter of 2007 due to an increase in non-accrual loans which
lessened the loan yield by 115 basis points during the second quarter of 2008.
Also, early payoff fees and late charges on loans, which are calculated as part
of the loan yield, decreased to $1.4 million for the second quarter of 2008 from
$6.1 million during the second quarter of 2007. An increasing number of our
loans have surpassed the period for which there is a prepayment
penalty.
Net
interest income decreased by 35% to $94.0 million for the six months of 2008
from $144.9 million for the first six months of 2007 due to an 18% decrease in
average interest-earning assets during the first six months of 2008 compared to
the first six months of 2007. The interest rate spread decreased by 51 basis
points during the first six months of 2008 from 3.08% during the first six
months of 2007. The decrease was caused by an increase in non-accrual loans
which lessened the loan yield by 92 basis points during the first six months of
2008. Also, early payoff fees and late charges on loans, which are calculated as
part of the loan yield, decreased to $2.9 million for the first six months of
2008 from $12.9 million during the first six months of 2007. An increasing
number of our loans have surpassed the period for which there is a prepayment
penalty.
The
following table sets forth: (i) the average daily dollar amounts of and average
yields earned on loans and investment securities, (ii) the average daily dollar
amounts of and average rates paid on savings deposits and borrowings, (iii) the
average daily dollar differences, (iv) the interest rate spreads, and (v) the
effective net spreads for the periods indicated:
|
|
Six
Months Ended June 30,
|
|
|
|
2008
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Average
loans
(1)
|
|
$
|
6,317,025
|
|
|
$
|
7,806,242
|
|
Average
investment securities
|
|
|
491,355
|
|
|
|
487,832
|
|
Average
interest-earning assets
|
|
|
6,808,380
|
|
|
|
8,294,074
|
|
Average
savings deposits
|
|
|
4,059,543
|
|
|
|
5,201,614
|
|
Average
borrowings
|
|
|
2,405,607
|
|
|
|
2,436,988
|
|
Average
interest-bearing liabilities
|
|
|
6,465,150
|
|
|
|
7,638,602
|
|
Excess
of interest-earning assets over
interest-bearing
liabilities
|
|
$
|
343,230
|
|
|
$
|
655,472
|
|
|
|
|
|
|
|
|
|
|
Yields
earned on average interest-earning assets
|
|
|
6.38
|
%
|
|
|
7.84
|
%
|
Rates
paid on average interest-bearing liabilities
|
|
|
3.81
|
|
|
|
4.76
|
|
Interest
rate spread
|
|
|
2.57
|
|
|
|
3.08
|
|
Effective
net spread
(2)
|
|
|
2.76
|
|
|
|
3.49
|
|
|
|
|
|
|
|
|
|
|
Interest
on loans
|
|
$
|
204,666
|
|
|
$
|
311,833
|
|
Interest
and dividends on investments
|
|
|
12,514
|
|
|
|
13,320
|
|
Total
interest income
|
|
|
217,180
|
|
|
|
325,153
|
|
Interest
on deposits
|
|
|
73,458
|
|
|
|
115,118
|
|
Interest
on borrowings
|
|
|
49,677
|
|
|
|
65,125
|
|
Total
interest expense
|
|
|
123,135
|
|
|
|
180,243
|
|
Net
interest income
|
|
$
|
94,045
|
|
|
$
|
144,910
|
|
(1)
Non-accrual
loans are included in the average dollar amount of loans outstanding; however,
there was no income included for
the
period in which loans were on non-accrual status.
(2)
The
effective net spread is a fraction, the numerator of which is net interest
income and the denominator of which is the average
amount
of interest-earning assets.
Non-Interest
Income and Expense
Non-interest
income increased to $9.6 million during the second quarter of 2008 from $4.3
million during the second quarter of 2007. The increase was primarily due to
gains on the sale of foreclosed real estate, additional loan income recognized
upon the reversal of a $2.5 million reserve on spread accounts receivable and
higher income from investment services. These increases were offset by lower
gains on the sale of loans due to unfavorable secondary market
conditions.
Non-interest
income increased to $12.6 million during the first six months of 2008 from $10.2
million during the second quarter of 2007. The increase during the first six
months was also due to gains on the sale of foreclosed real estate, additional
loan income resulting from the reversal of the reserve on accounts receivable
and higher income from investment services, offset by lower gains on the sale of
loans.
Net gain
(loss) on real estate owned is comprised of the following items for the periods
indicated:
|
|
Three
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Gain
on sale of REO
|
|
$
|
7,359
|
|
|
$
|
101
|
|
Loss
on sale of REO
|
|
|
(234
|
)
|
|
|
(180
|
)
|
Write
downs on REO
|
|
|
(3,754
|
)
|
|
|
(24
|
)
|
|
|
$
|
3,371
|
|
|
$
|
(103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars
in thousands)
|
|
Gain
on sale of REO
|
|
$
|
10,007
|
|
|
$
|
101
|
|
Loss
on sale of REO
|
|
|
(302
|
)
|
|
|
(181
|
)
|
Write
downs on REO
|
|
|
(6,518
|
)
|
|
|
(109
|
)
|
|
|
$
|
3,187
|
|
|
$
|
(189
|
)
|
|
|
|
|
|
|
|
|
|
Non-interest
expense increased to $25.1 million for the second quarter of 2008 from $20.9
million for the second quarter of 2007. The increase was primarily due to higher
expenses on foreclosed assets which increased to $3.1 million during the second
quarter of 2008 from $369 thousand during the second quarter of 2007. Also,
expenses increased due to higher loan incentive costs and higher FDIC insurance
premiums. The ratio of non-interest expense to average total assets
increased to 1.41% during the second quarter of 2008 from 1.03% during the
second quarter of 2007 due to the increased expenses mentioned above and a
decrease in average total assets compared to the second quarter of
2007.
Non-interest
expense increased to $47.2 million for the first six months of 2008 from $41.8
million for the first six months of 2007. The increase was primarily due to
occupancy costs associated with newly opened branches and a $1.1 million write
off of lease-related expenses associated with the early abandonment of our
former corporate headquarters during the first quarter of 2008. Also, foreclosed
asset expense increased to $4.4 million during the first six months of 2008 from
$555 thousand during the first six months of 2007. The ratio of non-interest
expense to average total assets increased to 1.32% during the first six months
of 2008 from 0.98% during the first six months of 2007 due to the increased
expenses mentioned above and a decrease in average total assets compared to the
first six months of 2007.
Non-accrual,
Past Due, Modified and Restructured Loans
The Bank
establishes allowances for delinquent interest equal to the amount of accrued
interest on all loans 90 days or more past due or in foreclosure. This practice
effectively places such loans on non-accrual status for financial reporting
purposes. Loans requiring delinquent interest allowances (non-accrual loans)
totaled $491.7 million at June 30, 2008, compared to $180.4 million at December
31, 2007 and $53.3 million at June 30, 2007. Delinquent interest allowances for
loans in foreclosure and delinquent greater than 90 days increased to $24.6
million at June 30, 2008 compared to $7.8 million at December 31, 2007 and $2.3
million at June 30, 2007.
Many
loans became delinquent because borrowers chose to make less than a fully
amortizing payment on “payment option” adjustable rate mortgages. This caused
the loans to experience very large amounts of negative amortization which in
turn contributed to a large payment adjustment at the end of the initial term.
Also, if the negative amortization became so large that it caused the loan to
reach its lifetime negative amortization cap, the loan was required to be
re-amortized over its remaining loan term before the end of its initial term. As
a result, many borrowers found their adjusted loan payments difficult to afford
because their adjusted payments may have been significantly higher than their
initial loan payment. Further, due to the weak single family real estate market
and the tighter credit standards required by mortgage lenders, many borrowers
found that they could not sell or refinance their home to remedy their
situation.
The rate
of increase in the Bank’s non-performing loans has slowed in recent months.
After having reached $273.3 million as of March 31, 2008, single family loans
delinquent less than 90 days decreased to $207.7 million as of June 30, 2008. In
comparison, single family loans delinquent less than 90 days were $236.7 million
as of December 31, 2007 and $35.2 million as of June 30, 2007.
The Bank
has a program to reach out to borrowers faced with loan recasts to encourage
them to modify their loans before the recast date. At June 30, 2008, 708 loans
with principal balances totaling $348.1 million had been modified. Of these
modified loans, 681 loans with principal balances totaling $335.0 million are
considered troubled debt restructurings (“TDRs”) and are included in impaired
loans. Valuation allowances on these loans totaled $32.8 million. Another $13.2
million in loans were modified as of June 30, 2008 but were not considered TDRs,
and therefore had no valuation allowances. Modified loans are not considered
TDRs when the loan terms are consistent with the Bank’s current product
offerings and the borrowers meet the Bank’s current underwriting standards with
regard to FICO score, debt-to-income ratio and loan-to-value ratio. At June 30,
2007, the Bank had no modified loans outstanding.
The Bank
considers a loan impaired when management believes that it is probable that the
Bank will not be able to collect all amounts due under the contractual terms
of
the loan
agreement. Estimated impairment losses are recorded as separate valuation
allowances and may be subsequently adjusted based upon changes in the
measurement of impairment. Impaired loans, disclosed net of valuation
allowances, include non-accrual major loans (commercial business loans with an
outstanding principal amount greater than or equal to $500 thousand, single
family loans greater than or equal to $1.0 million, and income property loans
with an outstanding principal amount greater than or equal to $1.5 million),
modified loans, and major loans less than 90 days delinquent in which full
payment of principal and interest is not expected to be received.
The
following is a summary of impaired loans, net of valuation allowances for
impairment, at the dates indicated:
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
|
June
30, 2007
|
|
|
|
(Dollars
in thousands)
|
|
Restructured
loans
|
|
$
|
308,700
|
|
|
$
|
1,799
|
|
|
$
|
—
|
|
Non-accrual
loans
|
|
|
29,910
|
|
|
|
20,112
|
|
|
|
11,489
|
|
Other
impaired loans
|
|
|
744
|
|
|
|
1,625
|
|
|
|
3,997
|
|
|
|
$
|
339,354
|
|
|
$
|
23,536
|
|
|
$
|
15,486
|
|
When a
loan is considered impaired, the Bank measures impairment based on the present
value of expected future cash flows discounted at the loan's effective interest
rate. However, if the loan is "collateral-dependent" or foreclosure is probable,
impairment is measured based on the fair value of the collateral. When the
measure of an impaired loan is less than the recorded investment in the loan,
the Bank records an impairment allowance equal to the excess of our recorded
investment in the loan over its measured value.
The
following is a summary of information pertaining to impaired loans at the dates
indicated:
|
|
June
30,
2008
|
|
|
December
31,
2007
|
|
|
June
30,
2007
|
|
|
(Dollars
in thousands)
|
|
Impaired
loans without valuation allowances
|
|
$
|
12,941
|
|
|
$
|
16,606
|
|
|
$
|
15,486
|
|
Impaired
loans with valuation allowances
|
|
|
359,231
|
|
|
|
7,485
|
|
|
|
—
|
|
Valuation
allowances related to impaired loans
|
|
|
(32,818
|
)
|
|
|
(555
|
)
|
|
|
—
|
|
|
|
Six
months ended
|
|
|
|
June
30,
2008
|
|
|
June
30,
2007
|
|
|
|
(Dollars
in thousands)
|
|
Average
investment in impaired loans
|
|
$
|
260,386
|
|
|
$
|
11,431
|
|
Interest
recognized on impaired loans using the accrual basis of income
recognition
|
|
|
1,952
|
|
|
|
83
|
|
Interest
recognized on impaired loans using the cash basis of income
recognition
|
|
|
1,954
|
|
|
|
82
|
|
Asset
Quality
The
following table sets forth certain asset quality ratios at the dates
indicated:
|
|
June
30,
2008
|
|
|
December
31, 2007
|
|
|
June
30,
2007
|
|
Non-performing
loans to gross loans receivable
(1)
|
|
|
7.50
|
%
|
|
|
2.72
|
%
|
|
|
0.75
|
%
|
Non-performing
assets to total assets
(2)
|
|
|
8.20
|
%
|
|
|
2.79
|
%
|
|
|
0.85
|
%
|
Loan
loss allowances to non-performing loans
(3)
|
|
|
53
|
%
|
|
|
71
|
%
|
|
|
215
|
%
|
Loan
loss allowances to gross loans receivable
|
|
|
3.96
|
%
|
|
|
1.93
|
%
|
|
|
1.62
|
%
|
(1)
Loans
receivable are before deducting unrealized loan fees (costs), general valuation
allowance and valuation allowances for impaired loans.
(2)
Non-performing
assets are net of valuation allowances related to those assets and include both
loans and real estate
acquired
by foreclosure.
(3)
Loan loss
allowances include the general valuation allowance and valuation allowances for
impaired loans.
Non-performing
Assets
The Bank
defines non-performing assets as non-accrual loans (loans delinquent over 90
days or in foreclosure) and real estate acquired by foreclosure (REO). The
following is an analysis of non-performing assets at the dates
indicated:
|
|
June
30,
2008
|
|
|
December
31, 2007
|
|
|
June
30,
2007
|
|
|
|
(Dollars
in thousands)
|
|
Non-accrual
loans :
|
|
|
|
|
|
|
|
|
|
Single
family
|
|
$
|
491,693
|
|
|
$
|
179,679
|
|
|
$
|
53,330
|
|
Other
|
|
|
19
|
|
|
|
734
|
|
|
|
14
|
|
Total
non-accrual loans
|
|
|
491,712
|
|
|
|
180,413
|
|
|
|
53,344
|
|
Real
estate owned
|
|
|
96,665
|
|
|
|
21,090
|
|
|
|
11,774
|
|
Total
non-performing assets
|
|
$
|
588,377
|
|
|
$
|
201,503
|
|
|
$
|
65,118
|
|
The Bank
has experienced an increase in non-performing assets primarily due to defaults
on single family loans. Single family real estate owned and non-accrual loans
have continued to increase during the first six months due to the downturn in
the California real estate market and higher payment requirements on adjustable
rate loans that reached their maximum allowed negative amortization. Because
real estate prices in California have decreased substantially over the past few
quarters, delinquent borrowers are no longer able to sell their homes for
sufficient amounts to repay their mortgages. Also, some borrowers have taken out
second trust deeds with other lenders since their loan was originated. This
makes it more likely that the total encumbrances on their property will exceed
its value.
Single
family loan delinquencies are likely to continue during the rest of 2008 and
2009. The Bank forecasts that another 594 loans with principal balances totaling
$266.3 million will recast during the remainder of 2008 and that another 1,422
loans with principal balances totaling $653.0 million will recast during
2009.
The
following table shows activity in real estate owned during the periods
indicated:
|
|
Six
months ended
|
|
|
|
June
30, 2008
|
|
|
June
30,2007
|
|
|
|
(Dollars
in thousands)
|
|
Beginning
Balance
|
|
$
|
21,090
|
|
|
$
|
1,094
|
|
Acquisitions
|
|
|
131,488
|
|
|
|
15,212
|
|
Write-downs
|
|
|
(6,518
|
)
|
|
|
(109
|
)
|
Sales
of REO
|
|
|
(49,395
|
)
|
|
|
(4,423
|
)
|
Ending
Balance
|
|
$
|
96,665
|
|
|
$
|
11,774
|
|
Sources
of Funds
External
sources of funds include savings deposits from several sources, advances from
the FHLB of San Francisco, and securitized borrowings.
Savings
deposits are accepted from retail banking offices, national deposit brokers,
telemarketing sources and the internet. As the cost of each source of funds
fluctuates from time to time, based on market rates of interest offered by us
and other depository institutions, the Bank selects funds from the lowest cost
source until the relative costs change. We do not deem our use of any specific
source of funds to have a material impact on our operations because the cost of
funds and operating margins associated with all of the sources are
comparable.
Total
retail and commercial deposits at branch offices decreased by $45.6 million
during the second quarter of 2008, but increased by $60.6 million during the
first six months of 2008. This brought total retail and commercial deposits to
83% of deposits at June 30, 2008 compared to 63% at June 30, 2007. The Bank is
actively seeking to expand its retail sources of deposits through the
establishment of additional branch offices. Two new retail branch offices were
opened during the second quarter of 2008 in addition to the one branch opened
during the first quarter of 2008. Three additional retail branches are scheduled
to open later in 2008. The Bank is continuing to evaluate these and other
potential branch sites in the Southern California area. However, there can be no
assurance that any of these evaluations will result in the establishment of
additional branch offices.
Telemarketing
deposits decreased by $50.7 million and $39.1 million during the second quarter
and the first six months of 2008. These are normally large deposits from pension
plans, managed trusts and other financial institutions. The level of these
deposits fluctuates based on the attractiveness of our rates compared to returns
available to investors on alternative investments. Telemarketing deposits
comprised 3% of total deposits at both June 30, 2008 and June 30,
2007.
The Bank
also accepts internet deposits by posting our rates on internet rate boards.
Internet deposits decreased by $7.6 million and $3.9 million during the second
quarter and the first six months of 2008. Internet deposits comprised 1% of
total deposits at both June 30, 2008 and June 30, 2007.
Brokered
deposits decreased by $94.1 million and $323.5 million during the second quarter
and the first six months of 2008 because FHLB advances were generally the lowest
cost source of funds during the first six months of 2008. As a result, brokered
deposits decreased to 13% of total deposits at June 30, 2008 from 33% at June
30, 2007. The Bank may solicit brokered funds without special regulatory
approval because the Bank has sufficient capital to be deemed “well-capitalized”
under the standards established by the OTS.
Total
borrowings increased by $324.0 million during the second quarter of 2008 due to
an increase in FHLB advances. Total borrowings increased by $365.0 million
during the first six months of 2008 due to $250.0 million in additional
borrowings under reverse repurchase agreements from the FHLB and a net increase
of $115.0 million in FHLB advances.
Internal
sources of funds include amortized principal payments that can vary based upon
the borrower’s option to adjust their loan payment amounts, as well as
prepayments. The level of prepayment activity fluctuates based upon the
availability of loans with lower interest rates and lower monthly payments. Loan
prepayments and principal reductions totaled $299.7 million and $619.8 million
during the second quarter and the first six months of 2008, compared to $806.0
million and $1.6 billion during the second quarter and the first six months of
2007. Proceeds from the sale of loans to other financial institutions are
another internal source of funds. However, the Bank sold only one loan during
the second quarter and two loans during the first six months of 2008, due to the
unfavorable secondary market conditions that started in the second quarter of
2007. Since that time, the Bank has been focusing on originating loans for its
own portfolio.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
See
“Management’s Discussion and Analysis of Consolidated Balance Sheets and
Consolidated Statements of Income- Asset/Liability Management” on page 25 hereof
for Quantitative and Qualitative Disclosures about market risk.
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Under SEC rules, the Company is
required to maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company file or
submit 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. Within the 90-day period prior to the filing date of this report, the
Company carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Our management, including
our Chief Executive Officer and Chief Financial Officer, supervised and
participated in the evaluation. Based on this evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that as of the evaluation
date, our disclosure controls and procedures the were effective in alerting
management to material information that may be required to be included in our
public filings. In designing and evaluating the disclosure controls and
procedures, management recognizes that any such controls and procedures can
provide only reasonable assurance as to the control objectives. Management is
required to apply its judgment in evaluating the cost-benefit relationship of
such controls and procedures.
Changes
in Internal Controls
There
were no significant changes in our internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
PART
II – OTHER INFORMATION
Item
4. Submission of Matters to a Vote of Securities Holders
On April
30, 2008, the Company held its Annual Meeting of Stockholders for the purpose of
voting on two proposals. The following are matters voted on at the meeting and
the votes cast for, against or withheld, and abstentions as to each such matter.
There were no broker non-votes as to these matters.
1)
|
Election of
Directors.
|
|
|
|
|
For
|
Withhold
|
|
Brian E.
Argrett
|
12,185,586
|
162,101
|
|
William G.
Ouchi
|
11,985,691
|
361,996
|
|
William P.
Rutledge
|
12,178,857
|
168,830
|
2)
|
Ratification
of Grant Thornton LLP as the Company’s independent public auditors for
2008.
|
|
|
|
|
For
|
12,285,274
|
|
|
Against
|
54,389
|
|
|
Abstain
|
8,024
|
|
Item
6.
Exhibits
(3i))
Restated
Certificate of Incorporation filed as Exhibit 3.1 to Form 10-K for the fiscal
year ended December 31, 1999 and incorporated by reference.
(3(ii))
Amended
and Restated Bylaws filed as Exhibit 3(ii) to Form 8-K filed June 27, 2008 and
incorporated by reference.
(4.1)
Amended
and Restated Rights Agreement dated as of September 25, 1998, filed as Exhibit
4.1 to Form 8-A/A, dated September 25, 1998 and
incorporated
by
reference.
(10.1)
Supplemental
Executive Retirement Plan dated January 16, 1986 filed as Exhibit 10.5 to Form
10-K
for the
fiscal year ended December 31, 1992 and
incorporated by reference.
(10.2)
Change of
Control Agreement effective September 26, 1996 filed as Exhibit 10.4 to Form
10-Q for the Quarter ended September 30, 1996 and Amendment
filed as Exhibit 10.3 and
10.4 for change of control to Form 10-Q for the Quarter ended June 30, 2001 and
incorporated by reference.
(10.3)
1997
Non-employee Directors Stock Incentive Plan file as Exhibit 1 to Form S-8 date
August 12, 1997 and Amendment file as Exhibit 10.5 to Form 10-Q
for
the
Quarter ended
June 30,
2001, and incorporated by reference.
(10.4)
2007
Non-employee Directors Restricted Stock Plan filed as Appendix A to Schedule
14A, Proxy Statement for the Annual Stockholders’ Meeting held
on April 26, 2006.
(31.1)
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
(31.2)
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
(32.1)
Certification
of Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2)
Certification
of Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
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.
Registrant
Date: August
11,
2008 By:
/s/ Douglas J.
Goddard
Douglas J. Goddard
Chief Financial Officer and
Executive Vice President
Exhibit
31.1
CERTIFICATION
OF CHIEF EXECUTIVE OFFICER
I,
Babette E. Heimbuch, certify that:
(1) I
have reviewed this quarterly report on Form 10-Q of FirstFed Financial
Corp.;
(2)
Based on
my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the
statements made, in
light of
the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly
report;
(3)
Based on
my knowledge, the financial statements, and other financial information included
in this quarterly report, fairly present in all material respects
the
financial condition,
results
of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
(4)
The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in
Exchange
Act Rules 13a-14 and
15d-14)
and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(i)
Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure
that material
information
relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly
during the period in which this
quarterly
report is
being
prepared; and
(ii)
Designed
such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision,
to provide reasonable
assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in
accordance with generally accepted accounting
principles;
and
(iii)
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the disclosure
controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
(iv)
Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s fourth fiscal
quarter
that has materially
affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
(5)
The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s
auditors and the
audit
committee of the registrant’s board of directors:
(i)
All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to
adversely affect
the
registrant’s ability to record, process, summarize and report financial
information; and
(ii)
Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over
financial reporting; and
(6)
The
registrant’s other certifying officer and I have indicated in this quarterly
report whether or not there were significant changes in internal control
over
financial reporting or in
other
factors that could significantly affect internal control over financial
reporting subsequent to the date of our most recent evaluation,
including any corrective actions with
regard to
significant deficiencies and material weaknesses.
Dated
this 11th day of August, 2008
By:
/s/ Babette E.
Heimbuch
Babette E.
Heimbuch
Chief
Executive Officer
Exhibit
31.2
CERTIFICATION
OF CHIEF FINANCIAL OFFICER
I,
Douglas J. Goddard, certify that:
(1) I
have reviewed this quarterly report on Form 10-Q of FirstFed Financial
Corp.;
(2)
Based on
my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the
statements
made, in
light of
the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly
report;
(3)
Based on
my knowledge, the financial statements, and other financial information included
in this quarterly report, fairly present in all material respects
the
financial
condition,
results
of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
(4)
The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in
Exchange
Act Rules
13a-14
and
15d-14)
and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(i)
Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure
that
material
information
relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly
during the
period in
which this
quarterly
report is
being
prepared; and
(ii)
Designed
such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision,
to provide
reasonable
assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in
accordance with generally
accepted
accounting
principles;
and
(iii)
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the
disclosure
controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
(iv)
Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s fourth fiscal
quarter
that has
materially
affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
(5)
The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s
auditors and the
audit
committee of the registrant’s board of directors:
(i)
All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to
adversely
affect
the
registrant’s ability to record, process, summarize and report financial
information; and
(ii)
Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over
financial
reporting;
and
(6)
The
registrant’s other certifying officer and I have indicated in this quarterly
report whether or not there were significant changes in internal control
over
financial
reporting
or in
other
factors that could significantly affect internal control over financial
reporting subsequent to the date of our most recent evaluation,
including any
corrective
actions with
regard to
significant deficiencies and material weaknesses.
Dated
this 11th day of August, 2008
By:
/s/ Douglas J.
Goddard
Douglas J. Goddard
Chief Financial Officer
EXHIBIT
32.1
CEO
CERTIFICATION
The
undersigned, as Chief Executive Officer hereby certifies, to the best of her
knowledge and belief, that:
(1)
the
Form 10-Q of FirstFed Financial Corp. (the "Company") for the quarterly period
ended June 30, 2008 (the "Report ") accompanying this certification
fully
complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)
the
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company for such
period.
FIRSTFED FINANCIAL
CORP.
Registrant
By:
/s/ Babette E.
Heimbuch
Babette E. Heimbuch
Chief Executive Officer
This
certification is made solely for purposes of complying with the provisions of
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350,
and is
not being filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, and is not to be incorporated by reference into any
filing
of the
Company, whether made before or after the date of hereof, regardless of any
general incorporation language into such filing.
EXHIBIT
32.2
CFO
CERTIFICATION
The
undersigned, as Chief Financial Officer hereby certifies, to the best of his
knowledge and belief, that:
(1)
the
Form 10-Q of FirstFed Financial Corp. (the "Company") for the quarterly period
ended June 30, 2008 (the "Report ") accompanying this certification
fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)
the
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company for such
period.
FIRSTFED FINANCIAL
CORP.
Registrant
Date:
August 11, 2008
By:
/s/
Douglas J. Goddard
Douglas J.
Goddard
Chief Financial Officer and
Executive Vice President
This
certification is made solely for purposes of complying with the provisions of
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350,
and is
not being filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, and is not to be incorporated by reference into any
filing
of the
Company, whether made before or after the date of hereof, regardless of any
general incorporation language into such filing.
Firstfed (NYSE:FED)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Firstfed (NYSE:FED)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024