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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2004
OR
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
From the Transition Period From ________ to __________
Commission File Number: 1-9566
FIRSTFED FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 95-4087449
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
401 Wilshire Boulevard, Santa Monica, California 90401-1490
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 319-6000
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 |X| No | |
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes |X| No | |
As of May 1, 2004, 16,958,848 shares of the Registrant's $.01 par value common
stock were outstanding.
FirstFed Financial Corp.
Index
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of March 3
31, 2004, December 31, 2003 and March 31, 2003
Consolidated Statements of Operations and Comprehensive 4
Earnings for the three months ended March 31, 2004 and 2003
Consolidated Statements of Cash Flows for the three months 5
ended March 31, 2004 and 2003
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Item 4. Controls and Procedures 18
Part II. Other Information (omitted items are inapplicable)
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibits
31.1 Certification of Chief Executive Officer pursuant to 21
Section 302 of the Sarbanes-Oxley Act of 2002
22
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 23
18 USC Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 24
18 USC Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
2
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements
FirstFed Financial Corp. and Subsidiary
Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)
March 31, December 31, March 31,
2004 2003 2003
-------------- ------------- ---------------
ASSETS
Cash and cash equivalents $ 41,417 $ 54,318 $ 58,830
Investment securities, available-for-sale
(at fair value) 213,605 116,411 109,390
Mortgage-backed securities,
available-for-sale (at fair value) 124,217 135,176 185,315
Loans receivable, held-for-sale (fair value
of $494 and $4,476) -- 492 4,426
Loans receivable, net 4,640,055 4,373,620 3,925,471
Accrued interest and dividends receivable 18,155 16,941 17,422
Real estate, net 1,324 1,324 404
Office properties and equipment, net 10,622 10,568 10,111
Investment in Federal Home Loan Bank (FHLB)
stock, at cost 95,400 87,775 75,182
Other assets 28,230 28,397 29,730
-------------- ------------- ---------------
$ 5,173,025 $ 4,825,022 $ 4,416,281
============== ============= ===============
LIABILITIES
Deposits $ 2,712,922 $ 2,538,398 $ 2,492,422
FHLB advances 1,852,000 1,694,000 1,347,000
Securities sold under agreements to
repurchase 117,122 122,622 149,021
Accrued expenses and other liabilities 38,804 33,435 40,651
-------------- ------------- ---------------
4,720,848 4,388,455 4,029,094
-------------- ------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
Authorized 100,000,000 shares;
issued 23,589,144, 23,543,339 and
23,469,842 shares, outstanding 17,091,448,
17,045,643 and 16,972,146 shares 236 235 235
Additional paid-in capital 38,386 37,733 36,582
Retained earnings - substantially restricted 498,342 483,360 434,362
Unreleased shares to employee stock
ownership plan (105) (125) (556)
Treasury stock, at cost, 6,497,696 shares, (85,727) (85,727) (85,727)
Accumulated other comprehensive earnings,
net of taxes 1,045 1,091 2,291
-------------- ------------- ---------------
452,177 436,567 387,187
-------------- ------------- ---------------
$ 5,173,025 $ 4,825,022 $ 4,416,281
============== ============= ===============
See accompanying notes to consolidated financial statements.
3
FirstFed Financial Corp. and Subsidiary
Consolidated Statements of Operations and Comprehensive Earnings
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended March 31,
------------------------------
2004 2003
------------ --------------
Interest income:
Interest on loans $ 55,660 $ 57,069
Interest on mortgage-backed securities 939 1,670
Interest and dividends on investments 1,918 2,099
------------ --------------
Total interest income 58,517 60,838
------------ --------------
Interest expense:
Interest on deposits 8,484 11,367
Interest on borrowings 12,320 11,956
------------ --------------
Total interest expense 20,804 23,323
------------ --------------
Net interest income 37,713 37,515
Provision for loan losses -- --
------------ --------------
Net interest income after provision for loan losses 37,713 37,515
------------ --------------
Non-interest income:
Loan servicing and other fees 2,001 1,610
Retail office fees 1,320 1,147
Gain on sale of loans 13 472
Real estate operations, net 49 15
Other operating income 78 102
------------ --------------
Total non-interest income 3,461 3,346
------------ --------------
Non-interest expense:
Salaries and employee benefits 9,194 8,782
Occupancy 2,057 2,007
Amortization of core deposit intangible 499 499
Other expense 3,532 2,828
------------ --------------
Total non-interest expense 15,282 14,116
------------ --------------
Earnings before income taxes 25,892 26,745
Income tax provision 10,915 11,268
------------ --------------
Net earnings $ 14,977 $ 15,477
============ ==============
Other comprehensive earnings (loss),
net of taxes (46) 90
------------ --------------
Comprehensive earnings $ 14,931 $ 15,567
============ ==============
Earnings per share:
Basic $ 0.88 $ 0.91
============ ==============
Diluted $ 0.86 $ 0.90
============ ==============
Weighted average shares outstanding:
Basic 17,067,581 16,920,158
============ ==============
Diluted 17,495,422 17,271,160
============ ==============
See accompanying notes to consolidated financial statements.
4
FirstFed Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended March 31,
-------------------------------------
2004 2003
---------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 14,977 $ 15,477
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Net change in loans held-for-sale 492 (2,133)
Depreciation 266 372
Valuation adjustments on real estate sold -- 31
Amortization of fees and premiums/discounts 1,512 178
Decrease in servicing asset 30 60
Change in taxes payable 9,311 11,230
(Increase) decrease in interest and dividends receivable (1,214) 330
Increase (decrease) in interest payable 236 (1,981)
Amortization of core deposit intangible asset 499 499
Increase in other assets (2,083) (3,128)
Decrease in accrued expenses and
other liabilities (4,178) (1,387)
---------------- -----------------
Total adjustments 4,871 4,071
---------------- -----------------
Net cash provided by operating activities 19,848 19,548
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans made to customers and principal
collections on loans (262,248) (156,619)
Loans purchased (293) (45)
Change in unearned loan fees (4,635) (2,275)
Proceeds from sales of real estate owned -- 177
Proceeds from maturities and principal payments
of investment securities, available-for-sale 6,277 35,307
Principal reductions on mortgage-backed securities,
available for sale 10,527 16,115
Purchase of investment securities,
available for sale (103,242) (42,300)
(Purchases) redemptions of FHLB stock (6,838) 4,600
---------------- -----------------
Net cash used by investing activities (360,452) (145,040)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 174,524 (34,604)
Net increase in short term borrowings 234,500 143,748
Net Increase (decrease) in long term borrowings (82,000) 30,000
Purchases of treasury stock -- (964)
Other 679 943
---------------- -----------------
Net cash provided by financing activities 327,703 139,123
---------------- -----------------
Net increase (decrease) in cash and cash equivalents (12,901) 13,631
Cash and cash equivalents at beginning of period 54,318 45,199
---------------- -----------------
Cash and cash equivalents at end of period $ 41,417 $ 58,830
================ =================
See accompanying notes to consolidated financial statements.
5
FirstFed Financial Corp. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
1. 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. 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. The results for the periods covered
hereby are not necessarily indicative of the operating results for a full year.
2. Basic earnings per share were computed by dividing net earnings by the
weighted average number of shares of common stock outstanding for the period.
Diluted earnings per share additionally include the effect of stock options, if
dilutive.
3. 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. The Company applies the intrinsic-value-based method of accounting prescribed
by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations including FASB Interpretation No. 44,
Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25, issued in March 2000, to account for its
fixed-plan stock options. Under this method, compensation expense is recorded on
the date of grant only if the current market price of the underlying stock
exceeded the exercise price. SFAS No. 123, Accounting for Stock-Based
Compensation, establishes accounting and disclosure requirements using a
fair-value-based method of accounting for stock-based employee compensation
plans. As allowed by SFAS No. 123, the Company has elected to continue to apply
the intrinsic-value-based method of accounting described above, and has adopted
only the disclosure requirements of SFAS No. 123. The following table
illustrates the effect on net income if the fair-value-based method had been
applied to all outstanding and unvested awards in each period.
Three Months Ended March 31,
-----------------------------
2004 2003
------------ -------------
(In thousands, except per share data)
Net income as reported.................. $ 14,977 $ 15,477
------------ -------------
Deduction:
Total stock-based compensation expense
determined under fair-value-based method
for all rewards, net of tax............ (206) (132)
------------ -------------
Pro forma net income.................. $ 14,771 $ 15,345
============ =============
Earnings per share:
Basic:
As reported........................... $ 0.88 $ 0.91
Pro forma............................. $ 0.87 $ 0.91
Diluted:
As reported........................... $ 0.86 $ 0.90
Pro forma............................. $ 0.85 $ 0.89
6
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 2004 and 2003, respectively: no dividend yield in
any year; expected volatility of 32% and 34%; risk free interest rates of 4.2%
and 3.8%; and expected average lives of 5.5 years in both periods. The
weighted-average grant date fair value of options granted during the periods are
$15.58 and $11.82 for 2004 and 2003, respectively. The Company has elected to
recognize forfeitures in the year they occur.
5. The following table sets forth the net periodic benefit cost attributable to
the Company's Supplementary Executive Retirement Plan:
Pension Benefits
Three months ended March 31,
--------------------------------
2004 2003
-------------- ---------------
(In thousands)
Quarterly Expense
Service cost........................... $ 121,034 $ 111,690
Interest cost.......................... 150,625 146,542
Expected return on plan assets......... -- --
Amortization of net (gain) loss........ 35,546 29,865
Amortization of prior service cost..... 33,661 33,661
Amortization of transition
obligation/(asset).................... -- --
-------------- ---------------
Net periodic benefit cost............ $ 340,886 $ 321,758
============== ===============
Weighted Average Assumptions
Discount rate.......................... 6.00% 6.50%
Rate of compensation increase.......... 4.00% 4.00%
Expected return on plan assets......... N/A N/A
The Company does not expect any significant changes to the amounts previously
disclosed for contributions for benefits payments.
6. Recent Accounting Pronouncements
In December 2003, SFAS Statement No. 132 (revised), Employers' Disclosures
about Pensions and Other Postretirement Benefits, was issued. Statement 132
(revised) prescribes employers' disclosures about pension plans and other
postretirement benefit plans; it does not change the measurement or recognition
of those plans. The Statement retains and revises the disclosure requirements
contained in the original Statement 132. It also requires additional disclosures
about the assets, obligations, cash flows, and net periodic benefit cost of
defined benefit pension plans and other postretirement benefit plans. The
Statement generally is effective for fiscal years ending after December 15,
2003. The Company's disclosures in Note 5 incorporate the requirements of
Statement 132 (revised).
SFAS Statement No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, was issued in May 2003. This
Statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. The Statement also includes required disclosures for financial
instruments within its scope. For the Company, the Statement was effective for
instruments entered into or modified after May 31, 2003 and otherwise will be
effective as of January 1, 2004, except for mandatorily redeemable financial
instruments. For certain mandatorily redeemable financial instruments, the
Statement will be effective for the Company on January 1, 2005. The effective
date has been deferred indefinitely for certain other types of mandatorily
redeemable financial instruments. The Company currently does not have any
financial instruments that are within the scope of this Statement.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following narrative is written with the presumption that the users have read
or have access to the Company's 2003 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, 2003, and for the year then ended. Therefore, only
material changes in financial condition and results of operations are discussed
herein.
The Securities and Exchange Commission ("SEC") maintains a web site which
contains reports, proxy and information statements, and other information
pertaining to registrants that file electronically with the SEC, including the
Company. The address is: www.sec.gov. In addition, the Company's periodic and
current reports are available free of charge on its 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 the
Company expects, believes or anticipates will or may occur in the future, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. These forward-looking
statements are subject to various factors, many of which are beyond the
Company's control, which could cause actual results to differ materially from
such statements. Such factors include, but are not limited to, the general
business environment, interest rate fluctuations that may affect operating
margins, the California real estate market, branch openings, competitive
conditions in the business and geographic areas in which the Company conducts
its business, and regulatory actions. In addition, these forward-looking
statements are subject to assumptions as to future business strategies and
decisions that are subject to change. The Company makes no guarantee or promises
regarding future results and assumes no responsibility to update such
forward-looking statements.
Financial Condition
At March 31, 2004, FirstFed Financial Corp. ("Company"), holding company for
First Federal Bank of California and its subsidiaries ("Bank"), had consolidated
stockholders' equity of $452.2 million compared to $436.6 million at December
31, 2003 and $387.2 million at March 31, 2003. Consolidated total assets at
March 31, 2004 were $5.2 billion compared to $4.8 billion at December 31, 2003
and $4.4 billion at March 31, 2003. The increase in total assets for the period
ended March 31, 2004 compared to December 31, 2003 and March 31, 2003 is
primarily attributable to an increase in the loan portfolio to $4.6 billion at
March 31, 2004 from $4.4 billion at December 31, 2003 and $3.9 billion at March
31, 2003. Loan originations and purchases were $593.5 million during the first
quarter of 2004 compared to $538.9 million during the first quarter of 2003.
Loan payoffs and principal reductions were $331.0 million during the first
quarter of 2004 compared to $383.4 million during the first quarter of 2003.
The Bank's financial results are primarily influenced by the interest rate
environment and Southern California real estate market. Residential real estate
prices in Southern California have continued at record high levels during 2004.
However, according to the UCLA Forecast for California, March 2004 Report
("Forecast"), real estate values in Los Angeles County slowed their ascent in
the final quarter of 2003. The Forecast predicts a slow increase in mortgage
rates over the next two years which will have a large impact on real estate
values.
8
The following table summarizes loan originations and purchases by property type
for the periods indicated:
Three months ended
March 31,
2004 2003
------------- ------------
(In thousands)
Single family $ 438,524 $ 388,780
Multi-family and commercial 133,333 131,925
Other (1) 21,681 18,224
----------- ----------
Total $ 593,538 $ 538,929
=========== ==========
(1) Includes consumer loans and commercial business loans.
At March 31, 2004, 81% of the Bank's loan portfolio was invested in adjustable
rate products. Loans that adjust monthly based on the FHLB Eleventh District
Cost of Funds Index ("COFI") comprised 33% of the loan portfolio. Loans that
adjust monthly based on the 12-month average U.S. Treasury Security rate
("12MAT") comprised 24% of the loan portfolio. Loans that adjust monthly based
on the 3-Month Certificate of Deposit Index ("CODI") comprised 21% of the loan
portfolio and loans that adjust monthly based on the London Inter-Bank Offering
Rate ("LIBOR") and other indices comprised 3% of the loan portfolio.
The following table summarizes loan originations and purchases by loan type for
the periods indicated:
Three months ended
March 31,
2004 2003
------------ ------------
(In thousands)
Adjustable:
12MAT $ 204,235 $ 174,563
CODI 321,942 111,814
COFI 26,615 50,391
Other 22,640 18,224
Fixed 1,549 29,068
Hybrid (1) 16,557 154,869
----------- ----------
Total $ 593,538 $ 538,929
=========== ==========
(1) These loan types are adjustable rate loans with initial fixed interest rate
periods ranging from 3 to 7 years.
The Bank's non-performing assets to total assets ratio was 0.06% as of March 31,
2004, compared to 0.10% as of December 31, 2003 and 0.14% as of March 31, 2003.
(See "Non-performing Assets" for further discussion.)
The Bank recorded net loan recoveries of $58 thousand and $47 thousand for the
first quarter of 2004 and first quarter of 2003, respectively. The Bank did not
record a provision for loan loss during the first quarter of 2004 or for the
comparable 2003 period. Allowances for loan losses (including general valuation
allowances and valuation allowances for impaired loans) totaled $75.8 million or
1.61% of gross loans at March 31, 2004. This compares with $75.7 million or
1.70% at December 31, 2003 and $75.8 million or 1.89% at March 31, 2003.
9
The following table shows the components of the Bank's portfolio of loans
(including loans held for sale) and mortgage-backed securities by collateral
type as of the dates indicated:
March 31, December 31, March 31,
2004 2003 2003
--------------- -------------- ---------------
(In thousands)
REAL ESTATE LOANS
First trust deed residential loans
One-to-four units $ 2,690,039 $ 2,456,971 $ 1,871,704
Five or more units 1,564,844 1,547,771 1,653,530
--------------- -------------- ---------------
Residential loans 4,254,883 4,004,742 3,525,234
OTHER REAL ESTATE LOANS
Commercial and industrial 346,305 345,273 408,846
Second trust deeds 6,621 9,053 5,507
Other 12,077 7,281 7,071
--------------- -------------- ---------------
Real estate loans 4,619,886 4,366,349 3,946,658
NON-REAL ESTATE LOANS:
Deposit accounts 641 649 1,196
Commercial business loans 40,401 34,424 27,930
Consumer 52,956 49,738 41,586
--------------- -------------- ---------------
Loans receivable 4,713,884 4,451,160 4,017,370
LESS:
General valuation allowances -
loan portfolio 75,296 75,238 75,270
Valuation allowances - impaired loans 496 496 496
Deferred loan origination fees
(costs), net (1,963) 1,314 11,707
--------------- -------------- ---------------
Net loans receivable 4,640,055 4,374,112 3,929,897
FHLMC AND FNMA MORTGAGE-BACKED
SECURITIES (at fair value):
Secured by single family dwellings 117,633 128,465 177,295
Secured by multi-family dwellings 6,584 6,711 8,020
--------------- -------------- ---------------
Mortgage-backed securities 124,217 135,176 185,315
--------------- -------------- ---------------
TOTAL $ 4,764,272 $ 4,509,288 $ 4,115,212
=============== ============== ===============
The mortgage-backed securities portfolio, classified as available-for-sale, was
recorded at fair value as of March 31, 2004. An unrealized gain of $715
thousand, net of taxes, was recorded in stockholders' equity as of March 31,
2004. This compares to net unrealized gains of $965 thousand as of December 31,
2003 and $2.1 million as of March 31, 2003.
The investment securities portfolio, classified as available-for-sale, was
recorded at fair value as of March 31, 2004. An unrealized gain of $330
thousand, net of taxes, was reflected in stockholders' equity as of March 31,
2004. This compares to net unrealized gains of $126 thousand as of December 31,
2003 and $212 thousand as of March 31, 2003.
Asset/Liability Management
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Bank's market risk arises primarily from the interest rate
risk inherent in its lending and liability funding activities.
10
The Bank's net interest income typically improves during periods of decreasing
interest rates because 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 the Bank's adjustable rate loans. Therefore, during
periods immediately following interest rate decreases, the Bank's cost of funds
tends to decrease faster than the yield earned on its adjustable rate loan
portfolio. The reverse is true during periods immediately following interest
rate increases. The composition of the Bank's financial instruments that are
subject to market risk has not changed materially since December 31, 2003.
The one year GAP (the difference between rate-sensitive assets and liabilities
repricing within one year or less) was a positive $541.3 million or 10.5% of
total assets at March 31, 2004. In comparison, the one year GAP was a positive
$666.1 million or 13.8% of total assets at December 31, 2003.
Capital
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and percentages of total capital to
assets. The Bank meets the standards necessary to be deemed well capitalized
under the applicable regulatory requirements. The following table summarizes the
Bank's actual capital and required capital as of March 31, 2004:
Tangible Core Risk-based
Capital Capital Capital
----------- ------------ -------------
(Dollars in thousands)
Actual Capital:
Amount $ 424,110 $ 424,110 $ 461,480
Ratio 8.21% 8.21% 15.63%
Minimum required capital:
Amount $ 77,500 $ 206,666 $ 236,132
Ratio 1.50% 4.00% 8.00%
Well capitalized required capital:
Amount $ -- $ 258,333 $ 295,165
Ratio --% 5.00% 10.00%
During the first quarter of 2003, the Company repurchased 33,800 shares of its
common stock at an average market price of $28.53 per share. There were no stock
repurchases during the first quarter of 2004. Subsequent to March 31, 2004 and
through May 1, 2004, the Company repurchased 133,100 shares of its common stock
at an average market price of $40.63 per share. There remain 1,215,577 shares
eligible for repurchase under the Company's stock repurchase program as of May
1, 2004.
11
Loan Loss Allowances
Listed below is a summary of activity in the Bank's general valuation allowance
and the valuation allowance for impaired loans during the periods indicated:
Three Months Ended March 31, 2004
--------------------------------------------
General Impaired
Valuation Valuation
Allowances Allowances Total
------------- ------------ ----------
(In thousands)
Balance at December 31, 2003 $ 75,238 $ 496 $ 75,734
Recoveries 58 -- 58
------------- ------------ ---------
Balance at March 31, 2004 $ 75,296 $ 496 $ 75,792
============= ============ =========
Three Months Ended March 31, 2003
--------------------------------------------
General Impaired
Valuation Valuation
Allowances Allowances Total
------------- ------------- ----------
(In thousands)
Balance at December 31, 2002 $ 75,223 $ 496 $ 75,719
Charge-offs:
Single family (48) -- (48)
------------- ------------- ----------
Total charge-offs (48) -- (48)
Recoveries 95 -- 95
------------- ------------- ----------
Net recoveries 47 -- 47
------------- ------------- ----------
Balance at March 31, 2003 $ 75,270 $ 496 $ 75,766
============= ============= ==========
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, and the economy in Southern California.
Results of Operations
The Company reported consolidated net earnings of $15.0 million or $0.86 per
diluted share of common stock for the first quarter of 2004 compared to net
earnings of $15.5 million or $0.90 per diluted share of common stock for the
first quarter of 2003. Net earnings decreased for the first quarter of 2004
compared to the first quarter of 2003 primarily due to increased compensation
and legal costs, lower gain on sale of loans and higher other operating costs.
12
Net Interest Income
Net interest income was $37.7 million during the first quarter of 2004 compared
to $37.5 million for the first quarter of 2003. The interest rate spread
decreased by 39 basis points to 2.95% in the first quarter of 2004 from 3.34%
for the same period last year. The reduction in spread is attributable to
decreased yields on the Bank's adjustable rate loan portfolio which exceeded
decreases in the costs of funds during the period.
The following tables sets forth: (i) the average daily dollar amounts of and
average yields earned on loans, mortgage-backed securities 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:
During the Three Months Ended
March 31,
-------------------------------
2004 2003
------------ ---------------
(Dollars in thousands)
Average loans and mortgage-backed securities $ 4,619,315 $ 4,031,046
Average investment securities 169,682 116,624
----------- -------------
Average interest-earning assets 4,788,997 4,147,670
----------- -------------
Average savings deposits 2,639,485 2,513,998
Average borrowings 1,839,696 1,377,121
----------- -------------
Average interest-bearing liabilities 4,479,181 3,891,119
----------- -------------
Excess of interest-earning assets over
interest-bearing liabilities $ 309,816 $ 256,551
=========== =============
Yields earned on average interest-earning assets 4.82% 5.77%
Rates paid on average interest-bearing liabilities 1.87 2.43
Interest rate spread 2.95 3.34
Effective net spread (1) 3.07 3.49
Total interest income $ 57,707 $ 59,830
Total interest expense 20,826 23,323
----------- -------------
36,881 36,507
Total other items (2) 832 1,008
----------- -------------
Net interest income $ 37,713 $ 37,515
=========== =============
(1) The effective net spread is a fraction, the denominator of which is the
average dollar amount of interest-earning assets, and the numerator of which is
net interest income (excluding stock dividends and miscellaneous interest
income).
(2) Includes Federal Home Loan Bank Stock dividends and other miscellaneous
interest income.
Non-Interest Income and Expense
Loan servicing and other fees were $2.0 million for the first quarter of 2004
compared to $1.6 million for the same period of 2003. The increase is primarily
the result of increased prepayment fees as borrowers paid off loans early to
refinance into lower rate loans.
Gain on sale of loans was $13 thousand for the first quarter of 2004 compared to
gains of $472 thousand for the same period of 2003. The decrease is primarily
the result of a decrease in the volume of loans sold. The volume of loans sold
totaled $1.6 million during the first quarter of 2004 compared to $40.5 million
for the same period of 2003.
13
Real estate operations resulted in net income of $49 thousand for the first
quarter of 2004 compared to net income of $15 thousand for the same period of
2003. Real estate operations include gains and losses on the sale of foreclosed
properties as well as rental income and operating expense during the holding
period. Gains on sale typically result from legal fee and insurance recoveries
associated with foreclosed properties sold.
Non-interest expense increased to $15.3 million during the first quarter of
2004. This compares with $14.1 million during the first quarter of 2003. The
increase in non-interest expense during the first quarter of 2004 compared to
the same period last year resulted from an increase in compensation and legal
costs and higher other operating costs due to a vendor defalcation.
The ratio of non-interest expense to average assets decreased to 1.22% for the
first quarter of 2004 from 1.30% during the comparable 2003 period. The decrease
is primarily attributable to an increase in average assets for the comparable
periods.
Non-accrual, Past Due, Modified and Restructured Loans
The Bank accrues interest earned but uncollected for every loan without regard
to its contractual delinquency status and establishes a specific interest
allowance for each loan which becomes 90 days or more past due or in
foreclosure. Loans requiring delinquent interest allowances (non-accrual loans)
totaled $1.6 million at March 31, 2004 compared to $3.3 million at December 31,
2003 and $5.9 million at March 31, 2003.
The amount of interest allowance for loans 90 days or more delinquent or in
foreclosure was $200 thousand, $227 thousand, and $340 thousand as of March 31,
2004, December 31, 2003, and March 31, 2003, respectively.
Delinquent loans as a percentage of the Bank's total gross loan portfolio for
the periods indicated are as follows:
March 31, December 31, March 31,
2004 2003 2003
--------------- -------------- ---------------
(Percentage of Gross Loans)
Period of delinquency
1 monthly payment 0.07% 0.21% 0.25%
2 monthly payments 0.03% 0.01% 0.02%
3 or more monthly payments or in
foreclosure 0.03% 0.08% 0.15%
The Bank allows loan restructurings that result from temporary modifications of
principal and interest payments. Under these arrangements, loan terms are
typically reduced to no less than a monthly interest payment required under the
note. Any loss of revenues under the modified terms would be immaterial to the
Bank. Generally, if the borrower is unable to return to scheduled principal and
interest payments at the end of the modification period, foreclosure proceedings
are initiated. As of March 31, 2004, the Bank had net modified loans totaling
$3.9 million. No modified loans were 90 days or more delinquent as of March 31,
2004.
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. 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 and
single-family loans greater than or equal to $750 thousand, 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.
14
The following is a summary of impaired loans, net of valuation allowances for
impairment, as of the periods indicated:
March 31, December 31, March 31,
2004 2003 2003
--------------- -------------- ---------------
(In thousands)
Non-accrual loans $ -- $ 1,782 $ --
Modified loans 1,467 1,488 1,557
-------------- ---------------- --------------
$ 1,467 $ 3,270 $ 1,557
============== ================ ==============
The Bank evaluates loans for impairment whenever the collectibility of
contractual principal and interest payments is questionable. When a loan is
considered impaired the Bank measures impairment based on the present value of
expected future cash flows (over a period not to exceed 5 years) 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 the Bank's recorded investment in the loan over
its measured value.
All impaired loans were measured using the fair value method as of March 31,
2004, December 31, 2003 and March 31, 2003, respectively.
Impaired loans for which valuation allowances had been established totaled $496
thousand for each of the quarters ended March 31, 2004, December 31, 2003 and
March 31, 2003. Impaired loans for which there was no valuation allowance
established totaled $1.5 million for the quarter ended March 31, 2004, $3.3
million for the quarter ended December 31, 2003 and $1.6 million for the quarter
ended March 31, 2003. See "Loan Loss Allowances" for an analysis of activity in
the valuation allowance for impaired loans.
Cash payments received from impaired loans are recorded in accordance with the
contractual terms of the loan. The principal portion of the payment is used to
reduce the principal balance of the loan, whereas the interest portion is
recognized as interest income.
The average recorded investment in impaired loans was $1.5 million for the
quarter ended March 31, 2004, $3.3 million for the quarter ended December 31,
2003 and $1.6 million for the quarter ended March 31, 2003. The amount of
interest income recognized on the cash basis for impaired loans during the
quarters ended March 31, 2004, December 31, 2003 and March 31, 2003 was $16
thousand, $17 thousand and $20 thousand, respectively. Interest income
recognized under the accrual basis for the quarters ended March 31, 2004,
December 31, 2003 and March 31, 2003 was $16 thousand, $17 thousand and $19
thousand, respectively.
15
Asset Quality
The following table sets forth certain asset quality ratios of the Bank at the
periods indicated:
March 31, December 31, March 31,
2004 2003 2003
-------------- -------------- --------------
Non-performing loans to gross loans receivable (1) 0.03% 0.08% 0.15%
Non-performing assets to total assets (2) 0.06% 0.10% 0.14%
Loan loss allowances to non-performing loans (3) 4,855% 2,266% 1,286%
General loss allowances to loans gross receivable (4) 1.61% 1.70% 1.89%
--------------------------
(1) Non-performing loans are net of valuation allowances related to those
loans. Loans receivable are before deducting unrealized loan fees, general
valuation allowances and valuation allowances for impaired loans.
(2) Non-performing assets are net of valuation allowances related to those
assets.
(3) The Bank's loan loss allowances, including any valuation allowances for
non-performing loans, impaired loans and the general valuation allowance.
Non-performing loans are before deducting valuation allowances related to
those loans.
(4) The Bank's general valuation allowances plus the allowance for impaired
loans as a percentage of gross loans receivable before deducting
unrealized loan fees, general valuation allowances and valuation
allowances for impaired loans.
Non-performing Assets
The Bank defines non-performing assets as loans delinquent over 90 days
(non-accrual loans), loans in foreclosure and real estate acquired by
foreclosure (real estate owned). The following is an analysis of non-performing
assets as of the periods indicated:
March 31, December 31, March 31,
2004 2003 2003
---------------- -------------- -----------------
(In thousands)
Real estate owned:
Single family $ 1,324 $ 1,324 $ 568
Multi-family -- -- --
Less:
General valuation allowance -- -- (200)
--------------- ------------- ----------------
Total real estate owned 1,324 1,324 368
--------------- ------------- ----------------
Non-accrual loans:
Single family 1,551 3,326 5,176
Multi-family -- -- 701
Other 10 16 16
--------------- ------------- ----------------
Total non-accrual loans 1,561 3,342 5,893
--------------- ------------- ----------------
Total non-performing assets $ 2,885 $ 4,666 $ 6,261
=============== ============= ================
16
Real estate owned and non-accrual loans, while varying slightly from quarter to
quarter, have remained at very low levels for the last few years. Historically,
single family non-performing loans have been attributable to factors such as
layoffs and decreased incomes. Historically, multi-family and commercial
non-performing loans have been attributable to factors such as declines in
occupancy rates, employment rates and rental values.
Sources of Funds
External sources of funds include savings deposits from several sources,
advances from the Federal Home Loan Bank of San Francisco ("FHLB"), and
securitized borrowings.
Savings deposits are accepted from retail banking offices, telemarketing
sources, and national deposit brokers. The cost of funds, operating margins and
net earnings of the Bank associated with brokered and telemarketing deposits are
generally comparable to the cost of funds, operating margins and net earnings of
the Bank associated with retail deposits, FHLB borrowings and repurchase
agreements. As the cost of each source of funds fluctuates from time to time,
based on market rates of interest offered by the Bank and other depository
institutions, the Bank selects funds from the lowest cost source until the
relative costs change. As the cost of funds, operating margins and net earnings
of the Bank associated with each source of funds are generally comparable, the
Bank does not deem the impact of its use of any one of the specific sources of
funds at a given time to be material.
Total savings deposits increased by $174.5 million during the first quarter of
2004. The increase in deposits for the first quarter of 2004 is attributable to
an increase in deposits acquired from national brokerage firms ("brokered
deposits") and telemarketing deposits.
Brokered deposits increased by $108.4 million during the first quarter of 2004.
Due to increased asset growth from loan originations, the Bank increased its use
of brokered deposits during the first quarter of 2004. Brokered deposits
comprised 4% and 2% of total deposits at March 31, 2004 and March 31, 2003,
respectively. Because the Bank has sufficient capital to be deemed
"well-capitalized" under the standards established by the Office of Thrift
Supervision, it may solicit brokered funds without special regulatory approval.
Deposits accepted by retail banking offices increased by $41.2 million during
the first quarter of 2004. Retail deposits comprised 95% and 96% of total
deposits as of March 31, 2004 and March 31, 2003, respectively.
Telemarketing deposits increased by $24.9 million during the first quarter of
2004. These deposits are normally large deposits from pension plans, managed
trusts and other financial institutions. These deposit levels fluctuate based on
the attractiveness of the Bank's rates compared to returns available to
investors on alternative investments. Telemarketing deposits comprised 1% and 2%
of total deposits at March 31, 2004 and March 31, 2003, respectively.
Total borrowings increased by $152.5 million during the first quarter of 2004
due to a $158.0 million net increase in advances from the FHLB and net payoffs
of $5.5 million in repurchase agreements. The increase during the first quarter
of 2004 in borrowings is primarily attributable to increased loan origination
activity.
Internal sources of funds include both principal payments and payoffs on loans
and mortgage-backed securities, loan sales, and positive cash flows from
operations. Principal payments include amortized principal and prepayments that
are a function of lending activity and the general level of interest rates.
Loan payoffs and principal reductions were $331.0 million during the first
quarter of 2004 compared to $383.4 million during the first quarter of 2003. The
decrease is primarily attributable to decreased payoff activity as fewer
borrowers refinanced existing loans into new loans at lower rates.
The volume of loans sold totaled $1.6 million during the first quarter of 2004
compared to $40.5 million for the same period of 2003. Loan sale activity varies
based upon borrower demand for 15-year and 30-year fixed rate loans, which the
Bank only originates for sale in the secondary market.
17
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See "Management's and Discussion and Analysis of Financial Condition and Results
of Operations - Asset/Liability Management" on page 10 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 by the
Company in the reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms. 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 its disclosure controls and
procedures. The Company's management, including the Company's 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, the Company's
disclosure controls and procedures were effective in alerting management to
material information that may be required to be included in the Company's 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 the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.
18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form-8K
(a) Exhibits
(3.1) 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.
(3.2) Bylaws filed as Exhibit 3.2 to Form 10-Q dated August 12, 2002 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) Deferred Compensation Plan filed as Exhibit 10.3 to Form 10-K for the
fiscal year ended December 31, 1983 and incorporated by reference.
(10.2) 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.
(10.3) 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 10.4 for change of control to Form
10-Q for the Quarter ended March 31, 2001 and incorporated by
reference.
(10.4) 1997 Non-employee Directors Stock Incentive Plan filed as Exhibit 1 to
Form S-8 dated August 12, 1997 and Amendment filed as Exhibit 10.5 to
Form 10-Q for the Quarter ended March 31,
2001, and incorporated by reference.
(21) Registrant's sole subsidiary is First Federal Bank of California, a
federal savings bank.
(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.
(b) Reports on Form 8-K
The Company filed current reports on Form 8-K during the quarter ended March 31,
2004 on the following dates: January 28, 2004, February 24, 2004, and March 23,
2004. These reports are related to the release of the Company's disclosure of
certain other financial data.
19
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: May 10, 2004 By: /s/ Douglas J. Goddard
----------------------
Douglas J. Goddard
Chief Financial Officer and
Executive Vice President
20
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Babette 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over the 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;
(ii) Designed such internal control over financial reporting, or caused
such disclosure controls and procedures 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
principals;
(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 quarterly report any change in the registrant's
internal control over financial reporting that occurred in the
registrant's most recent 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 officers 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 (or persons fulfilling the equivalent function):
(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 officers and I have indicated in this
annual 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 10th day of May 2004.
By: /s/ Babette E. Heimbuch
-----------------------
Babette E. Heimbuch
Chief Executive Officer
21
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Douglas 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over the 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;
(ii) Designed such internal control over financial reporting, or caused
such disclosure controls and procedures 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
principals;
(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 quarterly report any change in the registrant's
internal control over financial reporting that occurred in the
registrant's most recent 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 officers 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 (or persons fulfilling the equivalent function):
(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 officers and I have indicated in this
annual 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 10th day of May 2004.
By: /s/ Douglas Goddard
-------------------
Douglas Goddard
Chief Financial Officer
22
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 March 31, 2004 (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.
This certification is made solely for purposes of complying with the provisions
of Section 906 of the Sarbanes-Oxley Act of 2003, 18 U.S.C. Section 1350.
FIRSTFED FINANCIAL CORP.
Registrant
Date: May 10, 2004
By: /s/ Babette E. Heimbuch
-----------------------
Babette E. Heimbuch
Chief Executive Officer
23
EXHIBIT 32.2
CFO CERTIFICATION
The undersigned, as Chief Financial 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 March 31, 2004 (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.
This certification is made solely for purposes of complying with the provisions
of Section 906 of the Sarbanes-Oxley Act of 2003, 18 U.S.C. Section 1350.
FIRSTFED FINANCIAL CORP.
Registrant
Date: May 10, 2004
By: /s/ Douglas J. Goddard
----------------------
Douglas J. Goddard
Chief Financial Officer and
Executive Vice President
24