LITTLE ROCK — A Harrison-based bank is considering an early fall stock offering to increase its capital and fund potential growth, its chief executive said while discussing second-quarter earnings Tuesday.
First Federal Bancshares of Arkansas Inc. reported a second-quarter profit of $637,000, its second profitable quarter in a row after 2009’s losses topped $44.5 million.
First Federal Bancshares, the holding company for First Federal Bank of Arkansas, released its earnings reports for the quarter that ended June 30 after the markets closed Tuesday.
Shares for First Federal on the Nasdaq exchange were valued at $3.36 at the end of trading on June 15 but closed 46 percent lowerat $1.80 Tuesday, unchanged from Monday. They have traded between $1.70 and $4.69 in the past year.
The company reported a second-quarter net loss of $937,000 a year ago. Net income in the second quarter of 2010 includes interest income of $7.71 million and noninterest income of $1.86 million, according to a news release.
Interest expenses were reported at $2.58 million and noninterest expenses were listed at $6.38 million.
Earnings per share for the second quarter of 2010 equaled 9 cents, up from the loss of 24 cents reported for the same quarter last year.
The bank’s assets stood at $678.1 million as of June 30, down 7.25 percent from thetotal assets of $731.1 million reported on Dec. 31, 2009.
Larry Brandt, the bank’s president and chief executive officer, said the holding company would most likely make the additional stock offering either in late September or early October. The amount has not been determined as yet, he said.
Brandt said the Northwest Arkansas market is outperforming other areas of the country, in his opinion.
“When you look at Florida, Georgia or Michigan, they are still having problems,” he said Tuesday from his Harrison office. He referred to unemployment rates, unsold property and stagnant economies in those other states.
“We are very pleased with Northwest Arkansas’ economy,” he said.
He also praised the bank’s efforts to sell real estate itowns from foreclosure or forfeiture of unpaid loans, particularly in Benton and Washington counties.
About $7.6 million of bankowned properties were sold in the second quarter and about $12.2 million over the past six months, according to the news release.
Provision for loan losses dropped in the second quarter of 2010 to $63,000, from $2.45 million in the same quarter last year, a drop of 97.43 percent.
Tim Yeager, associate professor and Arkansas Banking Association chair for the Sam M. Walton College of Business at the University of Arkansas at Fayetteville, said most banks are turning the corner on anticipating future bad loans.
“That’s a good sign,” he said of First Federal’s reduced loan-loss provision. “That usually means loan-loss provisions have finally caught upto bad loans. They don’t expect an increase of bad loans in the near future.”
Business, Pages 21 on 07/28/2010