First Federal Bancshares, the Harrison-based bank that was in financial distress early last year, had the bestperforming stock among Arkansas public companies in the second quarter, climbing almost 19 percent.
First Federal’s stock price also improved the most for the first six months of the year, up more than 87 percent.
Bear State Financial of Little Rock, owned by Joe and Scott Ford, former Alltel Corp. executives, and others, invested $55 million in First Federal in May last year. For the previous three years, First Federal had lost morethan $35 million.
“We’ve made significant improvements in our reduction of bad assets, but we’ve still got some work to do there,” Dabbs Cavin, First Federal’s chief executive officer, said Friday.
Before Bear State’s investment, much of First Federal’s problems was with bad loans in Northwest Arkansas. That is improving, too, Cavin said.
“We’ve seen a definite uptick in Northwest Arkansas,” Cavin said. “At the same time, we’ve opened a loan production office in Little Rock. That has provided us with a meaningful amount of high-quality loan oppor-tunities in central Arkansas. That is an important part of our process in rehabilitating the bank.”
By the end of the year, Cavin said First Federal will be substantially transformed from the condition it was in when Bear State invested in it last year.
This week, First Federal was added to the Russell 3000 Index, an index of the 3,000 largest publicly traded U.S. companies.
Home BancShares rose about 15 percent in the quarter, the second-best performance of the companies on the Arkansas Index of the state’s largest public companies.
The performance of First Federal and Home Banc-Shares differed from the returns of the country’s and the region’s largest banks,said Bob Williams, senior vice president and managing director of Delta Trust Investments Inc. in Little Rock.
“This was likely the result of their agility and the relative strength of our economy,” Williams said. “Arkansas’ economic woes, while real, are nonetheless better than the national averages.”
Wal-Mart Stores Inc. was up almost 14 percent for the quarter. It has risen 44 percent since its 52-week low of $48.41 on Aug. 10.
“Wal-Mart, despite fears that its growth is limited, remains a clear beneficiary of global consumers’ desire to reduce their expenditures,” Williams said.
Ten of the 16 public companies in Arkansas showed a drop in stock value in the second quarter.
Two trucking firms had the worst performances of the quarter. USA Truck lost almost 40 percent in thequarter and Arkansas Best was down 33 percent.
“Truckers Arkansas Best and USA Truck have seen their rate of increase in freight growth slowing, which is overshadowing the decline in fuel prices,” Williams said. “That, combined with higher operational expenses, have hindered their stocks’ performances during the last quarter.”
Windstream, the Little Rock telecommunications company, was down more than 17 percent for the quarter.
“Windstream has an above-average dividend yield, which management confidently says they can maintain,” Williams said. “Nonetheless, some analysts have voiced their concernsthat the shares offer little upside from recent levels.”
Windstream pays a $1 dividend a year, which is a yield of more than 10 percent a year as of Friday’s close.
Business, Pages 25 on 06/30/2012