First Federal restates 4Q; cites ‘Great Recession’ and Northwest Arkansas woes

Thinly traded First Federal Bancshares revised its fourth quarter and year-end results for 2009 on Friday, citing the "Great Recession’s" affect on the Harrison bank’s loan portfolio.

According to First Federal’s recent filing with the Securities and Exchange Commission, last week’s revision resulted from an internal analysis of the bank’s loan portfolio and an independent third party loan review before the company’s earning release on Jan. 28.

Subsequently, First Federal management "deemed it prudent to record an additional loan loss provision of $6.3 million for the fourth quarter of 2009 and a valuation allowance of $14.7 million for the federal deferred tax asset," the SEC filing said.

The revision now puts First Federal losses in 2009 at $46.2 million, or $9.54 per share. The Harrison bank previously reported losses of $27 million, $5.56 per share for the year ended Dec. 31.

"The ‘Great Recession’ has had a very detrimental impact on our market area of Northwest Arkansas, and consequently, our operating results. Management and the Board will continue to work diligently to resolve our operational issues," First Federal CEO Larry Brandt said in a statement. "In addition, we will consider all strategic alternatives available to us to improve our capital ratios, including raising capital in the latter half of this year.”

The additional loan loss provision also resulted in a total provision of $8.2 million for the fourth quarter and $44.4 million for the year ended Dec. 31, 2009, the company said. The federal deferred tax asset valuation allowance resulted in an income tax provision of $11.9 million for the fourth quarter and $148,000 for the year ended.

First Federal shares (NASDAQ: FFBH) during the past 52 weeks have posted a high of $4.99 and a low of $2.02.