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FirstFed Financial Corp. Announces Elimination of Repurchase Liability for Loans Sold with Recourse.

SANTA MONICA, Calif. -- FirstFed Financial Corp. (NYSE:FED), parent company of First Federal Bank of California, today announced that non-interest income for the quarter ended September 30, 2004 will be increased by approximately $5.4 million as the result of the elimination of the Company's repurchase liability for loans sold with recourse. This change in estimate, which is a non-cash transaction, will increase net earnings for the quarter by approximately $3.1 million, after tax, or approximately $0.19 per diluted share.

The Bank's portfolio of loans sold with recourse was originated prior to 1990, and the Bank's exposure to loss on these loans has decreased in recent years as the balances have declined. Credit experience has been better than previously estimated, with no charge-offs having occurred on these loans since 1997. At September 30, 2004, the dollar amount of loans sold with recourse on which the Company had recourse liability totaled $81 million. The maximum potential recourse liability on this portfolio is $15 million.

The Bank does not currently estimate that it will incur any future losses on this portfolio. In the past twelve months, the balances subject to recourse have declined by $12 million, or 13%, and all of the remaining loans are making current payments. These factors, combined with the age of the loans and the continuing escalation of real estate prices in Southern California, all contributed to the conclusion that it is no longer probable that the Bank will experience losses on this portfolio. As a result, the balance of repurchase liability for loans sold with recourse, which was $5.4 million as of June 30, 2004, will be reduced to zero as of September 30, 2004.

The Company expects to announce its final results of operations for the quarter ended September 30, 2004 on October 29, 2004.

This press release contains certain forward-looking statements that are subject to various factors which could cause actual results to differ materially from such statements. Such factors include, but are not limited to, the Southern California real estate market and the possibility that future performance on the loans discussed herein may be different from anticipated performance. FirstFed disclaims any intent or obligation to update this forward-looking information.
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Publication:Business Wire
Geographic Code:1USA
Date:Oct 7, 2004
Words:368
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