Exhibit
99.1


PRESS RELEASE


August
12, 2008


For
Immediate Release








For
      Further Information Contact:
            Barry
      E. BackhausPresident
      and Chief Executive OfficerFirst
      Federal Bankshares, Inc.712.277.0222Press
      Contact:
            Kelly
      WeberVP
      – Marketing and Sales ManagerVantus
      Bank515.745.4215





FIRST
FEDERAL BANKSHARES, INC. REPORTS FINANCIAL RESULTS FOR


FISCAL
FOURTH QUARTER AND FISCAL YEAR 2008





Sioux City,
Iowa.    Excluding a non-cash goodwill impairment
charge First Federal Bankshares, Inc. (the “Company”) (Nasdaq Global Market:
FFSX), the parent company of Vantus Bank (the “Bank”), reported a net loss of
$854,000, or $0.26 per diluted share for the three months ended June 30, 2008,
compared to net income of $670,000, or $0.20 per diluted share, for the three
months ended June 30, 2007.  During the most recent quarter, the
Company recognized a one-time non-cash goodwill impairment charge of $18.4
million related to earlier whole-bank acquisitions by the Company. The goodwill
impairment charge, which was required by generally accepted accounting
principles as a result of the Company’s stock trading at a discount to book
value, has no impact on the Company’s liquidity, cash flows, or regulatory
capital. Including this charge, the Company’s net loss was $19.3 million, or
$5.94 per diluted share, for the three months ended June 30, 2008.





Excluding
the goodwill impairment charge, the net loss amounted to $4.0 million, or $1.25
per diluted share for the twelve months ended June 30, 2008, compared to net
income of $3.1 million, or $0.92 per diluted share, for the twelve months ended
June 30, 2007.   Including the goodwill charge, the Company
reported a net loss of $22.5 million, or $6.92 per diluted share for the twelve
months ended June 30, 2008, compared to net income of $3.1 million, or $0.93 per
diluted share, for the twelve months ended June 30, 2007.





In
addition to the goodwill impairment charge, the Company’s results for the three-
and twelve-months ended June 30, 2008, were adversely affected by a non-cash
“other than temporary” impairment charge on the Company’s trust-preferred pooled
securities portfolio of $809,000 and $4.6 million, respectively, and a loan loss
provision of $1.4 million and $4.6 million, respectively.





Earnings
Details and Operating Results





Barry E.
Backhaus, who returned as Interim President and Chief Executive Officer of the
Company on July 17, 2008, stated “Industry, financial, and market conditions for
our industry remain challenging. However, our management team continues to
execute our strategic plan, which focuses on growing our
franchise.  During our just-completed fiscal year, the growth in the
number of new households increased145.0% over fiscal year
2007.  During the same timeframe, the number of checking accounts
increased by


1
 Exhibit
99.1


2,349 or
12.2%.  In addition to this growth, the number of consumer loans
originated increased 88.0%.  Over the past fiscal year, the Company
also opened branches in Jordan Creek and Ankeny, Iowa.  The number of
customers that use our online banking service has increased over the last fiscal
year, which we believe will lower our overhead costs in the long
run.  We believe these growth trends will continue as the new branches
mature and we continue to promote our Company’s brand and image.  The
Company also has had successes in the commercial banking
area.  Commercial core deposit balances have increased 15.3%, the
number of customers using cash management products increased 102.7%, penetration
of the Company’s business remote deposit product (FRED) increased 112.5%, and
the number of commercial internet banking users increased
27.4%.  Finally, the Company recently rolled out a small business
banking initiative.  We believe these as well as other new initiatives
planned for the 2009 fiscal year will assist in growing the franchise and will
lead to a return to profitability as industry conditions improve.”





The
“other than temporary” impairment charge relates to one of the Company’s
trust-preferred pooled securities investments. As previously reported by the
Company, the investment rating of this investment was lowered from “triple-B” to
“triple-C” in December 2007.  In December 2007 and in March of 2008,
the Company recorded an “other than temporary” impairment charge on this
investment. At June 30, 2008, the remaining carrying value of this investment
was $0.6 million.  Mr. Backhaus, stated, “While we believe the Company
will receive all of the principal and interest due from this investment, an
impairment loss is required to be recognized under generally accepted accounting
principles.”





Non-performing
loans increased from $9.3 million or 2.2% of loans receivable at March 31, 2008
to $17.7 million or 4.3% of loans receivable at June 30,
2008.  Adversely classified assets (which include non-performing loans
and consist of loans rated “substandard,” “doubtful,” or “loss,” as well as
foreclosed and repossessed assets) increased from $14.2 million or 2.4% of total
assets at March 31, 2008, to $24.2 million or 4.2% of total assets at June 30,
2008.





The
increase in non-performing loans and adversely classified assets was primarily
related to three large commercial real estate loan relationships totaling $12.9
million.   In all of these instances, the Company believes the
estimated fair value of the collateral securing these loans exceeds the amounts
due the Company; accordingly, the Company did not record a specific loss
allowance on these loans.





The
Company’s allowance for loan loss increased from $4.7 million or 1.1% of total
loans at March 31, 2008, to $5.9 million or 1.4% of total loans at June 30,
2008.





Mr.
Backhaus stated, “This has been a difficult year for us and the entire banking
industry in regards to loans.  However, we believe we have identified
our problem credits and have taken appropriate action to minimize the risk of
future losses.”





Net
interest income for the three months ended June 30, 2008 was $4.0 million, a
decrease of $0.1 million from $4.1 million for the three months ended June 30,
2007.  For the three months ended June 30, 2008, the Company’s net
interest margin was 3.13% compared to 2.83% for the same period a year
ago.  The increase in margin was due to liability costs falling faster
than the yield of the Company’s interest-earning assets.  During the
most recent quarter, asset yields decreased 72 basis points, while the cost of
interest-bearing liabilities declined 121 basis points reflecting overall
decreases in market interest rates.   The increase in margin was
offset by a decrease in the Company’s average interest-earning
assets.  Average interest-earning assets decreased $64.7 million to
$520.1 million during the most recent quarter compared to $584.8 million for the
three months ended June 30, 2007.  During the year, cash flows from
the investment and loan portfolio were used to pay off brokered certificates of
deposit.





For the
twelve months ended June 30, 2008, net interest income increased to $16.2
million compared to $15.9 million for the same period ended June 30,
2007.  For the twelve months ended June 30, 2008, the


2
 Exhibit
99.1


Company’s
net interest margin increased to 2.97% from 2.90% for the twelve months ended
June 30, 2007.  The increase in margin was partially offset by a
decrease in average interest-earning assets.  Average earning assets
for the twelve months ended June 30, 2008, were $551.2 million compared to
$555.4 million for the twelve months ended June 30, 2007.





Non-interest
income for the three months ended June 30, 2008, totaled $0.9 million compared
to $1.5 million for the three months ended June 30, 2007.  For the
twelve months ended June 30, 2008, non-interest income was $1.6 million compared
to $6.0 million for the twelve months ended June 30,
2007.     Non-interest income for the three- and
twelve-month periods ended June 30, 2008 reflected the other than temporary
impairment charge discussed above.  Excluding this charge,
non-interest income increased by $0.2 million or 10.0% during the three months
ended June 30, 2008, compared to the same period in the previous
year.  The increase was primarily attributed to an increase in
mortgage banking revenue, which increased due to an improvement in the value of
the Company’s mortgage servicing rights.  Excluding the impairment
charge, non-interest income increased by $0.2 million or 3.5% during the twelve
months ended June 30, 2008, compared to the same period in the previous
year.  The increase was attributable to the increase in mortgage
banking revenue and an increase in the amount of commercial and consumer loan
service fees.  The increase in the amount of service fees on
commercial and consumer loans was due to the collection of prepayment penalties
on a number of large commercial real estate loans that refinanced during the
period.





Excluding
the goodwill impairment charge discussed above, non-interest expense for the
three months ended June 30, 2008, increased $0.3 million or 5.4% over the same
period last year.  Excluding the goodwill impairment charge, for the
twelve months ended June 30, 2008, non-interest expense increased $2.1 million
or 11.6% as compared to the twelve months ended June 30,
2007.  Personnel expense increased $1.0 million or 9.6% for the twelve
months ended June 30, 2008, as compared to the same period last year, due
primarily to normal pay increases and an increase in the number of full-time
equivalent employees as compared to last year.  The number of
full-time equivalent employees was 195 as of June 30, 2008, as compared to 185
at the same time last year.  The increase in personnel was primarily
due to the opening of two new banking centers in the Des Moines market, as well
as the hiring of certain key employees over the past twelve
months.  Advertising, donations, and public relations for the twelve
months ended June 30, 2008, increased $0.7 million to $1.4 million as compared
to the same period last year, due to increased costs associated with the
promotion of the Bank’s new name and brand.  Data processing, ATM, and
other item processing expense increased $0.3 million from $1.3 million for the
twelve months ended June 30, 2007, to $1.6 million for the twelve months ended
June 30, 2008.  This increase was partially due to the increased
number of new checking accounts opened during fiscal year 2008 as compared to
the previous year.  In addition, the Company has been successful at
increasing the number of internet and mobile banking users and the number of
debit card transactions has increased. As a result, processing costs to service
these channels have increased as compared to the previous year.





Income
tax benefit for the twelve months ended June 30, 2008, was $2.9 million compared
to an expense of $739,000 for the twelve months ended June 30,
2007.  Income tax benefit for the three months ended June 30, 2008,
was $633,000 compared to an expense of $178,000 for the same period a year
ago.





Total
assets decreased by $80.9 million, or 12.5%, to $564.9 million at June 30, 2008,
from $645.8 million at June 30, 2007.  This decrease was due to short
term investments and cash being used to repay wholesale
borrowings.  In addition, loans receivable declined $20.1 million as
loan prepayment activity increased.  Total deposits declined
significantly from June 30, 2007, as a result of management’s decision to
replace $50.0 million in brokered certificates of deposit with $50.0 million in
advances from the FHLB.  Excluding brokered certificates, deposit
liabilities decreased $11.3 million or 2.5% since June 30,
2007.  However, total checking account balances have increased $9.7
million or 7.0% during the same timeframe.


3
 Exhibit
99.1





The
Company’s tangible book value per share was $9.69 at June 30, 2008, compared to
$15.29 at June 30, 2007.  The Company’s total risk based capital ratio
is 10.82% at June 30, 2008.  This is considered “well capitalized”
under regulatory guidelines.  The decline in tangible book value per
share was attributable to the Company’s net loss from operations for the year
ended June 30, 2008, as well as a $13.7 million increase in accumulated other
comprehensive loss, which is a component of stockholders’
equity.  This increase was caused by a decline in the fair value of
the Company’s available-for-sale securities, most notably its portfolio of
trust-preferred pooled securities (“TPSs”).





Trust
Preferred Securities Portfolio





As of
June 30, 2008, the Company owned TPSs with an amortized cost of $60.7
million.  The cash flows of the Company’s TPSs are derived from trust
preferred securities and subordinated debt issued by well-diversified pools of
banks and thrifts (76%), insurance companies (24%), and REIT/homebuilders (less
than 1%).  The Company’s TPS securities are secured through a
combination of subordination from lower classes within the TPS structures, as
well as over-collateralization of available future contractual cash
flows.  At the time of purchase, each of the securities in the
Company’s TPS portfolio were rated either single-A (66% of the portfolio) or
triple-B (33% of the portfolio) by a nationally recognized rating
agency.  In December 2007, however, a TPS was downgraded to triple-C
due to the default of two REITs within the TPS.  This security is the
only TPS in the Company’s portfolio that has an exposure to REITs
(27%).





On June
30, 2008, the fair value of the Company’s TPS portfolio was estimated to be
$39.5 million or 65.1% of unamortized cost, compared to $49.7 million or 76.3%
of unamortized cost at March 31, 2008. The Company expects to receive all
contractual principal and interest payments due on these securities, and the
Company has the intent to hold these securities until the market value recovers
or the maturity of the securities.  For these reasons, management has
concluded that the decline in the estimated fair value of the Company’s TPS
portfolio is temporary, with the exception of the Triple-C rated
security.  As such, the Company recorded the corresponding fair value
adjustment as a component of other comprehensive loss, net of estimated income
tax benefit.  Accumulated other comprehensive loss is a component of
stockholders’ equity.  This loss does not affect the cash flows of the
Company and does not affect the regulatory capital of the Bank.  It
should be noted, however, that the rating agencies have placed most of these
bonds on their watch list for possible ratings downgrade. In addition, should
the Company determine that all or portions of its TPS portfolio to be “other
than temporary”, it would have material adverse effect on the Company’s current
or future earnings, stockholders’ equity, and regulatory capital.





About
Vantus Bank





The
Company’s banking subsidiary, Vantus Bank, is headquartered in Sioux City,
Iowa.  Founded in 1923, Vantus Bank is a community bank serving
businesses and consumers in seven full-service offices in northwest Iowa, a
full-service office in South Sioux City, Nebraska, and seven full-service
offices in central Iowa, including four in the Des Moines market
area.





Certain
matters in the press release are “forward-looking statements” intended to
qualify for the safe harbor from liability as established by the Private
Securities Litigation Reform Act of 1995.  Such forward-looking
statements include words and phrases such as “believes” “will likely result,”
“are expected to,” “will continue,” “is anticipated,” “estimate,” “project,”
“intends to,” or similar expressions.  Similarly statements that
describe the Company’s future plans, objectives, or goals are forward-looking
statements.  The Company wishes to caution the readers not to place
undue reliance on any such forward looking statements, which speak only as of
the date of the press release, and to advise readers that various factors could
affect the Company’s financial performance and could cause results for future
periods to


4
 Exhibit
99.1


differ
materially from those anticipated or projected.  Such factors include,
but are not limited to: (i) general market interest rates, (ii) general economic
conditions, (iii) legislative/regulatory changes, (iv) monetary and fiscal
policies of the U.S. Treasury and Federal Reserve, (v) changes in the quality or
composition of Company’s loan and investment portfolios, (vi) demand for loan
products, (vii) deposit flow, (viii) competition, (ix) demand for financial
services in Company’s markets and (x) changes in accounting principles,
policies, or guidelines.





###














5





FIRST
      FEDERAL BANKSHARES, INC. and SUBSIDIARIESCONDENSED
      CONSOLIDATED BALANCE SHEETS (unaudited)June
      30
              
              
              June
      30(Dollars
      in thousands, except per share amounts)
              
              2008
              
              
              2007ASSETSCash
      and cash equivalents
              
              $
              12,491
              
              
              $
              25,738Securities
      available-for-sale, at fair value
              
              
              84,229
              
              
              
              122,309Securities
      held-to-maturity, at cost
              
              
              7,000
              
              
              
              9,549Mortgage
      loans held for sale
              
              
              1,102
              
              
              
              2,131Loans
      receivable, net
              
              
              407,819
              
              
              
              427,954Office
      property and equipment, net
              
              
              18,762
              
              
              
              16,205Federal
      Home Loan Bank stock, at cost
              
              
              4,283
              
              
              
              3,560Accrued
      interest receivable
              
              
              2,535
              
              
              
              2,940Goodwill
              
              
              -
              
              
              
              18,417Foreclosed
      and repossessed assets
              
              
              873
              
              
              
              2,156Deferred
      tax asset
              
              
              9,256
              
              
              
              165Other
      assets
              
              
              16,556
              
              
              
              14,693Total
      assets
              
              $
              564,906
              
              
              $
              645,817LIABILITIESDeposits
              
              $
              446,568
              
              
              $
              507,865Advances
      from FHLB and other borrowings
              
              
              81,637
              
              
              
              62,202Advance
      payments by borrowers for taxes and insurance
              
              
              884
              
              
              
              916Accrued
      interest payable
              
              
              1,801
              
              
              
              2,691Accrued
      expenses and other liabilities
              
              
              1,996
              
              
              
              1,888Total
      liabilities
              
              
              532,886
              
              
              
              575,562STOCKHOLDERS'
      EQUITYCommon
      stock, $.01 par value
              
              
              51
              
              
              
              51Additional
      paid-in capital
              
              
              39,505
              
              
              
              39,230Retained
      earnings, substantially restricted
              
              
              35,484
              
              
              
              58,704Treasury
      stock, at cost
              
              
              (28,535
              )
              
              
              (26,886
              )Accumulated
      other comprehensive loss
              
              
              (13,936
              )
              
              
              (179
              )Unearned
      ESOP
              
              
              (549
              )
              
              
              (665
              )Total
      stockholders' equity
              
              
              32,020
              
              
              
              70,255Total
      liabilities and stockholders' equity
              
              $
              564,906
              
              
              $
              645,817Actual
      number of shares outstanding at endof
      period, net of treasury stock
              
              
              3,304,471
              
              
              
              3,389,971Average
      shares outstanding used to compute:Basic
      earnings per share
              
              
              3,244,570
              
              
              
              3,316,774Diluted
      earnings per share
              
              
              3,244,570
              
              
              
              3,316,774Shareholders'
      equity to total assets
              
              
              5.67
              %
              
              
              10.88
              %Book
      value per share
              
              $
              9.69
              
              
              $
              20.72Tangible
      book value per share
              
              $
              9.69
              
              
              $
              15.29
  6
  FIRST
      FEDERAL BANKSHARES, INC. and SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)Three
      months ended
              
              
              Twelve
      months endedJune
      30
              
              
              June
      30(Dollars
      in thousands, except per share amounts)
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Interest
      on loans
              
              $
              6,143
              
              
              $
              7,333
              
              
              $
              27,618
              
              
              $
              29,845Interest
      on investment securities
              
              
              1,474
              
              
              
              2,136
              
              
              
              7,357
              
              
              
              5,465Interest
      on cash and cash equivalents
              
              
              1
              
              
              
              148
              
              
              
              126
              
              
              
              465Total
      interest income
              
              
              7,618
              
              
              
              9,617
              
              
              
              35,101
              
              
              
              35,775Interest
      on deposit liabilities
              
              
              2,857
              
              
              
              4,670
              
              
              
              14,904
              
              
              
              16,059Interest
      on borrowings
              
              
              731
              
              
              
              861
              
              
              
              3,976
              
              
              
              3,819Total
      interest expense
              
              
              3,588
              
              
              
              5,531
              
              
              
              18,880
              
              
              
              19,878Net
      interest income
              
              
              4,030
              
              
              
              4,086
              
              
              
              16,221
              
              
              
              15,897Provision
      for loan losses
              
              
              1,376
              
              
              
              13
              
              
              
              4,570
              
              
              
              547Net
      interest income after provision
              
              
              2,654
              
              
              
              4,073
              
              
              
              11,651
              
              
              
              15,350Service
      charges on deposit accounts
              
              
              884
              
              
              
              800
              
              
              
              3,275
              
              
              
              3,334Fees
      on commercial and consumer loans
              
              
              70
              
              
              
              60
              
              
              
              348
              
              
              
              196Gain
      on sale of real estate held for development
              
              
              -
              
              
              
              30
              
              
              
              47
              
              
              
              105Other-than-temporary
      impairment of investment securities
              
              
              (809
              )
              
              
              -
              
              
              
              (4,569
              )
              
              
              -Mortgage
      banking revenue
              
              
              318
              
              
              
              151
              
              
              
              837
              
              
              
              681Other
      income
              
              
              430
              
              
              
              507
              
              
              
              1,690
              
              
              
              1,673Total
      non-interest income
              
              
              893
              
              
              
              1,548
              
              
              
              1,628
              
              
              
              5,989Personnel
      expense
              
              
              2,907
              
              
              
              2,760
              
              
              
              11,470
              
              
              
              10,465Office
      property and equipment
              
              
              713
              
              
              
              735
              
              
              
              2,847
              
              
              
              2,851Data
      processing, ATM and debit card transactioncosts,
      and other item processing expense
              
              
              385
              
              
              
              350
              
              
              
              1,564
              
              
              
              1,261Professional,
      insurance, and regulatory expense
              
              
              360
              
              
              
              340
              
              
              
              1,149
              
              
              
              1,150Advertising,
      donations, and public relations
              
              
              321
              
              
              
              175
              
              
              
              1,375
              
              
              
              719Communications,
      postage, and office supplies
              
              
              235
              
              
              
              201
              
              
              
              883
              
              
              
              815Goodwill
      impairment
              
              
              18,417
              
              
              
              -
              
              
              
              18,417
              
              
              
              -Other
      expense
              
              
              113
              
              
              
              212
              
              
              
              930
              
              
              
              860Total
      non-interest expense
              
              
              23,451
              
              
              
              4,773
              
              
              
              38,635
              
              
              
              18,121Income
      (loss) from continuing operations before income taxes
              
              
              (19,904
              )
              
              
              848
              
              
              
              (25,356
              )
              
              
              3,218Income
      tax expense (benefit)
              
              
              (633
              )
              
              
              178
              
              
              
              (2,900
              )
              
              
              739Income
      (loss) from continuing operations
              
              
              (19,271
              )
              
              
              670
              
              
              
              (22,456
              )
              
              
              2,479Income
      from discontinued operations, net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              590Net
      income (loss)
              
              $
              (19,271
              )
              
              $
              670
              
              
              $
              (22,456
              )
              
              $
              3,069Basic
      earnings per share:Income
      (loss) from continuing operations
              
              $
              (5.94
              )
              
              $
              0.20
              
              
              $
              (6.92
              )
              
              $
              0.75Income
      from discontinued operations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              0.18Net
      income (loss) per share
              
              $
              (5.94
              )
              
              $
              0.20
              
              
              $
              (6.92
              )
              
              $
              0.93Diluted
      earnings per share:Income
      (loss) from continuing operations
              
              $
              (5.94
              )
              
              $
              0.20
              
              
              $
              (6.92
              )
              
              $
              0.74Income
      from discontinued operations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              0.18Net
      income (loss) per share
              
              $
              (5.94
              )
              
              $
              0.20
              
              
              $
              (6.92
              )
              
              $
              0.92Cash
      dividends declared per share
              
              
              -
              
              
              $
              0.105
              
              
              $
              0.315
              
              
              $
              0.415






7




FIRST
      FEDERAL BANKSHARES, INC and SUBSIDIARIESSELECTED
      FINANCIAL DATA (unaudited)At
      or for the three months ended
              
              
              At
      or for the twelve months endedJune
      30
              
              
              June
      30(Dollars
      in thousands, except per share amounts)
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Average
      total assets
              
              $
              588,500
              
              
              $
              644,243
              
              
              $
              616,908
              
              
              $
              600,538Average
      interest-earning assets
              
              
              520,131
              
              
              
              584,764
              
              
              
              551,244
              
              
              
              555,415Average
      interest-bearing liabilities
              
              
              480,134
              
              
              
              527,007
              
              
              
              502,905
              
              
              
              495,240Average
      interest-earning assets to averageinterest-bearing
      liabilities
              
              
              108.33
              %
              
              
              110.96
              %
              
              
              109.61
              %
              
              
              112.15
              %Activity
      in the allowance for loan losses during the period:Balance
      at beginning of period
              
              $
              4,693
              
              
              $
              2,031
              
              
              $
              1,797
              
              
              $
              5,466Provision
      for loan losses
              
              
              1,376
              
              
              
              13
              
              
              
              4,570
              
              
              
              547Charge-offs:Single-family
      mortgage loans
              
              
              -
              
              
              
              (69
              )
              
              
              (165
              )
              
              
              (93
              )Commercial
      real estate loans
              
              
              -
              
              
              
              (41
              )
              
              
              (17
              )
              
              
              (41
              )Commercial
      business loans
              
              
              (145
              )
              
              
              (74
              )
              
              
              (216
              )
              
              
              (2,694
              )Consumer
      loans
              
              
              (46
              )
              
              
              (94
              )
              
              
              (195
              )
              
              
              (284
              )Total
      loans charged-off
              
              
              (191
              )
              
              
              (278
              )
              
              
              (593
              )
              
              
              (3,112
              )Loans
      transferred to held for sale
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,300
              )Recoveries
              
              
              16
              
              
              
              31
              
              
              
              120
              
              
              
              196Charge-offs
      net of recoveries
              
              
              (175
              )
              
              
              (247
              )
              
              
              (473
              )
              
              
              (4,216
              )Balance
      at end of period
              
              $
              5,894
              
              
              $
              1,797
              
              
              $
              5,894
              
              
              $
              1,797Non-performing
      loans receivable
              
              $
              17,749
              
              
              $
              1,242
              
              
              $
              17,749
              
              
              $
              1,242Non-performing
      loans to total loans receivable
              
              
              4.29
              %
              
              
              0.29
              %
              
              
              4.29
              %
              
              
              0.29
              %Allowance
      for loan losses to non-performing loans
              
              
              33.21
              %
              
              
              144.69
              %
              
              
              33.21
              %
              
              
              144.69
              %Ratio
      of allowance for loan losses to total loansheld
      for investment at end of period
              
              
              1.42
              %
              
              
              0.42
              %
              
              
              1.42
              %
              
              
              0.42
              %Selected
      operating data: (1)Return
      on average assets
              
              
              -13.10
              %
              
              
              0.42
              %
              
              
              -3.64
              %
              
              
              0.50
              %Return
      on average equity
              
              
              -136.45
              %
              
              
              3.81
              %
              
              
              -34.63
              %
              
              
              4.39
              %Net
      interest rate spread
              
              
              2.91
              %
              
              
              2.42
              %
              
              
              2.65
              %
              
              
              2.46
              %Net
      yield on average interest-earning assets (2)
              
              
              3.13
              %
              
              
              2.83
              %
              
              
              2.97
              %
              
              
              2.90
              %Efficiency
      ratio (3)
              
              
              87.84
              %
              
              
              84.87
              %
              
              
              90.21
              %
              
              
              82.71
              %(1) Annualized
      except for efficiency ratio.(2) Net
      interest income, tax-effected, divided by average interest-earning
      assets.(3) Non-interest
      expense divided by net interest income plus non-interest income, less gain
      (loss) on sale of other
      real estate owned, investments, and fixed assets.






8




FIRST
      FEDERAL BANKSHARES, INC and SUBSIDIARIESSELECTED
      FINANCIAL DATA (unaudited)WeightedJune
      30
              
              
              Average(Dollars
      in thousands, except per share amounts)
              
              2008
              
              
              RateTime
      deposits maturing within ...Three
      months
              
              $
              47,817
              
              
              
              3.99
              %Four
      to six months
              
              
              23,844
              
              
              
              3.45
              %Seven
      to twelve months
              
              
              72,140
              
              
              
              3.61
              %More
      than twelve months
              
              
              76,369
              
              
              
              3.98
              %Total
      time deposits
              
              $
              220,170
              
              
              
              3.80
              %FHLB
      advances and all other borrowings maturing within...Three
      months
              
              $
              64,887
              
              
              
              3.00
              %Four
      to six months
              
              
              -
              
              
              
              -Seven
      to twelve months
              
              
              4,500
              
              
              
              4.80
              %More
      than twelve months
              
              
              12,250
              
              
              
              5.04
              %Total
      FHLB advances and all other borrowings
              
              $
              81,637
              
              
              
              3.40
              %
  Three
      months ended
              
              
              Twelve
      months endedJune
      30
              
              
              June
      302008
              
              
              2007
              
              
              2008
              
              
              2007Market
      price per share:High
      for the period
              
              $
              14.87
              
              
              $
              21.55
              
              
              $
              19.00
              
              
              $
              22.51Low
      for the period
              
              $
              6.00
              
              
              $
              18.50
              
              
              $
              6.00
              
              
              $
              18.50Close
      at end of period
              
              $
              6.57
              
              
              $
              19.44
              
              
              $
              6.57
              
              
              $
              19.44








9