| **Exhibit                99.1**          |   |
|------------------------------------------|--------|
|                                     |   |
| **PRESS                RELEASE**         |   |
| **January                24, 2007**      |   |
| **For                Immediate Release** |   |
|                                     |   |

| **For                Further Information Contact:** | **Michael                W. Dosland**                    |
|-----------------------------------------------------|----------------------------------------------------------|
|                                                | **President                and Chief Executive Officer** |
|                                                | **First                Federal Bankshares, Inc.**        |
|                                                | **329                Pierce Street, P.O. Box 897**       |
|                                                | **Sioux                City, IA 51102**                  |
|                                                | **712.277.0222**                                         |

**FIRST      FEDERAL BANKSHARES, INC. ANNOUNCES EARNINGS**

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*About      First Federal Bank*

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| **FIRST                  FEDERAL BANKSHARES, INC. and SUBSIDIARIES**   |   |                          |      |                      |   |                          |   |
|------------------------------------------------------------------------|--------|-------------------------------|-----------|---------------------------|--------|-------------------------------|--------|
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS (unaudited)** |   |                          |      |                      |   |                          |   |
|                                                                   |   |                          |      |                      |   |                          |   |
|                                                                   |   | December                  31, |      | June                  30, |   | December                  31, |   |
| *(Dollars                  in thousands, except per share amounts)*    |   | 2006                          |      | 2006                      |   | 2005                          |   |
| **ASSETS**                                                             |   |                          |      |                      |   |                          |   |   |   |   |
| Cash                  and cash equivalents                             |   | $                             | 19,357    |                      | $      | 39,905                        |   | $ | 13,842 |   |
| Securities                  available-for-sale                         |   |                          | 62,887    |                      |   | 47,320                        |   |   | 44,144 |   |
| Securities                  held-to-maturity                           |   |                          | 11,899    |                      |   | 13,077                        |   |   | 15,063 |   |
| Non-performing                  and classified loans held for sale     |   |                          | 10,349    |                      |   | -                             |   |   | - |   |
| Loans                  receivable, net                                 |   |                          | 439,560   |                      |   | 457,029                       |   |   | 459,833 |   |
| Office                  property and equipment, net                    |   |                          | 14,408    |                      |   | 12,545                        |   |   | 12,815 |   |
| Federal                  Home Loan Bank stock, at cost                 |   |                          | 4,583     |                      |   | 5,162                         |   |   | 5,690 |   |
| Accrued                  interest receivable                           |   |                          | 2,702     |                      |   | 2,628                         |   |   | 2,538 |   |
| Goodwill                                                               |   |                          | 18,417    |                      |   | 18,417                        |   |   | 18,417 |   |
| Other                  assets                                          |   |                          | 16,478    |                      |   | 16,452                        |   |   | 15,187 |   |
| Total                  assets                                          |   | $                             | 600,640   |                      | $      | 612,535                       |   | $ | 587,529 |   |
| **LIABILITIES**                                                        |   |                          |      |                      |   |                          |   |   |   |   |
| Deposits                                                               |   | $                             | 447,663   |                      | $      | 446,056                       |   | $ | 413,341 |   |
| Advances                  from FHLB and other borrowings               |   |                          | 77,889    |                      |   | 92,753                        |   |   | 101,103 |   |
| Advance                  payments by borrowers for taxes and insurance |   |                          | 914       |                      |   | 977                           |   |   | 965 |   |
| Accrued                  interest payable                              |   |                          | 2,524     |                      |   | 2,038                         |   |   | 1,464 |   |
| Accrued                  expenses and other liabilities                |   |                          | 1,961     |                      |   | 2,387                         |   |   | 2,286 |   |
| Total                  liabilities                                     |   |                          | 530,951   |                      |   | 544,211                       |   |   | 519,159 |   |
| **STOCKHOLDERS'                  EQUITY**                              |   |                          |      |                      |   |                          |   |   |   |   |
| Common                  stock, $.01 par value                          |   |                          | 50        |                      |   | 50                            |   |   | 50 |   |
| Additional                  paid-in capital                            |   |                          | 38,951    |                      |   | 38,293                        |   |   | 38,030 |   |
| Retained                  earnings, substantially restricted           |   |                          | 57,715    |                      |   | 57,014                        |   |   | 56,167 |   |
| Treasury                  stock, at cost                               |   |                          | (26,223   | )                         |   | (25,921                       | )      |   | (24,908 | ) |
| Accumulated                  other comprehensive income (loss)         |   |                          | (79       | )                         |   | (326                          | )      |   | (120 | ) |
| Unearned                  ESOP                                         |   |                          | (725      | )                         |   | (786                          | )      |   | (849 | ) |
| Total                  stockholders' equity                            |   |                          | 69,689    |                      |   | 68,324                        |   |   | 68,370 |   |
| Total                  liabilities and stockholders' equity            |   | $                             | 600,640   |                      | $      | 612,535                       |   | $ | 587,529 |   |
|                                                                   |   |                          |      |                      |   |                          |   |   |   |   |
| Actual                  number of shares outstanding at end            |   |                          |      |                      |   |                          |   |   |   |   |
| of                  period, net of treasury stock                      |   |                          | 3,410,748 |                      |   | 3,380,109                     |   |   | 3,408,863 |   |
| Average                  shares outstanding used to compute:           |   |                          |      |                      |   |                          |   |   |   |   |
| Basic                  earnings per share                              |   |                          | 3,309,482 |                      |   | 3,366,086                     |   |   | 3,427,934 |   |
| Diluted                  earnings per share                            |   |                          | 3,342,938 |                      |   | 3,417,367                     |   |   | 3,478,862 |   |
| Shareholders'                  equity to total assets                  |   |                          | 11.60     | %                         |   | 11.15                         | %      |   | 11.64 | % |
| Book                  value per share                                  |   | $                             | 20.43     |                      | $      | 20.21                         |   | $ | 20.06 |   |

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|                                                                             |   |                                |   |                              |   |   |   |   |   |
|----------------------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------------|--------|--------|--------|--------|--------|
| **FIRST                  FEDERAL BANKSHARES, INC. and SUBSIDIARIES**             |   |                                |   |                              |   |   |   |   |   |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)** |   |                                |   |                              |   |   |   |   |   |
|                                                                             |   |                                |   |                              |   |   |   |   |   |
|                                                                             |   | Three                  months ended |   | Six                  months ended |   |
|                                                                             |   | December                  31,       |   | December                  31,     |   |
| *(Dollars                  in thousands, except per share amounts)*              |   | 2006                                |   | 2005                              |   | 2006   |   | 2005   |   |
| Interest                  on loans                                               |   | $                                   | 7,530  |                              | $      | 7,269  |   | $      | 15,166 |   | $ | 14,131 |   |
| Interest                  on investment securities                               |   |                                | 1,005  |                              |   | 683    |   |   | 1,798  |   |   | 1,329 |   |
| Interest                  on deposits                                            |   |                                | 109    |                              |   | 19     |   |   | 244    |   |   | 94 |   |
| Total                  interest income                                           |   |                                | 8,644  |                              |   | 7,971  |   |   | 17,208 |   |   | 15,554 |   |
| Interest                  on deposit liabilities                                 |   |                                | 3,784  |                              |   | 2,512  |   |   | 7,206  |   |   | 4,789 |   |
| Interest                  on borrowings                                          |   |                                | 1,003  |                              |   | 1,144  |   |   | 2,040  |   |   | 2,275 |   |
| Total                  interest expense                                          |   |                                | 4,787  |                              |   | 3,656  |   |   | 9,246  |   |   | 7,064 |   |
| Net                  interest income                                             |   |                                | 3,857  |                              |   | 4,315  |   |   | 7,962  |   |   | 8,490 |   |
| Provision                  for loan losses                                       |   |                                | 403    |                              |   | 510    |   |   | 503    |   |   | 750 |   |
| Net                  interest income after provision                             |   |                                | 3,454  |                              |   | 3,805  |   |   | 7,459  |   |   | 7,740 |   |
| Service                  charges on deposit accounts                             |   |                                | 814    |                              |   | 782    |   |   | 1,657  |   |   | 1,622 |   |
| Service                  charges on loans                                        |   |                                | 79     |                              |   | 104    |   |   | 140    |   |   | 200 |   |
| Gain                  (loss) on sale of real estate                              |   |                                |   |                              |   |   |   |   |   |   |   |   |   |
| held                  for development                                            |   |                                | 20     |                              |   | -      |   |   | 60     |   |   | (242 | ) |
| Gain                  on sale of investments                                     |   |                                | 5      |                              |   | 203    |   |   | 5      |   |   | 203 |   |
| Gain                  on sale of loans                                           |   |                                | 161    |                              |   | 164    |   |   | 346    |   |   | 398 |   |
| Other                  income                                                    |   |                                | 568    |                              |   | 567    |   |   | 1,180  |   |   | 1,170 |   |
| Total                  non-interest income                                       |   |                                | 1,647  |                              |   | 1,820  |   |   | 3,388  |   |   | 3,351 |   |
| Compensation                  and benefits                                       |   |                                | 2,623  |                              |   | 2,486  |   |   | 5,210  |   |   | 4,978 |   |
| Office                  property and equipment                                   |   |                                | 693    |                              |   | 708    |   |   | 1,378  |   |   | 1,409 |   |
| Data                  processing, ATM and debit card transaction                 |   |                                |   |                              |   |   |   |   |   |   |   |   |   |
| costs                  and other item processing expense                         |   |                                | 251    |                              |   | 248    |   |   | 497    |   |   | 496 |   |
| Professional,                  insurance and regulatory expense                  |   |                                | 275    |                              |   | 246    |   |   | 559    |   |   | 466 |   |
| Advertising,                  donations and public relations                     |   |                                | 220    |                              |   | 168    |   |   | 389    |   |   | 381 |   |
| Communications,                  postage and office supplies                     |   |                                | 214    |                              |   | 208    |   |   | 414    |   |   | 405 |   |
| Other                  expense                                                   |   |                                | 315    |                              |   | 196    |   |   | 534    |   |   | 422 |   |
| Total                  non-interest expense                                      |   |                                | 4,591  |                              |   | 4,260  |   |   | 8,981  |   |   | 8,557 |   |
| Income                  before income taxes                                      |   |                                | 510    |                              |   | 1,365  |   |   | 1,866  |   |   | 2,534 |   |
| Income                  tax expense                                              |   |                                | 97     |                              |   | 367    |   |   | 487    |   |   | 711 |   |
| Net                  income                                                      |   | $                                   | 413    |                              | $      | 998    |   | $      | 1,379  |   | $ | 1,823 |   |
|                                                                             |   |                                |   |                              |   |   |   |   |   |   |   |   |   |
| Per                  share information:                                          |   |                                |   |                              |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share                                        |   | $                                   | 0.12   |                              | $      | 0.29   |   | $      | 0.42   |   | $ | 0.53 |   |
| Diluted                  earnings per share                                      |   | $                                   | 0.12   |                              | $      | 0.29   |   | $      | 0.41   |   | $ | 0.52 |   |
| Cash                  dividends declared per share                               |   | $                                   | 0.105  |                              | $      | 0.100  |   | $      | 0.205  |   | $ | 0.200 |   |

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| **FIRST                  FEDERAL BANKSHARES, INC and SUBSIDIARIES** |   |                                        |    |                                      |   |    |   |   |    |
|---------------------------------------------------------------------|--------|---------------------------------------------|---------|-------------------------------------------|--------|---------|--------|--------|---------|
| **SELECTED                  FINANCIAL DATA (unaudited)**            |   |                                        |    |                                      |   |    |   |   |    |
|                                                                |   |                                        |    |                                      |   |    |   |   |    |
|                                                                |   | At                  or for the three months |    | At                  or for the six months |   |
|                                                                |   | December                  31,               |    | December                  31,             |   |
| *(Dollars                  in thousands, except per share amounts)* |   | 2006                                        |    | 2005                                      |   | 2006    |   | 2005   |    |
| Average                  interest-earning assets                    |   | $                                           | 541,707 |                                      | $      | 526,952 |   | $      | 538,682 |   | $ | 526,880 |   |
| Average                  interest-bearing liabilities               |   |                                        | 480,272 |                                      |   | 463,439 |   |   | 477,160 |   |   | 463,290 |   |
| Average                  interest-earning assets to                 |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| average                  interest-bearing liabilities               |   |                                        | 112.79  | %                                         |   | 113.70  | %      |   | 112.89  | % |   | 113.73 | % |
|                                                                |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Activity                  in the allowance for loan losses          |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| during                  the period:                                 |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Balance                  at beginning of period                     |   | $                                           | 5,482   |                                      | $      | 6,723   |   | $      | 5,466   |   | $ | 6,718 |   |
| Provision                  for loan losses (1)                      |   |                                        | 403     |                                      |   | 510     |   |   | 503     |   |   | 750 |   |
| Charge-offs:                                                        |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Single-family                  mortgage loans                       |   |                                        | -       |                                      |   | (19     | )      |   | (20     | ) |   | (29 | ) |
| Commercial                  real estate loans                       |   |                                        | -       |                                      |   | (1      | )      |   | -       |   |   | (42 | ) |
| Commercial                  business loans                          |   |                                        | (2,617  | )                                         |   | (1,486  | )      |   | (2,617  | ) |   | (1,594 | ) |
| Consumer                  loans                                     |   |                                        | (49     | )                                         |   | (178    | )      |   | (127    | ) |   | (282 | ) |
| Total                  loans charged-off                            |   |                                        | (2,666  | )                                         |   | (1,684  | )      |   | (2,764  | ) |   | (1,947 | ) |
| Loans                  transferred to held for sale (2)             |   |                                        | (1,300  | )                                         |   | -       |   |   | (1,300  | ) |   | - |   |
| Recoveries                                                          |   |                                        | 125     |                                      |   | 23      |   |   | 139     |   |   | 51 |   |
| Charge-offs                  net of recoveries                      |   |                                        | (3,841  | )                                         |   | (1,661  | )      |   | (3,925  | ) |   | (1,896 | ) |
| Balance                  at end of period                           |   | $                                           | 2,044   |                                      | $      | 5,572   |   | $      | 2,044   |   | $ | 5,572 |   |
|                                                                |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Non-performing                  loans receivable (3)                |   | $                                           | 2,775   |                                      | $      | 3,876   |   | $      | 2,775   |   | $ | 3,876 |   |
| Non-performing                  loans to total loans receivable (3) |   |                                        | 0.63    | %                                         |   | 0.83    | %      |   | 0.63    | % |   | 0.83 | % |
| Allowance                  for loan losses to non-performing loans  |   |                                        | 73.66   | %                                         |   | 143.76  | %      |   | 73.66   | % |   | 143.76 | % |
| Ratio                  of allowance for loan losses to total        |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| loans                  held for investment at end of period         |   |                                        | 0.46    | %                                         |   | 1.20    | %      |   | 0.46    | % |   | 1.20 | % |
|                                                                |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Selected                  operating data: (4)                       |   |                                        |    |                                      |   |    |   |   |    |   |   |   |   |
| Return                  on average assets                           |   |                                        | 0.28    | %                                         |   | 0.69    | %      |   | 0.46    | % |   | 0.62 | % |
| Return                  on average equity                           |   |                                        | 2.35    | %                                         |   | 5.65    | %      |   | 3.93    | % |   | 5.12 | % |
| Net                  interest rate spread                           |   |                                        | 2.42    | %                                         |   | 2.95    | %      |   | 2.54    | % |   | 2.90 | % |
| Net                  yield on average interest-earning assets (5)   |   |                                        | 2.89    | %                                         |   | 3.35    | %      |   | 3.00    | % |   | 3.29 | % |
| Efficiency                  ratio (6)                               |   |                                        | 83.94   | %                                         |   | 71.78   | %      |   | 79.29   | % |   | 73.69 | % |

|   | (1) | Includes                  a $1.3 million loss on transfer of $11.6 million of non-performing                  and                  classified loans to held for sale, and $0.6 million of losses on                  other                  commercial business loans. These amounts are net of a $1.5 million                  reduction in the allowance for loan losses due to the significant                  decline                  in non-performing and classified assets resulting from the aforementioned                  transfer to loans held for sale. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | 2006                  data consists of $2.0 million relating to commercial real estate                  loans                  and, $0.1 million relating to single-family mortgage loans, offset                  by $0.8                  million recovery in commercial business                  loans. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | 2006                  data does not include $8.0 million in non-performing loans held                  for                  sale. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Annualized                  except for efficiency ratio. |
|--------|-----|----------------------------------------------------------|

|   | (5) | Net                  interest income, tax-effected, divided by average interest-earning                  assets. |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

|   | (6) | Noninterest                  expense divided by net interest income plus noninterest income,                  less gain                  (loss) on sale of other real estate owned, investments and fixed                  assets. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| **FIRST                  FEDERAL BANKSHARES, INC and SUBSIDIARIES** |   |                          |    |     |   |
|---------------------------------------------------------------------|--------|-------------------------------|---------|----------|--------|
| **SELECTED                  FINANCIAL DATA (unaudited)**            |   |                          |    |     |   |
|                                                                |   |                          |    | Weighted |   |
|                                                                |   | December                  31, |    | Average  |   |
| *(Dollars                  in thousands, except per share amounts)* |   | 2006                          |    | Rate     |   |
| Time                  deposits maturing within ...              |   |                          |    |     |   |   |   |
| Three                  months                                       |   | $                             | 57,775  |     |   | 4.52 | % |
| Four                  to six months                                 |   |                          | 43,841  |     |   | 4.79 | % |
| Seven                  to twelve months                             |   |                          | 95,035  |     |   | 4.88 | % |
| More                  than twelve months                            |   |                          | 47,664  |     |   | 4.21 | % |
| Total                  time deposits                                |   | $                             | 244,315 |     |   | 4.65 | % |
|                                                                |   |                          |    |     |   |   |   |
| FHLB                  advances and all other borrowings             |   |                          |    |     |   |   |   |
| maturing                  within ...                            |   |                          |    |     |   |   |   |
| Three                  months                                       |   | $                             | 15,889  |     |   | 4.06 | % |
| Four                  to six months                                 |   |                          | 500     |     |   | 4.77 | % |
| Seven                  to twelve months                             |   |                          | 8,000   |     |   | 3.69 | % |
| More                  than twelve months                            |   |                          | 53,500  |     |   | 5.28 | % |
| Total                  FHLB advances and all other borrowings       |   | $                             | 77,889  |     |   | 4.86 | % |
|                                                                |   |                          |    |     |   |   |   |

|                                   |   | Three                months ended |   | Six                months ended |   |
|----------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|
|                                   |   | December                31,       |   | December                31,     |   |
|                                   |   | 2006                              |   | 2005                            |   | 2006 |   | 2005 |   |
| Market                price per share: |   |                              |   |                            |   |   |   |   |   |
| High                for the period     |   | $                                 | 22.51  |                            | $      | 20.75 |   | $ | 22.51 |   | $ | 20.75 |   |
| Low                for the period      |   | $                                 | 21.40  |                            | $      | 17.30 |   | $ | 21.40 |   | $ | 17.30 |   |
| Close                at end of period  |   | $                                 | 21.70  |                            | $      | 19.45 |   | $ | 21.70 |   | $ | 19.45 |   |