Exhibit 99.1
News Release
First Regional | 1801 Century Park East | Jack A. Sweeney |
Bancorp | Century City, California 90067 | Board Chairman |
| Telephone (310) 552-1776 | Chief Executive Officer |
| Facsimile (310) 552-1772 |
|
IMMEDIATE RELEASE
FIRST REGIONAL BANCORP POSTS SUBSTANTIAL GROWTH TO NEW HIGHS IN
SECOND QUARTER AND FIRST HALF FINANCIAL RESULTS
Quarterly Highlights Include:
· Second quarter net income highest quarterly profit in history
· First half net income advances 56% over same period in 2005
· Total assets climb 38% to their highest level ever
· Total deposits rise 27% to all time high
· Net loans increase 32% to a new record
CENTURY CITY, Calif. (July 18, 2006)—First Regional Bancorp (Nasdaq Global Market: FRGB) today reported continued profitable growth in the second quarter ended June 30, 2006, with net income for the quarter surging more than 50% for the company’s best quarterly earnings performance in history.
For the three months ended June 30, 2006, net income totaled $9.6 million, up from $6.4 million in the corresponding quarter of 2005, and easily surpassed the previous all-time profit record achieved in this year’s first quarter. Diluted earnings per share advanced to $2.22, an increase of 49% from the $1.49 per diluted share recorded in the year-earlier period. Net income for the first half of 2006 rose 56% to $18.1 million from $11.6 million in the prior year, while earnings per diluted share advanced 54% to $4.18 from $2.72 in the first six months of 2005.
Jack A. Sweeney, Chairman and Chief Executive Officer, stated: “First Regional’s continued outstanding performance is truly gratifying. We are successfully managing a period of sustained growth without parallel in our 27-year history. Quarterly earnings once again exceeded those of the corresponding prior year period, marking a period of exceptional consistency. Moreover, earnings have again risen on a sequential basis from the preceding quarter, and set new quarterly earnings high marks for our company. Fueling our progress in the most recent quarter, assets at June 30, 2006 rose 38% to a record $1.999 billion from $1.452 billion a year ago, while deposits grew 27% to $1.537 billion from $1.211 billion in 2005. Net loans climbed 32% to $1.755 billion from $1.328 billion.”
Mr. Sweeney continued: “First Regional’s strong second quarter results reflected our continued successful implementation of the solid strategic plan that has served us well. We are adding quality earning assets at a steady pace. Average earning assets grew to $1.824 billion from $1.319 billion at this point last year, while our average yield on those assets was 8.76%, in the second quarter of 2006 compared with 7.38% a year ago. Second-quarter revenues from earnings assets grew 64%, to $39.8 million from $24.3 million in the prior year. We also continue to work diligently to keep operating costs in check while increasing our operating efficiency. In key measures of
1
productivity, assets per employee were 13 percent higher than one year ago, and our efficiency ratio improved to 37.60% in the second quarter from 40.90% in the same period a year earlier.
“We have benefited from the strength and resiliency of the Southern California economy, and from the Federal Reserve’s current policy of raising interest rates, which has resulted in increased interest income for First Regional. However, we are mindful of the challenges in the current situation, including pressure on our interest costs due to rising rates and the possible softening of the industries we serve. Moreover, no one can predict the impact of national and global challenges, such as soaring fuel prices and a troubling international scene. Therefore we continue our traditional conservative posture with respect to growth, placing prime emphasis on asset quality. At June 30, 2006, nonperforming assets amounted to only $62,000, enabling us to moderate our loan loss provisions while maintaining our loan loss reserves at levels that we regard as conservative and ample. Such reserves amounted to $20.3 million at the close of the quarter.”
Mr. Sweeney concluded: “We have growing financial strength, a proven and flexible business plan, and the experienced and talented managers and employees required to execute it effectively. Through our successful financings and the retention of earnings, we have expanded total capital to $125.5 million at June 30, 2006, a 40% increase from $89.7 million a year ago. We believe that First Regional is solidly positioned for further success, and we will continue to carefully manage our business in order to further maximize long-term values for our shareholders.”
First Regional Bancorp is a bank holding company headquartered in Century City, California. Its subsidiary, First Regional Bank, specializes in providing businesses and professionals with the management expertise of a major bank and the personalized service of an independent.
# # #
2
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
|
| (000’s omitted) |
| ||||
As of June 30 |
| 2006 |
| 2005 |
| ||
|
|
|
|
|
| ||
ASSETS: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 167,224 |
| $ | 63,006 |
|
Federal funds sold |
| 0 |
| 0 |
| ||
Cash and cash equivalents |
| 167,224 |
| 63,006 |
| ||
|
|
|
|
|
| ||
Investment securities |
| 17,646 |
| 18,560 |
| ||
Federal Home Loan Bank stock - at cost |
| 12,581 |
| 9,017 |
| ||
Federally guaranteed loans |
| 6,174 |
| 4,651 |
| ||
Other loans, net |
| 1,754,757 |
| 1,327,935 |
| ||
Premises and equipment - net |
| 3,821 |
| 3,674 |
| ||
Other real estate owned |
| 0 |
| 0 |
| ||
Accrued interest receivable and other assets |
| 37,741 |
| 25,211 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 1,999,944 |
| $ | 1,452,054 |
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITAL: |
|
|
|
|
| ||
Demand deposits |
| $ | 482,458 |
| $ | 420,282 |
|
Savings deposits |
| 50,160 |
| 38,817 |
| ||
Money market deposits |
| 816,585 |
| 581,584 |
| ||
Time deposits |
| 188,170 |
| 170,129 |
| ||
|
|
|
|
|
| ||
Total deposits |
| 1,537,373 |
| 1,210,812 |
| ||
|
|
|
|
|
| ||
Funds purchased |
| 0 |
| 0 |
| ||
Federal Home Loan Bank advances |
| 230,000 |
| 100,000 |
| ||
Subordinated debentures |
| 92,785 |
| 41,238 |
| ||
Accrued interest payable and other liabilities |
| 14,317 |
| 10,261 |
| ||
|
|
|
|
|
| ||
Total liabilities |
| 1,874,475 |
| 1,362,311 |
| ||
|
|
|
|
|
| ||
Stated capital |
| 50,974 |
| 48,108 |
| ||
Retained earnings |
| 74,611 |
| 41,626 |
| ||
Net unrealized gains (losses) on available-for-sale securities |
| (116 | ) | 9 |
| ||
|
|
|
|
|
| ||
Total capital |
| 125,469 |
| 89,743 |
| ||
|
|
|
|
|
| ||
Total liabilities and capital |
| $ | 1,999,944 |
| $ | 1,452,054 |
|
|
|
|
|
|
| ||
Book value per share outstanding |
| $ | 30.94 |
| $ | 22.32 |
|
|
|
|
|
|
| ||
Total shares outstanding | �� | 4,055,390 |
| 4,020,146 |
|
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 30 |
| June 30 |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on loans |
| $ | 39,669 |
| $ | 24,130 |
| $ | 76,176 |
| $ | 44,584 |
|
Interest on federal funds sold |
| 43 |
| 27 |
| 75 |
| 129 |
| ||||
Interest on investment securities |
| 129 |
| 114 |
| 197 |
| 151 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest income |
| 39,841 |
| 24,271 |
| 76,448 |
| 44,864 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on deposits |
| 8,839 |
| 2,927 |
| 16,212 |
| 5,158 |
| ||||
Interest on subordinated debentures |
| 1,641 |
| 595 |
| 2,684 |
| 1,120 |
| ||||
Interest on FHLB advances |
| 2,459 |
| 1,022 |
| 4,895 |
| 1,716 |
| ||||
Interest on other borrowings |
| 1 |
| 1 |
| 4 |
| 1 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest expense |
| 12,940 |
| 4,545 |
| 23,795 |
| 7,995 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
| 26,901 |
| 19,726 |
| 52,653 |
| 36,869 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for loan losses |
| 1,500 |
| 1,500 |
| 3,891 |
| 2,700 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income after provision for loan losses |
| 25,401 |
| 18,226 |
| 48,762 |
| 34,169 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other operating income |
| 2,498 |
| 1,575 |
| 4,450 |
| 3,056 |
| ||||
|
| . |
| . |
|
|
|
|
| ||||
Salaries and related benefits |
| 6,983 |
| 5,573 |
| 13,779 |
| 10,890 |
| ||||
Occupancy expenses |
| 682 |
| 598 |
| 1,304 |
| 1,394 |
| ||||
Other expenses |
| 3,389 |
| 2,542 |
| 6,372 |
| 4,751 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other operating expenses |
| 11,054 |
| 8,713 |
| 21,455 |
| 17,035 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before provision for income taxes |
| 16,845 |
| 11,088 |
| 31,757 |
| 20,190 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
| 7,252 |
| 4,713 |
| 13,680 |
| 8,573 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 9,593 |
| $ | 6,375 |
| $ | 18,077 |
| $ | 11,617 |
|
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 30 |
| June 30 |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 2.37 |
| $ | 1.59 |
| $ | 4.47 |
| $ | 2.90 |
|
Diluted |
| $ | 2.22 |
| $ | 1.49 |
| $ | 4.18 |
| $ | 2.72 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding |
| 4,052,311 |
| 4,015,855 |
| 4,047,018 |
| 4,008,446 |
| ||||
Diluted average shares |
| 4,331,094 |
| 4,285,387 |
| 4,322,628 |
| 4,277,036 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Average equity |
| $ | 119,992 |
| $ | 86,723 |
| $ | 115,267 |
| $ | 83,517 |
|
Average assets |
| $ | 1,926,284 |
| $ | 1,398,707 |
| $ | 1,897,332 |
| $ | 1,341,453 |
|
Return on average equity (%) |
| 32.07 |
| 29.48 |
| 31.63 |
| 28.05 |
| ||||
Return on average assets (%) |
| 2.00 |
| 1.83 |
| 1.92 |
| 1.75 |
| ||||
Efficiency ratio (%) |
| 37.60 |
| 40.90 |
| 37.57 |
| 42.67 |
| ||||
Number of employees |
| 243 |
| 199 |
|
|
|
|
| ||||
Assets per employee (000s) |
| $ | 8,230 |
| $ | 7,297 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
CREDIT QUALITY |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning reserve for loan losses (000s) |
| $ | 18,975 |
| $ | 13,355 |
| $ | 17,577 |
| $ | 11,825 |
|
Loan loss provisions |
| 1,500 |
| 1,500 |
| 3,891 |
| 2,700 |
| ||||
Loan recoveries |
| 0 |
| 0 |
| 0 |
| 130 |
| ||||
Loan chargeoffs |
| 0 |
| 35 |
| 941 |
| 35 |
| ||||
Net change in allowance for unfunded loan commitments |
| (162 | ) | (3 | ) | (214 | ) | 197 |
| ||||
Ending reserve for loan losses (000s) |
| $ | 20,313 |
| $ | 14,817 |
| $ | 20,313 |
| $ | 14,817 |
|
|
|
|
|
|
|
|
|
|
| ||||
Nonperforming assets (000s) |
| $ | 62 |
| $ | 853 |
|
|
|
|
| ||
Nonperforming assets / gross loans (%) |
| 0.00 |
| 0.06 |
|
|
|
|
| ||||
Reserve for loan losses / nonperforming assets (%) |
| 32762.90 |
| 1737.05 |
|
|
|
|
| ||||
Reserve for loan losses / gross loans (%) |
| 1.14 |
| 1.10 |
|
|
|
|
|
5
|
| (000s omitted) |
| ||||||||||||||
|
| For the Three Months Ended June 30, |
| ||||||||||||||
|
| 2006 |
| 2005 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 1,806,214 |
| $ | 39,669 |
| 8.81 |
| $ | 1,297,410 |
| $ | 24,130 |
| 7.46 |
|
Funds sold |
| 3,620 |
| 43 |
| 4.76 |
| 3,561 |
| 27 |
| 3.04 |
| ||||
Investment securities |
| 13,762 |
| 129 |
| 3.76 |
| 18,390 |
| 114 |
| 2.49 |
| ||||
Total earning assets |
| $ | 1,823,596 |
| $ | 39,841 |
| 8.76 |
| $ | 1,319,361 |
| $ | 24,271 |
| 7.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,507,316 |
| $ | 8,839 |
| 2.35 |
| $ | 1,128,476 |
| $ | 2,927 |
| 1.04 |
|
Federal Home Loan Bank advances |
| 197,341 |
| 2,459 |
| 5.00 |
| 135,275 |
| 1,022 |
| 3.03 |
| ||||
Subordinated debentures |
| 92,785 |
| 1,641 |
| 7.09 |
| 41,238 |
| 595 |
| 5.79 |
| ||||
Funds purchased |
| 99 |
| 1 |
| 4.05 |
| 272 |
| 1 |
| 1.47 |
| ||||
Total bearing liabilities |
| $ | 1,797,541 |
| $ | 12,940 |
| 2.89 |
| $ | 1,305,261 |
| $ | 4,545 |
| 1.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread (1) |
|
|
|
|
| 5.88 |
|
|
|
|
| 5.98 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin (2) |
|
|
|
|
| 5.92 |
|
|
|
|
| 5.93 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net interest spread represents the average yield earned on earning assets less the average cost of bearing liabilities.
(2) Net interest margin represents net interest income divided by average earning assets.
6
|
| (000s omitted) |
| ||||||||||||||
|
| For the Six Months Ended June 30, |
| ||||||||||||||
|
| 2006 |
| 2005 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Loans |
| $ | 1,780,873 |
| $ | 76,176 |
| 8.63 |
| $ | 1,243,090 |
| $ | 44,584 |
| 7.23 |
|
Funds Sold |
| 3,483 |
| 75 |
| 4.34 |
| 10,528 |
| 129 |
| 2.47 |
| ||||
Investment Securities |
| 11,367 |
| 197 |
| 3.49 |
| 13,060 |
| 151 |
| 2.33 |
| ||||
Total Earning Assets |
| $ | 1,795,723 |
| $ | 76,448 |
| 8.59 |
| $ | 1,266,678 |
| $ | 44,864 |
| 7.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,486,307 |
| $ | 16,212 |
| 2.20 |
| $ | 1,086,713 |
| $ | 5,158 |
| 0.96 |
|
Federal Home Loan Bank Advances |
| 207,746 |
| 4,895 |
| 4.75 |
| 123,612 |
| 1,716 |
| 2.80 |
| ||||
Subordinated Debentures |
| 77,577 |
| 2,684 |
| 6.98 |
| 41,238 |
| 1,120 |
| 5.48 |
| ||||
Other Borrowings |
| 90 |
| 4 |
| 8.96 |
| 182 |
| 1 |
| 1.11 |
| ||||
Total Bearing Liabilities |
| $ | 1,771,720 |
| $ | 23,795 |
| 2.71 |
| $ | 1,251,745 |
| $ | 7,995 |
| 1.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Spread (1) |
|
|
|
|
| 5.88 |
|
|
|
|
| 5.85 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Margin (2) |
|
|
|
|
| 5.91 |
|
|
|
|
| 5.87 |
|
(1) Net interest spread represents the average yield earned on earning assets less the average cost of bearing liabilities.
(2) Net interest margin represents net interest income divided by average earning assets.
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein may constitute forward-looking statements. Although First Regional believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from First Regional’s expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which First Regional conducts its operations.
7