Exhibit 99
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 45% NET INCOME INCREASE IN 2006,
MARKING ITS SEVENTH CONSECUTIVE YEAR OF RECORD RESULTS
Financial Highlights Include:
· Fourth quarter earnings climb 29%, reaching highest single-period total in company history
· Revenues from earning assets rise 52% to $162 million for the year
· Total assets and total deposits both increase 15% to new highs
· Total capital grows 39% to $147 million
CENTURY CITY, CALIFORNIA (Jan. 30, 2007)—First Regional Bancorp (Nasdaq-GM: FRGB) today announced that financial results for both the year and the fourth quarter ended December 31, 2006 set new historic highs, as the company continued its consistent record of increasing earnings and selectively building its base of quality assets.
Net income for the fourth quarter totaled a record $10.2 million, an increase of 29 percent from $7.9 million for the same period in 2005, while income per diluted share increased to 78 cents, compared with 61 cents in the comparable period a year ago.
For the full year, net income advanced sharply to $38.3 million, equal to $2.95 per diluted share, compared with $26.5 million or $2.06 per diluted share in 2005. Earnings for both the year and the quarter have been adjusted to reflect the 3-for-1 stock split effected in August 2006.
At December 31, 2006, assets totaled $2.076 billion, compared with $1.813 billion a year earlier. Total deposits at year-end were $1.628 billion, up from $1.420 billion in the prior year. Net loans advanced 7% to a total of $1.812 billion at the close of the fiscal year. During 2006, First Regional added $41 million in capital, primarily through the retention of earnings, bringing total capital to $147 million at year-end, an increase of 39% from December 31, 2005.
Jack A. Sweeney, Chairman and Chief Executive Officer, commented: “2006 represented another year of outstanding financial results, as First Regional achieved its seventh consecutive year in which earnings advanced to new record levels. During this remarkable period, we expanded our network of regional offices within the Southern California market, augmented our team of talented and productive bankers, added new services and capabilities, grew our assets to more than $2 billion, and increased our capital base substantially. Reflecting these achievements, our stock price (adjusted for the August 2006 3-for-1 stock split) has risen steadily in recent years.”
“Our record results of the past year reflected a solid banking performance in a generally positive environment. First Regional continues to reap the benefits of the portfolio of profitable, high quality assets
1
which we have built in recent years. We also benefited from the Federal Reserve’s actions to increase interest rates in the first half of 2006. Revenues from earning assets increased to $162 million in 2006, a 52 percent increase over the prior year.”
“Although our growth was substantial in 2006, we continue to maintain a conservative posture, with an emphasis on managing risk and enhancing operating efficiency. The high quality of our assets and the solid investment returns we derive from them represent the foundation of our ongoing success. Reflecting First Regional’s excellent credit quality, nonperforming assets amounted to just $14,000 at year-end.
Mr. Sweeney concluded: “It is possible that the operating environment may prove more challenging in the coming year. There are uncertainties regarding the continuing health of the economy. Possible downward movements in interest rates could have the effect of reducing our net interest margins. Falling housing prices and home mortgage delinquencies, while the subject of much news coverage of late, are not areas in which First Regional has much direct exposure, but other declines in the California real estate industry could have an impact. Despite these potential challenges, we remain optimistic based on our dedication to the proven strategies that have long served us well. Those strategies will guide our lending and deposit gathering operations as we move forward.
“Moreover, we will continue to benefit from our existing portfolio of high quality assets, our experienced management team, and our solid financial strength. With extensive experience gathered in good times and bad, we are well prepared to address the challenges and opportunities ahead.”
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 December 31 |
| 2006 |
| 2005 |
| ||
|
|
|
|
|
| ||
ASSETS: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 72,134 |
| $ | 67,964 |
|
Federal funds sold |
| 103,860 |
| 0 |
| ||
Cash and cash equivalents |
| 175,994 |
| 67,964 |
| ||
|
|
|
|
|
| ||
Investment securities |
| 27,485 |
| 7,507 |
| ||
Federal Home Loan Bank stock - at cost |
| 12,385 |
| 9,870 |
| ||
Loans - net |
| 1,812,489 |
| 1,688,357 |
| ||
Premises and equipment - net |
| 3,838 |
| 3,581 |
| ||
Accrued interest receivable and other assets |
| 44,048 |
| 35,654 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,076,239 |
| $ | 1,812,933 |
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITAL: |
|
|
|
|
| ||
Demand deposits |
| $ | 468,547 |
| $ | 446,098 |
|
Savings deposits |
| 60,443 |
| 55,394 |
| ||
Money market deposits |
| 865,434 |
| 735,237 |
| ||
Time deposits |
| 233,335 |
| 183,492 |
| ||
|
|
|
|
|
| ||
Total deposits |
| 1,627,759 |
| 1,420,221 |
| ||
|
|
|
|
|
| ||
Funds purchased |
| 0 |
| 0 |
| ||
Federal Home Loan Bank advances |
| 190,000 |
| 210,000 |
| ||
Subordinated debentures |
| 92,785 |
| 61,857 |
| ||
Accrued interest payable and other liabilities |
| 18,685 |
| 14,821 |
| ||
|
|
|
|
|
| ||
Total liabilities |
| 1,929,229 |
| 1,706,899 |
| ||
|
|
|
|
|
| ||
Stated capital |
| 52,167 |
| 49,527 |
| ||
Retained earnings |
| 94,869 |
| 56,534 |
| ||
Net unrealized gains (losses) on available-for-sale securities |
| (26 | ) | (27 | ) | ||
|
|
|
|
|
| ||
Total capital |
| 147,010 |
| 106,034 |
| ||
|
|
|
|
|
| ||
Total liabilities and capital |
| $ | 2,076,239 |
| $ | 1,812,933 |
|
|
|
|
|
|
| ||
Book value per share outstanding (1) |
| $ | 12.05 |
| $ | 8.76 |
|
|
|
|
|
|
| ||
Total shares outstanding (1) |
| 12,200,091 |
| 12,110,325 |
|
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on loans |
| $ | 42,416 |
| $ | 32,581 |
| $ | 160,733 |
| $ | 105,747 |
|
Interest on federal funds sold |
| 179 |
| 26 |
| 308 |
| 174 |
| ||||
Interest on investment securities |
| 253 |
| 51 |
| 672 |
| 265 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest income |
| 42,848 |
| 32,658 |
| 161,713 |
| 106,186 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on deposits |
| 11,851 |
| 6,437 |
| 38,819 |
| 16,224 |
| ||||
Interest on subordinated debentures |
| 1,750 |
| 967 |
| 6,259 |
| 2,726 |
| ||||
Interest on FHLB advances |
| 1,232 |
| 992 |
| 8,174 |
| 3,785 |
| ||||
Interest on other borrowings |
| 0 |
| 0 |
| 4 |
| 4 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest expense |
| 14,833 |
| 8,396 |
| 53,256 |
| 22,739 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
| 28,015 |
| 24,262 |
| 108,457 |
| 83,447 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for loan losses |
| 437 |
| 1,490 |
| 4,328 |
| 5,695 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income after provision for loan losses |
| 27,578 |
| 22,772 |
| 104,129 |
| 77,752 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other operating income |
| 1,962 |
| 1,678 |
| 8,342 |
| 6,424 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Salaries and related benefits |
| 8,354 |
| 7,099 |
| 30,249 |
| 24,426 |
| ||||
Occupancy expenses |
| 739 |
| 612 |
| 2,797 |
| 2,603 |
| ||||
Other operating expenses |
| 3,395 |
| 2,971 |
| 12,997 |
| 11,027 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other operating expenses |
| 12,488 |
| 10,682 |
| 46,043 |
| 38,056 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before provision for income taxes |
| 17,052 |
| 13,768 |
| 66,428 |
| 46,120 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
| 6,832 |
| 5,864 |
| 28,092 |
| 19,595 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 10,220 |
| $ | 7,904 |
| $ | 38,336 |
| $ | 26,525 |
|
4
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share (1) |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.84 |
| $ | 0.65 |
| $ | 3.15 |
| $ | 2.20 |
|
Diluted |
| $ | 0.78 |
| $ | 0.61 |
| $ | 2.95 |
| $ | 2.06 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding (1) |
| 12,194,155 |
| 12,104,163 |
| 12,164,867 |
| 12,057,735 |
| ||||
Diluted average shares (1) |
| 13,057,802 |
| 12,934,620 |
| 13,007,799 |
| 12,875,817 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Average equity |
| $ | 141,574 |
| $ | 101,142 |
| $ | 125,851 |
| $ | 90,456 |
|
Average assets |
| $ | 1,984,564 |
| $ | 1,685,533 |
| $ | 1,936,410 |
| $ | 1,477,252 |
|
Return on average equity (%) |
| 28.64 |
| 31.00 |
| 30.46 |
| 29.32 |
| ||||
Return on average assets (%) |
| 2.04 |
| 1.86 |
| 1.98 |
| 1.80 |
| ||||
Efficiency ratio (%) |
| 41.66 |
| 41.18 |
| 39.42 |
| 42.35 |
| ||||
Number of employees |
| 263 |
| 219 |
|
|
|
|
| ||||
Assets per employee (000s) |
| $ | 7,894 |
| $ | 8,278 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
CREDIT QUALITY |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning reserve for loan losses (000s) |
| $ | 20,131 |
| $ | 16,275 |
| $ | 17,577 |
| $ | 11,825 |
|
Loan loss provisions |
| 437 |
| 1,490 |
| 4,328 |
| 5,695 |
| ||||
Loan recoveries |
| 100 |
| 10 |
| 100 |
| 140 |
| ||||
Loan chargeoffs |
| 0 |
| 0 |
| 1,028 |
| 35 |
| ||||
Net change in allowance for unfunded loan commitments |
| -44 |
| -198 |
| -353 |
| -48 |
| ||||
Ending reserve for loan losses (000s) |
| $ | 20,624 |
| $ | 17,577 |
| $ | 20,624 |
| $ | 17,577 |
|
|
|
|
|
|
|
|
|
|
| ||||
Nonperforming assets (000s) |
| $ | 14 |
| $ | 2,212 |
|
|
|
|
| ||
Nonperforming assets / gross loans (%) |
| 0.00 |
| 0.13 |
|
|
|
|
| ||||
Reserve for loan losses / nonperforming assets (%) |
| 147314.29 |
| 794.62 |
|
|
|
|
| ||||
Reserve for loan losses / gross loans (%) |
| 1.13 |
| 1.03 |
|
|
|
|
|
(1) Amounts have been restated to reflect 3-for-1 stock split effected August 21, 2006.
5
|
| (000s omitted) |
| ||||||||||||||
|
| For the Three Months Ended December 31, |
| ||||||||||||||
|
| 2006 |
| 2005 |
| ||||||||||||
|
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 1,844,693 |
| $ | 42,416 |
| 9.12 |
| $ | 1,592,002 |
| $ | 32,581 |
| 8.12 |
|
Federal funds sold |
| 11,985 |
| 179 |
| 5.93 |
| 2,609 |
| 26 |
| 3.95 |
| ||||
Investment securities |
| 24,772 |
| 253 |
| 4.05 |
| 7,760 |
| 51 |
| 2.61 |
| ||||
Total earning assets |
| $ | 1,881,450 |
| $ | 42,848 |
| 9.04 |
| $ | 1,602,371 |
| $ | 32,658 |
| 8.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,647,048 |
| $ | 11,851 |
| 2.85 |
| $ | 1,420,641 |
| $ | 6,437 |
| 1.80 |
|
Federal Home Loan Bank advances |
| 90,652 |
| 1,232 |
| 5.39 |
| 95,142 |
| 992 |
| 4.14 |
| ||||
Subordinated debentures |
| 92,785 |
| 1,750 |
| 7.48 |
| 61,857 |
| 967 |
| 6.20 |
| ||||
Funds purchased |
| 0 |
| 0 |
| 0.00 |
| 4 |
| 0 |
| 0.00 |
| ||||
Total bearing liabilities |
| $ | 1,830,485 |
| $ | 14,833 |
| 3.21 |
| $ | 1,577,644 |
| $ | 8,396 |
| 2.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread (1) |
|
|
|
|
| 5.82 |
|
|
|
|
| 5.97 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin (2) |
|
|
|
|
| 5.91 |
|
|
|
|
| 6.01 |
|
(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 Twelve Months Ended December 31, |
| ||||||||||||||
|
| 2006 |
| 2005 |
| ||||||||||||
|
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Loans |
| $ | 1,810,347 |
| $ | 160,733 |
| 8.88 |
| $ | 1,380,743 |
| $ | 105,747 |
| 7.66 |
|
Federal funds sold |
| 5,946 |
| 308 |
| 5.18 |
| 6,429 |
| 174 |
| 2.71 |
| ||||
Investment Securities |
| 16,822 |
| 672 |
| 3.99 |
| 11,284 |
| 265 |
| 2.35 |
| ||||
Total Earning Assets |
| $ | 1,833,115 |
| $ | 161,713 |
| 8.82 |
| $ | 1,398,456 |
| $ | 106,186 |
| 7.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,550,369 |
| $ | 38,819 |
| 2.50 |
| $ | 1,217,171 |
| $ | 16,224 |
| 1.33 |
|
Federal Home Loan Bank Advances |
| 163,992 |
| 8,174 |
| 4.98 |
| 115,717 |
| 3,785 |
| 3.27 |
| ||||
Subordinated Debentures |
| 85,328 |
| 6,259 |
| 7.34 |
| 46,605 |
| 2,726 |
| 5.85 |
| ||||
Funds Purchased |
| 34 |
| 4 |
| 11.76 |
| 117 |
| 4 |
| 3.42 |
| ||||
Total Bearing Liabilities |
| $ | 1,799,723 |
| $ | 53,256 |
| 2.96 |
| $ | 1,379,610 |
| $ | 22,739 |
| 1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Spread (1) |
|
|
|
|
| 5.86 |
|
|
|
|
| 5.94 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Margin (2) |
|
|
|
|
| 5.92 |
|
|
|
|
| 5.97 |
|
(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.
7
The following is a schedule of new loans booked (not including loan renewals) by First Regional’s subsidiary, First Regional Bank, during each month of the third and fourth quarters of 2006:
Month |
| New Loans Booked |
| |
|
| (000’s omitted) |
| |
July |
| $ | 128,383 |
|
August |
| 101,667 |
| |
September |
| 124,757 |
| |
Third Quarter Total |
| $ | 354,807 |
|
|
|
|
| |
October |
| $ | 76,541 |
|
November |
| 74,193 |
| |
December |
| 160,091 |
| |
Fourth Quarter Total |
| $ | 310,825 |
|
The following is a schedule describing the primary components of First Regional Bank’s loan portfolio as of December 31, 2006 and 2005:
| Disbursed Balance |
| Percentage |
| Disbursed Balance |
| Percentage |
| |||
|
| (000’s omitted) |
|
|
| (000’s omitted) |
|
|
| ||
Commercial Real Estate Loans |
|
|
|
|
|
|
|
|
| ||
Construction Loans |
| $ | 380,026 |
| 20.6 | % | $ | 222,439 |
| 13.0 | % |
Mini-Perm Loans |
| 216,792 |
| 11.8 | % | 317,591 |
| 18.5 | % | ||
Bridge Loans |
| 985,786 |
| 53.6 | % | 923,812 |
| 53.9 | % | ||
Other |
| 31,545 |
| 1.7 | % | 78,910 |
| 4.6 | % | ||
|
| 1,614,149 |
| 87.7 | % | 1,542,752 |
| 90.0 | % | ||
Commercial Non-Real Estate Secured Loans |
| $ | 226,578 |
| 12.3 | % | $ | 171,105 |
| 10.0 | % |
Total loans |
| $ | 1,840,727 |
| 100.0 | % | $ | 1,713,857 |
| 100.0 | % |
Less - Allowance for loan losses |
| 20,624 |
|
|
| 17,577 |
|
|
| ||
- Deferred loan fees |
| 7,614 |
|
|
| 7,923 |
|
|
| ||
Net Loans |
| 1,812,489 |
|
|
| 1,688,357 |
|
|
|
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.
8