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 ANNOUNCES FINANCIAL RESULTS FOR
THE THIRD QUARTER AND FIRST NINE MONTHS OF 2007
Financial Highlights Include:
• Net income for the third quarter and first nine months of 2007 reflect continued solid profitability
• Credit quality remains exceptionally strong
• Total assets, deposits and loans again reach new record highs
• Revenues from earning assets for the nine months rise over 7% to $127.9 million
• Total capital increases 24% to $168.3 million
CENTURY CITY, CALIF. (October 23, 2007) — First Regional Bancorp (NasdaqGM: FRGB) today reported that net income for the third quarter ended September 30, 2007 totaled $8.1 million, equal to 62 cents per diluted share, compared with $10.0 million, or 77 cents per diluted share, for the comparable quarter of 2006.
Net income for the first three quarters of 2007 was $25.7 million, equal to $1.98 per diluted share, compared with $28.1 million, or $2.16 per diluted share recorded in the corresponding months of 2006. Revenues from earning assets for the first nine months totaled $127.9 million, an increase of approximately 8% from $118.9 million one year ago.
At September 30, 2007, total assets amounted to $2.110 billion, an increase of approximately 4% from $2.037 billion twelve months ago. Total deposits rose 6% to $1.672 billion from $1.573 billion in 2006. Net loans advanced by approximately 7% to $1.951 billion from $1.822 billion in the prior year. Total capital at September 30, 2007 amounted to $168.3 million, an increase of 24% from $136.3 million one year earlier. The increase in capital was achieved through the retention of earnings, notwithstanding the repurchase of shares pursuant to First Regional’s previously announced share repurchase program.
Jack A. Sweeney, chairman and CEO, commented: “In view of the current challenging environment for financial institutions, we believe that First Regional continues to demonstrate strong performance. We registered substantial profits and growth in our assets, deposits and net loans.
“First Regional’s long-standing focus on high credit quality continues to serve us well. Non-performing assets totaled just $12,000 at September 30, 2007, compared to strengthened reserves of $22.0 million. Further, we have never been involved in products such as sub-prime lending, and plan to maintain this posture.”
Mr. Sweeney continued: “It should be noted that earnings for the third quarter were adversely affected by three factors. First, we provided $900,000 to our reserve for loan losses in the third quarter of 2007, as opposed to no provision to reserves in last year’s third quarter. The addition to reserves was made strictly to
keep pace with continuing growth in our loan portfolio and changes in its composition, rather than as the result of any new problem loans or other credit quality issues.
“Second, salary and related benefit expense includes an $800,000 provision to reflect the accrued vacation time of First Regional’s employees. This item was not deemed material in years past, but with the ongoing growth of our organization, it became appropriate to record it in our financial statements. Since this provision covers the entire period from First Regional’s inception in 1979, this clearly is a one-time adjustment, and future changes in accrued vacation time will be recognized on an ongoing basis.
“Finally, other expense reflects a $300,000 provision for the estimated costs of discontinuing our custodial services program for third-party administrators of retirement accounts. As previously announced, changes in the industry and regulatory environment reduced the profitability of this activity for us, and it is not central to our business model. The discontinued operation is unrelated to First Regional’s Trust Administration Services business unit.”
Mr. Sweeney concluded: “The present operating environment for financial companies is clearly challenging, with turmoil in some credit markets, uncertainty in the housing industry, slower growth, rising expenses, and pressure on net interest margins. Without question, we are not impervious to these challenges, but our conservative philosophy and sound strategies continue to prove their validity. Since our founding, our overriding objective has been to build a quality institution with financial strength and staying power. We remain committed to profitable growth without compromising our lending standards and credit quality.
“Looking ahead, we benefit from the flexibility provided by our financial strength and our well-established market position. Our talented team of banking professionals continues to compete successfully for new business while providing our customers with top-quality, individualized service. At the same time, we remain keenly focused on the operating environment, and are prepared to act quickly and decisively to meet whatever challenges may arise. We believe that by adhering to proven strategies we enhance our opportunities for success now and in the years ahead. In this way, we intend to achieve our primary goal of building further value for our shareholders.”
First Regional Bancorp is a bank holding company headquartered in Century City. 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 September 30 |
| 2007 |
| 2006 |
| ||
|
|
|
|
|
| ||
ASSETS: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 59,006 |
| $ | 81,893 |
|
Federal funds sold |
| 0 |
| 60,055 |
| ||
Cash and cash equivalents |
| 59,006 |
| 141,948 |
| ||
|
|
|
|
|
| ||
Investment securities |
| 32,069 |
| 18,178 |
| ||
Federal Home Loan Bank stock - at cost |
| 8,930 |
| 12,748 |
| ||
Loans, net |
| 1,950,700 |
| 1,821,654 |
| ||
Premises and equipment - net |
| 5,536 |
| 3,793 |
| ||
Other real estate owned |
| 0 |
| 0 |
| ||
Accrued interest receivable and other assets |
| 53,750 |
| 38,529 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,109,991 |
| $ | 2,036,850 |
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITAL: |
|
|
|
|
| ||
Demand deposits |
| $ | 407,583 |
| $ | 470,492 |
|
Savings deposits |
| 53,702 |
| 49,182 |
| ||
Money market deposits |
| 985,510 |
| 836,476 |
| ||
Time deposits |
| 224,994 |
| 216,537 |
| ||
|
|
|
|
|
| ||
Total deposits |
| 1,671,789 |
| 1,572,687 |
| ||
|
|
|
|
|
| ||
Funds purchased |
| 0 |
| 0 |
| ||
Federal Home Loan Bank advances |
| 150,000 |
| 220,000 |
| ||
Subordinated debentures |
| 100,517 |
| 92,785 |
| ||
Accrued interest payable and other liabilities |
| 19,357 |
| 15,094 |
| ||
|
|
|
|
|
| ||
Total liabilities |
| 1,941,663 |
| 1,900,566 |
| ||
|
|
|
|
|
| ||
Stated capital |
| 47,718 |
| 51,630 |
| ||
Retained earnings |
| 120,575 |
| 84,649 |
| ||
Net unrealized gains (losses) |
|
|
|
|
| ||
on available-for-sale securities |
| 35 |
| 5 |
| ||
|
|
|
|
|
| ||
Total capital |
| 168,328 |
| 136,284 |
| ||
|
|
|
|
|
| ||
Total liabilities and capital |
| $ | 2,109,991 |
| $ | 2,036,850 |
|
|
|
|
|
|
| ||
Book value per share outstanding |
| $ | 14.05 |
| $ | 11.18 |
|
|
|
|
|
|
| ||
Total shares outstanding |
| 11,979,498 |
| 12,186,119 |
|
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30 |
| September 30 |
| ||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on loans |
| $ | 43,678 |
| $ | 42,141 |
| $ | 126,430 |
| $ | 118,317 |
|
Interest on federal funds sold |
| 120 |
| 54 |
| 332 |
| 129 |
| ||||
Interest on investment securities |
| 438 |
| 245 |
| 1,164 |
| 486 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest income |
| 44,236 |
| 42,440 |
| 127,926 |
| 118,932 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on deposits |
| 13,028 |
| 10,756 |
| 36,906 |
| 26,968 |
| ||||
Interest on subordinated debentures |
| 1,727 |
| 1,825 |
| 5,126 |
| 4,509 |
| ||||
Interest on FHLB advances |
| 1,677 |
| 2,046 |
| 4,871 |
| 6,941 |
| ||||
Interest on other borrowings |
| 2 |
| 1 |
| 11 |
| 5 |
| ||||
|
|
|
|
|
|
| �� |
|
| ||||
Total interest expense |
| 16,434 |
| 14,628 |
| 46,914 |
| 38,423 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
| 27,802 |
| 27,812 |
| 81,012 |
| 80,509 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for loan losses |
| 900 |
| 0 |
| 1,200 |
| 3,891 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income after provision |
|
|
|
|
|
|
|
|
| ||||
for loan losses |
| 26,902 |
| 27,812 |
| 79,812 |
| 76,618 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other operating income |
| 2,343 |
| 1,907 |
| 6,750 |
| 6,313 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Salaries and related benefits |
| 9,652 |
| 8,116 |
| 27,300 |
| 21,895 |
| ||||
Occupancy expenses |
| 903 |
| 754 |
| 2,684 |
| 2,058 |
| ||||
Other expenses |
| 4,620 |
| 3,230 |
| 11,929 |
| 9,602 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other operating expenses |
| 15,175 |
| 12,100 |
| 41,913 |
| 33,555 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before provision for income taxes |
| 14,070 |
| 17,619 |
| 44,649 |
| 49,376 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
| 5,997 |
| 7,580 |
| 18,941 |
| 21,260 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 8,073 |
| $ | 10,039 |
| $ | 25,708 |
| $ | 28,116 |
|
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30 |
| September 30 |
| ||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.67 |
| $ | 0.82 |
| $ | 2.11 |
| $ | 2.31 |
|
Diluted |
| $ | 0.62 |
| $ | 0.77 |
| $ | 1.98 |
| $ | 2.16 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding |
| 12,115,113 |
| 12,178,163 |
| 12,180,854 |
| 12,153,387 |
| ||||
Diluted average shares |
| 12,950,792 |
| 13,025,291 |
| 12,969,213 |
| 12,988,816 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Average equity |
| $ | 167,548 |
| $ | 130,953 |
| $ | 160,372 |
| $ | 120,553 |
|
Average assets |
| $ | 2,079,541 |
| $ | 1,965,099 |
| $ | 2,024,781 |
| $ | 1,920,169 |
|
Return on average equity (%) |
| 19.12 |
| 30.41 |
| 21.43 |
| 31.18 |
| ||||
Return on average assets (%) |
| 1.54 |
| 2.03 |
| 1.70 |
| 1.96 |
| ||||
Efficiency ratio (%) |
| 50.34 |
| 40.71 |
| 47.76 |
| 38.65 |
| ||||
Number of employees |
| 291 |
| 250 |
|
|
|
|
| ||||
Assets per employee (000s) |
| $ | 7,251 |
| $ | 8,147 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
CREDIT QUALITY |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning reserve for loan losses (000’s) |
| $ | 21,123 |
| $ | 20,313 |
| $ | 20,624 |
| $ | 17,577 |
|
Loan loss provisions |
| 900 |
| 0 |
| 1,200 |
| 3,891 |
| ||||
Loan recoveries |
| 0 |
| 0 |
| 94 |
| 0 |
| ||||
Loan charge-offs |
| 0 |
| 87 |
| 50 |
| 1,028 |
| ||||
Net change in allowance for unfunded loan commitments |
| (30 | ) | (95 | ) | 125 |
| (309 | ) | ||||
Ending reserve for loan losses (000’s) |
| $ | 21,993 |
| $ | 20,131 |
| $ | 21,993 |
| $ | 20,131 |
|
|
|
|
|
|
|
|
|
|
| ||||
Nonperforming assets (000’s) |
| $ | 12 |
| $ | 22 |
|
|
|
|
| ||
Nonperforming assets / gross loans (%) |
| 0.00 |
| 0.00 |
|
|
|
|
| ||||
Reserve for loan losses / Non-performing assets (%) |
| 183275.00 |
| 91504.55 |
|
|
|
|
| ||||
Reserve for loan losses / gross loans (%) |
| 1.11 |
| 1.09 |
|
|
|
|
|
5
|
| (000’s omitted) |
| ||||||||||||||
|
| For the Three Months Ended September 30, |
| ||||||||||||||
|
| 2007 |
| 2006 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 1,935,108 |
| $ | 43,678 |
| 8.95 |
| $ | 1,833,987 |
| $ | 42,141 |
| 9.12 |
|
Funds sold |
| 6,991 |
| 120 |
| 6.81 |
| 4,836 |
| 54 |
| 4.43 |
| ||||
Investment securities |
| 32,072 |
| 438 |
| 5.42 |
| 19,602 |
| 245 |
| 4.96 |
| ||||
Total earning assets |
| $ | 1,974,171 |
| $ | 44,236 |
| 8.89 |
| $ | 1,858,425 |
| $ | 42,440 |
| 9.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,681,025 |
| $ | 13,028 |
| 3.07 |
| $ | 1,579,732 |
| $ | 10,756 |
| 2.70 |
|
Federal Home Loan Bank advances |
| 128,967 |
| 1,677 |
| 5.16 |
| 151,250 |
| 2,046 |
| 5.37 |
| ||||
Subordinated debentures |
| 93,205 |
| 1,727 |
| 7.35 |
| 92,785 |
| 1,825 |
| 7.80 |
| ||||
Funds purchased |
| 485 |
| 2 |
| 1.64 |
| 67 |
| 1 |
| 5.92 |
| ||||
Total bearing liabilities |
| $ | 1,903,682 |
| $ | 16,434 |
| 3.42 |
| $ | 1,823,834 |
| $ | 14,628 |
| 3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread (1) |
|
|
|
|
| 5.46 |
|
|
|
|
| 5.88 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin (2) |
|
|
|
|
| 5.59 |
|
|
|
|
| 5.94 |
|
(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
|
| (000’s omitted) |
| ||||||||||||||
|
| For the Nine Months Ended September 30, |
| ||||||||||||||
|
| 2007 |
| 2006 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 1,878,584 |
| $ | 126,430 |
| 9.00 |
| $ | 1,798,773 |
| $ | 118,317 |
| 8.79 |
|
Funds sold |
| 7,714 |
| 332 |
| 5.75 |
| 3,939 |
| 129 |
| 4.38 |
| ||||
Investment securities |
| 30,526 |
| 1,164 |
| 5.10 |
| 14,143 |
| 486 |
| 4.59 |
| ||||
Total earning assets |
| $ | 1,916,824 |
| $ | 127,926 |
| 8.92 |
| $ | 1,816,855 |
| $ | 118,932 |
| 8.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,636,438 |
| $ | 36,906 |
| 3.02 |
| $ | 1,517,790 |
| $ | 26,968 |
| 2.38 |
|
Federal Home Loan Bank advances |
| 123,078 |
| 4,871 |
| 5.29 |
| 188,707 |
| 6,941 |
| 4.92 |
| ||||
Subordinated debentures |
| 92,927 |
| 5,126 |
| 7.38 |
| 82,816 |
| 4,509 |
| 7.28 |
| ||||
Funds purchased |
| 261 |
| 11 |
| 5.63 |
| 45 |
| 5 |
| 14.86 |
| ||||
Total bearing liabilities |
| $ | 1,852,704 |
| $ | 46,914 |
| 3.39 |
| $ | 1,789,358 |
| $ | 38,423 |
| 2.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread (1) |
|
|
|
|
| 5.54 |
|
|
|
|
| 5.88 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin (2) |
|
|
|
|
| 5.65 |
|
|
|
|
| 5.92 |
|
(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 quarter of 2007:
Month |
| New Loans Booked |
| |
|
| (000’s omitted) |
| |
|
|
|
| |
July |
| $ | 89,188 |
|
August |
| 156,444 |
| |
September |
| 75,131 |
| |
Third Quarter |
| $ | 320,763 |
|
The following is a schedule describing the primary components of First Regional Bank’s loan portfolio as of September 30, 2007 and 2006:
|
| Disbursed |
| Percentage |
| Disbursed |
| Percentage |
| ||
|
| (000’s omitted) |
|
|
| (000’s omitted) |
|
|
| ||
Commercial Real Estate Loans |
|
|
|
|
|
|
|
|
| ||
Construction Loans |
| $ | 558,912 |
| 28.2 | % | $ | 351,303 |
| 19.0 | % |
Mini-Perm Loans |
| 272,609 |
| 13.8 | % | 292,310 |
| 15.8 | % | ||
Bridge Loans |
| 892,087 |
| 45.0 | % | 980,701 |
| 53.0 | % | ||
Other |
| 26,931 |
| 1.4 | % | 34,783 |
| 1.9 | % | ||
|
| 1,750,539 |
| 88.4 | % | 1,659,097 |
| 89.7 | % | ||
Commercial Non-Real Estate Secured Loans |
| $ | 230,556 |
| 11.6 | % | $ | 190,722 |
| 10.3 | % |
|
|
|
|
|
| $ |
|
|
|
| |
Total loans |
| $ | 1,981,095 |
| 100.0 | % | 1,849,819 |
| 100.0 | % | |
Less - Allowance for loan losses |
| 21,993 |
|
|
| 20,131 |
|
|
| ||
- Deferred loan fees |
| 8,402 |
|
|
| 8,034 |
|
|
| ||
Net Loans |
| 1,950,700 |
|
|
| 1,821,654 |
|
|
|
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.