Exhibit 99
News Release
First Regional |
| 1801 Century Park East |
| Jack A. Sweeney |
Bancorp |
| Century City, California 90067 |
| Board Chairman |
|
| Telephone (310) 552-1776 |
|
|
|
| Facsimile (310) 552-1772 |
|
|
IMMEDIATE RELEASE
FIRST REGIONAL BANCORP POSTS SUCCESSFUL RESULTS FOR 2007
AGAINST CHALLENGING BACKDROP
| Financial Highlights Include: | ||
|
| ||
· |
| Profits total $33.6 million for the year, equal to $2.59 per diluted share | |
· |
| Revenues from earning assets rise to $171 million in 2007 | |
· |
| Total assets, net loans, and total deposits all increase to new year-end highs | |
· |
| Total capital grows to $175 million | |
CENTURY CITY, CALIFORNIA (February 6, 2008) — First Regional Bancorp (Nasdaq-GM: FRGB) today announced that financial results for both the year and the fourth quarter ended December 31, 2007 represented a continuation of the company’s consistent record of profitability.
Net income for the fourth quarter of 2007 totaled $7.9 million, equal to 62 cents per diluted share, compared to $10.2 million, or 78 cents per diluted shared, for the same period in 2006.
For all of 2007, net income was $33.6 million, equal to $2.59 per diluted share, versus 2006 net income of $38.3 million, or $2.95 per diluted share. The 2006 earnings have been adjusted to reflect the 3-for-1 stock split effected in August 2006.
At December 31, 2007, assets totaled $2.174 billion, compared with $2.076 billion a year earlier. Total deposits at year-end were $1.721 billion, up from $1.628 billion in the prior year. Net loans advanced to a total of $2.020 billion at the end of 2007 from $1.805 billion at the close of the prior fiscal year. First Regional increased its capital by a net of $27.6 million in 2007, primarily through the retention of earnings, bringing total capital to $174.6 million at year-end, compared to $147.0 million at the end of 2006.
Jack A. Sweeney, Chairman of the Board, commented: “2007 represented a year of achievement for First Regional despite a challenging environment. Revenues from earning assets increased to $171.5 million in 2007 from $161.7 million in 2006, but the actions of the Federal Reserve to reduce interest rates in the second half of 2007 put pressure on our net interest margins in that period and will continue to be a factor going forward. Nonrecurring items also had an impact on our results. In the fourth quarter of 2007 we realized a gain of $2.5 million on the redemption of restricted stock in MasterCard International, but were required to create a reserve of $2.2 million for our share of contingent liabilities relating to the settlement of lawsuits by Visa International. While we expect these provisions to be recovered in 2008, they did have an adverse effect on 2007 results. The fourth quarter of 2007 also saw increased provisions to our loan loss reserve, both to keep pace with loan growth and to reflect the changing economic climate.
Mr. Sweeney continued: “The Fed’s actions to reduce interest rates are in response to a slowing economy in general and a weakening real estate sector in particular. First Regional has never been involved in the riskiest segments of real estate credit, such as sub-prime mortgages. Nonetheless, it appears likely that the present economic situation will impact most areas of real estate, including those in which First Regional participates. Like the rest of the banking industry, First Regional will continue to address significant uncertainties in the months and years ahead.
“Fortunately, First Regional appears well positioned to deal with these challenges. Our approach has always been to maintain a conservative posture, with an emphasis on managing risk and maintaining operating efficiency. Our focus on asset quality gives us the flexibility to deal effectively with problems as they arise, and we have the years of experience and expertise needed to manage our operations effectively in difficult times. Moreover, our prudent reserves and strong capital base give us the financial strength to weather adverse conditions and respond to opportunities that emerge.”
Mr. Sweeney concluded: “I am very pleased to note that, effective January 2, 2008, H. Anthony Gartshore assumed the position of Chief Executive Officer, in addition to maintaining his existing responsibilities as President of the Company and its subsidiary, First Regional Bank. I continue to serve as Chairman of the Board, with oversight over both the Bank and Bancorp.
“While I have reduced my role somewhat, rest assured that the business model and the philosophy which have long guided First Regional remain unchanged. First Regional’s success is the result of many factors, including our capable staff and our experienced management team. Tony Gartshore has been a key member of that team for over a decade, and over the years I have worked closely with him to build First Regional into the institution that it is today. With extensive experience gathered in good times and bad, First Regional is well prepared to address the challenges and opportunities ahead, as we pursue our primary goal of protecting and enhancing the Company’s financial strength and shareholder value over the long-term.”
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 |
| 2007 |
| 2006 |
| ||
|
|
|
|
|
| ||
ASSETS: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 46,676 |
| $ | 72,134 |
|
Federal funds sold |
| 0 |
| 103,860 |
| ||
Cash and cash equivalents |
| 46,676 |
| 175,994 |
| ||
|
|
|
|
|
| ||
Investment securities |
| 32,156 |
| 27,485 |
| ||
Federal Home Loan Bank stock - at cost |
| 8,487 |
| 12,385 |
| ||
Loans, net |
| 2,020,217 |
| 1,805,301 |
| ||
Premises and equipment - net |
| 5,438 |
| 3,838 |
| ||
Other real estate owned |
| 0 |
| 0 |
| ||
Accrued interest receivable and other assets |
| 61,341 |
| 51,236 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,174,315 |
| $ | 2,076,239 |
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITAL: |
|
|
|
|
| ||
Demand deposits |
| $ | 418,220 |
| $ | 468,547 |
|
Savings deposits |
| 58,173 |
| 60,443 |
| ||
Money market deposits |
| 951,488 |
| 865,434 |
| ||
Time deposits |
| 293,196 |
| 233,335 |
| ||
|
|
|
|
|
| ||
Total deposits |
| 1,721,077 |
| 1,627,759 |
| ||
|
|
|
|
|
| ||
Funds purchased |
| 20,955 |
| 0 |
| ||
Federal Home Loan Bank advances |
| 135,000 |
| 190,000 |
| ||
Subordinated debentures |
| 100,517 |
| 92,785 |
| ||
Accrued interest payable and other liabilities |
| 22,147 |
| 18,685 |
| ||
|
|
|
|
|
| ||
Total liabilities |
| 1,999,696 |
| 1,929,229 |
| ||
|
|
|
|
|
| ||
Stated capital |
| 52,746 |
| 52,167 |
| ||
Retained earnings |
| 121,723 |
| 94,869 |
| ||
Net unrealized gains (losses) |
|
|
|
|
| ||
on available-for-sale securities |
| 150 |
| (26 | ) | ||
|
|
|
|
|
| ||
Total capital |
| 174,619 |
| 147,010 |
| ||
|
|
|
|
|
| ||
Total liabilities and capital |
| $ | 2,174,315 |
| $ | 2,076,239 |
|
|
|
|
|
|
| ||
Book value per share outstanding |
| $ | 14.69 |
| $ | 12.05 |
|
|
|
|
|
|
| ||
Total shares outstanding |
| 11,890,487 |
| 12,200,091 |
|
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
|
| ||||||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on loans |
| $ | 42,873 |
| $ | 42,361 |
| $ | 169,303 |
| $ | 160,678 |
|
Interest on federal funds sold |
| 244 |
| 179 |
| 576 |
| 308 |
| ||||
Interest on deposits in financial institutions |
| 80 |
| 59 |
| 293 |
| 217 |
| ||||
Interest on investment securities |
| 338 |
| 217 |
| 1,289 |
| 545 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest income |
| 43,535 |
| 42,816 |
| 171,461 |
| 161,748 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on deposits |
| 13,219 |
| 11,851 |
| 50,125 |
| 38,819 |
| ||||
Interest on subordinated debentures |
| 1,969 |
| 1,750 |
| 7,095 |
| 6,259 |
| ||||
Interest on FHLB advances |
| 1,543 |
| 1,232 |
| 6,414 |
| 8,174 |
| ||||
Interest on other borrowings |
| 5 |
| 0 |
| 16 |
| 4 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest expense |
| 16,736 |
| 14,833 |
| 63,650 |
| 53,256 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
| 26,799 |
| 27,983 |
| 107,811 |
| 108,492 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for loan losses |
| 1,422 |
| 437 |
| 2,622 |
| 4,328 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income after provision for loan losses |
| 25,377 |
| 27,546 |
| 105,189 |
| 104,164 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other operating income |
| 4,671 |
| 1,994 |
| 11,421 |
| 8,307 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Salaries and related benefits |
| 9,073 |
| 8,354 |
| 36,373 |
| 30,249 |
| ||||
Occupancy expenses |
| 956 |
| 739 |
| 3,640 |
| 2,797 |
| ||||
Other operating expenses |
| 6,638 |
| 3,395 |
| 18,567 |
| 12,997 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other operating expenses |
| 16,667 |
| 12,488 |
| 58,580 |
| 46,043 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before provision for income taxes |
| 13,381 |
| 17,052 |
| 58,030 |
| 66,428 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
| 5,479 |
| 6,832 |
| 24,420 |
| 28,092 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 7,902 |
| $ | 10,220 |
| $ | 33,610 |
| $ | 38,336 |
|
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| |||||||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share (1) |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.66 |
| $ | 0.84 |
| $ | 2.77 |
| $ | 3.15 |
|
Diluted |
| $ | 0.62 |
| $ | 0.78 |
| $ | 2.59 |
| $ | 2.95 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding (1) |
| 11,935,640 |
| 12,194,155 |
| 12,120,892 |
| 12,164,867 |
| ||||
Diluted average shares (1) |
| 12,793,075 |
| 13,057,802 |
| 12,981,088 |
| 13,007,799 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Average equity |
| $ | 172,263 |
| $ | 141,574 |
| $ | 163,370 |
| $ | 125,851 |
|
Average assets |
| $ | 2,150,076 |
| $ | 1,984,564 |
| $ | 2,056,426 |
| $ | 1,936,410 |
|
Return on average equity (%) |
| 18.20 |
| 28.64 |
| 20.57 |
| 30.46 |
| ||||
Return on average assets (%) |
| 1.46 |
| 2.04 |
| 1.63 |
| 1.98 |
| ||||
Efficiency ratio (%) |
| 52.96 |
| 41.66 |
| 49.13 |
| 39.42 |
| ||||
Number of employees |
| 301 |
| 263 |
|
|
|
|
| ||||
Assets per employee (000s) |
| $ | 7,224 |
| $ | 7,894 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
CREDIT QUALITY |
|
|
|
|
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|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning reserve for loan losses (000s) |
| $ | 21,993 |
| $ | 20,131 |
| $ | 20,624 |
| $ | 17,577 |
|
Loan loss provisions |
| 1,422 |
| 437 |
| 2,622 |
| 4,328 |
| ||||
Loan recoveries |
| 0 |
| 100 |
| 94 |
| 100 |
| ||||
Loan chargeoffs |
| 691 |
| 0 |
| 741 |
| 1,028 |
| ||||
Net change in allowance for unfunded loan commitments |
| 47 |
| (44 | ) | 172 |
| (353 | ) | ||||
Ending reserve for loan losses (000s) |
| $ | 22,771 |
| $ | 20,624 |
| $ | 22,771 |
| $ | 20,624 |
|
|
|
|
|
|
|
|
|
|
| ||||
Nonperforming assets (000s) |
| $ | 10,525 |
| $ | 14 |
|
|
|
|
| ||
Nonperforming assets / gross loans (%) |
| 0.52 |
| 0.00 |
|
|
|
|
| ||||
Reserve for loan losses / nonperforming |
| 216.35 |
| 147314.29 |
|
|
|
|
| ||||
Reserve for loan losses / gross loans (%) |
| 1.11 |
| 1.13 |
|
|
|
|
|
(1) 2006 per-share results and shares outstanding have been adjusted to reflect the company’s 3-for-1 stock split effected in August 2006.
5
|
| (000s omitted) |
| ||||||||||||||
|
| For the Three Months Ended December 31, |
| ||||||||||||||
|
| 2007 |
| 2006 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 2,028,014 |
| $ | 42,873 |
| 8.39 |
| $ | 1,840,843 |
| $ | 42,361 |
| 9.13 |
|
Federal funds sold |
| 21,653 |
| 244 |
| 4.47 |
| 11,985 |
| 179 |
| 5.93 |
| ||||
Investment securities |
| 31,954 |
| 418 |
| 5.19 |
| 24,772 |
| 276 |
| 4.42 |
| ||||
Total earning assets |
| $ | 2,081,621 |
| $ | 43,535 |
| 8.30 |
| $ | 1,877,600 |
| $ | 42,816 |
| 9.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,746,931 |
| $ | 13,219 |
| 3.00 |
| $ | 1,647,048 |
| $ | 11,851 |
| 2.85 |
|
Federal Home Loan Bank advances |
| 132,446 |
| 1,543 |
| 4.62 |
| 90,652 |
| 1,232 |
| 5.39 |
| ||||
Subordinated debentures |
| 100,517 |
| 1,969 |
| 7.77 |
| 92,785 |
| 1,750 |
| 7.48 |
| ||||
Funds purchased |
| 475 |
| 5 |
| 4.18 |
| 0 |
| 0 |
| 0.00 |
| ||||
Total bearing liabilities |
| $ | 1,980,369 |
| $ | 16,736 |
| 3.35 |
| $ | 1,830,485 |
| $ | 14,833 |
| 3.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread(1) |
|
|
|
|
| 4.95 |
|
|
|
|
| 5.84 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin(2) |
|
|
|
|
| 5.11 |
|
|
|
|
| 5.91 |
|
(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, |
| ||||||||||||||
|
| 2007 |
| 2006 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Loans |
| $ | 1,916,249 |
| $ | 169,303 |
| 8.84 |
| $ | 1,809,377 |
| $ | 160,678 |
| 8.88 |
|
Federal funds sold |
| 11,772 |
| 576 |
| 4.89 |
| 5,946 |
| 308 |
| 5.18 |
| ||||
Investment Securities |
| 30,886 |
| 1,582 |
| 5.12 |
| 16,822 |
| 762 |
| 4.53 |
| ||||
Total Earning Assets |
| $ | 1,958,907 |
| $ | 171,461 |
| 8.75 |
| $ | 1,832,145 |
| $ | 161,748 |
| 8.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,664,273 |
| $ | 50,125 |
| 3.01 |
| $ | 1,550,369 |
| $ | 38,819 |
| 2.50 |
|
Federal Home Loan Bank Advances |
| 125,439 |
| 6,414 |
| 5.11 |
| 163,992 |
| 8,174 |
| 4.98 |
| ||||
Subordinated Debentures |
| 94,840 |
| 7,095 |
| 7.48 |
| 85,328 |
| 6,259 |
| 7.34 |
| ||||
Funds Purchased |
| 210 |
| 16 |
| 7.62 |
| 62 |
| 4 |
| 6.45 |
| ||||
Total Bearing Liabilities |
| $ | 1,884,762 |
| $ | 63,650 |
| 3.38 |
| $ | 1,799,751 |
| $ | 53,256 |
| 2.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Spread(1) |
|
|
|
|
| 5.37 |
|
|
|
|
| 5.87 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Margin(2) |
|
|
|
|
| 5.50 |
|
|
|
|
| 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 fourth quarter of 2007:
Month |
| New Loans Booked |
| |
|
| (000’s omitted) |
| |
|
|
|
| |
October |
| $ | 88,701 |
|
November |
| 75,854 |
| |
December |
| 136,205 |
| |
Fourth Quarter |
| $ | 300,760 |
|
The following is a schedule describing the primary components of First Regional Bank’s loan portfolio as of
December 31, 2007 and 2006:
|
| Disbursed Balance |
| Percentage |
| Disbursed |
| Percentage |
| ||
|
| (000’s omitted) |
|
|
| (000’s omitted) |
|
|
| ||
Commercial Real Estate Loans |
|
|
|
|
|
|
|
|
| ||
Construction Loans |
| $ | 565,712 |
| 27.6 | % | $ | 375,175 |
| 20.5 | % |
Mini-Perm Loans |
| 267,425 |
| 13.0 | % | 216,792 |
| 11.8 | % | ||
Bridge Loans |
| 933,150 |
| 45.5 | % | 985,786 |
| 53.8 | % | ||
Other |
| 26,778 |
| 1.3 | % | 29,119 |
| 1.6 | % | ||
|
| 1,793,065 |
| 87.4 | % | 1,606,872 |
| 87.7 | % | ||
Commercial Non-Real Estate Secured Loans |
| $ | 257,489 |
| 12.6 | % | $ | 226,667 |
| 12.3 | % |
|
|
|
|
|
| $ |
|
|
| ||
Total loans |
| $ | 2,050,554 |
| 100.0 | % | 1,833,539 |
| 100.0 | % | |
Less - Allowance for loan losses |
| 22,771 |
|
|
| 20,624 |
|
|
| ||
- Deferred loan fees |
| 7,566 |
|
|
| 7,614 |
|
|
| ||
Net Loans |
| 2,020,217 |
|
|
| 1,805,301 |
|
|
|
8
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.
9