Exhibit 99
News Release
First Regional |
| 1801 Century Park East |
| Jack A. Sweeney |
Bancorp |
| Century City, California 90067 |
| Board Chairman |
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| Telephone (310) 552-1776 |
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| Facsimile (310) 552-1772 |
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IMMEDIATE RELEASE
FIRST REGIONAL BANCORP MAINTAINS PROFITABILITY IN FIRST QUARTER DESPITE CHALLENGING ECONOMIC CONDITIONS
· Total assets, total deposits and net loans all set new first-quarter records
· Net income registered $4.7 million, equal to 37 cents per diluted share
· Net interest income of $26.4 million reflects lower operating margins compared to the prior year
· Bank adds substantially to loan loss reserves in challenging environment
CENTURY CITY, CALIFORNIA (April 28, 2008)—First Regional Bancorp (Nasdaq-GSM: FRGB), maintained profitability in the first quarter of 2008 while bolstering its balance sheet by adding substantially to its loan loss reserve.
For the three months ended March 31, 2008, net income was $4.7 million, equal to 37 cents per diluted share, compared with last year’s first quarter totals of $9.0 million, or 69 cents per diluted share. At March 31, 2008, total assets amounted to $2.321 billion, up 14.5% from $2.027 billion one year earlier. Total deposits at the end of the quarter were $1.696 billion, an increase of approximately 7% from $1.587 billion in the prior year. Net loans grew 19%, to $2.166 billion from $1.824 billion at March 31, 2007. Total capital at quarter’s end was $177.8 million, an increase of 13.2% from $157.1 million one year ago, the gain achieved primarily through the retention of earnings. First Regional continues to exceed all financial ratio requirements for Well Capitalized status under applicable regulations.
Results for the first quarter of 2008 reflected certain nonrecurring items. First Regional recorded a $2.8 million gain (included in other income) as a result of the redemption of a portion of the company’s stock in Visa International in conjunction with Visa’s initial public offering in late March of this year. Also, as a result of that initial public offering, First Regional was able to reverse a $2.2 million reserve for contingent liabilities established in late 2007 due to Visa-related litigation. The two Visa-related transactions increased after-tax net income by $2.9 million, equal to 23 cents per diluted share.
Reflecting concerns with the economic climate and its potential impact, in the first quarter First Regional made a $10.8 million provision to its loan loss reserve, bringing that reserve to $33.6 million, or 1.53% of gross loans, at March 31, 2008. Nonperforming assets as of the same date totaled $17.8 million, or 0.81% of gross loans, compared to $10.5 million at December 31, 2007, and just $63,000 on March 31 of 2007.
H. Anthony Gartshore, President and Chief Executive Officer, commented: “As underscored by the constant stream of negative headlines, these are unusually challenging times for financial institutions like First Regional, and obviously our results are being adversely affected by these difficult conditions. While we have avoided involvement in sub-prime mortgages and other ultra high-risk segments of real estate credit, we must
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anticipate that areas of real estate in which we do participate will be impacted by the current economic realities. Consistent with the conservative and prudent basis on which First Regional has always operated, we are being even more selective on loan transactions, and will continue to make loan loss provisions as necessary based on our ongoing analysis of First Regional’s loan portfolio performance and economic conditions in general.”
Mr. Gartshore continued: “The Federal Reserve is focused on reversing the current economic slowdown by reducing interest rates. Our operating margins felt the impact of the Federal Reserve’s actions during the first quarter, as our net interest margin fell to 4.88% from 5.76% in the same period a year ago. Net interest income was $26.4 million in the first quarter of 2008 compared to the $26.5 million recorded in last year’s first quarter, as higher loan totals largely offset our lower net interest margin.
“Recognizing the cyclical nature of the environment in which we operate, we have taken care to position First Regional to address challenging conditions when they arise with the overriding goal of prospering on a long-term basis. To execute our strategy, we have built a highly talented and experienced management team along with a capable and professional staff. Our organization is structured to provide our clients with our signature level of service while operating on an efficient, cost-effective basis.”
Mr. Gartshore concluded: “We foresee many challenges going forward, but also opportunities and we look to the future with a sense of confidence and determination. While we expect our actions in the present environment will have the effect of limiting short-term growth, we believe they are necessary to protect the value of our franchise. Over the years, we have built substantial value for our shareholders, and remain dedicated to preserving and enhancing shareholder value.”
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)
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| (000’s omitted) |
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As of March 31 |
| 2008 |
| 2007 |
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ASSETS: |
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Cash and due from banks |
| $ | 36,301 |
| $ | 108,118 |
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Federal funds sold |
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| 1,280 |
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| 0 |
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Cash and cash equivalents |
| 37,581 |
| 108,118 |
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Investment securities |
| 32,178 |
| 30,577 |
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Federal Home Loan Bank stock - at cost |
| 15,322 |
| 10,947 |
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Loans - net |
| 2,166,153 |
| 1,823,526 |
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Premises and equipment - net |
| 5,374 |
| 4,345 |
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Other real estate owned |
| 0 |
| 0 |
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Accrued interest receivable and other assets |
| 64,493 |
| 49,722 |
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Total assets |
| $ | 2,321,101 |
| $ | 2,027,235 |
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LIABILITIES AND CAPITAL: |
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Demand deposits |
| $ | 400,099 |
| $ | 412,788 |
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Savings deposits |
| 61,746 |
| 53,500 |
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Money market deposits |
| 920,613 |
| 890,999 |
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Time deposits |
| 313,450 |
| 229,642 |
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Total deposits |
| 1,695,908 |
| 1,586,929 |
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Funds purchased |
| 0 |
| 0 |
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Federal Home Loan Bank advances |
| 326,000 |
| 170,000 |
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Subordinated debentures |
| 100,517 |
| 92,785 |
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Accrued interest payable and other liabilities |
| 20,865 |
| 20,400 |
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Total liabilities |
| 2,143,290 |
| 1,870,114 |
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Stated capital |
| 44,373 |
| 53,063 |
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Retained earnings |
| 133,212 |
| 103,858 |
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Net unrealized gains on available-for-sale securities |
| 226 |
| 200 |
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Total capital |
| 177,811 |
| 157,121 |
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Total liabilities and capital |
| $ | 2,321,101 |
| $ | 2,027,235 |
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Book value per share outstanding |
| $ | 15.08 |
| $ | 12.84 |
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Total shares outstanding |
| 11,790,967 |
| 12,234,656 |
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3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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| (000’s omitted) |
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| Three Months Ended |
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| 2008 |
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| 2007 |
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Interest on loans |
| $ | 40,296 |
| $ | 40,938 |
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Interest on federal funds sold |
| 68 |
| 91 |
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Interest on securities |
| 431 |
| 296 |
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Total interest income |
| 40,795 |
| 41,325 |
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Interest on deposits |
| 11,067 |
| 11,523 |
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Interest on subordinated debentures |
| 1,616 |
| 1,683 |
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Interest on FHLB advances |
| 1,708 |
| 1,595 |
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Interest on funds purchased |
| 8 |
| 6 |
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Total interest expense |
| 14,399 |
| 14,807 |
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Net interest income |
| 26,396 |
| 26,518 |
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Provision for loan losses |
| 10,790 |
| 0 |
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Net interest income after provision |
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for loan losses |
| 15,606 |
| 26,518 |
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Other operating income |
| 5,171 |
| 2,367 |
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Salaries and related benefits |
| 9,486 |
| 9,021 |
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Occupancy expenses |
| 969 |
| 819 |
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Other expenses |
| 2,087 |
| 3,479 |
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Total other operating expenses |
| 12,542 |
| 13,319 |
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Income before provision for income taxes |
| 8,235 |
| 15,566 |
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Provision for income taxes |
| 3,500 |
| 6,575 |
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Net income |
| $ | 4,735 |
| $ | 8,991 |
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4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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| (000’s omitted) |
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| Three Months Ended |
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| 2008 |
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| 2007 |
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Net income per share |
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Basic |
| $ | 0.40 |
| $ | 0.74 |
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Diluted |
| $ | 0.37 |
| $ | 0.69 |
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Average shares outstanding |
| 11,811,829 |
| 12,215,675 |
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Diluted average shares |
| 12,710,929 |
| 13,079,261 |
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Average Equity |
| $ | 175,487 |
| $ | 156,921 |
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Average Assets |
| $ | 2,241,357 |
| $ | 1,977,349 |
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Return on Average Equity (%) |
| 10.85 |
| 23.24 |
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Return on Average Assets (%) |
| 0.85 |
| 1.84 |
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Efficiency Ratio (%) |
| 39.73 |
| 46.11 |
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Number of Employees |
| 299 |
| 271 |
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Assets per Employee (000s) |
| $ | 7,763 |
| $ | 7,481 |
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CREDIT QUALITY |
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Beginning Reserve for Loan Losses (000s) |
| $ | 22,771 |
| $ | 20,624 |
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Loan Loss Provisions |
| 10,790 |
| 0 |
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Loan Recoveries |
| 0 |
| 79 |
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Loan Chargeoffs |
| 0 |
| 0 |
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Net Change in Allowance for Unfunded Loan Commitments |
| 19 |
| (9) |
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Ending Reserve for Loan Losses (000s) |
| $ | 33,580 |
| $ | 20,694 |
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Loans Past Due 30-89 days |
| $ | 26,165 |
| $ | 0 |
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Loans Past Due 90 Days or More |
| $ | 12,087 |
| $ | 13 |
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Nonaccrual Loans |
| 5,687 |
| 50 |
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Other Real Estate Owned |
| 0 |
| 0 |
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Nonperforming Assets (000s) |
| $ | 17,774 |
| $ | 63 |
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Nonperforming Assets / |
| 0.81 |
| 0.00 |
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Reserve for Loan Losses / |
| 188.93 |
| 32847.62 |
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Reserve for Loan Losses / Gross Loans (%) |
| 1.53 |
| 1.12 |
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| (000’s Omitted) |
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| For the Three Months Ended March 31, |
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| 2008 |
| 2007 |
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| Average |
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| Average |
| Average |
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| Average |
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| Balance |
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| Interest |
| Yield/Cost (%) |
| Balance |
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| Interest |
| Yield/Cost (%) |
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Gross Loans |
| $ | 2,129,698 |
| $ | 40,296 |
| 7.61 |
| $ | 1,831,040 |
| $ | 40,938 |
| 9.07 |
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Funds Sold |
| 8,827 |
| 68 |
| 3.10 |
| 6,765 |
| 91 |
| 5.46 |
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Investment Securities |
| 35,268 |
| 431 |
| 4.92 |
| 28,554 |
| 296 |
| 4.20 |
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Total Earning Assets |
| $ | 2,173,793 |
| $ | 40,795 |
| 7.55 |
| $ | 1,866,359 |
| $ | 41,325 |
| 8.98 |
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Deposits |
| $ | 1,739,710 |
| $ | 11,067 |
| 2.56 |
| 1,598,369 |
| $ | 11,523 |
| 2.92 |
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Federal Home Loan Bank Advances |
| 221,780 |
| 1,708 |
| 3.10 |
| 118,578 |
| 1,595 |
| 5.46 |
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Subordinated Debentures |
| 100,517 |
| 1,616 |
| 6.47 |
| 92,785 |
| 1,683 |
| 7.36 |
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Funds Purchased |
| 734 |
| 8 |
| 4.38 |
| 407 |
| 6 |
| 5.98 |
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Total Bearing Liabilities |
| $ | 2,062,741 |
| $ | 14,399 |
| 2.81 |
| $ | 1,810,139 |
| $ | 14,807 |
| 3.32 |
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Net Interest Spread (1) |
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| 4.74 |
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| 5.66 |
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Net Interest Margin (2) |
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| 4.88 |
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| 5.76 |
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(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.
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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 first quarter of 2008:
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| New Loans Booked |
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Month |
| (000’s omitted) |
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January |
| $ | 113,283 |
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February |
| 63,339 |
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March |
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| 89,602 |
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First Quarter Total |
| $ |
| 266,224 |
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The following is a schedule describing the primary components of First Regional Bank’s loan portfolio as of March 31, 2008 and 2007:
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| Disbursed Balance |
| Percentage |
| Disbursed Balance |
| Percentage |
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| (000’s omitted) |
| of Total |
| (000’s omitted) |
| of Total |
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Commercial Real Estate Loans |
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Construction Loans |
| $ | 665,753 |
| 30.2% |
| $ | 426,684 |
| 23.0% |
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Mini-Perm Loans |
| 298,882 |
| 13.5% |
| 277,016 |
| 15.0% |
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Bridge Loans |
| 942,597 |
| 42.7% |
| 868,212 |
| 46.9% |
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Other |
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| 32,666 |
| 1.5% |
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| 38,217 |
| 2.1% |
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| 1,939,898 |
| 87.9% |
| 1,610,129 |
| 87.0% |
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Commercial Non-Real Estate |
| $ | 267,127 |
| 12.1% |
| $ | 241,864 |
| 13.0% |
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Total loans |
| $ | 2,207,025 |
| 100.0% |
| $ | 1,851,993 |
| 100.0% |
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Less - Allowance for loan losses |
| 33,580 |
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| 20,694 |
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| - Deferred loan fees |
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| 7,292 |
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| 7,773 |
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Net Loans |
| $ | 2,166,153 |
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| $ | 1,823,526 |
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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.
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