Exhibit 99
News Release
First Regional |
| 1801 Century Park East |
Bancorp |
| Century City, California 90067 |
|
| Telephone (310) 552-1776 |
|
| Facsimile (310) 552-1772 |
IMMEDIATE RELEASE
FIRST REGIONAL BANCORP REPORTS PROFITABLE THIRD QUARTER RESULTS
CAPITAL POSITION STRENGTHENS, REMAINS WELL-CAPITALIZED
CENTURY CITY, CALIFORNIA – October 30, 2008 – First Regional Bancorp (Nasdaq:FRGB), returned to profitable operations for the third quarter ended September 30, 2008.
For the three months ended September 30, 2008 net income was $1.2 million, equal to 9 cents per diluted share, compared with last year’s third quarter profit of $8.1 million, or 62 cents per diluted share. Reflecting the Company’s loss in the second quarter of 2008, results for the first nine months of 2008 were a net loss of $12.6 million, or $1.07 per diluted share, versus a profit of $25.7 million, or $1.98 per diluted share, for the first nine months of 2007. At September 30, 2008, total assets were $2.418 billion, up 14.6% from $2.110 billion one year earlier. Total deposits grew 22.3% to $2.045 billion from $1.672 billion a year earlier, and net loans posted growth of 15.2% to $2.248 billion from $1.951 billion at September 30, 2007. First Regional’s capital ratios strengthened further in the third quarter of 2008, and continue to exceed all financial ratio requirements under applicable regulations for “Well Capitalized” status, the highest level established by banking regulators.
H. Anthony Gartshore, President and Chief Executive Officer, commented: “We are pleased with First Regional’s prompt return to profitability in the third quarter despite the challenging economic times for financial institutions. Much uncertainty remains regarding the economic environment in which we operate. While operating margins are under pressure due to the Federal Reserve’s actions to reduce interest rates, our core earnings remain strong, Moreover, First Regional’s long-standing emphasis on capital strength continues to serve us well, enabling us to deal realistically with the economic environment while maintaining “well capitalized” capital ratios, the highest standard established by banking regulators.
Mr. Gartshore continued: “First Regional’s third quarter profit comes against a backdrop of continued weakness in the real estate industry. As noted in the past, we benefit from having avoided involvement in sub-prime mortgages and other exotic financial instruments, which are the source of much of the nation’s current economic woes. However, there are few real estate, financial, or other economic segments which have escaped the current environment unscathed. First Regional’s approach has always been to confront challenges fully, directly, and realistically. We perform ongoing analyses of our loan portfolio and economic conditions, and make loan loss provisions as necessary.”
In the third quarter of 2008 First Regional made a $10.4 million provision to its loan loss reserve, which brought the loan loss reserve to $54.7 million, or 2.37% of gross loans at September 30, 2008. In comparison,
1
the loan loss provision for the second quarter of 2008 was $44.7 million. Nonperforming assets at the end of the third quarter of 2008 totaled $33.1 million, or 1.43% of gross loans and OREO, compared to $32.9 million (or 1.41% of gross loans and OREO) at June 30, 2008, and just $12,000 on September 30, 2007.
Mr. Gartshore added: “We continue to provide our clients with financial strength and safety; efficient, cost-effective operation; and our unrivaled level of service. That effort is made possible by our skilled and experienced management and our capable and professional staff. These members of the First Regional team have the talent and experience to execute our strategy, confront the challenges, and capitalize on the opportunities that will undoubtedly arise as the economy and the credit markets return to health.”
Mr. Gartshore concluded: “While we are pleased to have returned to profitability in the third quarter, we will continue our pursuit of the operating results we expect of ourselves and the shareholder value that our investors deserve. Nonetheless, our third quarter profit is an important milestone. While we foresee many challenges, we remain confident regarding First Regional’s future in this difficult time for the Southern California economy.”
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.
# # #
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.
2
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
|
| (000’s omitted) |
| ||||
As of September 30, |
| 2008 |
| 2007 |
| ||
|
|
|
|
|
| ||
ASSETS: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 24,886 |
| $ | 59,006 |
|
Federal funds sold |
| 8,815 |
| 0 |
| ||
Cash and cash equivalents |
| 33,701 |
| 59,006 |
| ||
|
|
|
|
|
| ||
Investment securities |
| 26,335 |
| 32,069 |
| ||
Federal Home Loan Bank stock - at cost |
| 11,781 |
| 8,930 |
| ||
Loans - net |
| 2,247,934 |
| 1,950,700 |
| ||
Premises and equipment - net |
| 5,052 |
| 5,536 |
| ||
Other real estate owned |
| 4,605 |
| 0 |
| ||
Accrued interest receivable and other assets |
| 88,557 |
| 53,750 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,417,965 |
| $ | 2,109,991 |
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITAL: |
|
|
|
|
| ||
Demand deposits |
| $ | 369,283 |
| $ | 407,583 |
|
Savings deposits |
| 58,774 |
| 53,702 |
| ||
Money market deposits |
| 700,453 |
| 985,510 |
| ||
Time deposits |
| 916,179 |
| 224,994 |
| ||
|
|
|
|
|
| ||
Total deposits |
| 2,044,689 |
| 1,671,789 |
| ||
|
|
|
|
|
| ||
Funds purchased |
| 0 |
| 0 |
| ||
Federal Home Loan Bank advances |
| 90,000 |
| 150,000 |
| ||
Subordinated debentures |
| 100,517 |
| 100,517 |
| ||
Accrued interest payable and other liabilities |
| 22,004 |
| 19,357 |
| ||
|
|
|
|
|
| ||
Total liabilities |
| 2,257,210 |
| 1,941,663 |
| ||
|
|
|
|
|
| ||
Stated capital |
| 44,882 |
| 47,718 |
| ||
Retained earnings |
| 115,881 |
| 120,575 |
| ||
Net unrealized gains (losses) on available-for-sale securities |
| (8 | ) | 35 |
| ||
|
|
|
|
|
| ||
Total capital |
| 160,755 |
| 168,328 |
| ||
|
|
|
|
|
| ||
Total liabilities and capital |
| $ | 2,417,965 |
| $ | 2,109,991 |
|
|
|
|
|
|
| ||
Book value per share outstanding |
| $ | 13.59 |
| $ | 14.05 |
|
|
|
|
|
|
| ||
Total shares outstanding |
| 11,829,654 |
| 11,979,498 |
|
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months |
| Nine Months Ended |
| ||||||||
|
| September 30 |
| September 30 |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on loans |
| $ | 37,136 |
| $ | 43,678 |
| $ | 113,389 |
| $ | 126,430 |
|
Interest on federal funds sold |
| 105 |
| 120 |
| 278 |
| 332 |
| ||||
Interest on investment securities |
| 342 |
| 438 |
| 1,141 |
| 1,164 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest income |
| 37,583 |
| 44,236 |
| 114,808 |
| 127,926 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest on deposits |
| 11,884 |
| 13,028 |
| 32,388 |
| 36,906 |
| ||||
Interest on subordinated debentures |
| 1,210 |
| 1,727 |
| 4,050 |
| 5,126 |
| ||||
Interest on FHLB advances |
| 750 |
| 1,677 |
| 4,086 |
| 4,871 |
| ||||
Interest on other borrowings |
| 1 |
| 2 |
| 33 |
| 11 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total interest expense |
| 13,845 |
| 16,434 |
| 40,557 |
| 46,914 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
| 23,738 |
| 27,802 |
| 74,251 |
| 81,012 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for loan losses |
| 10,418 |
| 900 |
| 65,951 |
| 1,200 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net interest income after provision for loan losses |
| 13,320 |
| 26,902 |
| 8,300 |
| 79,812 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other operating income |
| 2,393 |
| 2,343 |
| 10,045 |
| 6,750 |
| ||||
. |
| . |
|
|
|
|
|
|
| ||||
Salaries and related benefits |
| 7,815 |
| 9,652 |
| 25,788 |
| 27,300 |
| ||||
Occupancy expenses |
| 993 |
| 903 |
| 2,916 |
| 2,684 |
| ||||
Other expenses |
| 5,134 |
| 4,620 |
| 12,637 |
| 11,929 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other operating expenses |
| 13,942 |
| 15,175 |
| 41,341 |
| 41,913 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before provision for income taxes |
| 1,771 |
| 14,070 |
| (22,996 | ) | 44,649 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes (benefit) |
| 589 |
| 5,997 |
| (10,400 | ) | 18,941 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ | 1,182 |
| $ | 8,073 |
| $ | (12,596 | ) | $ | 25,708 |
|
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| (000’s omitted) |
| (000’s omitted) |
| ||||||||
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30 |
| September 30 |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income per share |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.10 |
| $ | 0.67 |
| $ | (1.07 | ) | $ | 2.11 |
|
Diluted |
| $ | 0.09 |
| $ | 0.62 |
| $ | (1.07 | ) | $ | 1.98 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding |
| 11,821,961 |
| 12,115,113 |
| 11,812,896 |
| 12,180,854 |
| ||||
Diluted average shares |
| 12,759,009 |
| 12,951,251 |
| 11,812,896 |
| 12,969,763 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Average equity |
| $ | 162,179 |
| $ | 167,548 |
| $ | 170,264 |
| $ | 160,372 |
|
Average assets |
| $ | 2,435,671 |
| $ | 2,079,541 |
| $ | 2,361,678 |
| $ | 2,024,781 |
|
Return on average equity (%) |
| 2.90 |
| 19.12 |
| (9.88 | ) | 21.43 |
| ||||
Return on average assets (%) |
| 0.19 |
| 1.54 |
| (0.71 | ) | 1.70 |
| ||||
Efficiency ratio (%) |
| 53.35 |
| 50.34 |
| 49.04 |
| 47.76 |
| ||||
Number of employees |
| 296 |
| 291 |
|
|
|
|
| ||||
Assets per employee (000s) |
| $ | 8,169 |
| $ | 7,251 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
CREDIT QUALITY |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning reserve for loan losses (000s) |
| $ | 44,152 |
| $ | 21,123 |
| $ | 22,771 |
| $ | 20,624 |
|
Loan loss provisions |
| 10,418 |
| 900 |
| 65,951 |
| 1,200 |
| ||||
Loan recoveries |
| 0 |
| 0 |
| 18 |
| 94 |
| ||||
Loan chargeoffs |
| 0 |
| 0 |
| 34,244 |
| 50 |
| ||||
Net change in allowance for unfunded loan commitments |
| 104 |
| (30 | ) | 178 |
| 125 |
| ||||
Ending reserve for loan losses (000s) |
| $ | 54,674 |
| $ | 21,993 |
| $ | 54,674 |
| $ | 21,993 |
|
|
|
|
|
|
|
|
|
|
| ||||
Loans Past Due 30-89 days |
| $ | 20,614 |
| $ | 891 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
Loans Past Due 90 Days or More |
| $ | 0 |
| $ | 12 |
|
|
|
|
| ||
Nonaccrual Loans |
| 28,497 |
| 0 |
|
|
|
|
| ||||
Other Real Estate Owned |
| 4,605 |
| 0 |
|
|
|
|
| ||||
Nonperforming Assets |
| $ | 33,102 |
| $ | 12 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
Nonperforming Assets / Gross Loans + OREO (%) |
| 1.43 |
| 0.00 |
|
|
|
|
| ||||
Reserve for Loan Losses / Nonperforming Assets (%) |
| 165.17 |
| 183275.00 |
|
|
|
|
| ||||
Reserve for Loan Losses / Gross Loans (%) |
| 2.37 |
| 1.11 |
|
|
|
|
|
5
|
| (000s omitted) |
| ||||||||||||||
|
| For the Three Months Ended September 30, |
| ||||||||||||||
|
| 2008 |
| 2007 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross loans |
| $ | 2,328,298 |
| $ | 37,136 |
| 6.35 |
| $ | 1,935,108 |
| $ | 43,678 |
| 8.95 |
|
Funds sold |
| 21,434 |
| 105 |
| 1.95 |
| 9,282 |
| 120 |
| 5.13 |
| ||||
Investment securities |
| 26,585 |
| 342 |
| 5.12 |
| 32,072 |
| 438 |
| 5.42 |
| ||||
Total earning assets |
| $ | 2,376,317 |
| $ | 37,583 |
| 6.29 |
| $ | 1,976,462 |
| $ | 44,236 |
| 8.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 2,066,357 |
| $ | 11,884 |
| 2.29 |
| $ | 1,681,025 |
| $ | 13,028 |
| 3.07 |
|
Federal Home Loan Bank advances |
| 130,380 |
| 750 |
| 2.29 |
| 128,967 |
| 1,677 |
| 5.16 |
| ||||
Subordinated debentures |
| 100,517 |
| 1,210 |
| 4.79 |
| 93,205 |
| 1,727 |
| 7.35 |
| ||||
Funds purchased |
| 230 |
| 1 |
| 1.73 |
| 485 |
| 2 |
| 1.64 |
| ||||
Total bearing liabilities |
| $ | 2,297,484 |
| $ | 13,845 |
| 2.40 |
| $ | 1,903,682 |
| $ | 16,434 |
| 3.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest spread (1) |
|
|
|
|
| 3.89 |
|
|
|
|
| 5.46 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest margin (2) |
|
|
|
|
| 3.97 |
|
|
|
|
| 5.58 |
|
(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 Nine Months Ended September 30, |
| ||||||||||||||
|
| 2008 |
| 2007 |
| ||||||||||||
|
| Average |
|
|
| Average |
| Average |
|
|
| Average |
| ||||
|
| Balance |
| Interest |
| Yield/Cost (%) |
| Balance |
| Interest |
| Yield/Cost (%) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Loans |
| $ | 2,249,687 |
| $ | 113,389 |
| 6.73 |
| $ | 1,878,584 |
| $ | 126,430 |
| 9.00 |
|
Funds Sold |
| 17,182 |
| 278 |
| 2.16 |
| 7,714 |
| 332 |
| 5.75 |
| ||||
Investment Securities |
| 29,435 |
| 1,141 |
| 5.18 |
| 30,526 |
| 1,164 |
| 5.10 |
| ||||
Total Earning Assets |
| $ | 2,296,304 |
| $ | 114,808 |
| 6.68 |
| $ | 1,916,824 |
| $ | 127,926 |
| 8.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
| $ | 1,883,262 |
| $ | 32,388 |
| 2.30 |
| $ | 1,636,438 |
| $ | 36,906 |
| 3.02 |
|
Federal Home Loan Bank Advances |
| 213,544 |
| 4,086 |
| 2.56 |
| 123,078 |
| 4,871 |
| 5.29 |
| ||||
Subordinated Debentures |
| 100,517 |
| 4,050 |
| 5.38 |
| 92,927 |
| 5,126 |
| 7.38 |
| ||||
Other Borrowings |
| 1,489 |
| 33 |
| 2.96 |
| 261 |
| 11 |
| 5.63 |
| ||||
Total Bearing Liabilities |
| $ | 2,198,812 |
| $ | 40,557 |
| 2.46 |
| $ | 1,852,704 |
| $ | 46,914 |
| 3.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Spread (1) |
|
|
|
|
| 4.22 |
|
|
|
|
| 5.53 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Interest Margin (2) |
|
|
|
|
| 4.32 |
|
|
|
|
| 5.65 |
|
(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 the primary components of First Regional Bank’s loan portfolio as of September 30, 2008:
|
| Disbursed Balance |
| Percentage |
|
|
|
|
|
|
|
Commercial Real Estate Loans |
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
Condominium |
| 394,174,000 |
| 17.08 | % |
Apartment |
| 32,491,000 |
| 1.41 | % |
SFR |
| 105,899,000 |
| 4.59 | % |
Office |
| 18,730,000 |
| 0.81 | % |
Retail |
| 59,839,000 |
| 2.59 | % |
Commercial/Industrial |
| 0 |
| 0.00 | % |
Mixed Use |
| 53,108,000 |
| 2.30 | % |
Other (Hotel/Motel) |
| 24,556,000 |
| 1.06 | % |
|
|
|
|
|
|
Total |
| 688,797,000 |
| 29.84 | % |
|
|
|
|
|
|
Mini Perm/Bridge |
|
|
|
|
|
|
|
|
|
|
|
Apartment |
| 523,971,000 |
| 22.70 | % |
SFR |
| 0 |
| 0.00 | % |
Office |
| 87,427,000 |
| 3.79 | % |
Retail |
| 157,196,000 |
| 6.81 | % |
Commercial/Industrial |
| 37,640,000 |
| 1.63 | % |
Mixed Use |
| 110,292,000 |
| 4.78 | % |
Other (Hotel/Motel) |
| 150,765,000 |
| 6.53 | % |
|
|
|
|
|
|
Total |
| 1,067,291,000 |
| 46.24 | % |
|
|
|
|
|
|
Land Loans by County |
|
|
|
|
|
|
|
|
|
|
|
California Counties |
|
|
|
|
|
Los Angeles |
| 166,134,000 |
| 7.20 | % |
Orange |
| 26,794,000 |
| 1.16 | % |
Riverside |
| 15,491,000 |
| 0.67 | % |
San Bernardino |
| 13,939,000 |
| 0.60 | % |
San Diego |
| 12,373,000 |
| 0.54 | % |
Other |
| 10,901,000 |
| 0.47 | % |
|
|
|
|
|
|
California Total |
| 245,632,000 |
| 10.64 | % |
8
|
| Disbursed Balance |
| Percentage |
| |
|
|
|
|
|
| |
Other States |
| 25,402,000 |
| 1.10 | % | |
|
|
|
|
|
| |
Total Land Loans |
| 271,034,000 |
| 11.74 | % | |
|
|
|
|
|
| |
Government Guaranteed Loans |
| 1,490,000 |
| 0.06 | % | |
|
|
|
|
|
| |
Total Real Estate Loans |
| 2,028,612,000 |
| 87.89 | % | |
|
|
|
|
|
| |
Commercial Non-Real Estate Secured Loans |
| 279,543,000 |
| 12.11 | % | |
|
|
|
|
|
| |
Total Loans |
| 2,308,155,000 |
| 100.00 | % | |
|
|
|
|
|
| |
Less | - Allowance for loan losses |
| 54,674,000 |
|
|
|
|
|
|
|
|
|
|
| - Deferred loan fees |
| 5,547,000 |
|
|
|
|
|
|
|
|
| |
Net loans |
| 2,247,934,000 |
|
|
|
9