SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-8937
FIRST BANKS AMERICA, INC.
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-1604965
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
P.O. Box 630369, HOUSTON, TEXAS 77263-0369
(address of principal executive offices) (Zip Code)
(713) 954-2400
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class July 31, 1996
----- -------------
Common Stock, $.15 par value 1,241,842
Class B Common Stock, $.15 par value 2,500,000
First Banks America, Inc.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 -2-
Consolidated Statements of Income for the three
and six month periods ended June 30, 1996 and 1995 -4-
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1996 and 1995 -5-
Notes to Consolidated Financial Statements -6-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -8-
PART II OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K -13-
SIGNATURES -14-
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
First Banks America, Inc.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
June 30, December 31,
1996 1995
---- ----
ASSETS
------
Cash and cash equivalents:
Cash and due from banks .................................... $ 7,868 25,072
Interest-bearing deposits with other financial institutions-
with maturities of three months or less ................. 146 11,050
Federal funds sold ......................................... 125 4,800
--------- ---------
Total cash and cash equivalents ...................... 8,139 40,922
--------- ---------
Investment securities - available for sale, at fair value ...... 98,738 39,337
Loans:
Real estate construction and development .................... 10,282 15,055
Commercial .................................................. 26,524 26,048
Real estate mortgage:
Residential ............................................. 3,783 4,529
Commercial .............................................. 12,053 8,144
Consumer and installment .................................... 109,587 140,757
--------- ---------
Total loans .......................................... 162,229 194,533
Unearned discount ............................................ (1,322) (1,960)
Allowance for possible loan losses ........................... (4,116) (5,228)
--------- ---------
Net loans ............................................ 156,791 187,345
--------- ---------
Bank premises and equipment, net of
accumulated depreciation ................................... 6,305 6,540
Receivable from sale of investment securities .................. -- 4,915
Accrued interest receivable .................................... 1,468 665
Other real estate owned ........................................ 949 1,013
Deferred income taxes .......................................... 13,972 14,605
Other assets ................................................... 1,192 1,241
--------- ---------
Total assets ......................................... $ 287,554 296,583
========= =========
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
June 30, December 31,
1996 1995
---- ----
LIABILITIES
-----------
Deposits:
Demand:
Non-interest bearing ............................................ $ 46,598 49,822
Interest bearing ................................................ 20,229 21,151
Savings ........................................................... 54,012 53,046
Time:
Time deposits of $100 or more ................................... 27,035 23,509
Other time deposits ............................................. 97,588 101,735
--------- ---------
Total deposits ............................................... 245,462 249,263
--------- ---------
Federal Home Loan Bank advances ........................................ 2,225 5,663
Securities sold under agreements to repurchase ......................... 629 711
Deferred income taxes .................................................. 1,276 1,362
Accrued and other liabilities .......................................... 2,522 4,326
--------- ---------
Total liabilities ............................................ 252,114 261,325
--------- ---------
STOCKHOLDERS' EQUITY
--------------------
Common Stock:
Common stock, $.15 par value; 10,866,667 shares authorized;
1,408,567 and 1,276,342 shares issued and outstanding,
respectively, at June 30, 1996 and 1,401,901 and 1,322,298
shares issued and outstanding, respectively, at December 31, 1995 211 210
Class B common stock, $.15 par value; 4,000,000 shares
authorized; 2,500,000 shares issued and outstanding ............. 375 375
Capital surplus ........................................................ 39,294 39,271
Retained deficit since elimination of accumulated deficit
of $259,117 effective December 31, 1994 ........................... (2,920) (3,820)
Treasury stock ......................................................... (1,355) (828)
Net fair value adjustment for securities available for sale ............ (165) 50
--------- ---------
Total stockholders' equity ................................... 35,440 35,258
--------- ---------
Total liabilities and stockholders' equity ................... $ 287,554 296,583
========= =========
See accompanying notes to consolidated financial statements
FIRST BANKS AMERICA, INC.
Consolidated Statements of Income (unaudited)
(dollars expressed in thousands, except per share data)
Three months ended Six months ended
June 30 June 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
Interest income:
Interest and fees on loans ............................ $3,650 4,474 7,629 8,732
Investment securities ................................. 718 1,433 1,243 2,658
Federal funds sold and other .......................... 614 57 1,118 323
------ ------ ------ ------
Total interest income ........................... 4,982 5,964 9,990 11,713
------ ------ ------ ------
Interest expense:
Deposits:
Interest-bearing demand ............................ 100 173 198 236
Savings ............................................ 426 486 862 1,108
Time deposits of $100 or more ...................... 363 296 706 569
Other time deposits ................................ 1,390 1,328 2,823 2,398
Federal Home Loan Bank advances, securities sold under
agreements to repurchase and federal funds purchased 161 643 293 1,318
Notes payable and other ............................... 12 5 44 79
------ ------ ------ ------
Total interest expense .......................... 2,452 2,931 4,926 5,708
------ ------ ------ ------
Net interest income ............................. 2,530 3,033 5,064 6,005
Provision for possible loan losses ........................ 250 650 350 1,100
------ ------ ------ ------
Net interest income after provision for
possible loan losses ......................... 2,280 2,383 4,714 4,905
------ ------ ------ ------
Noninterest income:
Service charges on deposit accounts
and customer service fees .................... 392 361 737 703
Loan servicing fees, net ........................... 12 43 33 108
Gain (loss) on sales of investment securities, net . -- -- 75 --
Other income ....................................... 32 85 29 961
------ ------ ------ ------
Total noninterest income ........................ 436 489 874 1,772
------ ------ ------ ------
Noninterest expenses:
Salaries and employee benefits ..................... 661 1,044 1,386 2,247
Occupancy, net of rental income .................... 205 284 401 560
Furniture and equipment ............................ 137 183 304 346
Federal Deposit Insurance Corporation premiums ..... 19 153 37 306
Postage, printing and supplies ..................... 68 118 142 214
Data processing fees ............................... 77 81 157 494
Legal, examination and professional fees ........... 277 294 561 553
Communications ..................................... 93 182 203 294
Losses and expenses on foreclosed real estate,
net of gains .................................... 11 6 17 128
Other expenses ..................................... 446 461 879 869
------ ------ ------ ------
Total noninterest expenses ...................... 1,994 2,806 4,087 6,011
------ ------ ------ ------
Income before provision for income taxes ........ 722 66 1,501 666
Provision for income taxes ................................ 284 18 602 226
------ ------ ------ ------
Net income (loss) ............................... $ 438 48 899 440
====== ====== ====== ======
Earnings (loss) per common share .......................... $ 0.11 0.01 0.23 0.01
====== ====== ====== ======
Weighted average shares of common stock
and common stock equivalents
outstanding (in thousands) .......................... 3,973 4,093 3,990 4,093
====== ====== ====== ======
See accompanying notes to consolidated financial statements
FIRST BANKS AMERICA, INC.
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands)
Six months ended
June 30,
-----------------
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss) ............................................. $ 899 440
Adjustments to reconcile net income (loss) to net cash:
Depreciation and amortization of bank premises and equipment 285 276
Amortization, net of accretion ............................. (418) (576)
Provision for possible loan losses ......................... 350 1,100
(Increase) decrease in accrued interest receivable ......... (803) 147
Interest accrued on liabilities ............................ 4,926 5,708
Payments of interest on liabilities ........................ (5,053) (5,697)
Provision for income taxes ................................. 318 226
(Gain) loss on sales of securities, net .................... (75) --
Other ...................................................... (522) (342)
--------- ---------
Net cash provided by (used in) operating activities .... (93) 1,282
--------- ---------
Cash flows from investing activities:
Sales of investment securities ............................... 10,513 --
Maturities of investment securities .......................... 88,024 41,227
Purchases of investment securities ........................... (152,615) (58,922)
Net decrease (increase) in loans ............................ 29,563 (14,005)
Recoveries of loans previously charged off ................... 587 286
Purchases of bank premises and equipment ..................... (112) (256)
Other investing activities ................................... 579 (4,376)
--------- ---------
Net cash provided by (used in) investing activities .... (23,461) (36,046)
--------- ---------
Cash flows from financing activities:
Increase (decrease) in deposits .............................. (3,801) 1,544
Decrease in borrowed funds ................................... (4,926) (2,376)
Purchase of treasury stock ................................... (526) --
Other financing activities ................................... 24 48
--------- ---------
Net cash provided by (used in) financing activities .... (9,229) (784)
--------- ---------
Net increase (decrease) in cash and cash equivalents ... (32,783) (35,548)
Cash and cash equivalents, beginning of period ................... 40,922 47,071
--------- ---------
Cash and cash equivalents, end of period ......................... $ 8,139 11,523
========= =========
Noncash investing and financing activities:
Loans transferred to other real estate ....................... $ 54 --
Transfer of loans held for sale (to) from loans .............. -- (7,253)
========= =========
See accompanying notes to consolidated financial statements
FIRST BANKS AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying consolidated financial statements of First Banks
America, Inc. (FBA) are unaudited and should be read in conjunction with the
consolidated financial statements contained in the 1995 annual report on Form
10-K. In the opinion of management, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation of the results
of operations for the interim periods presented herein, have been included.
Operating results for the three and six month periods ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
The consolidated financial statements include the accounts of First
Banks America, Inc. and its subsidiaries, all of which are wholly owned. All
significant intercompany accounts and transactions have been eliminated.
On August 23, 1995, the Common and Class B Common stock shareholders of
FBA approved a reverse stock split. The reverse stock split converted 15 shares
of Common Stock or Class B Common stock into one share of Common Stock or Class
B Common Stock, respectively. Accordingly, all per share amounts, as well as
ending and average common shares data, have been restated to reflect the
one-for-15 reverse stock split.
Certain reclassifications of 1995 amounts have been made to conform
with the 1996 presentation.
(2) Transactions with Related Party
In December 1994, the Board of Directors of BankTEXAS N.A. (Bank), a
wholly owned subsidiary of FBA, approved a data processing agreement and a
management fee agreement with First Banks, Inc. (First Banks). Under the data
processing agreement, a subsidiary of First Banks began providing data
processing and various related services to the Bank in February 1995. The fees
for such services are significantly less than the Bank was paying to its
non-affiliated vendors. The management fee agreement provides that the Bank will
compensate First Banks on an hourly basis for its use of personnel for various
functions including internal auditing, loan review, income tax preparation and
assistance, accounting, asset/liability and investment services, loan servicing
and other management and administrative services. Hourly rates for such services
compare favorably with those for similar services from unrelated sources, as
well as the internal costs of the Bank personnel which were used previously, and
it is estimated the aggregate cost for the services will be significantly more
economical than those previously incurred by the Bank separately. Fees paid
under this agreement were $252,000 and $475,000 for the three and six month
periods ended June 30, 1996 compared to $201,000 and $417,000 for the three and
six month periods ended June 30, 1995, respectively.
The Bank also participates in loans with other affiliated banks of
First Banks. At June 30, 1996, $1.2 million of purchased loan participations and
$5.4 million of sold loan participations were outstanding. Loans are purchased
and sold at the prevailing interest rates and terms at the time of the
transactions, and in accordance with the credit standards and policies of the
purchasing entity.
(3) Business Combinations
On June 24, 1996, FBA and Sunrise Bancorp, a California corporation
("Sunrise"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Sunrise will merge with a wholly owned subsidiary
of FBA. Sunrise Bank of California, a state chartered bank which is a wholly
owned subsidiary of Sunrise, will become a wholly owned indirect subsidiary of
FBA. The Merger Agreement provides for the shareholders of Sunrise to receive
$4.00 per share in cash for their stock, an aggregate of approximately $18.1
million (which includes the purchase price of outstanding stock options of
Sunrise). The transaction is subject to regulatory approvals and the approval of
the shareholders of Sunrise and is expected to be completed during the fourth
quarter of 1996.
The merger, which will be accounted for under the purchase method of
accounting, was announced in a press release issued by FBA and Sunrise on June
24, 1996 (the "Joint Press Release").
FBA intends to borrow a portion of the funds needed in order to
consummate the merger from First Banks, Inc., a Missouri corporation, which is
the owner of approximately 66% of the voting stock of FBA. Pursuant to the terms
of the Merger Agreement, First Banks, Inc. has executed a guarantee of FBA's
ability to fund the acquisition. The Merger Agreement also contains provisions
intended to assure that both FBA and Sunrise complete the transaction.
Additionally, FBA obtained irrevocable proxies of the directors of Sunrise
assuring that their shares would be voted for approval of the merger.
The Merger Agreement and the Joint Press Release appear as exhibits to
the Report on Form 8-K as filed by FBA with the Securities and Exchange
Commission on July 8, 1996.
Sunrise is headquartered in Roseville, California and operates from two
full-service banking offices in Roseville and Citrus Heights, California and one
loan production office in San Francisco, California. At June 30, 1996, Sunrise
had total assets of $113.5 million, consisting primarily of cash and cash
equivalents and investment securities of $46.9 million and $62.5 million,
respectively.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
FBA is a registered bank holding company, incorporated in Delaware and
headquartered in Houston, Texas. At June 30, 1996, FBA had approximately $287.6
million in total assets; $160.9 million in total loans, net of unearned
discount; $245.5 million in total deposits; and $35.4 million in total
stockholders' equity. FBA operates through its subsidiary bank, BankTEXAS N.A.
(Bank).
Through the Bank, FBA offers a broad range of commercial and personal
banking services including certificate of deposit accounts, individual
retirement and other time deposit accounts, checking and other demand deposit
accounts, interest checking accounts, savings accounts and money market
accounts. Loans include commercial, financial, agricultural, real estate
construction and development, residential real estate and consumer and
installment loans. Other financial services include credit-related insurance,
automatic teller machines and safe deposit boxes.
Financial Condition
FBA's total assets were $287.6 million and $296.6 million at June 30,
1996 and December 31, 1995, respectively. The primary changes from December 31,
1995 were an increase in investment securities of $59.4 million which was funded
principally by a decrease in cash and cash equivalents of $32.8 million and a
reduction of the loan portfolio of $31.7 million. The increase in the investment
security portfolio, consisting of shorter term securities designated as
available for sale, is consistent with the securities restructuring plan
implemented in September 1994.
Results of Operations
Net Income
Net income was $438,000 for the three months ended June 30, 1996,
compared to $48,000 for the same period in 1995. Net income for the six months
ended June 30, 1996 was $899,000 compared to $440,000 for the same period in
1995. The improved net income, as more fully described below, is attributable to
the reductions in the provision for possible loan losses and noninterest
expenses for the three and six month periods ended June 30, 1996, in comparison
to the same periods in 1995, partially offset by reductions in net interest
income and noninterest income.
Net Interest Income
Net interest income was $2.53 million, or 3.83% of average interest
earning assets for the three months ended June 30, 1996, compared to $3.03
million, or 4.10% of average interest earning assets, for the same period in
1995. Net interest income for the six months ended June 30, 1996 was $5.06
million, or 3.83% of average interest earning assets, compared to $6.0 million,
or 4.05% of average interest earning assets, for the same period in 1995. The
decrease is attributable to the reduction in average interest earning assets to
$264.7 million and $265.1 million for the three and six month periods ended June
30, 1996, respectively, from $297.2 million and $297.1 million for the three and
six month periods ended June 30, 1995, respectively. The decrease is also
attributable to the lower yields earned within the restructured investment
security portfolio, which coincide with the overall reduction of interest rate
risk in that portfolio.
The following table sets forth, on a tax-equivalent basis, certain
information relating to FBA's average balance sheet, and reflects the average
yield earned on interest-earning assets, the average cost of interest-bearing
liabilities and the resulting net interest income for the three and six month
periods ended June 30:
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
----------------------- --------------------- ------------------------ ---------------------
Interest Interest Interest Interest
Average income/ Yield/ Average income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
balance expense rate balance expense rate balance expense rate balance expense rate
------- ------- ----- ------- ------ ---- -------- ------ ---- ------- ------- -----
(dollars expressed in thousands)
Assets
Interest-earning assets:
Loans $168,873 3,650 8.67% $211,462 4,474 8.48% $ 178,664 7,629 8.56% $206,021 8,732 8.50%
Investment securities 49,796 718 5.76 81,351 1,433 7.05 44,328 1,243 5.61 76,897 2,658 6.91
Federal funds sold and other 46,008 614 5.36 4,362 57 5.24 42,143 1,118 5.32 14,173 323 4.57
-------- ----- ------- ------ ------- ----- -------- ------
Total interest-earning assets 264,677 4,982 7.55 297,175 5,964 8.05 265,135 9,990 7.56 297,091 11,713 7.91
----- ----- ----- ------
Nonearning assets 29,375 30,008 29,659 25,749
--------- ------- ------- ---------
Total assets $ 294,052 $327,183 $294,794 $ 322,840
======== ======= ======= ========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits $21,340 100 1.87% $ 23,742 173 2.91% $ 21,089 198 1.89% $24,699 236 1.91%
Savings deposits 53,993 426 3.16 57,054 486 3.41 53,932 862 3.21 56,119 1,108 3.96
Time deposits of $100 or more 26,044 363 5.62 21,562 296 5.49 25,025 706 5.66 21,660 569 5.27
Other time deposits 100,964 1,390 5.53 99,128 1,328 5.36 101,892 2,823 5.56 97,037 2,398 4.95
------- ----- ------ ----- ------- ----- ------- ------
Total interest-bearing deposits 202,341 2,279 4.52 201,486 2,283 4.54 201,938 4,589 4.56 199,515 4,311 4.33
Notes payable and other 5,837 173 11.86 37,856 648 6.85 6,709 337 10.05 37,877 1,397 7.38
--------- ----- ------- ----- ------- ----- ------- -----
Total interest-bearing
liabilities 208,178 2,452 4.72 239,342 2,931 4.91 208,647 4,926 4.73 237,392 5,708 4.82
----- ----- ----- -----
Noninterest-bearing liabilities:
Demand deposits 46,569 43,132 46,603 45,662
Other liabilities 3,959 5,679 4,153 495
-------- ------- ------- -------
Total liabilities 258,706 288,153 259,403 283,549
Stockholders' equity 35,346 39,030 35,391 39,291
-------- ------- ------- -------
Total liabilities and
stockholders' equity $294,052 $327,183 $294,794 $322,840
======= ======= ======= =======
Net interest income 2,530 3,033 5,064 6,005
===== ===== ===== =====
Net interest margin 3.83% 4.10% 3.83% 4.05%
==== ==== ===== =====
Provision for Possible Loan Losses
The provision for possible loan losses was $250,000 and $350,000 for
the three and six month periods ended June 30, 1996, respectively, in comparison
to $650,000 and $1.1 million for the same periods in 1995, respectively. Net
loan charge-offs were $921,000 and $1.5 million for the three and six month
periods ended June 30, 1996, respectively, compared to $1.2 million and $1.6
million for the same periods in 1995. The reduced provisions in 1996 are the
result of several factors, including the gradual reduction in the level of loan
charge-offs, the overall reduction in the size of the loan portfolio and the
more stringent lending standards implemented in 1995. The provisions made for
the year ended December 31, 1995, which totaled $5.83 million, were higher than
normal in recognition of increasing charge-offs and delinquencies which were
then being experienced within the portfolio of indirect automobile loans. In
addition, the current provision for possible loan losses reflects management's
evaluation of the credit quality of the loans in the portfolio and its
assessment of the adequacy of the allowance for possible loan losses.
Noninterest Income
Noninterest income was $436,000 and $874,000 for the three and six
months ended June 30, 1996, respectively, in comparison to $489,000 and $1.8
million for the same periods in 1995. The decrease is associated with
non-recurring income of $802,000 received by FBA from the termination of a
self-insurance trust during the six months ended June 30, 1995.
Loan servicing fees, net decreased to $12,000 and $33,000 for the three
and six month periods ended June 30, 1996, respectively, in comparison to
$43,000 and $180,000 for the same periods in 1995, respectively, reflecting the
continued reduction in the amount of loans serviced for others.
Noninterest income also includes a gain of $75,000 recognized upon the
sale of an investment security for the six month period ended June 30, 1996.
Noninterest Expenses
Noninterest expenses were $2.0 million and $4.1 million for the three
and six month periods ended June 30, 1996, respectively, compared to $2.8
million and $6.0 million for the same periods in 1995. The decrease is
attributable to salaries and employee benefits which decreased by $383,000 and
$861,000 for the three and six month periods ended June 30, 1996, respectively,
compared to the same periods in 1995. Data processing fees also decreased by
$337,000 for the six months ended June 30, 1996, as compared to the same period
in 1995. These decreases are consistent with cost savings anticipated by the
data processing conversion and centralization of various bank operating
functions to First Banks' systems which commenced during the first quarter of
1995.
Contributing further to the decrease in noninterest expense was a
reduction in Federal Deposit Insurance Corporation premiums by $134,000 and
$269,000 to $19,000 from $37,000 for the three and six months ended June 30,
1996, respectively, compared to the same periods in 1995. These decreases
resulted from premium rate reductions instituted by the FDIC effective June 1,
1995 and January 1, 1996.
Lending and Credit Management
Interest earned on the loan portfolio is the primary source of income
of FBA. Total loans, net of unearned discount, represented 55.96% and 64.93% of
total assets as of June 30, 1996 and December 31, 1995, respectively. Total
loans, net of unearned discount, were $160.9 million and $192.6 million at June
30, 1996 and December 31, 1995, respectively. The decrease is primarily due to
the consumer automobile loan portfolio reflecting the more stringent lending
practices implemented during 1995. As the size of the consumer automobile loan
portfolio continues to decline, FBA is evaluating its lending programs,
including purchasing loans from affiliated banks, with the objective to increase
loans as a percentage of total assets and to further diversify the credit risk
profile of FBA.
The following is a summary of nonperforming assets and past due loans at
the dates indicated:
June 30, December 31,
1996 1995
---- ----
(dollars expressed in thousands)
Nonperforming assets:
Nonperforming loans $ 453 549
Other real estate 949 1,013
-------- -----
Total nonperforming assets $ 1,402 1,562
======== =====
Loans past due:
Over 30 days to 90 days $ 7,262 6,649
Over 90 days and still accruing 549 517
--------- ------
Total past due loans $ 7,811 7,166
======== =====
Loans, net of unearned discount $160,907 192,573
======= =======
Allowance for possible loan losses to loans 2.56% 2.71%
Nonperforming loans to loans 0.28 0.29
Allowance for possible loan losses to
nonperforming loans 908.61 952.28
Nonperforming assets to loans and foreclosed assets 0.87 0.81
==== ====
As of June 30, 1996 and December 31, 1995, approximately $3.0 million
and $5.2 million, respectively, of loans not included in the table above were
identified by management as having potential credit problems which raised doubts
as to the ability of the borrowers to comply with the present loan repayment
terms.
Impaired loans, consisting of certain nonaccrual loans and consumer and
installment loans which were 60 days or more past due, were $2.0 million at June
30, 1996 and $1.6 million at December 31, 1995.
The allowance for possible loan losses is based on past loan loss
experience, on management's evaluation of the quality of the loans in the
portfolio and on the anticipated effect of national and local economic
conditions relative to the ability of loan customers to repay. Each month, the
allowance for possible loan losses is reviewed relative to FBA's internal watch
list and other data utilized to determine its adequacy. The provision for
possible loan losses is management's estimate of the amount necessary to
maintain the allowance at a level consistent with this evaluation. As
adjustments to the allowance for possible loan losses are considered necessary,
they are reflected in the results of operations.
The following is a summary of the loan loss experience for the three and
six month periods ended June 30:
Three months ended Six months ended
1996 1995 1996 1995
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for possible loan losses,
beginning of period $ 4,787 2,789 5,228 2,756
Loans charged-off (1,298) (1,347) (2,049) (1,872)
Recoveries of loans previously charged-off 377 178 587 286
------ ------ ------- ------
Net loan (charge-offs) recoveries (921) (1,169) (1.462) (1,586)
------ ----- ------- ------
Provision for possible loan losses 250 650 350 1,100
------ ------ ------- ------
Allowance for possible loan losses, end of period $ 4.116 2,270 4,116 2,270
====== ====== ====== ======
Liquidity
The liquidity of FBA and the Bank is the ability to maintain a cash
flow which is adequate to fund operations, service its debt obligations and meet
other commitments on a timely basis. The primary sources of funds for liquidity
are derived from customer deposits, loan payments, maturities, sales of
investments and operations. In addition, FBA and the Bank may avail themselves
of more volatile sources of funds through issuance of certificates of deposit in
denominations of $100,000 or more, federal funds borrowed, securities sold under
agreements to repurchase and borrowings from the Federal Home Loan Bank. The
aggregate funds acquired from those sources were $29.9 million at June 30, 1996
and December 31, 1995.
At June 30, 1996, FBA's more volatile sources of funds mature as
follows:
1996
----
(dollars expressed in thousands)
Three months or less $ 12,442
Over three months through six months 4,606
Over six months through twelve months 4,615
Over twelve months 8,226
-------
Total $ 29,889
=======
Management believes the available liquidity and earnings of the Bank
will be sufficient to provide funds for FBA's operating and debt service
requirements both on a short-term and long-term basis.
Capital
Risk-based capital guidelines for financial institutions are designed
to relate regulatory capital requirements to the risk profiles of the specific
institutions and to provide more uniform requirements among the various
regulators. FBA and the Bank are required to maintain a minimum risk-based
capital to risk-weighted assets ratio of 8.00%, with at least 4.00% being "Tier
1" capital. Tier 1 capital is composed of total stockholders' equity excluding
the net fair value adjustment for securities available for sale and excess net
deferred tax assets, as defined by regulation. In addition, a minimum leverage
ratio (Tier 1 capital to total assets) of 3.00% plus an additional cushion of
100 to 200 basis points is expected.
At June 30, 1996 and December 31, 1995, FBA's and the Bank's capital ratios
were as follows:
Risk-based capital ratios
-------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1996 1995 1996 1995 1996 1995
----- ---- ---- ----- ---- ----
FBA 14.18% 11.69% 12.92% 10.43% 8.61% 8.38%
Bank 10.54 8.01 9.28 6.74 6.53 5.38
PART II - OTHER INFORMATION
Item 6 - Exhibit and Reports on Form 8-K
(a) These exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit
Number Description
27 Article 9 - Financial Data Schedule
(EDGAR only)
(b) A current report on Form 8-K was filed by FBA on July 8, 1996. Items 5
and 7 of the Report described the execution by FBA on June 24, 1996 of
a definitive agreement for the acquisition of Sunrise Bancorp by FBA.
No financial statements were filed with the Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANKS AMERICA, INC.
Registrant
Date: August 8, 1996 By: /s/James F. Dierberg
--------------------
James F. Dierberg
Chairman, President
and Chief Executive Officer
Date: August 8, 1996 By: /s/Allen H. Blake
-----------------
Allen H. Blake
Vice President,
Chief Financial Officer
and Secretary
(Principal Financial Officer)