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 September 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
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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 October 31, 1996
----- ----------------
Common Stock, $.15 par value 1,214,931
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 September 30, 1996
and December 31, 1995 -2-
Consolidated Statements of Income for the three
and nine month periods ended September 30, 1996
and 1995 -4-
Consolidated Statements of Cash Flows for the nine month
periods ended September 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)
September 30, December 31,
1996 1995
---- ----
ASSETS
------
Cash and cash equivalents:
Cash and due from banks...................................... $ 6,808 25,072
Interest-bearing deposits with other financial institutions-
with maturities of three months or less................... 722 11,050
Federal funds sold........................................... 600 4,800
-------- -------
Total cash and cash equivalents........................ 8,130 40,922
------- ------
Investment securities - available for sale, at fair value........ 71,144 39,337
Loans:
Real estate construction and development...................... 35,157 15,055
Commercial.................................................... 15,399 26,048
Real estate mortgage:
Residential............................................... 3,912 4,529
Commercial................................................ 17,998 8,144
Consumer and installment...................................... 101,401 140,757
------- -------
Total loans............................................ 173,867 194,533
Unearned discount.............................................. (1,129) (1,960)
Allowance for possible loan losses............................. (3,907) (5,228)
-------- -------
Net loans.............................................. 168,831 187,345
------- -------
Bank premises and equipment, net of
accumulated depreciation..................................... 6,192 6,540
Receivable from sale of investment securities.................... - 4,915
Accrued interest receivable...................................... 1,581 665
Other real estate owned.......................................... 890 1,013
Deferred income taxes............................................ 13,557 14,605
Other assets..................................................... 1,375 1,241
-------- -------
Total assets........................................... $ 271,700 296,583
======= =======
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
September 30, December 31,
1996 1995
LIABILITIES
Deposits:
Demand:
Non-interest bearing.......................................... $ 43,451 49,822
Interest bearing.............................................. 18,512 21,151
Savings......................................................... 54,652 53,046
Time:
Time deposits of $100 or more................................. 21,149 23,509
Other time deposits........................................... 91,654 101,735
-------- --------
Total deposits............................................. 229,418 249,263
Federal Home Loan Bank advances...................................... 1,967 5,663
Securities sold under agreements to repurchase....................... 728 711
Deferred income taxes................................................ 1,242 1,362
Accrued and other liabilities........................................ 2,989 4,326
--------- ----------
Total liabilities.......................................... 236,344 261,325
------- --------
STOCKHOLDERS' EQUITY
Common Stock:
Common stock, $.15 par value; 10,866,667 shares authorized;
1,409,567 and 1,214,931 shares issued and outstanding,
respectively, at September 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...................................................... 39,304 39,271
Retained deficit since elimination of accumulated deficit
of $259,117 effective December 31, 1994......................... (2,464) (3,820)
Treasury stock....................................................... (1,968) (828)
Net fair value adjustment for securities available for sale.......... (102) 50
-------- -------
Total stockholders' equity................................. 35,356 35,258
------- -------
Total liabilities and stockholders' equity................. $ 271,700 296,583
======= =======
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 Nine months ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
Interest income:
Interest and fees on loans....................................... $ 4,024 4,472 11,653 13,204
Investment securities............................................ 1,101 1,050 2,344 3,708
Federal funds sold and other..................................... 174 69 1,292 392
------- ------- ------- --------
Total interest income...................................... 5,299 5,591 15,289 17,304
------ ----- ------ ------
Interest expense:
Deposits:
Interest-bearing demand....................................... 70 115 268 351
Savings....................................................... 438 493 1,300 1,601
Time deposits of $100 or more................................. 330 376 1,036 945
Other time deposits........................................... 1,316 1,347 4,139 3,745
Federal Home Loan Bank advances, securities sold under
agreements to repurchase and federal funds purchased.......... 76 562 369 1,880
Notes payable and other.......................................... 3 40 47 119
--------- ------- ------- --------
Total interest expense..................................... 2,233 2,933 7,159 8,641
------- ----- ------ -----
Net interest income........................................ 3,066 2,658 8,130 8,663
Provision for possible loan losses................................... 250 4,425 600 5,525
------- ----- ------ -----
Net interest income after provision for
possible loan losses .................................. 2,816 (1,767) 7,530 3,138
------- ------ ------ -----
Noninterest income:
Service charges on deposit accounts
and customer service fees............................... 371 384 1,108 1,087
Loan servicing fees, net...................................... 13 30 46 138
Gain (loss) on sales of investment securities, net............ - (99) 75 (99)
Other income.................................................. 45 271 74 1,232
-------- ------- ------- -----
Total noninterest income................................... 429 586 1,303 2,358
------- ------ ------ -----
Noninterest expenses:
Salaries and employee benefits................................ 654 1,000 2,040 3,247
Occupancy, net of rental income............................... 237 429 638 989
Furniture and equipment....................................... 152 155 456 501
Federal Deposit Insurance Corporation premiums................ 59 (17) 96 289
Postage, printing and supplies................................ 42 26 184 240
Data processing fees.......................................... 79 81 236 575
Legal, examination and professional fees...................... 339 331 900 884
Communications................................................ 102 121 305 415
Losses and expenses on foreclosed real estate,
net of gains............................................... 38 23 55 151
Other expenses................................................ 833 450 1,712 1,319
------- ------ ------- -----
Total noninterest expenses................................. 2,535 2,599 6,622 8,610
------ ----- ------- -----
Income before provision for income taxes................... 710 (3,780) 2,211 (3,114)
Provision for income taxes........................................... 253 (1,061) 855 (835)
------ ------- ------ ------
Net income (loss).......................................... $ 457 (2,719) 1,356 (2,279)
====== ======= ====== ======
Earnings (loss) per common share..................................... $ .12 (0.66) .34 (0.56)
======= ======== ======= =======
Weighted average shares of common stock
and common stock equivalents
outstanding (in thousands)..................................... 3,927 4,107 3,969 4,106
===== ===== ===== =====
See accompanying notes to consolidated financial statements
FIRST BANKS AMERICA, INC.
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands)
Nine months ended
September 30,
-------------
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss)............................................................. $ 1,356 (2,279)
Adjustments to reconcile net income (loss) to net cash:
Depreciation and amortization of bank premises and equipment............... 407 276
Amortization, net of accretion............................................. (571) (347)
Provision for possible loan losses......................................... 600 5,525
(Increase) decrease in accrued interest receivable......................... (916) (93)
Interest accrued on liabilities............................................ 7,159 8,641
Payments of interest on liabilities........................................ (7,294) (8,547)
Provision for income taxes................................................. 855 (835)
(Gain) loss on sales of securities, net.................................... (75) 99
Other...................................................................... (137) (116)
------- ------
Net cash provided by (used in) operating activities.................... 1,384 2,324
------ -----
Cash flows from investing activities:
Sales of investment securities............................................... 10,513 13,149
Maturities of investment securities.......................................... 134,417 44,278
Purchases of investment securities........................................... (171,084) (67,057)
Net decrease (increase) in loans............................................. 17,002 (1,854)
Recoveries of loans previously charged off................................... 857 504
Purchases of bank premises and equipment..................................... (145) (328)
Other investing activities................................................... 300 (4,676)
-------- -------
Net cash provided by (used in) investing activities.................... (8,140) (15,984)
-------- ------
Cash flows from financing activities:
Increase (decrease) in deposits............................................. (19,845) 505
Decrease in borrowed funds................................................... (5,085) (22,683)
Purchase of treasury stock................................................... (1,140) ( 144)
Other financing activities................................................... 34 98
-------- --------
Net cash provided by (used in) financing activities.................... (26,036) (22,224)
-------- -------
Net increase (decrease) in cash and cash equivalents................... (32,792) (35,884)
Cash and cash equivalents, beginning of period................................... 40,922 47,071
-------- -------
Cash and cash equivalents, end of period......................................... $ 8,130 11,187
======== =======
Noncash investing and financing activities:
Loans transferred to other real estate....................................... $ 55 -
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 nine month periods ended September 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.
On October 1, 1996, FBA purchased an outstanding warrant to acquire
131,336 shares of FBA Common Stock at $ .75 per share from the Federal Deposit
Insurance Corporation (FDIC), resulting in a reduction of capital surplus, for
an aggregate of $1.28 million. The warrant had been granted by the former
BancTEXAS Group Inc. to the FDIC in connection with its recapitalization in
1987.
Certain reclassifications of 1995 amounts have been made to conform
with the 1996 presentation.
(2) Transactions with Related Party
BankTEXAS N.A. (Bank), a wholly owned subsidiary of FBA, operates under
a data processing agreement and a management fee agreement with First Banks,
Inc. (First Banks). First Banks acquired the Class B Common Stock of FBA issued
on August 31, 1994, and consequently owns 67.3% of the outstanding common stock
of FBA. Fees paid under data processing and management fee agreements were
$269,000 and $744,000 for the three and nine month periods ended September 30,
1996 compared to $185,000 and $602,000 for the three and nine month periods
ended September 30, 1995, respectively.
The Bank also participates in loans with other affiliated banks of
First Banks. At September 30, 1996, $9.8 million of purchased loan
participations and $9.5 million of sold loan participations were outstanding to
affiliated entities. 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 bank.
(3) Business Combinations
On November 1, 1996, FBA completed its acquisition of Sunrise Bancorp,
a California corporation ("Sunrise"), and its wholly owned subsidiary, Sunrise
Bank of California, a state chartered bank, in exchange for $17.5 million in
cash. Accordingly, that transaction is not reflected in the consolidated
financial information as of September 30, 1996. The transaction will be
accounted for under the purchase method of accounting and financial statements
for future periods will include the financial position and results of operations
of Sunrise for the period subsequent to the acquisition date. The excess of cost
over the net assets of Sunrise was approximately $2.50 million and will be
amortized over 10 years on a straight-line basis.
FBA funded the acquisition from available cash and an advance under a
$15 million Revolving Note Agreement (Note) with First Banks of $3.5 million and
$14 million, respectively. The borrowings under the Note bear interest at an
annual rate of one-quarter percent less than the "Prime Rate" as reported in the
Wall Street Journal. Principal and accrued interest outstanding under the Note
are due and payable on October 31, 2001, but may be paid by FBA at anytime prior
thereto.
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 September 30, 1996,
Sunrise had total assets of $112.4 million, consisting primarily of cash and
cash equivalents and investment securities of $48.2 million and loans of $61.1
million.
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 September 30, 1996, FBA had approximately
$271.7 million in total assets; $172.7 million in total loans, net of unearned
discount; $229.4 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 $271.7 million and $296.6 million at September
30, 1996 and December 31, 1995, respectively. The primary changes from December
31, 1995 were an increase in investment securities of $31.8 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 $19.8 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 $457,000 for the three months ended September 30, 1996,
compared to a net loss of $2.72 million for the same period in 1995. Net income
for the nine months ended September 30, 1996 was $1.36 million, compared to a
net loss of $2.28 million 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 for the three and nine month periods ended
September 30, 1996, in comparison to the same periods in 1995, partially offset
by reductions in noninterest income.
Net Interest Income
Net interest income was $3.07 million, or 4.84% of average interest
earning assets for the three months ended September 30, 1996, compared to $2.66
million, or 3.63% of average interest earning assets, for the same period in
1995. Net interest income for the nine months ended September 30, 1996 was $8.13
million, or 4.16% of average interest earning assets, compared to $8.66 million,
or 3.96% of average interest earning assets, for the same period in 1995.
The improved net interest income for the three months ended September
30, 1996 is attributable to the higher yields within the loan and investment
security portfolios in comparison to the same period in 1995 and the reduction
of higher costs, more volatile deposits, which tended to produce only marginal
net interest income. The improved yield within the loan portfolio is primarily
attributable to the change in the composition of the portfolio and pricing
practices within the indirect automobile lending program. The decrease in net
interest income for the nine months ended September 30, 1996 as compared to the
same period in 1995 is primarily attributable to the reduction in average
interest earning assets to $260.5 million from $296.1 million, respectively.
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 nine month
periods ended September 30:
Three months ended September 30, Nine months ended September 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 $166,487 4,024 9.59% $211,285 4,472 8.49% $ 174,563 11,653 8.89% $207,600 13,204 8.50%
Investment securities 71,920 1,101 6.13 78,241 1,050 5.36 53,620 2,344 5.83 77,300 3,708 6.40
Federal funds sold and other 12,975 174 5.29 4,290 69 6.37 32,349 1,292 5.32 11,209 392 4.67
--------- ------ -------- ----- --------- ------ ------- ------
Total interest-earning assets 251,382 5,299 8.36 293,816 5,591 7.63 260,532 15,289 7.82 296,109 17,304 7.81
------ ----- ------ ------
Nonearning assets 26,345 32,823 28,547 27,871
--------- -------- -------- --------
Total assets $ 277,727 $326,639 $ 289,079 $ 323,980
======== ======= ======= =======
Liabilities and Stockholders' Equity
------------------------------------
Interest-bearing liabilities:
Interest-bearing demand
deposits $ 18,160 70 1.53% $ 22,790 115 2.04% $ 20,105 268 1.76%$ 24,128 351 1.95%
Savings deposits 54,169 438 3.21 57,687 493 3.42 54,008 1,300 3.21 56,590 1,601 3.78
Time deposits of $100 or more 24,022 330 5.44 26,107 376 5.76 24,696 1,036 5.59 22,994 945 5.49
Other time deposits 95,184 1,316 5.48 97,638 1,347 5.54 99,645 4,139 5.53 97,215 3,745 5.15
-------- ----- -------- ----- -------- ------ -------- ------
Total interest-bearing
deposits 191,535 2,154 4.46 204,222 2,331 4.58 198,454 6,743 4.53 200,927 6,642 4.42
Notes payable and other 2,861 79 10.88 34,839 602 6.90 5,417 416 10.24 36,966 1,999 7.21
--------- ------ ------- ----- -------- ----- -------- -----
Total interest-bearing
liabilities 194,396 2,233 4.55 239,061 2,933 4.92 203,871 7,159 237,893 8,641 4.86
----- ----- ----- -----
Noninterest-bearing liabilities:
Demand deposits 44,070 42,215 45,758 44,628
Other liabilities 3,920 7,468 4,076 2,587
--------- -------- --------- ---------
Total liabilities 242,386 288,744 253,705 285,108
Stockholders' equity 35,341 37,895 35,374 38,872
-------- -------- -------- --------
Total liabilities and
stockholders' equity $ 277,727 $326,639 $ 289,079 $323,980
======== ======= ======== =======
Net interest income 3,066 2,658 8,130 8,663
===== ===== ===== =====
Net interest margin 4.84% 3.63% 4.16% 3.96%
==== ==== ===== =====
Provision for Possible Loan Losses
The provision for possible loan losses was $250,000 and $600,000 for
the three and nine month periods ended September 30, 1996, respectively, in
comparison to $4.43 million and $5.53 million for the same periods in 1995,
respectively. Net loan charge-offs were $459,000 and $1.9 million for the three
and nine month periods ended September 30, 1996, respectively, compared to
$742,000 and $2.33 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. 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 $429,000 and $1.30 million for the three and
nine months ended September 30, 1996, respectively, in comparison to $586,000
and $2.36 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 nine months ended September 30, 1995. In
addition, other income for the three months ended September 30, 1995 included
$179,000 from the termination of the Directors' Retirement Plan. FBA had
previously adopted a noncontributory defined benefit pension plan covering
non-employee directors of FBA and the Bank. The Directors' Retirement Plan was
terminated by the Board of Directors on September 11, 1995. The income
represented the nonvested portion previously expensed by FBA under the
Directors' Retirement Plan.
Loan servicing fees, net, decreased to $13,000 and $46,000 for the
three and nine month periods ended September 30, 1996, respectively, in
comparison to $30,000 and $138,000 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 nine month period ended September 30,
1996, in comparison to a net loss of $99,000 for the same period in 1995.
Noninterest Expenses
Noninterest expenses were $2.54 million and $6.62 million for the three
and nine month periods ended September 30, 1996, respectively, compared to $2.60
million and $8.61 million for the same periods in 1995.
Included within the reduction of noninterest expenses are decreases in
salaries and employee benefits of $346,000 and $1.21 million for the three and
nine month periods ended September 30, 1996, respectively, compared to the same
periods in 1995, occupancy, net of rental income, of $192,000 and $351,000 for
the three and nine months ended September 30, 1996, respectively, compared to
the same periods in 1995, and data processing fees of $2,000 and $339,000,
respectively, for the three and nine months ended September 30, 1996, as
compared to the same periods 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 $193,000 for the
nine months ended September 30, 1996, compared to the same period in 1995. This
decrease resulted from premium rate reductions instituted by the FDIC effective
June 1, 1995 and January 1, 1996.
Offsetting the decrease in noninterest expenses for the three months
ended September 30, 1996 was an increase in other expense of $383,000. This
increase is primarily attributable to a non-credit provision for possible losses
within the indirect automobile dealer lending operation.
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 63.6% and 64.9% of
total assets as of September 30, 1996 and December 31, 1995, respectively. Total
loans, net of unearned discount, were $172.7 million and $192.6 million at
September 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 declined, FBA has expanded its corporate lending
function, including purchasing commercial loans from affiliated banks.
The following is a summary of nonperforming assets and past due loans at
the dates indicated:
September 30, December 31,
1996 1995
---- ----
(dollars expressed in thousands)
Nonperforming assets:
Nonperforming loans $ 421 549
Other real estate 890 1,013
---------- -------
Total nonperforming assets $ 1,311 1,562
========= =======
Loans past due:
Over 30 days to 90 days $ 6,229 6,649
Over 90 days and still accruing 751 517
---------- -------
Total past due loans $ 6,980 7,166
========= =======
Loans, net of unearned discount $ 172,738 192,573
======== =======
Allowance for possible loan losses to loans 2.26% 2.71%
Nonperforming loans to loans 0.24 0.29
Allowance for possible loan losses to
nonperforming loans 928.03 952.28
Nonperforming assets to loans and foreclosed assets 0.76 0.81
==== ====
As of September 30, 1996 and December 31, 1995, approximately $3.3
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 $1.9 million at
September 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 nine month periods ended September 30:
Three months ended Nine months ended
1996 1995 1996 1995
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for possible loan losses, beginning
of period $ 4,116 2,270 5,228 2,756
----- ----- ----- -----
Loans charged-off (729) (960) (2,778) (2,832)
Recoveries of loans previously charged-off 270 218 857 504
------- ------ ------- ------
Net loan (charge-offs) recoveries (459) (742) (1,921) (2,328)
------- ----- ------ -----
Provision for possible loan losses 250 4,425 600 5,525
------- ----- -------- -----
Allowance for possible loan losses, end of period $ 3,907 5,953 3,907 5,953
====== ===== ====== =====
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 $23.8 million and $29.9 million
at September 30, 1996 and December 31, 1995, respectively.
At September 30, 1996, FBA's more volatile sources of funds mature as
follows:
(dollars expressed in thousands)
Three months or less $ 7,795
Over three months through six months 3,614
Over six months through twelve months 4,564
Over twelve months 7,871
--------
Total $ 23,844
=======
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 September 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 13.99% 11.69% 12.73% 10.43% 9.64% 8.38%
Bank 10.13 8.01 8.87 6.74 6.97 5.38
On October 1, 1996, FBA purchased an outstanding warrant to acquire
131,336 shares of FBA Common Stock at $ .75 per share from the FDIC, resulting
in reduction of capital surplus, for an aggregate of $1.28 million. The warrant
had been granted by the former BancTEXAS Group Inc. to the FDIC in connection
with its recapitalization in 1987.
On September 7, 1996, FBA completed the repurchase of 194,517 shares of
its outstanding common stock pursuant to the initial stock repurchase plan
approved by the Board of Directors. During 1996, the second stock repurchase
plan was approved by the Board of Directors. The second repurchase plan provides
for the purchase of up to an additional 184,791 shares. As of November 6, 1996,
8,719 shares were purchased under the second stock repurchase plan.
Effects of New Accounting Standard
In June 1995, the FASB issued SFAS 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125). SFAS
125 established accounting and reporting standards for transfers and servicing
of financial assets and extinguishment of liabilities.
The standards established by SFAS 125 are based on consistent
applications of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
SFAS 125 is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively. Earlier or retroactive application is not permitted.
FBA does not believe the implementation of SFAS 125 will have a
material effect on its consolidated financial position or results of operation.
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: November 12, 1996 By: /s/James F. Dierberg
--------------------
James F. Dierberg
Chairman, President
and Chief Executive
Officer
Date: November 12, 1996 By: /s/Allen H. Blake
-----------------
Allen H. Blake
Vice President,
Chief Financial Officer
and Secretary
(Principal Financial
Officer)