UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 23, 2004
Date of Report (Date of earliest event reported)
FIRST BANKS, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-20632 43-1175538
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
135 North Meramec, Clayton, Missouri 63105
(Address of principal executive offices) (Zip code)
(314) 854-4600
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
FIRST BANKS, INC.
TABLE OF CONTENTS
Page
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION...................... 1
SIGNATURES.................................................................. 2
ITEM 12 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 23, 2004, First Banks, Inc. issued a press release announcing
its financial results for the three months ended March 31, 2004. A copy of the
press release is attached as Exhibit 99.2.
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 hereunto duly authorized.
FIRST BANKS, INC.
Date: April 23, 2004 By: /s/ Allen H. Blake
------------------------------------------
Allen H. Blake
President, Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer and
Principal Financial and
Accounting Officer)
Exhibit 99.2
First Banks, Inc.
St. Louis, Missouri
Contact: Allen H. Blake Terrance M. McCarthy
President and Senior Executive Vice President
Chief Executive Officer and Chief Operating Officer
First Banks, Inc. First Banks, Inc.
(314) 592-5000 (314) 592-5000
Traded: NASDAQ
Symbol: FBNKN -(First Preferred Capital Trust II, an affiliated trust of First
Banks, Inc.)
FBNKM -(First Preferred Capital Trust III, an affiliated trust of First
Banks, Inc.)
Traded: NYSE
Symbol: FBSPrA -(First Preferred Capital Trust IV, an affiliated trust of First
Banks, Inc.)
FOR IMMEDIATE RELEASE:
First Banks, Inc. Announces First Quarter 2004 Earnings
St. Louis, Missouri, April 23, 2004. First Banks, Inc. ("First Banks"
or the "Company") reported earnings of $18.3 million for the quarter ended March
31, 2004, compared to $19.0 million for the comparable period in 2003. Results
for the three months ended March 31, 2004 reflect increased net interest income,
reduced noninterest income and operating expenses and a slightly increased
provision for loan losses. Included in the first quarter of 2003 was a gain of
$6.3 million, before applicable income taxes, relating to the exchange of part
of First Banks' investment in Allegiant Bancorp, Inc. ("Allegiant") for a 100%
ownership in Bank of Ste. Genevieve, located in Ste. Genevieve, Missouri.
Excluding this transaction, net income for the three months ended March 31, 2004
reflected a 22.09% increase over net income for the comparable period in 2003.
Net income for the first quarter of 2004 includes a gain of $2.7 million, before
applicable income taxes, relating to the sale of a residential and recreational
development property that was foreclosed on in January 2003.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our financial performance for 2004 reflects our ongoing efforts to
improve net interest income, grow noninterest income and manage operating
expenses, after excluding the effect of the gain we realized on our acquisition
of Bank of Ste. Genevieve in March 2003. We also continue to focus on expanding
our banking franchise, through internal growth, acquisitions and the opening of
de novo branch offices." During the first three months of 2004, the Company
opened two de novo branch facilities, one in West St. Louis County, Missouri and
one in Houston, Texas, and announced the signing of an agreement to purchase
substantially all of the assets of a small business lending and servicing
company based in Houston, Texas. In addition, in April 2004, the Company
announced the signing of an agreement to acquire a bank based in Aurora,
Illinois. Mr. Blake continued, "We are pleased with these exciting new expansion
opportunities; however, we continue to focus our efforts on improving asset
quality as we address residual problems in our loan and lease portfolio that
primarily resulted from weak economic conditions in our markets."
Net interest income reflected continued growth, increasing $5.5
million, or 7.94%, to $74.7 million for the first quarter of 2004 compared to
the comparable period in 2003. Net interest margin increased 20 basis points to
4.56% for the first three months of 2004, up from 4.36% for the comparable
period in 2003. Earning assets increased to $6.61 billion at March 31, 2004 from
$6.47 billion at March 31, 2003. The increase is partially attributable to the
acquisition of Bank of Ste. Genevieve, which provided assets of $115.1 million,
as well as internal loan growth in 2004. The increase in net interest income is
partially attributable to the earnings on the Company's interest rate swap
agreements that were entered into in conjunction with its interest rate risk
management program to mitigate the effects of decreasing interest rates. The
derivative financial instruments used to hedge interest rate risk contributed
$16.2 million and $15.0 million to net interest income for the three months
ended March 31, 2004 and 2003, respectively. In addition, the Company reduced
its subordinated debentures by $63.1 million during 2003, further contributing
to the improvement in net interest income. However, prevailing low interest
rates, generally weak loan demand and overall economic conditions continue to
exert pressure on net interest income.
The higher level of problem loans, related charge-offs and past due
loans the Company experienced during 2003 has continued in the first quarter of
2004, and results primarily from economic conditions within the Company's
markets, and an increase in nonperforming assets attributable to the
deterioration of a single credit relationship. The Company recorded provision
for loan losses of $12.8 million and $11.0 million for the three months ended
March 31, 2004 and 2003, respectively. Net loan charge-offs were $5.3 million
for the three months ended March 31, 2004, compared to $2.5 million for the
comparable period in 2003. Nonperforming assets at March 31, 2004 increased to
$90.2 million from $86.5 million at December 31, 2003 and $86.9 million at March
31, 2003. The net increase in nonperforming assets in the first three months of
2004 primarily reflects two significant changes: the addition of a single $13.9
million credit relationship in the southern California region; and the sale of a
residential and recreational development property with a carrying value of $9.2
million that was foreclosed on in January 2003. The allowance for loan losses
increased to $124.9 million at March 31, 2004, compared to $116.5 million at
December 31, 2003 and $108.7 million at March 31, 2003. While the Company
believes it was successful in addressing asset quality problems experienced
during 2003 and into 2004, the Company continues to closely monitor its
operations to address the ongoing challenges posed by the current economic
environment, including reduced loan demand and lower prevailing interest rates.
The Company expects nonperforming assets to remain at elevated levels throughout
most of 2004 and considers this trend in its overall assessment of the adequacy
of the allowance for loan losses.
Noninterest income was $20.6 million and $25.5 million for the three
months ended March 31, 2004 and 2003, respectively. The decrease in noninterest
income is primarily due to a $6.3 million gain recorded in the first quarter of
2003 on the exchange of common stock of Allegiant, held by First Banks, for a
100% ownership interest in Bank of Ste. Genevieve. Excluding this transaction,
noninterest income increased $1.3 million for the three months ended March 31,
2004 compared to the comparable period in 2003. This increase is primarily
attributable to increased service charges on deposit accounts, increased
portfolio management fees, decreased losses on the sale of certain assets,
partially offset by reduced loan servicing fees and reduced gains on mortgage
loans sold relating to the continued slowdown in the volume of mortgage loans
originated that was initially experienced in the fourth quarter of 2003. The
increase also reflects a $390,000 gain, net of expenses, on the sale of a
Missouri branch banking office.
Noninterest expenses decreased by $1.0 million to $52.6 million from
$53.6 million for the three months ended March 31, 2004 and 2003, respectively.
The Company's efficiency ratio improved to 55.25% from 56.58%, respectively, for
the first three months of 2004 compared to the comparable period in 2003.
Noninterest expense for the first quarter of 2004 reflects a decrease in
expenses and losses, net of gains, on other real estate due to a $2.7 million
gain recorded in February 2004 as a result of the sale of a residential and
recreational development foreclosed property. This decrease in noninterest
expense was partially offset by a $4.4 million increase in salary and employee
benefit costs associated with employing and retaining qualified personnel and
additions to staff to enhance senior management expertise and expand our product
lines. Also, the slowdown in the volume of mortgage loans originated and sold
contributed to a decrease in the allocation of direct loan origination costs
from salaries and benefits expense to gains on loans sold and held for sale.
Noninterest expense for the first quarter of 2003 includes a $1.1 million
write-down on an operating lease associated with the commercial leasing
business.
As previously announced on March 30, 2004, First Banks and Small
Business Loan Source, Inc. ("SBLS"), headquartered in Houston, Texas, signed an
Asset Purchase Agreement that provides for First Banks' wholly-owned banking
subsidiary, First Bank, to purchase substantially all of the assets of SBLS in
exchange for cash and certain payments contingent on future valuations and the
assumption of certain liabilities of SBLS. The transaction, which is subject to
approval of the SBA and the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, is expected to be
completed during the second quarter of 2004. SBLS reported assets of
approximately $65.3 million, including $42.3 million of SBA loans, at December
31, 2003.
Also, as previously announced on April 12, 2004, First Banks and
Continental Mortgage Corporation - Delaware ("CMC") signed an Agreement and Plan
of Reorganization that provides for First Banks to acquire CMC and its
wholly-owned banking subsidiary, Continental Community Bank and Trust Company
("CCB"). CMC is headquartered in Aurora, Illinois, and through CCB, operates two
banking offices in the Chicago suburban communities of Aurora and Villa Park.
CMC reported total assets of $158.6 million and total deposits of $117.9 million
at December 31, 2003. The transaction, which is subject to regulatory approvals,
is expected to be completed during the second quarter of 2004.
At March 31, 2004, First Banks had consolidated assets of $7.37 billion
and operated 148 offices in Missouri, Illinois, California and Texas.
# # #
This release contains forward-looking statements that are subject to risks and
uncertainties arising out of or affecting the Company's business, not all of
which can be predicted or anticipated. These statements are based on information
currently available to First Banks' management, and numerous factors might cause
actual results to differ materially from those contemplated in the
forward-looking statements. For additional information, see the discussions of
forward-looking statements that appear in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections of First
Banks' most recent Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission.
FIRST BANKS, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
(unaudited)
Selected Operating Data
Three Months Ended
March 31,
--------------------------
2004 2003
---- ----
Interest income....................................................... $ 96,127 99,814
Interest expense...................................................... 21,474 30,651
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Net interest income............................................... 74,653 69,163
Provision for loan losses............................................. 12,750 11,000
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Net interest income after provision for loan losses............... 61,903 58,163
--------- -------
Noninterest income.................................................... 20,559 25,547
Noninterest expense................................................... 52,602 53,587
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Income before provision for income taxes.......................... 29,860 30,123
Provision for income taxes............................................ 11,591 11,092
--------- -------
Net income........................................................ $ 18,269 19,031
========= =======
Basic earnings per common share....................................... $ 763.81 796.04
========= =======
Diluted earnings per common share..................................... $ 753.93 784.29
========= =======
Selected Financial Data
March 31, December 31,
2004 2003
---- ----
Total assets.......................................................... $7,368,353 7,106,940
Investment securities................................................. 1,278,510 1,049,714
Loans, net of unearned discount....................................... 5,342,892 5,328,075
Allowance for loan losses............................................. 124,871 116,451
Deposits.............................................................. 6,053,316 5,961,615
Other borrowings...................................................... 418,014 273,479
Note payable.......................................................... 4,500 17,000
Subordinated debentures............................................... 213,222 209,320
Stockholders' equity.................................................. 568,736 549,815
Nonperforming assets.................................................. 90,249 86,494
Selected Financial Ratios
Three Months Ended
March 31,
---------------------
2004 2003
---- ----
Return on average assets.............................................. 1.01% 1.07%
Return on average equity.............................................. 13.16 14.64
Net interest margin................................................... 4.56 4.36
Efficiency ratio...................................................... 55.25 56.58