Exhibit 99
First Banks, Inc.
St. Louis, Missouri
Contact: Allen H. Blake Terrance M. McCarthy
President and Senior Executive Vice President and
Chief Executive Officer 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 Second Quarter 2005 Earnings
St. Louis, Missouri, July 28, 2005. First Banks, Inc. ("First Banks" or
the "Company") reported earnings of $26.8 million and $49.0 million for the
three and six months ended June 30, 2005, respectively, compared to $26.0
million and $44.3 million for the comparable periods in 2004. The Company's
return on average assets for the three and six months ended June 30, 2005 was
1.25% and 1.14% respectively, compared to 1.43% and 1.22% for the comparable
periods in 2004. The Company's return on average stockholders' equity was 17.43%
and 16.06% for the three and six months ended June 30, 2005, respectively,
compared to 18.21% and 15.72% for the comparable periods in 2004.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our financial performance in the second quarter of 2005 reflects the
Company's continued strengthening of asset quality, with a 15% reduction in our
nonperforming assets since December 31, 2004 and a $23.8 million reduction in
our provision for loan losses for the first six months of 2005 compared to the
same period in 2004. Our earnings continue to reflect increased net interest
income and noninterest income. These increases were offset by an overall
increase in our noninterest expenses, primarily increased salaries and benefits
expense and occupancy expenses resulting from a significantly expanded employee
base and branch network attributable to our recent acquisitions." Mr. Blake
added, "In April 2005, we increased our existing Chicago banking operation with
the completion of our acquisition of FBA Bancorp, Inc. and its subsidiary, First
Bank of the Americas, and announced plans to further expand our Chicago banking
operation with our upcoming acquisition of Northway State Bank, located in the
northern Chicago metropolitan area." Mr. Blake further added, "In May 2005, we
also announced our upcoming acquisition of International Bank of California,
which is headquartered in Los Angeles, California. Both transactions are
expected to be completed in 2005."
Financial results for the three and six months ended June 30, 2005
reflect increased net interest and noninterest income, and a negative provision
for loan losses, partially offset by increased noninterest expense and an
increased provision for income taxes. Total assets were $8.78 billion at June
30, 2005, compared to $8.73 billion at December 31, 2004. The overall increase
in total assets is primarily attributable to an increase in loans, net of
unearned discount, of $171.7 million, partially offset by a $38.0 million
decrease in cash and cash equivalents and a $65.1 million decrease in investment
securities. Total loans, net of unearned discount, increased to $6.31 billion at
June 30, 2005, from $6.14 billion at December 31, 2004, as a result of internal
growth and the acquisition of FBA Bancorp, Inc. ("FBA"), which provided loans of
$54.3 million. Total deposits increased $58.8 million to $7.21 billion at June
30, 2005, from $7.15 billion at December 31, 2004. The increase is primarily
attributable to a single source temporary deposit of approximately $216.4
million and the acquisition of FBA, which provided total deposits of $55.7
million, largely offset by an anticipated level of attrition during the first
quarter of 2005 primarily associated with the time deposits acquired with the
acquisition of CIB Bank in November 2004. The decline in total deposits during
the first quarter was funded from available cash and cash equivalents as well as
maturities of investment securities.
Net interest income experienced continued growth, increasing $2.2
million and $5.6 million to $77.8 million and $155.9 million for the three and
six months ended June 30, 2005, respectively, from $75.6 million and $150.3
million for the comparable periods in 2004. Average earning assets were $7.95
billion and $7.98 billion for the three and six months ended June 30, 2005,
respectively, compared to $6.70 billion and $6.65 billion for the comparable
periods in 2004. Net interest margin was 3.94% and 3.96% for the three and six
months ended June 30, 2005, respectively, compared to 4.56% for the three and
six months ended June 30, 2004. The increase in net interest income is primarily
attributable to net interest-earning assets provided by the Company's 2004 and
2005 acquisitions, higher-yielding investment securities, internal loan growth
and higher interest rates on loans, partially offset by increased interest
expense associated with higher deposit rates and a redistribution of deposit
balances toward higher-yielding products, increased levels of other borrowings
and increased rates on such borrowings, and the issuance of additional
subordinated debentures late in 2004 to partially fund the acquisition of CIB
Bank. Net interest income was also adversely affected by a decline in 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. These derivative financial instruments
contributed $297,000 and $3.9 million to net interest income for the three and
six months ended June 30, 2005, respectively, compared to $15.4 million and
$31.7 million for the comparable periods in 2004. The decreased earnings on the
interest rate swap agreements for the six months ended June 30, 2005 resulted in
a compression of the Company's net interest margin of approximately 70 basis
points and reflect the impact of higher interest rates, the maturities of
interest rate swap agreements of $800.0 million during 2004 and $200.0 million
in March 2005, as well as the Company's termination of $150.0 million and $101.2
million of interest rate swap agreements in February 2005 and May 2005,
respectively. The current interest rate environment, overall economic conditions
and the impact of the maturity and termination of certain interest rate swap
agreements, as discussed above, continue to exert pressure on the Company's net
interest margin.
Nonperforming assets showed continued improvement during the second
quarter of 2005, decreasing to $76.3 million at June 30, 2005, from $81.6
million and $89.8 million at March 31, 2005 and December 31, 2004, respectively.
The level of nonperforming loans added by the Company's recent acquisitions has
increased the level of nonperforming assets, but has been offset by improving
asset quality in the remainder of the loan portfolio. Nonperforming loans
associated with the recent acquisition of CIB Bank continue to represent a
significant portion of total nonperforming assets. However, these nonperforming
loans have decreased to $42.9 million at June 30, 2005, from $43.7 million at
March 31, 2005 and $50.5 million at December 31, 2004. Nonperforming loans were
1.18% of loans, net of unearned discount, at June 30, 2005, compared to 1.30%
and 1.40% at March 31, 2005 and December 31, 2004, respectively. Additionally,
loans past due 90 days or more and still accruing interest decreased to $7.1
million at June 30, 2005, from $8.8 million at March 31, 2005 and $28.7 million
at December 31, 2004. The decrease in nonperforming assets and loans past due 90
days or more and still accruing interest during the three and six months ended
June 30, 2005 reflect the Company's emphasis on asset quality, the sale of
approximately $14.3 million of certain acquired nonperforming loans, a notable
reduction in net loan charge-offs, as well as loan payoffs and/or external
refinancings of various credits. The Company closely monitors its loan portfolio
and considers these factors in its overall assessment of the adequacy of the
allowance for loan losses. While the Company continues to make substantial
progress in reducing its nonperforming assets, it expects the overall level of
such loans to remain at somewhat elevated levels in the near future primarily as
a result of the significant level of nonperforming loans associated with the CIB
Bank acquisition.
The allowance for loan losses was $140.2 million at June 30, 2005 and
$144.2 million at March 31, 2005, compared to $150.7 million at December 31,
2004. The Company recorded a negative provision for loan losses of $8.0 million
for the three and six months ended June 30, 2005, in comparison to a $3.0
million and $15.8 million provision for loan losses recorded for the three and
six months ended June 30, 2004, respectively. The negative provision for loan
losses recorded in the second quarter of 2005 is attributable to a 13.46%
improvement in nonperforming loans from December 31, 2004 to June 30, 2005
resulting from loan payoffs and/or external refinancings as well as a reduction
in net loan charge-offs, as previously discussed. The allowance for loan losses
as a percentage of nonperforming loans was 188.77% at June 30, 2005, compared to
180.71% at March 31, 2005 and 175.65% at December 31, 2004. The Company recorded
net loan recoveries of $3.6 million for the three months ended June 30, 2005 and
net loan charge-offs of $3.0 million for the six months ended June 30, 2005,
compared to net loan charge-offs of $5.4 million and $10.8 million for three and
six months ended June 30, 2004.
Noninterest income was $25.8 million and $46.9 million for the three
and six months ended June 30, 2005, respectively, compared to $20.1 million and
$40.7 million for the comparable periods in 2004. The increase in 2005 is
primarily attributable to increases in gains on loans sold and held for sale,
loan servicing fees, investment management fees, service charges on deposit
accounts, customer service fees related to higher deposit balances, and a
recovery of loan collection expenses. The increase is also attributable to a
decrease in write-downs and net losses on the sale of certain assets related to
the commercial leasing portfolio. The overall increase in noninterest income for
2005 was partially offset by a decrease of $1.0 million in gains, net of
expenses, resulting from the sale of two Midwest banking offices in February
2004 and April 2004, a decline in rental income associated with reduced
commercial leasing activities and an increase in losses on the disposal of fixed
assets, primarily associated with the demolition of a drive-thru branch facility
in the first quarter of 2005.
Noninterest expenses were $69.8 million and $133.5 million for the
three and six months ended June 30, 2005, respectively, compared to $55.4
million and $108.0 million for the comparable periods in 2004. The Company's
efficiency ratio was 67.33% and 65.84% for the three and six months ended June
30, 2005, respectively, compared to 57.89% and 56.57% for the comparable periods
in 2004. The increase in noninterest expenses and the efficiency ratio for the
six months ended June 30, 2005 was primarily attributable to expenses resulting
from our 2004 and 2005 acquisitions, increases in salaries and employee benefits
expense, charitable contribution expense, and expenditures and losses, net of
gains, on other real estate. The Company continues to closely monitor
noninterest expense levels following its recent acquisitions and anticipates the
implementation of certain expense reduction measures will result in a future
improved efficiency ratio. Salaries and employee benefits expense increased $6.3
million and $11.6 million for the three and six months ended June 30, 2005,
respectively, compared to the comparable periods in 2004, primarily due to the
impact of recent acquisitions and costs associated with employing and retaining
qualified personnel, including increased employee benefit costs. The number of
employees on a full-time equivalent basis increased to approximately 2,230 at
June 30, 2005 from approximately 1,970 at June 30, 2004. Expenses and losses,
net of gains, on other real estate, were $570,000 and $608,000 for the three and
six months ended June 30, 2005, respectively, and included an $812,000 expense
in May 2005 related to a parcel of other real estate acquired in conjunction
with the acquisition of CIB Bank. Gains, net of losses and expenses, on other
real estate, were $404,000 and $3.1 million for the three and six months ended
June 30, 2004, respectively, and included a $2.7 million gain recorded in
February 2004 on the sale of a foreclosed residential and recreational
development property. In May 2005, the Company contributed $1.5 million to an
urban revitalization development project in exchange for certain state tax
credits, resulting in an increase in charitable contribution expense of $1.5
million for the three and six months ended June 30, 2005. The increase in
noninterest expenses is also attributable to increased information technology
fees, resulting from the Company's system conversions of recent acquisitions and
continued expansion and upgrades to technological equipment, networks and
communication channels.
On April 29, 2005, First Banks completed its acquisition of FBA and its
wholly owned subsidiary bank, First Bank of the Americas, S.S.B. ("FBOTA"), for
approximately $10.5 million in cash. FBA was headquartered in Chicago, Illinois,
and through FBOTA, operated three banking offices in the southwestern Chicago
metropolitan communities of Back of the Yards, Little Village and Cicero.
As previously announced, on April 27, 2005, First Banks and Northway
State Bank ("NSB"), entered into an Agreement and Plan of Reorganization that
provides for First Banks to acquire NSB. NSB is headquartered in Grayslake,
Illinois, and operates one banking office in Lake County in the northern Chicago
metropolitan area. The transaction is expected to be completed during the fourth
quarter of 2005. On May 2, 2005, First Banks and International Bank of
California ("IBOC"), entered into an Agreement and Plan of Reorganization that
provides for First Banks to acquire IBOC. IBOC, headquartered in Los Angeles,
California, operates seven banking offices, including six offices in the Los
Angeles area and one office in downtown San Francisco. The transaction is
expected to be completed during the third quarter of 2005.
At June 30, 2005, First Banks had consolidated assets of $8.78 billion
and operated 170 branch banking offices in Missouri, Illinois, California and
Texas.
# # #
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements include, but
are not limited to, statements about First Banks' plans, objectives, estimates
or projections with respect to our future financial condition, expected or
anticipated revenues with respect to our results of operations and our business,
expectations and intentions and other statements that are not historical facts.
Such statements are based upon the current beliefs and expectations of First
Banks' management and are subject to significant risks and uncertainties which
may cause actual results to differ materially from those contemplated in the
forward-looking statements. The following factors, among others, could cause
actual results to differ from those set forth in the forward-looking statements:
increased competition and its effect on pricing, spending, third-party
relationships and revenues; and the risk of new and changing regulation.
Additional factors which may cause First Banks' results to differ materially
from those described in the forward-looking statements may be found in First
Banks' most recent Annual Report on Form 10-K and subsequent Quarterly Report on
Form 10-Q, as filed with the Securities and Exchange Commission ("SEC") and
available at the SEC's internet site (http://www.sec.gov). The forward-looking
statements in this press release speak only as of the date of the press release,
and First Banks does not assume any obligation to update the forward-looking
statements or to update the reasons why actual results could differ from those
contained in the forward-looking statements.
FIRST BANKS, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
(unaudited)
Selected Operating Data
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2005 2004 2005 2004
---- ---- ---- ----
Interest income........................................... $ 117,188 96,585 229,416 192,712
Interest expense.......................................... 39,367 20,979 73,516 42,453
--------- -------- -------- ---------
Net interest income................................... 77,821 75,606 155,900 150,259
Provision for loan losses................................. (8,000) 3,000 (8,000) 15,750
--------- -------- -------- ---------
Net interest income after provision for loan losses... 85,821 72,606 163,900 134,509
--------- -------- -------- ---------
Noninterest income........................................ 25,803 20,104 46,904 40,663
Noninterest expense....................................... 69,773 55,405 133,528 108,007
--------- -------- -------- ---------
Income before provision for income taxes.............. 41,851 37,305 77,276 67,165
Provision for income taxes................................ 15,005 11,302 28,303 22,893
--------- -------- -------- ---------
Net income............................................ $ 26,846 26,003 48,973 44,272
========= ======== ======== =========
Basic earnings per common share........................... $1,129.05 1,093.42 2,055.92 1,857.23
========= ======== ======== =========
Diluted earnings per common share......................... $1,110.42 1,074.06 2,025.30 1,827.13
========= ======== ======== =========
Selected Financial Data
June 30, December 31,
2005 2004
---- ----
Total assets.......................................................... $8,776,376 8,732,841
Investment securities................................................. 1,748,208 1,813,349
Loans, net of unearned discount....................................... 6,309,680 6,137,968
Allowance for loan losses............................................. 140,164 150,707
Deposits.............................................................. 7,210,730 7,151,970
Other borrowings...................................................... 556,291 594,750
Note payable.......................................................... -- 15,000
Subordinated debentures............................................... 275,213 273,300
Stockholders' equity.................................................. 643,224 600,893
Nonperforming assets.................................................. 76,253 89,830
Selected Financial Ratios
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
---- ---- ---- ----
Return on average assets................................. 1.25% 1.43% 1.14% 1.22%
Return on average stockholders' equity................... 17.43 18.21 16.06 15.72
Net interest margin...................................... 3.94 4.56 3.96 4.56
Efficiency ratio......................................... 67.33 57.89 65.84 56.57