Exhibit 99
First Banks, Inc.
St. Louis, Missouri
Contacts: 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: 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 Third Quarter 2005 Earnings
St. Louis, Missouri, October 27, 2005. First Banks, Inc. ("First Banks"
or the "Company") reported net income of $27.5 million for the three months
ended September 30, 2005, compared to $19.7 million for the comparable period in
2004, an increase of 39.3%. The Company reported net income of $76.5 million for
the nine months ended September 30, 2005, compared to $64.0 million for the
comparable period in 2004, an increase of 19.5%. The Company's return on average
assets for the three and nine months ended September 30, 2005 was 1.23% and
1.17%, respectively, compared to 1.04% and 1.16% for the comparable periods in
2004, and the Company's return on average stockholders' equity was 16.61% and
16.26% for the three and nine months ended September 30, 2005, respectively,
compared to 13.89% and 15.11% for the comparable periods in 2004.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our financial performance in the third quarter of 2005 reflects the
Company's continuing efforts to strengthen earnings and simultaneously improve
asset quality. A 21% reduction in our nonperforming assets since December 31,
2004 has allowed us to substantially reduce our provision for loan losses for
the first nine months of 2005 compared to the same period in 2004. Our earnings
also reflect increased net interest income and noninterest income. These
increases were partially offset by an increase in our noninterest expenses,
primarily increased salaries and benefits expense and occupancy expenses
attributable to our recent acquisitions." Mr. Blake added, "On September 30,
2005, we increased our existing southern California banking operation with the
completion of our previously announced acquisition of International Bank of
California, which added five banking offices in the Los Angeles area." Mr. Blake
further added, "We will further expand our banking franchise with our upcoming
acquisitions of Northway State Bank, located in the northern Chicago
metropolitan area, and First National Bank of Sachse, located northeast of the
Dallas, Texas metropolitan area."
Total assets increased $275.7 million to $9.01 billion at September 30,
2005, compared to $8.73 billion at December 31, 2004. The overall increase in
total assets reflects a $489.8 million increase in loans, net of unearned
discount, as a result of internal growth and our acquisitions of International
Bank of California ("IBOC") and Chicago-based FBA Bancorp, Inc. ("FBA"). The
increase in loans was primarily funded by an increase in deposits of $228.5
million and a decrease in investment securities of $227.3 million. First Banks'
acquisition of IBOC on September 30, 2005 provided assets of $151.6 million,
loans, net of unearned discount, of $113.5 million and deposits of $132.1
million. First Banks' acquisition of FBA on April 29, 2005 provided assets of
$73.3 million, loans, net of unearned discount, of $54.3 million and deposits of
$55.7 million. In addition, on September 30, 2005, the Company redeemed the
First Preferred Capital Trust II ("First Preferred II") 10.24% cumulative trust
preferred securities, and in conjunction with this, paid in full its outstanding
$59.3 million of 10.24% subordinated debentures that were issued in October
2000. Also, the Company amended its secured credit agreement with a group of
unaffiliated financial institutions in August 2005 to include a $100.0 million
term loan, of which $80.0 million was outstanding as of September 30, 2005.
Net interest income experienced continued growth, increasing to $82.6
million and $238.5 million for the three and nine months ended September 30,
2005, respectively, from $75.6 million and $225.9 million for the comparable
periods in 2004. Average earning assets were $8.22 billion and $8.06 billion for
the three and nine months ended September 30, 2005, respectively, compared to
$6.90 billion and $6.74 billion for the comparable periods in 2004, reflecting
increases of 19.1% and 19.7%, respectively. Net interest margin was 4.00% and
3.97% for the three and nine months ended September 30, 2005, respectively,
compared to 4.37% and 4.50% for the comparable periods in 2004. The increase in
interest income during 2005 is primarily attributable to the increase in
interest-earning assets provided by the Company's 2004 and 2005 acquisitions,
internal loan growth coupled with higher interest rates on loans, and
higher-yielding investment securities. However, the Company's net interest
income was adversely affected by a decline in earnings on the 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 reduced net interest income by $626,000 for the
third quarter of 2005, in comparison to a $13.0 million increase in net interest
income for the comparable period in 2004. For the nine months ended September
30, 2005 and 2004, these derivative financial instruments increased net interest
income by $3.3 million and $44.7 million, respectively. Also, interest expense
increased due to higher interest rates on deposits and a redistribution of
deposit balances toward higher-yielding products, increased levels of borrowings
coupled with increased rates on such borrowings, including the term loan, and
the issuance of additional subordinated debentures late in 2004 to partially
fund the acquisition of CIB Bank that was completed in November 2004.
The Company's focus on improving asset quality is reflected by a
continued reduction in nonperforming assets and loans past due 90 days or more
and still accruing interest. Nonperforming assets were $70.6 million at
September 30, 2005, reflecting a 7.5% and 21.4% improvement from nonperforming
assets of $76.3 million and $89.8 million at June 30, 2005 and December 31,
2004, respectively. Loans past due 90 days or more and still accruing interest
decreased to $2.8 million at September 30, 2005, reflecting a 61.1% and 90.3%
improvement from $7.1 million and $28.7 million at June 30, 2005 and December
31, 2004, respectively. Nonperforming loans were 1.02% of loans, net of unearned
discount, at September 30, 2005, compared to 1.18% and 1.40% at June 30, 2005
and December 31, 2004, respectively. Nonperforming loans added by recent
acquisitions contributed to the overall level of nonperforming assets, but has
been offset by improvements both in the remainder of the loan portfolio and in
the acquired loan portfolios subsequent to acquisition. Nonperforming loans
associated with the acquisition of CIB Bank, which represent a significant
portion of total nonperforming assets, have decreased to $32.8 million at
September 30, 2005, from $42.9 million at June 30, 2005 and $50.5 million at
December 31, 2004. These improvements in asset quality reflect the Company's
continuing emphasis on asset quality, the sale of certain acquired nonperforming
loans, strengthening of certain loans, and loan payoffs and/or external
refinancing of various credits. Along with this, net loan charge-offs decreased
to $1.8 million and $4.7 million for the three and nine months ended September
30, 2005, respectively, from $7.9 million and $18.6 million for the comparable
periods in 2004.
The allowance for loan losses was $139.5 million at September 30, 2005,
compared to $150.7 million at December 31, 2004. The Company did not record a
provision for loan losses in the third quarter of 2005. The Company recorded a
negative provision for loan losses of $8.0 million for the nine months ended
September 30, 2005, in comparison to a $7.5 million and $23.3 million provision
for loan losses recorded for the three and nine months ended September 30, 2004,
respectively. The negative provision for loan losses recorded in 2005 is
reflective of a 21.0% improvement in nonperforming loans from December 31, 2004
to September 30, 2005 resulting from loan payoffs and/or external refinancing of
various credit relationships as well as a reduction in net loan charge-offs, as
previously discussed. The allowance for loan losses as a percentage of
nonperforming loans increased to 205.64% at September 30, 2005, compared to
188.77% at June 30, 2005 and 175.65% at December 31, 2004.
Noninterest income was $24.5 million and $71.4 million for the three
and nine months ended September 30, 2005, respectively, compared to $22.0
million and $62.6 million for the comparable periods in 2004. The increase in
2005 reflects increases in gains on loans sold and held for sale, investment
management fees associated with the Company's institutional money management
subsidiary, service charges on deposit accounts, customer service fees related
to higher deposit balances, and increases in gains, net of losses, on the sale
of certain assets, primarily related to the commercial leasing portfolio. The
increase in noninterest income in the third quarter of 2005 was partially offset
by a decline in loan servicing fees, which decreased as a result of the
recognition of a $2.5 million impairment charge on the Company's small business
lending servicing assets following substantial damage to several shrimping
vessels within the servicing portfolio caused by the effects of Hurricane
Katrina.
Noninterest expenses were $67.4 million and $201.0 million for the
three and nine months ended September 30, 2005, respectively, compared to $58.4
million and $166.4 million for the comparable periods in 2004. The Company's
efficiency ratio was 62.92% and 64.83% for the three and nine months ended
September 30, 2005, respectively, compared to 59.83% and 57.67% for the
comparable periods in 2004. The increase in noninterest expenses and the
efficiency ratio for the nine months ended September 30, 2005 was primarily
attributable to expenses resulting from the 2004 and 2005 acquisitions, which
added a total of 26 branch offices, the addition of five de novo branch offices
in 2004 and 2005, and increases in salaries and employee benefits expense,
primarily resulting from the impact of recent acquisitions and costs associated
with employing and retaining qualified personnel, including enhanced incentive
compensation and benefit plans. 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,
increased charitable contribution expense, and expenditures and losses, net of
gains, on other real estate. Expenses and losses, net of gains, on other real
estate for 2005 included $982,000 of expenses incurred in the second and third
quarters of 2005 in preparation for the sale of a parcel of other real estate
acquired with the acquisition of CIB Bank. Gains, net of losses and expenses, on
other real estate for 2004 included a $2.7 million gain recorded in the first
quarter of 2004 on the sale of a foreclosed residential and recreational
development property.
First Banks had assets of $9.01 billion at September 30, 2005 and
currently operates 176 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 Reports
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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
2005 2004 2005 2004
---- ---- ---- ----
Interest income........................................... $ 127,801 99,461 357,217 292,173
Interest expense.......................................... 45,155 23,853 118,671 66,306
--------- --------- --------- ---------
Net interest income................................... 82,646 75,608 238,546 225,867
Provision for loan losses................................. -- 7,500 (8,000) 23,250
--------- --------- --------- ---------
Net interest income after provision for loan losses... 82,646 68,108 246,546 202,617
--------- --------- --------- ---------
Noninterest income........................................ 24,535 21,982 71,439 62,645
Noninterest expense....................................... 67,439 58,391 200,967 166,398
--------- --------- --------- ---------
Income before provision for income taxes and
minority interest in loss of subsidiary............. 39,742 31,699 117,018 98,864
Provision for income taxes................................ 13,265 11,951 41,568 34,844
--------- --------- --------- ---------
Income before minority interest in
loss of subsidiary.................................. 26,477 19,748 75,450 64,020
Minority interest in loss of subsidiary................... (1,036) -- (1,036) --
--------- --------- --------- ---------
Net income............................................ $ 27,513 19,748 76,486 64,020
========= ========= ========= =========
Basic earnings per common share........................... $1,154.52 826.33 3,210.44 2,683.56
========= ========= ========= =========
Diluted earnings per common share......................... $1,139.46 815.20 3,163.13 2,642.12
========= ========= ========= =========
Selected Financial Data
September 30, December 31,
2005 2004
---- ----
Total assets.......................................................... $9,008,502 8,732,841
Investment securities................................................. 1,586,080 1,813,349
Loans, net of unearned discount....................................... 6,627,810 6,137,968
Allowance for loan losses............................................. 139,471 150,707
Deposits.............................................................. 7,380,491 7,151,970
Other borrowings...................................................... 568,699 594,750
Notes payable......................................................... 80,000 15,000
Subordinated debentures............................................... 215,433 273,300
Stockholders' equity.................................................. 665,119 600,893
Nonperforming assets.................................................. 70,570 89,830
Selected Financial Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
---- ---- ---- ----
Return on average assets................................. 1.23% 1.04% 1.17% 1.16%
Return on average equity................................. 16.61 13.89 16.26 15.11
Net interest margin...................................... 4.00 4.37 3.97 4.50
Efficiency ratio......................................... 62.92 59.83 64.83 57.67