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 Fourth Quarter 2005 Earnings
St. Louis, Missouri, January 25, 2006. First Banks, Inc. ("First Banks"
or the "Company") reported net income for the year ended December 31, 2005 of
$96.9 million, compared to $82.9 million for 2004, an increase of 16.9%. The
Company's return on average stockholders' equity and average assets for the year
ended December 31, 2005 were 15.11% and 1.10%, respectively, compared to 14.44%
and 1.10% for 2004. For the three months ended December 31, 2005, the Company
reported net income of $20.4 million, compared to $18.9 million for the
comparable period in 2004. Return on average stockholders' equity and average
assets for the fourth quarter of 2005 were 11.94% and 0.89%, respectively,
compared to 12.55% and 0.93% for the comparable period in 2004.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "The Company has strengthened its earnings while simultaneously focusing
on growing our banking franchise, both through internal growth and acquisitions
of banks in our target markets." Mr. Blake added, "On October 31, 2005, we
expanded our footprint in the Chicago metropolitan area with the acquisition of
Northway State Bank, which added one banking office in Grayslake. We have also
recently expanded our Texas banking franchise, primarily in the Dallas
metropolitan area, with our acquisition of First National Bank of Sachse that we
completed on January 3rd and our purchase of the East Renner Road branch office
of Dallas National Bank in Richardson that we completed on January 20th. In
addition, we recently announced the signing of an agreement to acquire First
Independent National Bank, which currently operates two banking offices in
Plano, Texas, situated in Collin County, and is in the process of opening a de
novo branch banking office in the Preston Forest Shopping Center in Dallas
County."
Total assets increased $437.5 million to $9.17 billion at December 31,
2005, compared to $8.73 billion at December 31, 2004. The overall increase in
total assets was the result of both internal growth and our 2005 acquisitions.
The increase reflects an $882.8 million increase in loans, net of unearned
discount, primarily funded by an increase in deposits of $389.9 million and a
reduction of investment securities of $472.6 million. Additionally, the Company
repaid $59.3 million of its subordinated debentures through the redemption of
the First Preferred Capital Trust II trust preferred securities on September 30,
2005. This was partially funded by the proceeds of a $100.0 million term loan
under the Company's amended secured credit agreement completed in August 2005.
The 2005 acquisitions of Northway State Bank, International Bank of California
and FBA Bancorp, Inc. provided total assets of $50.4 million, $151.6 million and
$73.3 million, respectively, on their respective acquisition dates. The
acquisitions, in aggregate, provided increases in total assets, loans, net of
unearned discount, and total deposits of $275.3 million, $209.6 million and
$233.0 million, respectively, on their respective acquisition dates.
Net interest income experienced continued growth, increasing to $87.1
million and $325.7 million for the three months and year ended December 31,
2005, respectively, from $74.1 million and $300.0 million for the comparable
periods in 2004. Average earning assets were $8.42 billion and $8.15 billion for
the three months and year ended December 31, 2005, respectively, compared to
$7.43 billion and $6.91 billion for the comparable periods in 2004, reflecting
increases of 13.3% and 18.0%, respectively. Net interest margin was 4.12% and
4.01% for the three months and year ended December 31, 2005, respectively,
compared to 3.99% and 4.36% 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 $1.1 million for
the fourth quarter of 2005, in comparison to improving net interest income by
$5.4 million for the comparable period in 2004. Furthermore, these derivative
financial instruments increased net interest income by $2.2 million and $50.1
million for the years ended December 31, 2005 and 2004, respectively.
Additionally, interest expense increased as a result of 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 a $100.0 million term loan, and the issuance of $61.9
million of subordinated debentures late in 2004, partially offset by the
redemption of $59.3 million of 10.24% subordinated debentures on September 30,
2005.
Nonperforming assets were $98.9 million at December 31, 2005, compared
to $70.6 million at September 30, 2005 and $89.8 million at December 31, 2004.
Loans past due 90 days or more and still accruing interest decreased $23.1
million to $5.6 million at December 31, 2005, compared to $28.7 million at
December 31, 2004. Nonperforming loans were 1.38% of loans, net of unearned
discount, at December 31, 2005, compared to 1.02% at September 30, 2005 and
1.40% at December 31, 2004. While the Company showed a 21.4% improvement in the
level of nonperforming assets during the first nine months of 2005 as a result
of the sale of certain acquired nonperforming loans, strengthening of certain
loans, and loan payoffs and/or external refinancing of various credits, the
level of nonperforming assets increased $28.3 million during the fourth quarter
of 2005. This increase primarily resulted from further deterioration of a few
large relationships in the Midwest region, including a single relationship of
approximately $14.9 million that was acquired in the purchase of CIB Bank.
Nonperforming loans associated with the acquisition of CIB Bank, which continue
to represent a significant portion of total nonperforming assets, were $55.0
million at December 31, 2005, compared to $32.8 million at September 30, 2005
and $50.5 million at December 31, 2004. Additionally, at December 31, 2005, the
Company recognized $7.6 million of loan charge-offs in conjunction with the
transfer of approximately $59.7 million of nonperforming loans to its held for
sale portfolio, which included several relationships that deteriorated during
the fourth quarter of 2005 as previously discussed.
The allowance for loan losses was $135.3 million at December 31, 2005,
compared to $150.7 million at December 31, 2004. The Company recorded a
provision for loan losses of $4.0 million for the three months ended December
31, 2005 and a negative provision for loan losses of $4.0 million for the year
ended December 31, 2005, in comparison to a provision for loan losses of $2.5
million and $25.8 million recorded for the three months and year ended December
31, 2004, respectively. The provision for loan losses of $4.0 million recorded
in the fourth quarter of 2005 resulted from further deterioration of a few large
credit relationships in the Midwest region during the quarter and partially
offset the negative provision for loan losses of $8.0 million recorded for the
first nine months of 2005 as a result of an improvement in nonperforming loans
from December 31, 2004 to September 30, 2005, as previously discussed. The
allowance for loan losses as a percentage of nonperforming loans was 139.73% at
December 31, 2005, compared to 175.65% at December 31, 2004. Net loan
charge-offs were $8.6 million and $13.4 million for the three months and year
ended December 31, 2005, respectively, compared to $6.1 million and $24.8
million for the comparable periods in 2004. Net loan charge-offs for the fourth
quarter of 2005 included $7.6 million of charge-offs associated with the $59.7
million of loans transferred to the held for sale portfolio at December 31,
2005, as previously discussed.
Noninterest income was $23.3 million and $94.7 million for the three
months and year ended December 31, 2005, respectively, compared to $20.8 million
and $83.5 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
Company's termination of a $50.0 million term repurchase agreement and the
related sale of certain investment securities associated with repurchase
agreements in the fourth quarter of 2005 resulted in a $2.9 million loss on the
sale of available-for-sale securities. The increase in noninterest income also
reflects the recognition of recoveries of certain loans that had been
charged-off prior to the date of acquisition by First Banks, the reversal of a
specific reserve upon the cancellation of a letter of credit, partially offset
by the recognition of an impairment charge on the Company's small business
lending servicing assets.
Noninterest expense was $75.3 million and $276.3 million for the three
months and year ended December 31, 2005, respectively, compared to $63.1 million
and $229.5 million for the comparable periods in 2004. The Company's efficiency
ratio was 68.21% and 65.72% for the three months and year ended December 31,
2005, respectively, compared to 66.44% and 59.84% for the comparable periods in
2004. The increase in noninterest expense and the efficiency ratio for 2005 was
attributable to increased expense levels resulting from the 2004 and 2005
acquisitions, which added a total of 27 branch offices, the addition of five de
novo branch offices in 2004 and 2005, significant charitable contributions
expense, and increases in salaries and employee benefits expense. The increase
in salaries and employee benefits expense primarily resulted from the impact of
recent acquisitions and costs associated with employing and retaining qualified
personnel, including enhanced incentive compensation and employee benefit plans.
The Company contributed $4.0 million to certain charitable foundations during
the fourth quarter of 2005 and $1.5 million to a St. Louis urban revitalization
development project during the second quarter of 2005. The increase in
noninterest expense was also attributable to increased information technology
fees resulting from the Company's system conversions of recent acquisitions and
continued enhancement of technological equipment, networks and communication
channels, and expenditures and losses, net of gains, on other real estate, which
increased primarily as a result of a gain recorded in the first quarter of 2004
on the sale of a foreclosed residential and recreational development property.
First Banks had assets of $9.17 billion at December 31, 2005 and
currently operates 179 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 Year Ended
December 31, December 31,
--------------------- --------------------
2005 2004 2005 2004
---- ---- ---- ----
Interest income........................................... $ 136,723 102,609 493,940 394,782
Interest expense.......................................... 49,588 28,461 168,259 94,767
--------- -------- -------- --------
Net interest income................................... 87,135 74,148 325,681 300,015
Provision for loan losses................................. 4,000 2,500 (4,000) 25,750
--------- -------- -------- --------
Net interest income after provision for loan losses... 83,135 71,648 329,681 274,265
--------- -------- -------- --------
Noninterest income........................................ 23,304 20,841 94,743 83,486
Noninterest expense....................................... 75,329 63,107 276,296 229,505
--------- -------- -------- --------
Income before provision for income taxes and
minority interest in loss of subsidiary........... 31,110 29,382 148,128 128,246
Provision for income taxes ............................... 10,941 10,494 52,509 45,338
--------- -------- -------- --------
Income before minority interest in loss of subsidiary. 20,169 18,888 95,619 82,908
Minority interest in loss of subsidiary................... (251) -- (1,287) --
--------- -------- -------- --------
Net income............................................ $ 20,420 18,888 96,906 82,908
========= ======== ======== ========
Basic earnings per common share........................... $ 851.91 787.25 4,062.36 3,470.80
========= ======== ======== ========
Diluted earnings per common share......................... $ 846.12 780.71 4,007.46 3,421.58
========= ======== ======== ========
Selected Financial Data
December 31, December 31,
2005 2004
---- ----
Total assets.......................................................... $9,170,333 8,732,841
Investment securities................................................. 1,340,783 1,813,349
Loans, net of unearned discount....................................... 7,020,771 6,137,968
Allowance for loan losses............................................. 135,330 150,707
Deposits.............................................................. 7,541,831 7,151,970
Other borrowings...................................................... 539,174 594,750
Note payable.......................................................... 100,000 15,000
Subordinated debentures............................................... 215,461 273,300
Stockholders' equity.................................................. 678,938 600,893
Nonperforming assets.................................................. 98,873 89,830
Selected Financial Ratios
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
2005 2004 2005 2004
---- ---- ---- ----
Return on average assets................................. 0.89% 0.93% 1.10% 1.10%
Return on average equity................................. 11.94 12.55 15.11 14.44
Net interest margin...................................... 4.12 3.99 4.01 4.36
Efficiency ratio......................................... 68.21 66.44 65.72 59.84