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 First Quarter 2006 Earnings
St. Louis, Missouri, April, 27, 2006. First Banks, Inc. ("First Banks"
or the "Company") reported earnings of $29.0 million for the three months ended
March 31, 2006, compared to $22.1 million for the comparable period in 2005, an
increase of 31.1%. The Company's return on average assets and return on average
stockholders' equity increased to 1.26% and 16.91% for the three months ended
March 31, 2006, compared to 1.04% and 14.67% for the comparable period in 2005.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our strong financial performance for the first quarter of 2006 reflects
earnings driven by an improved net interest margin, increased net interest
income and noninterest income and a reduced provision for income taxes,
partially offset by higher noninterest expenses primarily associated with our
continued growth. Additionally, we reduced the overall level of our
nonperforming assets by nearly 30% through the execution and completion of
planned strategies to achieve improved asset quality." Mr. Blake added, "During
the first quarter of 2006, we expanded our Texas banking franchise with the
acquisition of First National Bank of Sachse and the purchase of the Richardson
branch office of Dallas National Bank, adding two branch offices in the Dallas
area, and we announced plans to acquire First Independent National Bank in
Plano, Texas, which will add two branch offices in Plano as well as a de novo
branch office in Preston Forest Shopping Center in Dallas. We will also expand
our banking operation in Pittsfield, Illinois with our upcoming acquisition of
Pittsfield Community Bancorp, Inc." Mr. Blake further added, "First Banks
ventured into a new business niche with our recent acquisition of Adrian N.
Baker & Company, also completed in the first quarter, providing an excellent
opportunity for us to further diversify our existing product line." Adrian N.
Baker & Company, an insurance brokerage company based in Clayton, Missouri,
provides a comprehensive range of employee benefit, commercial and personal
insurance services.
Internal growth and acquisitions of banks in the Company's target
markets led to a $228.4 million increase in assets for the quarter to $9.40
billion at March 31, 2006. The increase in assets reflects a $150.5 million
increase in loans, net of unearned discount, to $7.17 billion at March 31, 2006,
and a $115.7 million net increase in investment securities, which increased
$77.1 million due to the securitization of certain residential mortgage loans
held in the Company's loan portfolio. Deposits increased $351.7 million during
the quarter to $7.89 billion at March 31, 2006, primarily reflecting internal
growth through enhanced product and service offerings as well as marketing
campaigns. On March 1, 2006, the Company issued $41.2 million of subordinated
debentures associated with the issuance of $40.0 million of trust preferred
securities through First Bank Statutory Trust IV, a newly formed statutory
trust, to provide additional capital resources for continued future growth.
Additionally, the Company terminated $150.0 million of term repurchase
agreements in the first quarter of 2006 to better position its overall interest
rate risk, and simultaneously recognized a pre-tax loss of $2.4 million on the
related sale of $150.0 million of the underlying securities associated with the
term repurchase agreements. The 2006 acquisitions of First National Bank of
Sachse, the Richardson branch office of Dallas National Bank and Adrian N. Baker
& Company, in aggregate, provided, assets, loans, net of unearned discount, and
deposits of $80.4 million, $49.5 million and $67.3 million, respectively, on
their respective acquisition dates.
Net interest income increased $12.8 million, or 16.4%, to $90.9 million
for the three months ended March 31, 2006, from $78.1 million for the comparable
period in 2005. Net interest margin increased to 4.30% for the three months
ended March 31, 2006, compared to 3.97% for the same period in 2005. The
increase in net interest income for the first three months of 2006 over the
comparable period in 2005 is primarily attributable to interest income provided
by average interest-earning assets, which increased 7.4% from internal growth
and acquisitions, and higher yields on loans and investment securities,
partially offset by increased interest expense stemming from higher deposit
balances and higher interest rates paid on deposits. Average interest-earning
assets increased to $8.61 billion for the three months ended March 31, 2006,
from $8.01 billion for the comparable period in 2005. Average deposits increased
to $7.73 billion for the three months ended March 31, 2006, from $7.09 billion
for the comparable period in 2005. Interest and fees on loans include a $2.0
million recovery of interest from the payoff of a single nonaccrual loan, as
further discussed below. 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.
Additionally, in February 2006, the Company terminated its single remaining
$25.0 million notional fair value interest rate swap agreement associated with
its subordinated debentures.
The Company successfully reduced its nonperforming assets to $70.4
million at March 31, 2006, from $99.2 million at December 31, 2005 and $81.6
million at March 31, 2005. Loans past due 90 days or more and still accruing
interest were $2.2 million at March 31, 2006, compared to $5.6 million at
December 31, 2005 and $8.8 million at March 31, 2005. Nonperforming loans were
0.94% of loans, net of unearned discount, at March 31, 2006, compared to 1.38%
at December 31, 2005 and 1.30% at March 31, 2005. The Company's 29.1% reduction
in the level of nonperforming assets during the first quarter of 2006 primarily
resulted from the sale of certain acquired nonperforming loans, loan payoffs
and/or external refinancing of various credits. First Banks had been actively
marketing approximately $59.7 million of nonperforming loans that were
transferred to the held for sale portfolio on December 31, 2005. In January
2006, First Banks received a payoff on one of the loans held for sale that had a
carrying value of $12.4 million at year-end 2005, resulting in the recognition
of a loan recovery of $5.0 million and interest and late fees of $2.0 million.
Additionally, in March 2006, the Company completed the sale of the majority of
the remaining loans held for sale and recorded a pre-tax gain of approximately
$1.7 million on the sale of these loans.
The allowance for loan losses was $140.2 million at March 31, 2006,
compared to $135.3 million at December 31, 2005 and $144.2 million at March 31,
2005. The Company recorded a provision for loan losses of $1.0 million for the
three months ended March 31, 2006, and did not record a provision for loan
losses for the comparable period in 2005. The Company recorded net loan
recoveries of $3.3 million for the three months ended March 31, 2006, compared
to net loan charge-offs of $6.6 million for the comparable period in 2005. Net
loan recoveries for 2006 included a loan recovery of $5.0 million on the payoff
of a single loan, as previously discussed. As a result of the increase in the
allowance for loan losses in 2006 coupled with the improvement in nonperforming
assets, the allowance for loan losses as a percentage of nonperforming loans
increased to 209.00% at March 31, 2006, compared to 139.23% at December 31, 2005
and 180.71% at March 31, 2005.
Noninterest income increased 20.2% to $25.5 million for the three
months ended March 31, 2006, from $21.2 million for the three months ended March
31, 2005. The increase in 2006 reflects increases in gains on loans sold and
held for sale, including a $1.7 million gain on the sale of certain
nonperforming loans, as previously discussed, in addition to increases in
service charges on deposit accounts and customer service fees related to higher
deposit balances. Noninterest income for 2006 also includes $1.2 million
associated with increased loan servicing income generated from the
capitalization of mortgage servicing rights related to the securitization of
$77.1 million of residential mortgage loans, and a $1.5 million gain on the sale
of a parcel of other real estate. The increase in noninterest income was
partially offset by a $2.4 million pre-tax loss on sales of available-for-sale
investment securities associated with the termination of $150.0 million of term
repurchase agreements during the first quarter of 2006, as previously mentioned.
Noninterest expense was $74.8 million and $63.9 million for the three
months ended March 31, 2006 and 2005, respectively. The Company's efficiency
ratio was 64.29% for the first quarter of 2006, compared to 64.32% for the
comparable period in 2005. The increase in noninterest expense for 2006 was
attributable to increased expense levels resulting from the Company's growth in
2005 and 2006, which expanded our employee base and added two branch offices in
2006, nine branch offices in 2005 and the addition of one de novo branch office
in early 2005. The increased expense levels include a $6.6 million increase in
salaries and employee benefits expense and a $996,000 increase in occupancy
expense for the three months ended March 31, 2006, compared to the same period
in 2005. In addition to the Company's continued growth, the increase in salaries
and employee benefits expense was also attributable to costs associated with
employing and retaining qualified personnel, including enhanced incentive
compensation and employee benefit plans. Increased information technology fees
resulting from the Company's system conversions of recent acquisitions and
expansion of technological equipment, networks and communication channels, as
well as increased charitable contributions expense also contributed to the
overall increase in noninterest expenses.
The provision for income taxes was $11.7 million and $13.3 million for
the three months ended March 2006 and 2005, respectively, representing an
effective income tax rate of 28.9% and 37.5%, respectively. The decrease is
attributable to a nonrecurring $3.2 million reduction of the provision for
federal and state income taxes due to the reversal of certain tax reserves no
longer deemed necessary.
First Banks had assets of $9.40 billion at March 31, 2006 and currently
operates 178 branch banking offices in California, Illinois, Missouri 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, 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
March 31,
--------------------------
2006 2005
---- ----
Interest income....................................................... $ 147,234 112,228
Interest expense...................................................... 56,368 34,149
--------- --------
Net interest income............................................... 90,866 78,079
Provision for loan losses............................................. 1,000 --
--------- --------
Net interest income after provision for loan losses............... 89,866 78,079
--------- --------
Noninterest income.................................................... 25,497 21,215
Noninterest expense................................................... 74,815 63,869
--------- --------
Income before provision for income taxes and
minority interest in loss of subsidiary....................... 40,548 35,425
Provision for income taxes............................................ 11,703 13,298
--------- --------
Income before minority interest in loss of subsidiary............. 28,845 22,127
Minority interest in loss of subsidiary............................... (158) --
--------- --------
Net income........................................................ $ 29,003 22,127
========= ========
Basic earnings per common share....................................... $1,217.49 926.87
========= ========
Diluted earnings per common share..................................... $1,202.46 915.04
========= ========
Selected Financial Data
March 31, December 31,
2006 2005
---- ----
Total assets.......................................................... $9,398,689 9,170,333
Investment securities................................................. 1,456,474 1,340,783
Loans, net of unearned discount....................................... 7,171,283 7,020,771
Allowance for loan losses............................................. 140,235 135,330
Deposits.............................................................. 7,893,493 7,541,831
Other borrowings...................................................... 347,644 539,174
Notes payable......................................................... 95,000 100,000
Subordinated debentures............................................... 257,601 215,461
Stockholders' equity.................................................. 705,420 678,938
Nonperforming assets.................................................. 70,386 99,221
Selected Financial Ratios
Three Months Ended
March 31,
----------------------
2006 2005
---- ----
Return on average assets.............................................. 1.26% 1.04%
Return on average equity.............................................. 16.91 14.67
Net interest margin................................................... 4.30 3.97
Efficiency ratio...................................................... 64.29 64.32