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 Second Quarter 2006 Earnings
St. Louis, Missouri, July 27, 2006. First Banks, Inc. ("First Banks" or
the "Company") reported earnings of $22.1 million for the three months ended
June 30, 2006, compared to $26.8 million for the comparable period in 2005. The
Company reported earnings of $51.1 million for the six months ended June 30,
2006, compared to $49.0 million for the comparable period in 2005. Net income
for the three and six months ended June 30, 2006 includes provisions for loan
losses of $5.0 million and $6.0 million, respectively. For the comparable
periods in 2005, the Company recorded a negative provision for loan losses of
$8.0 million to reduce the allowance for loan losses to a level commensurate
with the decreasing credit risk that existed in the loan portfolio during those
periods. The Company's return on average assets for the three and six months
ended June 30, 2006 was 0.94% and 1.10%, respectively, compared to 1.25% and
1.14% for the comparable periods in 2005, and the Company's return on average
stockholders' equity was 12.35% and 14.58% for the three and six months ended
June 30, 2006, respectively, compared to 17.43% and 16.06% for the comparable
periods in 2005.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our earnings performance for the second quarter of 2006 reflects
increased net interest income and relatively consistent noninterest income,
partially offset by an increase in our provision for loan losses and higher
noninterest expenses primarily attributable to continued growth. In addition, we
reduced the overall level of our nonperforming assets by nearly 21% during 2006
through the execution and completion of planned strategies to achieve improved
asset quality." Mr. Blake added, "First Bank further diversified its product
line with the acquisition of Universal Premium Acceptance Corporation on May 31,
2006." Universal Premium Finance Corporation, headquartered in Lenexa, Kansas,
specializes in providing short-term collateralized financing through independent
insurance agencies to facilitate the payment of insurance premiums for property
and casualty risks of small and medium sized businesses, and primarily serves
agency clients financing commercial insurance premiums. Mr. Blake further added,
"During the second quarter of 2006, we expanded our banking franchise in the
Dallas area with the acquisition of First Independent National Bank, which added
two branch offices in Plano and a recently opened de novo branch office in
Preston Forest. We also expanded our banking operation in Pittsfield, Illinois
with the acquisition of Pittsfield Community Bancorp, Inc. More recently, we
announced plans to acquire San Diego Community Bank in Chula Vista, California;
Oak Lawn Bank, in Oak Lawn, Illinois; and three branch offices of MidAmerica
National Bank, in central Illinois. These acquisitions will add three branch
offices in San Diego, two branch offices in the Chicago area, two branch offices
in Peoria, Illinois and one branch office in Bloomington, Illinois."
The Company's assets increased $444.9 million to $9.62 billion at June
30, 2006, from $9.17 billion at December 31, 2005, primarily resulting from
internal growth and acquisitions in the Company's target markets. Loans, net of
unearned discount, increased $579.8 million to $7.60 billion at June 30, 2006,
from $7.02 billion at December 31, 2005, reflecting internal loan growth and the
acquisition of $269.5 million of loans associated with the Company's
acquisitions, partially offset by a decrease of $138.9 million resulting from
the securitization of certain residential mortgage loans held in the Company's
loan portfolio that were transferred to the investment portfolio. The Company's
investment portfolio declined to $1.19 billion at June 30, 2006 from $1.34
billion at December 31, 2005. The decline in the investment portfolio is
primarily attributable to maturities of investment securities and the sale of
securities associated with the termination of $200.0 million term repurchase
agreements to better position the overall interest rate risk profile, partially
offset by an increase associated with the loan securitization previously
discussed. Deposits increased $524.1 million to $8.07 billion at June 30, 2006,
from $7.54 billion at December 31, 2005, reflecting internal growth through
enhanced product and service offerings and marketing campaigns, as well as the
acquisition of $135.1 million of deposits associated with the 2006 acquisition
activity. A $211.2 million decline in other borrowings to $328.0 million at June
30, 2006 is primarily attributable to the termination of $150.0 million and
$50.0 million of term repurchase agreements in the first and second quarters of
2006, respectively. In addition, the Company issued $87.6 million of
subordinated debentures in private placements through three newly formed
statutory trusts during the first six months of 2006 to provide additional
capital resources for future growth.
Net interest income increased to $95.7 million and $186.5 million for
the three and six months ended June 30, 2006, respectively, compared to $77.8
million and $155.9 million for the comparable periods in 2005. Net interest
margin increased to 4.41% and 4.36% for the three and six months ended June 30,
2006, respectively, compared to 3.94% and 3.96% for the same periods in 2005.
The improvement in net interest income for the first six months of 2006 over the
comparable period in 2005 is primarily attributable to an increase in average
interest-earning assets, which increased 8.6% from internal growth and
acquisitions, and higher yields on loans. The overall increase was partially
offset by increased interest expense stemming from higher deposit balances and
borrowings, including the recently issued subordinated debentures, and increased
interest rates paid on deposits and other borrowings. Average interest-earning
assets increased to $8.73 billion and $8.67 billion for the three and six months
ended June 30, 2006, respectively, from $7.95 billion and $7.98 billion for the
comparable periods in 2005. The increase was primarily attributable to increases
of $1.12 billion and $1.05 billion in loans, net of unearned discount, for the
three and six months ended June 30, 2006, respectively, compared to the same
periods in 2005, partially offset by a decrease in investment securities for the
comparable periods. Average deposits increased to $7.95 billion and $7.84
billion for the three and six months ended June 30, 2006, respectively, from
$7.04 billion and $7.07 billion for the comparable periods in 2005.
Nonperforming assets declined nearly 21% to $78.5 million at June 30,
2006, from $99.2 million at December 31, 2005. The Company's reduction in the
level of nonperforming assets during the first six months of 2006 primarily
resulted from: the sale of approximately $32.5 million of acquired nonperforming
loans that had been transferred to the Company's held for sale portfolio in
December 2005 in connection with the Company's plan to reduce nonperforming
assets; and loan payoffs of various credits, including the payoff of a single
nonperforming loan held for sale that had a carrying value of $12.4 million.
Nonperforming assets at June 30, 2006 reflect an $8.1 million increase from
nonperforming assets at March 31, 2006, primarily resulting from the placement
of a single credit relationship on nonaccrual status. Nonperforming loans were
$73.0 million, or 0.96% of loans, net of unearned discount, at June 30, 2006,
compared to $67.1 million, or 0.94% of loans, net of unearned discount, at March
31, 2006, and $97.2 million, or 1.38% of loans, net of unearned discount, at
December 31, 2005.
The allowance for loan losses was $147.4 million at June 30, 2006,
compared to $140.2 million at March 31, 2006 and $135.3 million at December 31,
2005, representing 201.81%, 209.00% and 139.23% of nonperforming loans,
respectively. The Company recorded provisions for loan losses of $5.0 million
and $6.0 million for the three and six months ended June 30, 2006, respectively,
reflecting loan portfolio growth and an increase in nonperforming loans during
the second quarter of 2006, as previously discussed. The Company recorded a
negative provision for loan losses of $8.0 million for the three and six months
ended June 30, 2005, which resulted from improvement in nonperforming loans
attributable to loan payoffs and/or external refinancings as well as a reduction
in net loan charge-offs during the first six months of 2005. The Company
recorded net loan charge-offs of $1.2 million for the three months ended June
30, 2006 and net loan recoveries of $2.1 million for the six months ended June
30, 2006. 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. Net loan recoveries for 2006 included a loan
recovery of $5.0 million on the payoff of a single nonperforming loan in the
first quarter of 2006 that had been transferred to the Company's held for sale
portfolio in December 2005, as previously discussed.
Noninterest income was $25.9 million and $51.4 million for the three
and six months ended June 30, 2006, respectively, compared to $26.2 million and
$47.4 million for the comparable periods in 2005. Noninterest income for the
second quarter of 2006 compared to the same period in 2005 was relatively
constant and reflected increased service charges on deposit accounts and
customer service fees related to higher deposit balances, and increased
commission fee income associated with the Company's recently acquired insurance
brokerage agency, Adrian N. Baker & Company, on March 31, 2006, partially offset
by reduced gains on loans sold and held for sale and increased losses on sales
of investment securities, as further discussed below. The increase in
noninterest income for the first six months of 2006 reflects increases in
service charges on deposit accounts and customer service fees and gains on loans
sold and held for sale, partially offset by $2.7 million of net losses on sales
of available-for-sale investment securities primarily associated with the
termination of $200.0 million of term repurchase agreements, and $1.3 million of
net losses recorded on the Company's trading portfolio. Noninterest income for
2006 includes $2.1 million of loan servicing income generated from the
capitalization of mortgage servicing rights associated with the securitization
of $138.9 million of certain residential mortgage loans; a $1.5 million gain on
the sale of a parcel of other real estate; and a gain of approximately $1.7
million on the sale of certain nonperforming loans held for sale.
Noninterest expense was $81.1 million and $155.9 million for the three
and six months ended June 30, 2006, respectively, compared to $70.2 million and
$134.0 million for the comparable periods in 2005. The Company's efficiency
ratio was 66.68% and 65.51% for the three and six months ended June 30, 2006,
respectively, compared to 67.45% and 65.93% for the comparable periods in 2005.
The 2005 and 2006 acquisitions resulted in significant expansion of the
Company's branch office network and employee base, and contributed to the
increase in overall expense levels, specifically salaries and employee benefits
expense and occupancy expense. The Company's growth through acquisitions, branch
purchases and de novo branch openings resulted in the addition of ten branch
offices in 2005, an additional five branch offices during the first six months
of 2006, and the acquisition of an insurance premium finance company and an
insurance brokerage agency. The Company's employee base has increased to
approximately 2,560 employees at June 30, 2006, from approximately 2,230
employees at June 30, 2005. Salaries and employee benefits expense increased
$8.1 million and $14.6 million for the three and six months ended June 30, 2006,
respectively, compared to the comparable periods in 2005, and occupancy expenses
increased $1.2 million and $2.2 million for the three and six months ended June
30, 2006, respectively, compared to the comparable periods 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. Charitable contributions expense of $1.7 million and
$3.3 million for the three and six months ended June 30, 2006, respectively,
compared to $1.6 million and $1.7 million for the comparable periods in 2005,
also contributed to the overall increase in noninterest expenses.
First Banks had assets of $9.62 billion at June 30, 2006 and currently
operates 181 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 and 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,
---------------------- ----------------------
2006 2005 2006 2005
---- ---- ---- ----
Interest income.......................................... $ 157,731 117,188 304,965 229,416
Interest expense......................................... 62,051 39,367 118,419 73,516
--------- --------- --------- ---------
Net interest income.................................. 95,680 77,821 186,546 155,900
Provision for loan losses................................ 5,000 (8,000) 6,000 (8,000)
--------- --------- --------- ---------
Net interest income after provision for loan losses.. 90,680 85,821 180,546 163,900
--------- --------- --------- ---------
Noninterest income....................................... 25,879 26,191 51,376 47,406
Noninterest expense...................................... 81,051 70,161 155,866 134,030
--------- --------- --------- ---------
Income before provision for income taxes and
minority interest in loss of subsidiary.......... 35,508 41,851 76,056 77,276
Provision for income taxes .............................. 13,500 15,005 25,203 28,303
--------- --------- --------- ---------
Income before minority interest in loss
of subsidiary.................................... 22,008 26,846 50,853 48,973
Minority interest in loss of subsidiary.................. (78) -- (236) --
--------- --------- --------- ---------
Net income........................................... $ 22,086 26,846 51,089 48,973
========= ========= ========= =========
Basic earnings per common share.......................... $ 927.86 1,129.05 2,145.35 2,055.92
========= ========= ========= =========
Diluted earnings per common share........................ $ 916.31 1,110.42 2,118.11 2,025.30
========= ========= ========= =========
Selected Financial Data
June 30, December 31,
2006 2005
---- ----
Total assets.......................................................... $9,615,227 9,170,333
Investment securities................................................. 1,187,059 1,340,783
Loans, net of unearned discount....................................... 7,600,591 7,020,771
Allowance for loan losses............................................. 147,383 135,330
Deposits.............................................................. 8,065,945 7,541,831
Other borrowings...................................................... 327,996 539,174
Notes payable......................................................... 85,000 100,000
Subordinated debentures............................................... 304,270 215,461
Stockholders' equity.................................................. 719,373 678,938
Nonperforming assets.................................................. 78,490 99,221
Selected Financial Ratios
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2006 2005 2006 2005
---- ---- ---- ----
Return on average assets................................. 0.94% 1.25% 1.10% 1.14%
Return on average equity................................. 12.35 17.43 14.58 16.06
Net interest margin...................................... 4.41 3.94 4.36 3.96
Efficiency ratio......................................... 66.68 67.45 65.51 65.93