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 2006 Earnings
St. Louis, Missouri, October 26, 2006. First Banks, Inc. ("First Banks"
or the "Company") reported earnings of $29.7 million for the three months ended
September 30, 2006, compared to $27.5 million for the comparable period in 2005.
The Company reported earnings of $80.7 million for the nine months ended
September 30, 2006, compared to $76.5 million for the comparable period in 2005.
The Company's return on average assets for the three and nine months ended
September 30, 2006 was 1.22% and 1.14%, respectively, compared to 1.23% and
1.17% for the comparable periods in 2005, and the Company's return on average
stockholders' equity was 16.01% and 15.08% for the three and nine months ended
September 30, 2006, respectively, compared to 16.61% and 16.26% for the
comparable periods in 2005. Net income for the three and nine months ended
September 30, 2006 reflects increased net interest income and noninterest
income, partially offset by an increase in the provision for loan losses and
higher noninterest expense.
Allen H. Blake, President and Chief Executive Officer of First Banks,
said, "Our financial performance for the third quarter of 2006 reflects our
ongoing commitment to strengthen earnings through internal strategies
supplemented with growth through acquisitions of banks and other financial
service companies in our target markets. We continue our efforts to improve
asset quality and have realized a 13% reduction in nonperforming assets during
the year. Our net interest income for the quarter increased 20% over the same
quarter last year, reflective of a 45 basis point increase in our net interest
margin and an 8% increase in our interest-earning assets. Additionally, we
recently expanded our use of derivative financial instruments in conjunction
with planned hedging strategies associated with our interest rate risk
management program." Mr. Blake added, "Fees associated with our insurance
brokerage subsidiary acquired in early 2006 contributed to an increase in our
noninterest income. While our acquisition activity in 2005 and 2006 has greatly
expanded our banking franchise in several key dynamic market areas, this growth
has also resulted in higher overall expense levels associated with expansion of
our branch office network and employee base."
First Banks expanded its banking franchise in southern California with
the acquisition of San Diego Community Bank in Chula Vista, California on August
15, 2006, adding three additional branch offices in the San Diego market area.
First Banks also completed its acquisition of TeamCo, Inc., the parent company
of Oak Lawn Bank, in Oak Lawn, Illinois on August 31, 2006, adding two
additional branch offices in the Chicago market area. Furthermore, First Banks
announced plans during the quarter to acquire three branch offices of MidAmerica
National Bank in central Illinois, which will expand its presence in Peoria and
add one branch office in Bloomington, and announced plans to acquire one branch
office of First Bank of Beverly Hills, in Beverly Hills, California.
The Company's assets increased $590.4 million to $9.76 billion at
September 30, 2006, from $9.17 billion at December 31, 2005, primarily
attributable to growth through acquisitions in the Company's target markets as
well as internal growth. Loans, net of unearned discount, increased $696.7
million to $7.72 billion at September 30, 2006, from $7.02 billion at December
31, 2005, reflecting internal loan growth and the addition of $391.0 million of
loans associated with the Company's acquisitions. This increase in loans was
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 during the first and
second quarters of 2006, and the sale of $100.0 million of certain other
residential mortgage loans during the third quarter of 2006. The Company's
investment portfolio declined $163.5 million to $1.18 billion at September 30,
2006, from $1.34 billion at December 31, 2005, primarily attributable to
maturities and the sale of securities associated with the termination of $200.0
million of term repurchase agreements to better position the overall interest
rate risk profile, partially offset by an increase associated with the loan
securitization previously discussed and an increase in the trading portfolio.
Deposits increased $557.0 million to $8.10 billion at September 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 Company's
acquisition activity in 2006, which added $271.3 million of deposits. A decline
in other borrowings of $147.0 million to $392.2 million at September 30, 2006
resulted from the net repayment of $39.3 million of Federal Home Loan Bank
advances that were acquired with bank acquisitions and the termination of $200.0
million of term repurchase agreements in the first six months of 2006, partially
offset by the addition of a $100.0 million term repurchase agreement in the
third quarter of 2006. In addition, the Company reduced its notes payable by
$25.0 million during the first nine months of 2006. The reductions in other
borrowings and notes payable were partially offset by an increase in
subordinated debentures, which was attributable to the issuance of $87.6 million
of subordinated debentures in private placements through three newly formed
statutory trusts during the first and second quarters of 2006 to provide
additional capital resources for continued growth.
Net interest income increased to $99.2 million and $285.7 million for
the three and nine months ended September 30, 2006, respectively, compared to
$82.6 million and $238.5 million for the comparable periods in 2005,
representing increases of $16.5 million and $47.2 million, respectively. Net
interest margin increased to 4.45% and 4.39% for the three and nine months ended
September 30, 2006, respectively, compared to 4.00% and 3.97% for the same
periods in 2005. The increased net interest income for the first nine months of
2006 over the comparable period in 2005 is primarily attributable to an increase
in average interest-earning assets and higher yields on those assets stemming
from internal growth, growth through acquisitions and increased interest rates.
The increase in interest income was partially offset by increased interest
expense related to higher deposit balances coupled with higher interest rates
paid on deposits and on short-term and long-term borrowings. Average
interest-earning assets increased to $8.88 billion and $8.74 billion for the
three and nine months ended September 30, 2006, respectively, from $8.22 billion
and $8.06 billion for the comparable periods in 2005, reflecting increases in
average loans of $1.18 billion and $1.09 billion, respectively, partially offset
by decreases in average investment securities of $502.0 million and $427.1
million, respectively. Average deposits increased $805.8 million and $784.6
million for the three and nine months ended September 30, 2006, respectively,
compared to the same periods in 2005.
Nonperforming assets were $86.0 million at September 30, 2006, compared
to $78.5 million at June 30, 2006 and $99.2 million at December 31, 2005.
Nonperforming loans were $79.1 million, or 1.02% of loans, net of unearned
discount, at September 30, 2006, compared to $73.0 million, or 0.96% of loans,
net of unearned discount, at June 30, 2006, and $97.2 million, or 1.38% of
loans, net of unearned discount, at December 31, 2005. The increase in
nonperforming assets during the third quarter of 2006 primarily reflects the
placement of two credit relationships on nonaccrual status, partially offset by
a write-down of $1.1 million on a nonperforming loan that was transferred from
loans held for sale to the loan portfolio. The 13% overall reduction in
nonperforming assets during the first nine months of 2006 primarily resulted
from the sale of approximately $32.5 million of acquired nonperforming loans
that had been transferred to the 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 $12.4 million
nonperforming loan held for sale.
The allowance for loan losses was $149.3 million at September 30, 2006,
compared to $147.4 million and $135.3 million at June 30, 2006 and December 31,
2005, respectively, representing 188.79%, 201.81% and 139.23% of nonperforming
loans, respectively. The Company recorded a provision for loan losses of $2.0
million and $8.0 million for the three and nine months ended September 30, 2006,
respectively, reflecting loan portfolio growth during 2006 and an increase in
nonperforming loans during the second and third quarters of 2006. The Company
recorded a negative provision for loan losses of $8.0 million for the nine
months ended September 30, 2005 commensurate with the decreasing credit risk
that existed in the loan portfolio during that period. The Company did not
record a provision for loan losses for the three months ended September 30,
2005. The Company recorded net loan charge-offs of $1.3 million for the three
months ended September 30, 2006 and net loan recoveries of $772,000 for the nine
months ended September 30, 2006, compared to net loan charge-offs of $1.8
million and $4.7 million for the three and nine months ended September 30, 2005,
respectively. Net loan recoveries for 2006 include 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 held for sale portfolio in December 2005.
Noninterest income was $30.0 million and $81.4 million for the three
and nine months ended September 30, 2006, respectively, compared to $24.9
million and $72.4 million for the comparable periods in 2005, reflecting
increases of 20% and 13%, respectively. Noninterest income for 2006 reflects
increased service charges on deposit accounts and customer service fees related
to higher deposit balances, increased commission fee income associated with the
Company's insurance brokerage agency acquired in March 2006, increased loan
servicing income, primarily attributable to a reduction in impairment charges
associated with small business lending servicing assets, and increased gains on
sales of other assets including a $2.8 million gain recognized in September 2006
on the cash exchange of stock received as settlement in full of a previously
charged-off loan. The increased noninterest income was partially offset by
reduced gains on loans sold and held for sale, including a $1.1 million
write-down of a nonperforming loan held for sale and the transfer of the loan
into the loan portfolio, as previously discussed. Noninterest income also
reflects net gains of $1.6 million and net losses of $2.4 million on investment
securities for the three and nine months ended September 30, 2006, respectively.
Noninterest expense was $80.5 million and $236.3 million for the three
and nine months ended September 30, 2006, respectively, compared to $67.9
million and $201.9 million for the comparable periods in 2005. The Company's
efficiency ratio was 62.30% and 64.38% for the three and nine months ended
September 30, 2006, respectively, compared to 63.06% and 64.93% for the
comparable periods in 2005. The increase in expense levels for 2006 is primarily
attributable to increased salaries and employee benefits expense, occupancy
expense and amortization of intangible assets, and is commensurate with the
Company's significant expansion of its branch office network and employee base
as a result of the 2005 and 2006 acquisitions, branch purchases and de novo
branch openings. This growth reflects the addition of ten branch offices in
2005, the addition of ten branch offices and the acquisition of an insurance
premium finance company and an insurance brokerage agency during the first nine
months of 2006, and a 15% increase in the Company's employee base, on a
full-time equivalent basis, from September 30, 2005 to September 30, 2006.
Salaries and employee benefits expense increased $6.8 million and $21.4 million
for the three and nine months ended September 30, 2006, respectively, compared
to the comparable periods in 2005, and occupancy expenses increased $1.7 million
and $3.9 million for the three and nine months ended September 30, 2006,
respectively, compared to the comparable periods in 2005. In addition to the
Company's continued growth, the overall increase in noninterest expense also
reflects a significantly higher level of charitable contributions.
First Banks had assets of $9.76 billion at September 30, 2006 and
currently operates 186 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 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,
---------------------- ----------------------
2006 2005 2006 2005
---- ---- ---- ----
Interest income.......................................... $ 168,293 127,801 473,258 357,217
Interest expense......................................... 69,109 45,155 187,528 118,671
--------- -------- -------- --------
Net interest income.................................. 99,184 82,646 285,730 238,546
Provision for loan losses................................ 2,000 -- 8,000 (8,000)
--------- -------- -------- --------
Net interest income after provision for loan losses.. 97,184 82,646 277,730 246,546
--------- -------- -------- --------
Noninterest income....................................... 29,994 24,948 81,370 72,354
Noninterest expense...................................... 80,473 67,852 236,339 201,882
--------- -------- -------- --------
Income before provision for income taxes and
minority interest in loss of subsidiary.......... 46,705 39,742 122,761 117,018
Provision for income taxes............................... 17,249 13,265 42,452 41,568
--------- -------- -------- --------
Income before minority interest in
loss of subsidiary............................... 29,456 26,477 80,309 75,450
Minority interest in loss of subsidiary.................. (204) (1,036) (440) (1,036)
--------- -------- -------- --------
Net income........................................... $ 29,660 27,513 80,749 76,486
========= ======== ======== ========
Basic earnings per common share.......................... $1,245.28 1,154.52 3,390.62 3,210.44
========= ======== ======== ========
Diluted earnings per common share........................ $1,231.06 1,139.46 3,347.84 3,163.13
========= ======== ======== ========
Selected Financial Data
September 30, December 31,
2006 2005
---- ----
Total assets.......................................................... $9,760,688 9,170,333
Investment securities................................................. 1,177,236 1,340,783
Loans, net of unearned discount....................................... 7,717,470 7,020,771
Allowance for loan losses............................................. 149,310 135,330
Deposits.............................................................. 8,098,863 7,541,831
Other borrowings...................................................... 392,210 539,174
Notes payable......................................................... 75,000 100,000
Subordinated debentures............................................... 304,547 215,461
Stockholders' equity.................................................. 763,883 678,938
Nonperforming assets.................................................. 86,012 99,221
Selected Financial Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2006 2005 2006 2005
---- ---- ---- ----
Return on average assets................................. 1.22% 1.23% 1.14% 1.17%
Return on average equity................................. 16.01 16.61 15.08 16.26
Net interest margin...................................... 4.45 4.00 4.39 3.97
Efficiency ratio......................................... 62.30 63.06 64.38 64.93