Exhibit 99
First Banks, Inc.
St. Louis, Missouri
Contacts: Terrance M. McCarthy Lisa K. Vansickle
President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
First Banks, Inc. First Banks, Inc.
(314) 592-5000 (314) 592-5000
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 2007 Earnings
St. Louis, Missouri, April 26, 2007. First Banks, Inc. ("First Banks"
or the "Company") reported earnings of $19.2 million for the three months ended
March 31, 2007, compared to $29.0 million for the comparable period in 2006.
Return on average assets and return on average stockholders' equity for the
first quarter of 2007 were 0.77% and 9.62%, respectively, compared to 1.26% and
16.91% for the comparable period in 2006.
Terrance M. McCarthy, President and Chief Executive Officer of First
Banks, said, "Our financial results for the first quarter of 2007 compared to
the same period last year reflect the impact of higher noninterest expense
levels, compression of our net interest margin and an increase in the provision
for loan losses. Our net interest margin declined 15 basis points to 4.15% for
the first quarter of 2007 compared to 4.30% for the same quarter last year
primarily resulting from increased interest expense on our deposit portfolio
driven by highly competitive pricing within our markets." Noninterest expenses
increased $10.9 million to $85.7 million for the first quarter of 2007 from
$74.8 million for the same period last year. Mr. McCarthy commented, "Our
increased noninterest expense levels were anticipated and are commensurate with
the significant expansion of our banking franchise during 2006 and 2007 through
the acquisitions of banks and other financial service companies in our key
markets and the opening of three de novo branch offices during the first quarter
of 2007. Furthermore, while we successfully reduced our nonperforming assets by
44% during 2006, we experienced an increase in our nonperforming assets of
nearly 29% during the first quarter of 2007, primarily due to deterioration in
two residential construction projects and repurchases of certain residential
mortgage loans by our mortgage banking operation resulting from current market
conditions within the industry. We will continue our efforts throughout 2007 to
reduce the level of our nonperforming assets, while we work to control
noninterest expense levels, grow fee income and strengthen our net interest
margin." Mr. McCarthy added, "During the quarter, we significantly expanded our
banking franchise in Houston, Texas, with the completion of our acquisition of
Royal Oaks Bancshares, Inc. and its wholly owned banking subsidiary, Royal Oaks
Bank, ssb, on February 28, 2007. This transaction added $206.9 million in assets
and six branch banking offices."
Total assets increased $226.6 million to $10.39 billion at March 31,
2007, from $10.16 billion at December 31, 2006, primarily attributable to
acquisition growth as well as organic growth. Loans, net of unearned discount,
increased $265.6 million to $7.93 billion at March 31, 2007, from $7.67 billion
at December 31, 2006, reflecting internal growth and the addition of $175.5
million of loans associated with the acquisition of Royal Oaks Bank. The
investment portfolio decreased $197.7 million during the first quarter of 2007
to $1.27 billion at March 31, 2007, primarily as a result of maturities of
investment securities, and the reinvestment of these funds in short-term
investments, which increased $142.0 million during the first quarter of 2007.
Deposits increased $257.4 million to $8.70 billion at March 31, 2007, from $8.44
billion at December 31, 2006, reflecting growth in savings and money market
deposits through enhanced product campaigns, as well as growth in time deposits.
The acquisition of Royal Oaks Bank provided total deposits of $159.1 million.
The Company reduced its notes payable by $25.0 million during the first quarter
of 2007 through principal repayments and on February 23, 2007, the Company
issued $25.8 million of subordinated debentures in a private placement through a
newly formed statutory trust to provide supplementary capital resources for
continued growth and general corporate purposes.
Net interest income increased to $94.9 million for the three months
ended March 31, 2007, compared to $90.9 million for the comparable period in
2006. Net interest margin declined to 4.15% for the three months ended March 31,
2007, compared to 4.30% for the same period in 2006. The decrease in net
interest margin during the first quarter of 2007 primarily resulted from an
increase in higher priced deposits driven by competitive conditions within the
market. The average rates paid on interest-bearing deposits increased 88 basis
points to 3.68% for the first three months of 2007, from 2.80% for the same
period in 2006, while the average yield earned on interest-earning assets
increased 55 basis points to 7.51% for the first quarter of 2007, from 6.96% for
the same period in 2006, contributing to a compression of the Company's net
interest margin. Average interest-earning assets increased $695.5 million, or
8%, to $9.30 billion for the three months ended March 31, 2007, from $8.61
billion for the comparable period in 2006, reflecting an increase in average
loans of $665.8 million and an increase in average short-term investments of
$51.8 million, partially offset by a decrease in average investment securities
of $22.1 million. Average deposits increased $743.9 million for the three months
ended March 31, 2007, compared to the same period in 2006. Average other
borrowings and notes payable, in aggregate, decreased $136.4 million for the
three months ended March 31, 2007, and average subordinated debentures increased
$80.1 million for the three months ended March 31, 2007, compared to the same
period in 2006, reflecting a decrease of $56.3 million in the overall level of
short-term and long term borrowings.
Nonperforming assets were $71.0 million at March 31, 2007, compared to
$55.2 million at December 31, 2006. Nonperforming loans were $62.5 million, or
0.79% of loans, net of unearned discount, at March 31, 2007, compared to $48.7
million, or 0.64% of loans, net of unearned discount, at December 31, 2006. The
increase in nonperforming loans primarily resulted from the deterioration of two
residential construction projects totaling $10.2 million and the placement of
these credits on nonaccrual status. The increase also resulted from increased
levels of delinquencies within the Company's one-to-four family residential
portfolio driven by current market conditions and repurchases of certain
residential mortgage loans sold with recourse that were placed back into the
Company's one-to-four family residential loan portfolio, as well as the global
impact of sub-prime products experienced throughout the mortgage banking
industry. The Company's involvement in the sub-prime market has been limited to
origination and subsequent sale of these loans in the secondary market. In March
2007, the Company recognized loan charge-offs of $3.5 million in conjunction
with the transfer of approximately $17.5 million of repurchased residential
mortgage loans to the loans held for sale portfolio, including approximately
$13.1 million of loans on nonaccrual status.
The allowance for loan losses was $142.1 million at March 31, 2007,
compared to $145.7 million at December 31, 2006, representing 1.79% and 1.90% of
loans, net of unearned discount, respectively, and 227.37% and 299.05% of
nonperforming loans, respectively. The Company recorded a provision for loan
losses of $3.5 million and $1.0 million for the three months ended March 31,
2007 and 2006, respectively. The increase in the provision for loan losses in
2007 was driven by increased loan charge-offs, an increase in nonperforming
loans and growth within the loan portfolio. The Company recorded net loan
charge-offs of $10.0 million for the first three months of 2007, including $5.5
million of charge-offs associated with the one-to-four family residential
portfolio, of which $3.5 million was recorded in conjunction with the transfer
of certain repurchased residential mortgage loans to the loans held for sale
portfolio, as previously discussed. Net loan charge-offs for 2007 also include a
charge-off of $2.5 million on a residential development and construction credit
relationship. The Company recorded net loan recoveries of $3.3 million for the
first three months of 2006, primarily as a result of a $5.0 million recovery on
the payoff of a single nonperforming loan.
Noninterest income was $24.6 million and $25.5 million for the three
months ended March 31, 2007 and 2006, respectively. Noninterest income for the
first quarter of 2007 reflects commission fee income of $1.7 million associated
with the Company's insurance brokerage agency acquired on March 31, 2006. The
decline in noninterest income reflects significantly reduced gains on loans sold
and held for sale and reduced fee income from the Company's institutional money
management subsidiary. Gains on loans sold and held for sale for the first
quarter of 2006 include a $1.7 million gain on the sale of certain nonperforming
loans and $1.2 million of increased loan servicing income generated from the
capitalization of mortgage servicing rights related to the securitization of
$77.1 million of residential mortgage loans. Noninterest income for the first
quarter of 2006 also includes a $1.5 million gain on the sale of a parcel of
other real estate, partially offset by a $2.4 million pre-tax loss on the sale
of investment securities in conjunction with the termination of $150.0 million
of term repurchase agreements.
Noninterest expense was $85.7 million and $74.8 million for the three
months ended March 31, 2007 and 2006, respectively. The increased expense levels
were commensurate with the Company's significant expansion of its branch office
network and employee base following the completion of numerous acquisitions of
banks and branch offices in 2006 and 2007, the acquisition of an insurance
premium financing company and an insurance brokerage agency in 2006, and the
opening of three de novo branch offices in 2007. First Banks' full-time
equivalent employee base increased nearly 16% from March 31, 2006 to March 31,
2007 and its acquisition and de novo activities during 2006 and 2007 added an
aggregate of 21 branch offices. The primary increases in noninterest expenses
included salaries and employee benefits expenses, which increased $5.7 million;
occupancy and furniture and equipment expenses, which increased $1.8 million;
and amortization of intangible assets, which increased $1.4 million.
First Banks had assets of $10.39 billion at March 31, 2007 and
currently operates 196 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
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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,
---------------------------
2007 2006
---- ----
Interest income..................................................... $ 171,827 147,234
Interest expense.................................................... 76,966 56,368
--------- --------
Net interest income............................................. 94,861 90,866
Provision for loan losses........................................... 3,500 1,000
--------- --------
Net interest income after provision for loan losses............. 91,361 89,866
--------- --------
Noninterest income.................................................. 24,583 25,497
Noninterest expense................................................. 85,701 74,815
--------- --------
Income before provision for income taxes and
minority interest in income (loss) of subsidiary............ 30,243 40,548
Provision for income taxes.......................................... 10,950 11,703
--------- --------
Income before minority interest in income (loss) of subsidiary.. 19,293 28,845
Minority interest in income (loss) of subsidiary.................... 70 (158)
--------- --------
Net income...................................................... $ 19,223 29,003
========= ========
Basic earnings per common share..................................... $ 804.12 1,217.49
========= ========
Diluted earnings per common share................................... $ 799.23 1,202.46
========= ========
Selected Financial Data
March 31, December 31,
2007 2006
---- ----
Total assets........................................................ $10,385,356 10,158,714
Investment securities............................................... 1,267,285 1,464,946
Loans, net of unearned discount..................................... 7,932,129 7,666,481
Allowance for loan losses........................................... 142,148 145,729
Goodwill and other intangible assets................................ 319,537 295,382
Deposits............................................................ 8,700,470 8,443,086
Other borrowings.................................................... 374,827 373,899
Notes payable....................................................... 40,000 65,000
Subordinated debentures............................................. 327,921 297,966
Stockholders' equity................................................ 826,180 800,435
Nonperforming assets................................................ 71,023 55,163
Selected Financial Ratios
Three Months Ended
March 31,
------------------------
2007 2006
---- ----
Return on average assets............................................ 0.77% 1.26%
Return on average equity............................................ 9.62 16.91
Net interest margin................................................. 4.15 4.30
Efficiency ratio.................................................... 71.75 64.29