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 Second Quarter 2007 Earnings
St. Louis, Missouri, July 26, 2007. First Banks, Inc. ("First Banks" or
the "Company") reported earnings of $19.8 million for the three months ended
June 30, 2007, compared to $19.2 million for the three months ended March 31,
2007, and $22.1 million for the three months ended June 30, 2006. The Company
reported earnings of $39.0 million for the six months ended June 30, 2007,
compared to $51.1 million for the comparable period in 2006. The Company's
return on average assets for the three and six months ended June 30, 2007 was
0.76% and 0.77%, respectively, compared to 0.94% and 1.10% for the comparable
periods in 2006, and the Company's return on average stockholders' equity was
9.50% and 9.56% for the three and six months ended June 30, 2007, respectively,
compared to 12.35% and 14.58% for the comparable periods in 2006. The Company's
return on average assets and return on average stockholders' equity for the
three months ended March 31, 2007 were 0.77% and 9.62%, respectively.
Terrance M. McCarthy, President and Chief Executive Officer of First
Banks, said, "Our financial results for the second quarter of 2007 compared to
the same period last year reflect compression of net interest margin due
primarily to increased deposit costs, competitive pressures on loan yields,
along with impacts from the inverted yield curve. In addition, the quarter was
negatively impacted by higher noninterest expense levels related to recent
acquisitions and expansionary activities."
Net interest income increased to $96.8 million and $191.6 million for
the three and six months ended June 30, 2007, respectively, compared to $95.7
million and $186.5 million for the comparable periods in 2006 reflecting an
increase in average interest-earning assets offset by a compression in the net
interest margin and an increase in average interest-bearing liabilities. Net
interest margin declined to 4.09% and 4.12% for the three and six months ended
June 30, 2007, compared to 4.41% and 4.36% for the same periods in 2006. The
decrease in net interest margin primarily resulted from an increase in higher
priced deposits driven by competitive conditions within the Company's markets as
well as the inverted yield curve. The average rates paid on interest-bearing
deposits increased 62 and 75 basis points for the three and six months ended
June 30, 2007, respectively, compared to the same periods in 2006, while the
average yield earned on interest-earning assets increased 22 and 38 basis points
for the three and six months ended June 30, 2007, respectively, from the same
periods in 2006, contributing to a reduction of the Company's net interest
margin.
The provision for loan losses increased to $5.5 million and $9.0
million for the three and six months ended June 30, 2007, respectively, compared
to $5.0 million and $6.0 million for the comparable periods in 2006. The
increase in the provision for loan losses was primarily driven by loan growth
along with increased net loan charge-offs and a decline in asset quality related
to our one-to-four family residential loan portfolio. The allowance for loan
losses was $142.9 million at June 30, 2007, compared to $145.7 million at
December 31, 2006, representing 1.79% and 1.90% of loans, net of unearned
discount, respectively, and 225.19% and 299.05% of nonperforming loans,
respectively. The Company recorded net loan charge-offs of $4.7 million and
$14.7 million for the three and six months ended June 30, 2007, respectively,
compared to net loan charge-offs of $1.2 million and net loan recoveries of $2.1
million for the comparable periods in 2006. Net loan charge-offs for the three
and six months ended June 30, 2007 include $3.2 million and $8.7 million,
respectively, of charge-offs associated with the Company's one-to-four family
residential portfolio. Net loan charge-offs for the six months ended June 30,
2007 include charge-offs of $4.3 million recorded in conjunction with the
transfer of certain repurchased and other nonperforming residential mortgage
loans to the loans held for sale portfolio and subsequent sale in April 2007
resulting in a pre-tax gain of $851,000. Net loan charge-offs for the six months
ended June 30, 2007 also include a charge-off of $2.5 million during the first
quarter of 2007 on a residential development and construction credit
relationship. The Company recorded net loan recoveries of $2.1 million for the
first six months of 2006, primarily as a result of a $5.0 million recovery on
the payoff of a single nonperforming loan. Mr. McCarthy commented, "In early
2007, we made the decision to discontinue originating and selling sub-prime
loans as a result of the unstable market conditions surrounding these loan
products. While we have experienced a higher level of charge-offs related to our
one-to-four family residential loan portfolio during the first six months of
2007, our recourse risk on sub-prime loans that we previously sold in the
secondary market expires throughout the remainder of 2007."
Nonperforming loans were $63.5 million, or 0.79% of loans, net of
unearned discount, at June 30, 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 an increase of $8.3 million within
the Company's one-to-four family residential portfolio to $27.2 million at June
30, 2007 compared to $18.9 million at December 31, 2006 driven by current market
conditions and repurchases of certain residential mortgage loans sold with
recourse that were placed back into the Company's loan portfolio, as well as the
overall impact of sub-prime products experienced throughout the mortgage banking
industry. The Company's involvement in the sub-prime market has been
specifically limited to origination and subsequent sale of these loan products
in the secondary market. The increase in nonperforming loans is also
attributable to an increase of $7.7 million within the Company's land
acquisition, development and construction loan portfolio to $21.0 million at
June 30, 2007 compared to $13.3 million at December 31, 2006, resulting from a
slowdown in home sales and real estate values in many of the Company's markets.
Noninterest income decreased to $24.0 million and $48.6 million for the
three and six months ended June 30, 2007, respectively, compared to $25.9
million and $51.4 million for the comparable periods in 2006 primarily due to a
decline in mortgage banking revenues including significantly reduced gains on
loans sold and held for sale. The gain on loans sold and held for sale decreased
to $4.6 million and $8.5 million for the three and six months ended June 30,
2007 compared to $6.1 million and $12.9 million for the same periods in 2006 due
primarily to a decrease in volume of loans originated and sold. Gains on loans
sold and held for sale for the six months ended June 30, 2006 also include a
$1.7 million gain on the sale of certain nonperforming loans and $2.1 million of
increased loan servicing income generated from the capitalization of mortgage
servicing rights related to the securitization of $138.9 million of residential
mortgage loans. The overall decline in noninterest income was partially offset
by increased revenue from service charges on deposits and customer service fees
generated by higher deposit levels and changes in the overall mix of the
Company's deposit portfolio; and increased insurance fee and commission income
generated through the Company's recently acquired subsidiaries purchased in
March and May of 2006.
Noninterest expenses increased to $84.4 million and $170.1 million for
the three and six months ended June 30, 2007, respectively, compared to $81.1
million and $155.9 million for the same periods in 2006. 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 acquisition of banks and other financial service companies in our
key markets and the opening of five de novo branch offices during the first six
months of 2007. We have been taking steps, however, to reduce the level of our
noninterest expenses and improve our operating efficiency, as evidenced by an
improvement in our efficiency ratio from 71.75% for the three months ended March
31, 2007 to 69.89% for the three months ended June 30, 2007." First Banks'
acquisition and de novo activities during 2006 and 2007 added an aggregate of 23
branch offices. The primary increases in noninterest expenses included salaries
and employee benefits expenses, which increased to $43.7 million and $89.0
million for the three and six months ended June 30, 2007, respectively, from
$42.6 million and $82.1 million for the same periods last year; occupancy and
furniture and equipment expenses, which increased to $12.4 million and $24.4
million from $10.5 million and $20.7 million, respectively; and amortization of
intangible assets, which increased to $3.2 million and $6.2 million from $1.7
million and $3.2 million, respectively.
Total assets increased $320.0 million to $10.48 billion at June 30,
2007, from $10.16 billion at December 31, 2006, and increased $863.5 million
from $9.62 billion at June 30, 2006. The Company's acquisition of Royal Oaks
Bancshares, Inc. and its wholly owned banking subsidiary, Royal Oaks Bank, ssb,
("Royal Oaks") on February 28, 2007, provided $206.9 million in assets and six
branch banking offices. Loans, net of unearned discount, increased to $7.99
billion at June 30, 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.
Total liabilities increased $288.2 million to $9.65 billion at June 30,
2007 from $9.36 billion at December 31, 2006. Deposits increased to $8.75
billion at June 30, 2007, from $8.44 billion at December 31, 2006, primarily as
a result of growth in savings and money market deposits through enhanced product
campaigns. The acquisition of Royal Oaks provided deposits of $159.1 million.
The Company also reduced its notes payable by $30.0 million during the first six
months of 2007 through principal repayments.
Total stockholders' equity increased to $832.3 million at June 30, 2007
from $800.4 million at December 31, 2006. The increase is a result of net income
of $39.0 million and a cumulative effect of change in accounting principle of
$2.5 million partially offset by dividends of $328,000 and an increase in
accumulated other comprehensive loss of $9.3 million attributable to a decline
in the fair value of the Company's investment securities portfolio.
First Banks had assets of $10.48 billion at June 30, 2007 and currently
operates 197 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 subsequent 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, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
---- ---- ---- ---- ----
Interest income...................................... $177,319 171,827 157,731 349,146 304,965
Interest expense..................................... 80,548 76,966 62,051 157,514 118,419
-------- -------- -------- -------- --------
Net interest income.............................. 96,771 94,861 95,680 191,632 186,546
Provision for loan losses............................ 5,500 3,500 5,000 9,000 6,000
-------- -------- -------- -------- --------
Net interest income after provision for
loan losses.................................. 91,271 91,361 90,680 182,632 180,546
-------- -------- -------- -------- --------
Noninterest income................................... 24,037 24,583 25,879 48,620 51,376
Noninterest expense.................................. 84,435 85,701 81,051 170,136 155,866
-------- -------- -------- -------- --------
Income before provision for income taxes and
minority interest in income (loss) of
subsidiary................................... 30,873 30,243 35,508 61,116 76,056
Provision for income taxes........................... 11,092 10,950 13,500 22,042 25,203
-------- -------- -------- -------- --------
Income before minority interest in income
(loss) of subsidiary......................... 19,781 19,293 22,008 39,074 50,853
Minority interest in income (loss) of subsidiary..... 31 70 (78) 101 (236)
-------- -------- -------- -------- --------
Net income....................................... $ 19,750 19,223 22,086 38,973 51,089
======== ======== ======== ======== ========
Basic earnings per common share...................... $ 829.17 804.12 927.86 1,633.29 2,145.35
======== ======== ======== ======== ========
Diluted earnings per common share.................... $ 821.63 799.23 916.31 1,620.45 2,118.11
======== ======== ======== ======== ========
Selected Financial Data
June 30, December 31, June 30,
2007 2006 2006
---- ---- ----
Total assets...................................................... $10,478,735 10,158,714 9,615,227
Investment securities............................................. 1,353,491 1,464,946 1,187,059
Loans, net of unearned discount................................... 7,988,576 7,666,481 7,600,591
Allowance for loan losses......................................... 142,922 145,729 147,383
Goodwill and other intangible assets.............................. 317,786 295,382 258,895
Deposits.......................................................... 8,753,394 8,443,086 8,065,945
Other borrowings.................................................. 434,971 373,899 327,996
Notes payable..................................................... 35,000 65,000 85,000
Subordinated debentures........................................... 302,166 297,966 304,270
Stockholders' equity.............................................. 832,295 800,435 719,373
Nonperforming assets.............................................. 71,508 55,163 78,490
Selected Financial Ratios
Three Months Ended Six Months Ended
------------------------------ ------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
---- ---- ---- ---- ----
Return on average assets............................. 0.76% 0.77% 0.94% 0.77% 1.10%
Return on average equity............................. 9.50 9.62 12.35 9.56 14.58
Net interest margin.................................. 4.09 4.15 4.41 4.12 4.36
Efficiency ratio..................................... 69.89 71.75 66.68 70.82 65.51