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 Fourth Quarter And Year-End 2007 Results
St. Louis, Missouri, January 23, 2008. First Banks, Inc. ("First Banks"
or the "Company") reported earnings of $3.3 million for the three months ended
December 31, 2007, compared to earnings of $15.0 million for the three months
ended September 30, 2007, and $30.9 million for the three months ended December
31, 2006. The Company reported earnings of $57.2 million for the year ended
December 31, 2007, compared to $111.7 million in 2006. The financial results for
the three months and year ended December 31, 2007 compared to the three months
and year ended December 31, 2006 reflect the following:
>> A provision for loan losses of $49.0 million and $75.0 million
for the three months and year ended December 31, 2007,
respectively, compared to $4.0 million and $12.0 million for the
comparable periods in 2006;
>> A decline in the net interest margin to 3.91% and 4.07% for the
three months and year ended December 31, 2007, respectively,
compared to 4.27% and 4.36% for the comparable periods in 2006;
>> Gain on loans sold and held for sale of $2.0 million and $14.1
million for the three months and year ended December 31, 2007,
respectively, compared to $8.5 million and $26.0 million for the
comparable periods in 2006;
>> Noninterest expense of $89.6 million and $344.3 million for the
three months and year ended December 31, 2007, respectively,
compared to $82.9 million and $319.2 million for the comparable
periods in 2006; and
>> A provision (benefit) for income taxes reflecting an income tax
benefit of $20.0 million and income tax expense of $10.2 million
for the three months and year ended December 31, 2007,
respectively, compared to income tax expense of $12.6 million and
$55.1 million for the comparable periods in 2006.
Terrance M. McCarthy, President and Chief Executive Officer of First
Banks, said, "We faced a very challenging banking environment throughout 2007
with the decline in the real estate market and compression in our net interest
margin. While we believe we have aggressively addressed these risks from a
financial and risk management perspective, we anticipate 2008 will also be a
challenging year until the real estate market recovers and our net interest
margin stabilizes. We did, however, implement a number of steps to improve our
operating performance in the future through certain profit improvement
initiatives. In addition, we entered the Florida marketplace with our
acquisition of Coast Financial Holdings, Inc. and its wholly owned subsidiary,
Coast Bank of Florida (collectively, "Coast"), on November 30, 2007. The
acquisition of Coast provides us with a strong retail branch presence in Florida
and additional growth opportunities in future periods."
Net interest income was $94.0 million and $383.5 million for the three
months and year ended December 31, 2007, respectively, compared to $98.7 million
and $384.4 million for the comparable periods in 2006. Net interest margin
declined to 3.91% and 4.07% for the three months and year ended December 31,
2007, compared to 4.27% 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 competitive pressures on loan yields. The average rates paid on
interest-bearing deposits increased 3 and 46 basis points to 3.60% and 3.67% for
the three months and year ended December 31, 2007, respectively, compared to
3.57% and 3.21% for the same periods in 2006, while the average yield earned on
interest-earning assets decreased 31 basis points to 7.17% for the three months
ended December 31, 2007 and increased 10 basis points to 7.41% for the year
ended December 31, 2007, compared to 7.48% and 7.31% for the same periods in
2006.
The provision for loan losses increased to $49.0 million and $75.0
million for the three months and year ended December 31, 2007, respectively,
compared to $4.0 million and $12.0 million for the comparable periods in 2006.
The increase in the provision for loan losses was primarily driven by increased
net loan charge-offs and a decline in asset quality related to the Company's
one-to-four family residential mortgage and land acquisition, development and
construction loan portfolios. The allowance for loan losses was $168.4 million
at December 31, 2007, compared to $145.7 million at December 31, 2006,
representing 1.90% of loans, net of unearned discount, at both dates. The
Company recorded net loan charge-offs of $32.3 million and $66.8 million for the
three months and year ended December 31, 2007, respectively, compared to net
loan charge-offs of $7.6 million and $6.8 million for the comparable periods in
2006. Net loan charge-offs for the three months and year ended December 31, 2007
include $20.5 million and $40.9 million, respectively, of net charge-offs
associated with the Company's one-to-four family residential loan portfolio. The
Company sold $59.6 million of nonperforming one-to-four family residential
mortgage loans during 2007, resulting in total charge-offs of $23.3 million, of
which $14.5 million was recorded in the fourth quarter. Net loan charge-offs
also include charge-offs of $7.6 million recorded during the third quarter of
2007 associated with the sale of certain commercial loans which resulted in
sales proceeds of $33.5 million. Mr. McCarthy commented, "Throughout 2007, we
encountered considerable distress in our one-to-four family residential loan
portfolio as a result of the unstable market conditions surrounding sub-prime
loan products. We took aggressive steps throughout 2007 to mitigate our risk to
sub-prime loans, including discontinuing the origination and sale of these loans
in early 2007 as well as consummating three loan sales. We also continue to see
declining market conditions in our land acquisition, development and
construction loan portfolio, particularly in Northern California, resulting in
increased developer inventories, slower lot and home sales, and declining market
values. All of these factors have led to increased risk in our loan portfolio
thereby contributing to a significant increase in our provision for loan
losses."
Nonperforming loans were $202.2 million, or 2.28% of loans, net of
unearned discount, at December 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 is primarily due to an increase in nonperforming loans in
the Company's Northern California real estate portfolio to $99.2 million at
December 31, 2007 from $7.9 million at December 31, 2006. The other primary
factor contributing to the increase is the Coast acquisition, which added
nonperforming loans of $45.1 million. Nonperforming residential mortgage loans,
excluding Coast, were $26.4 million at December 31, 2007, and included $6.6
million of sub-prime loans, which represented approximately 12.1% of the
Company's remaining $54.8 million sub-prime residential mortgage loan portfolio.
Mr. McCarthy commented, "We have made substantial efforts to appropriately
capture the problem loans within our loan portfolio. We expect our nonperforming
loans to remain at higher-than-historical levels for the next few quarters but
are focused on reducing the level of such loans throughout 2008."
Noninterest income decreased to $27.8 million and $103.3 million for
the three months and year ended December 31, 2007, respectively, compared to
$31.6 million and $112.9 million for the comparable periods in 2006, primarily
resulting from 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 $2.0 million and $14.1 million for the three months and
year ended December 31, 2007, respectively, compared to $8.5 million and $26.0
million for the same periods in 2006, due primarily to a decrease in the volume
of loans originated and sold. The decrease in volume is primarily attributable
to the discontinuation of the origination and subsequent sale of sub-prime loans
in February of 2007. 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; increased insurance fee and commission
income generated through the Company's subsidiaries purchased in March and May
of 2006; a gain on the sale of the Company's Denton and Garland, Texas branches
of $1.0 million completed in the third quarter of 2007; and a decrease in losses
on sales of investment securities.
Noninterest expenses increased to $89.6 million and $344.3 million for
the three months and year ended December 31, 2007, respectively, compared to
$82.9 million and $319.2 million for the same periods in 2006. First Banks'
acquisition and de novo expansion activities during 2006 and 2007 added an
aggregate of 46 branch offices. Mr. McCarthy commented, "We have been focused on
controlling our noninterest expenses despite 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 eight de
novo branch offices during 2007. Our efficiency ratio improved from 71.75% for
the first quarter of 2007 to 69.89% and 67.79% for the second and third quarters
of 2007, respectively, before increasing to 73.56% during the fourth quarter of
2007 as a result of the acquisition of Coast and certain other nonrecurring
expenses incurred in the fourth quarter primarily related to profit improvement
initiatives and other items. Despite the significant expansion of our banking
franchise, we were able to reduce salaries and benefits expense levels by 4.4%
for the fourth quarter of 2007 compared to the same period last year, and
overall, these expenses increased by a modest 3.4% in 2007 compared to 2006. We
are working on additional profit improvement initiatives aimed at reducing the
level of our noninterest expenses throughout 2008." The primary increases in
noninterest expenses included occupancy and furniture and equipment expenses,
which increased to $14.7 million and $52.4 million, from $12.0 million and $43.9
million, respectively; and amortization of intangible assets, which increased to
$3.1 million and $12.4 million, from $2.8 million and $8.2 million,
respectively.
The Company recorded a benefit for income taxes of $20.0 million for
the three months ended December 31, 2007, and a provision for income taxes of
$10.2 million for the year ended December 31, 2007, compared to provisions for
income taxes of $12.6 million and $55.1 million for the comparable periods in
2006. The decrease in the provision (benefit) for income taxes is primarily due
to reduced earnings for the three months and year ended December 31, 2007
compared to the same periods in 2006 as well as the reversal of a portion of the
Company's deferred tax asset valuation allowance during the three months ended
December 31, 2007 which had the effect of reducing the provision (benefit) for
income taxes by $10.7 million. The reversal of the deferred tax asset valuation
allowance was necessitated by a reduction in the allowance for loan losses
allocated to certain loans acquired in 2004 as a result of final resolution of
the loans through repayment, sale or other means.
Total assets increased $738.6 million to $10.90 billion at December 31,
2007, from $10.16 billion at December 31, 2006. The Company's acquisition of
Royal Oaks Bancshares, Inc. ("Royal Oaks") on February 28, 2007, provided $206.9
million in assets and six branch banking offices. The Company's acquisition of
Coast on November 30, 2007 provided $660.4 million in assets and 20 branch
banking offices. Loans, net of unearned discount, increased to $8.88 billion at
December 31, 2007, from $7.67 billion at December 31, 2006, reflecting internal
growth and the addition of $175.5 million and $518.0 million of loans associated
with the acquisitions of Royal Oaks and Coast, respectively.
Total liabilities increased $671.6 million to $10.03 billion at
December 31, 2007 from $9.36 billion at December 31, 2006. Deposits increased to
$9.15 billion at December 31, 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 and growth in certificates of deposit resulting from
the Coast acquisition, partially offset by a decline in checking accounts. The
acquisitions of Royal Oaks and Coast provided deposits of $159.1 million and
$628.1 million, respectively. Subordinated debentures increased $55.8 million
primarily due to three separate issuances of trust preferred securities during
the third quarter of 2007 aggregating $51.5 million. The Company also reduced
its notes payable by $26.0 million during 2007.
Total stockholders' equity increased to $867.5 million at December 31,
2007 from $800.4 million at December 31, 2006. The increase reflects net income
of $57.2 million, a cumulative effect of change in accounting principle of $2.5
million, and a decrease in accumulated other comprehensive loss of $8.1 million,
partially offset by dividends of $786,000.
First Banks had assets of $10.90 billion at December 31, 2007 and
currently operates 218 branch banking offices in California, Florida, 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 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 Year Ended
------------------------------------------ ----------------------------
December 31, September 30, December 31, December 31, December 31,
2007 2007 2006 2007 2006
---- ---- ---- ---- ----
Interest income............................. $172,662 178,105 173,046 699,913 646,304
Interest expense............................ 78,688 80,259 74,334 316,461 261,862
-------- -------- -------- -------- --------
Net interest income...................... 93,974 97,846 98,712 383,452 384,442
Provision for loan losses................... 49,000 17,000 4,000 75,000 12,000
-------- -------- -------- -------- --------
Net interest income after provision
for loan losses........................ 44,974 80,846 94,712 308,452 372,442
-------- -------- -------- -------- --------
Noninterest income.......................... 27,809 26,840 31,573 103,269 112,943
Noninterest expense......................... 89,585 84,529 82,877 344,250 319,216
-------- -------- -------- -------- --------
Income (loss) before provision (benefit)
for income taxes and minority interest
in income (loss) of subsidiary......... (16,802) 23,157 43,408 67,471 166,169
Provision (benefit) for income taxes........ (19,970) 8,087 12,610 10,159 55,062
-------- -------- -------- -------- --------
Income before minority interest in
income (loss) of subsidiary............ 3,168 15,070 30,798 57,312 111,107
Minority interest in income (loss)
of subsidiary.......................... (97) 74 (147) 78 (587)
-------- -------- -------- -------- --------
Net income............................... $ 3,265 14,996 30,945 57,234 111,694
======== ======== ======== ======== ========
Basic earnings per common share............. $ 126.91 625.48 1,296.75 2,385.68 4,687.38
======== ======== ======== ======== ========
Diluted earnings per common share........... $ 126.91 623.84 1,285.63 2,379.45 4,630.72
======== ======== ======== ======== ========
Selected Financial Data
December 31, September 30, December 31,
2007 2007 2006
---- ---- ----
Total assets......................................................... $10,897,360 10,272,036 10,158,714
Investment securities................................................ 1,019,271 1,165,517 1,464,946
Loans, net of unearned discount...................................... 8,883,254 8,132,773 7,666,481
Allowance for loan losses............................................ 168,391 140,165 145,729
Goodwill and other intangible assets................................. 315,651 314,084 295,382
Deposits............................................................. 9,149,193 8,622,345 8,443,086
Other borrowings..................................................... 376,123 310,772 373,899
Notes payable........................................................ 39,000 10,000 65,000
Subordinated debentures.............................................. 353,752 353,733 297,966
Stockholders' equity................................................. 867,488 856,861 800,435
Nonperforming assets................................................. 213,448 102,650 55,163
Selected Financial Ratios
Three Months Ended Year Ended
------------------------------------------ ----------------------------
December 31, September 30, December 31, December 31, December 31,
2007 2007 2006 2007 2006
---- ---- ---- ---- ----
Return on average assets.................... 0.12% 0.58% 1.23% 0.55% 1.16%
Return on average equity.................... 1.50 7.06 15.76 6.83 15.26
Net interest margin......................... 3.91 4.12 4.27 4.07 4.36
Efficiency ratio............................ 73.56 67.79 63.61 70.73 64.18
Tangible efficiency ratio................... 71.00 65.27 61.50 68.18 62.53