-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UJdnu0xaOHNnmogXvhm5nHNlSLrkmXKwLmTAg/srrvuUqJ45079TXsjX7mdf3zlZ 6dpeeXKHxKt6dmF0gebyWQ== 0000310979-96-000005.txt : 19960816 0000310979-96-000005.hdr.sgml : 19960816 ACCESSION NUMBER: 0000310979-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANKS AMERICA INC CENTRAL INDEX KEY: 0000310979 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 751604965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08230 FILM NUMBER: 96611478 BUSINESS ADDRESS: STREET 1: P O BOX 630369 CITY: HOUSTON STATE: TX ZIP: 77263-0369 BUSINESS PHONE: 7137817171 FORMER COMPANY: FORMER CONFORMED NAME: BANCTEXAS GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCE SOUTHWEST INC DATE OF NAME CHANGE: 19820831 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-8937 FIRST BANKS AMERICA, INC. ------------------------- (Exact name of registrant as specified in its charter) DELAWARE 75-1604965 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) P.O. Box 630369, HOUSTON, TEXAS 77263-0369 (address of principal executive offices) (Zip Code) (713) 954-2400 (Registrant's telephone number, including area code) (Former name, former address, and former fiscal year, if changed since last report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class July 31, 1996 ----- ------------- Common Stock, $.15 par value 1,241,842 Class B Common Stock, $.15 par value 2,500,000 First Banks America, Inc. INDEX Page PART I FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 -2- Consolidated Statements of Income for the three and six month periods ended June 30, 1996 and 1995 -4- Consolidated Statements of Cash Flows for the six month periods ended June 30, 1996 and 1995 -5- Notes to Consolidated Financial Statements -6- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations -8- PART II OTHER INFORMATION Item 6. Exhibit and Reports on Form 8-K -13- SIGNATURES -14- PART I - FINANCIAL INFORMATION Item 1 Financial Statements First Banks America, Inc. Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data)
June 30, December 31, 1996 1995 ---- ---- ASSETS ------ Cash and cash equivalents: Cash and due from banks .................................... $ 7,868 25,072 Interest-bearing deposits with other financial institutions- with maturities of three months or less ................. 146 11,050 Federal funds sold ......................................... 125 4,800 --------- --------- Total cash and cash equivalents ...................... 8,139 40,922 --------- --------- Investment securities - available for sale, at fair value ...... 98,738 39,337 Loans: Real estate construction and development .................... 10,282 15,055 Commercial .................................................. 26,524 26,048 Real estate mortgage: Residential ............................................. 3,783 4,529 Commercial .............................................. 12,053 8,144 Consumer and installment .................................... 109,587 140,757 --------- --------- Total loans .......................................... 162,229 194,533 Unearned discount ............................................ (1,322) (1,960) Allowance for possible loan losses ........................... (4,116) (5,228) --------- --------- Net loans ............................................ 156,791 187,345 --------- --------- Bank premises and equipment, net of accumulated depreciation ................................... 6,305 6,540 Receivable from sale of investment securities .................. -- 4,915 Accrued interest receivable .................................... 1,468 665 Other real estate owned ........................................ 949 1,013 Deferred income taxes .......................................... 13,972 14,605 Other assets ................................................... 1,192 1,241 --------- --------- Total assets ......................................... $ 287,554 296,583 ========= =========
FIRST BANKS AMERICA, INC. Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data) (continued)
June 30, December 31, 1996 1995 ---- ---- LIABILITIES ----------- Deposits: Demand: Non-interest bearing ............................................ $ 46,598 49,822 Interest bearing ................................................ 20,229 21,151 Savings ........................................................... 54,012 53,046 Time: Time deposits of $100 or more ................................... 27,035 23,509 Other time deposits ............................................. 97,588 101,735 --------- --------- Total deposits ............................................... 245,462 249,263 --------- --------- Federal Home Loan Bank advances ........................................ 2,225 5,663 Securities sold under agreements to repurchase ......................... 629 711 Deferred income taxes .................................................. 1,276 1,362 Accrued and other liabilities .......................................... 2,522 4,326 --------- --------- Total liabilities ............................................ 252,114 261,325 --------- --------- STOCKHOLDERS' EQUITY -------------------- Common Stock: Common stock, $.15 par value; 10,866,667 shares authorized; 1,408,567 and 1,276,342 shares issued and outstanding, respectively, at June 30, 1996 and 1,401,901 and 1,322,298 shares issued and outstanding, respectively, at December 31, 1995 211 210 Class B common stock, $.15 par value; 4,000,000 shares authorized; 2,500,000 shares issued and outstanding ............. 375 375 Capital surplus ........................................................ 39,294 39,271 Retained deficit since elimination of accumulated deficit of $259,117 effective December 31, 1994 ........................... (2,920) (3,820) Treasury stock ......................................................... (1,355) (828) Net fair value adjustment for securities available for sale ............ (165) 50 --------- --------- Total stockholders' equity ................................... 35,440 35,258 --------- --------- Total liabilities and stockholders' equity ................... $ 287,554 296,583 ========= =========
See accompanying notes to consolidated financial statements FIRST BANKS AMERICA, INC. Consolidated Statements of Income (unaudited) (dollars expressed in thousands, except per share data)
Three months ended Six months ended June 30 June 30, ------------------ ---------------- 1996 1995 1996 1995 ---- ---- ---- ---- Interest income: Interest and fees on loans ............................ $3,650 4,474 7,629 8,732 Investment securities ................................. 718 1,433 1,243 2,658 Federal funds sold and other .......................... 614 57 1,118 323 ------ ------ ------ ------ Total interest income ........................... 4,982 5,964 9,990 11,713 ------ ------ ------ ------ Interest expense: Deposits: Interest-bearing demand ............................ 100 173 198 236 Savings ............................................ 426 486 862 1,108 Time deposits of $100 or more ...................... 363 296 706 569 Other time deposits ................................ 1,390 1,328 2,823 2,398 Federal Home Loan Bank advances, securities sold under agreements to repurchase and federal funds purchased 161 643 293 1,318 Notes payable and other ............................... 12 5 44 79 ------ ------ ------ ------ Total interest expense .......................... 2,452 2,931 4,926 5,708 ------ ------ ------ ------ Net interest income ............................. 2,530 3,033 5,064 6,005 Provision for possible loan losses ........................ 250 650 350 1,100 ------ ------ ------ ------ Net interest income after provision for possible loan losses ......................... 2,280 2,383 4,714 4,905 ------ ------ ------ ------ Noninterest income: Service charges on deposit accounts and customer service fees .................... 392 361 737 703 Loan servicing fees, net ........................... 12 43 33 108 Gain (loss) on sales of investment securities, net . -- -- 75 -- Other income ....................................... 32 85 29 961 ------ ------ ------ ------ Total noninterest income ........................ 436 489 874 1,772 ------ ------ ------ ------ Noninterest expenses: Salaries and employee benefits ..................... 661 1,044 1,386 2,247 Occupancy, net of rental income .................... 205 284 401 560 Furniture and equipment ............................ 137 183 304 346 Federal Deposit Insurance Corporation premiums ..... 19 153 37 306 Postage, printing and supplies ..................... 68 118 142 214 Data processing fees ............................... 77 81 157 494 Legal, examination and professional fees ........... 277 294 561 553 Communications ..................................... 93 182 203 294 Losses and expenses on foreclosed real estate, net of gains .................................... 11 6 17 128 Other expenses ..................................... 446 461 879 869 ------ ------ ------ ------ Total noninterest expenses ...................... 1,994 2,806 4,087 6,011 ------ ------ ------ ------ Income before provision for income taxes ........ 722 66 1,501 666 Provision for income taxes ................................ 284 18 602 226 ------ ------ ------ ------ Net income (loss) ............................... $ 438 48 899 440 ====== ====== ====== ====== Earnings (loss) per common share .......................... $ 0.11 0.01 0.23 0.01 ====== ====== ====== ====== Weighted average shares of common stock and common stock equivalents outstanding (in thousands) .......................... 3,973 4,093 3,990 4,093 ====== ====== ====== ======
See accompanying notes to consolidated financial statements FIRST BANKS AMERICA, INC. Consolidated Statements of Cash Flows (unaudited) (dollars expressed in thousands)
Six months ended June 30, ----------------- 1996 1995 ---- ---- Cash flows from operating activities: Net income (loss) ............................................. $ 899 440 Adjustments to reconcile net income (loss) to net cash: Depreciation and amortization of bank premises and equipment 285 276 Amortization, net of accretion ............................. (418) (576) Provision for possible loan losses ......................... 350 1,100 (Increase) decrease in accrued interest receivable ......... (803) 147 Interest accrued on liabilities ............................ 4,926 5,708 Payments of interest on liabilities ........................ (5,053) (5,697) Provision for income taxes ................................. 318 226 (Gain) loss on sales of securities, net .................... (75) -- Other ...................................................... (522) (342) --------- --------- Net cash provided by (used in) operating activities .... (93) 1,282 --------- --------- Cash flows from investing activities: Sales of investment securities ............................... 10,513 -- Maturities of investment securities .......................... 88,024 41,227 Purchases of investment securities ........................... (152,615) (58,922) Net decrease (increase) in loans ............................ 29,563 (14,005) Recoveries of loans previously charged off ................... 587 286 Purchases of bank premises and equipment ..................... (112) (256) Other investing activities ................................... 579 (4,376) --------- --------- Net cash provided by (used in) investing activities .... (23,461) (36,046) --------- --------- Cash flows from financing activities: Increase (decrease) in deposits .............................. (3,801) 1,544 Decrease in borrowed funds ................................... (4,926) (2,376) Purchase of treasury stock ................................... (526) -- Other financing activities ................................... 24 48 --------- --------- Net cash provided by (used in) financing activities .... (9,229) (784) --------- --------- Net increase (decrease) in cash and cash equivalents ... (32,783) (35,548) Cash and cash equivalents, beginning of period ................... 40,922 47,071 --------- --------- Cash and cash equivalents, end of period ......................... $ 8,139 11,523 ========= ========= Noncash investing and financing activities: Loans transferred to other real estate ....................... $ 54 -- Transfer of loans held for sale (to) from loans .............. -- (7,253) ========= =========
See accompanying notes to consolidated financial statements FIRST BANKS AMERICA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying consolidated financial statements of First Banks America, Inc. (FBA) are unaudited and should be read in conjunction with the consolidated financial statements contained in the 1995 annual report on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for the interim periods presented herein, have been included. Operating results for the three and six month periods ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. The consolidated financial statements include the accounts of First Banks America, Inc. and its subsidiaries, all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated. On August 23, 1995, the Common and Class B Common stock shareholders of FBA approved a reverse stock split. The reverse stock split converted 15 shares of Common Stock or Class B Common stock into one share of Common Stock or Class B Common Stock, respectively. Accordingly, all per share amounts, as well as ending and average common shares data, have been restated to reflect the one-for-15 reverse stock split. Certain reclassifications of 1995 amounts have been made to conform with the 1996 presentation. (2) Transactions with Related Party In December 1994, the Board of Directors of BankTEXAS N.A. (Bank), a wholly owned subsidiary of FBA, approved a data processing agreement and a management fee agreement with First Banks, Inc. (First Banks). Under the data processing agreement, a subsidiary of First Banks began providing data processing and various related services to the Bank in February 1995. The fees for such services are significantly less than the Bank was paying to its non-affiliated vendors. The management fee agreement provides that the Bank will compensate First Banks on an hourly basis for its use of personnel for various functions including internal auditing, loan review, income tax preparation and assistance, accounting, asset/liability and investment services, loan servicing and other management and administrative services. Hourly rates for such services compare favorably with those for similar services from unrelated sources, as well as the internal costs of the Bank personnel which were used previously, and it is estimated the aggregate cost for the services will be significantly more economical than those previously incurred by the Bank separately. Fees paid under this agreement were $252,000 and $475,000 for the three and six month periods ended June 30, 1996 compared to $201,000 and $417,000 for the three and six month periods ended June 30, 1995, respectively. The Bank also participates in loans with other affiliated banks of First Banks. At June 30, 1996, $1.2 million of purchased loan participations and $5.4 million of sold loan participations were outstanding. Loans are purchased and sold at the prevailing interest rates and terms at the time of the transactions, and in accordance with the credit standards and policies of the purchasing entity. (3) Business Combinations On June 24, 1996, FBA and Sunrise Bancorp, a California corporation ("Sunrise"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Sunrise will merge with a wholly owned subsidiary of FBA. Sunrise Bank of California, a state chartered bank which is a wholly owned subsidiary of Sunrise, will become a wholly owned indirect subsidiary of FBA. The Merger Agreement provides for the shareholders of Sunrise to receive $4.00 per share in cash for their stock, an aggregate of approximately $18.1 million (which includes the purchase price of outstanding stock options of Sunrise). The transaction is subject to regulatory approvals and the approval of the shareholders of Sunrise and is expected to be completed during the fourth quarter of 1996. The merger, which will be accounted for under the purchase method of accounting, was announced in a press release issued by FBA and Sunrise on June 24, 1996 (the "Joint Press Release"). FBA intends to borrow a portion of the funds needed in order to consummate the merger from First Banks, Inc., a Missouri corporation, which is the owner of approximately 66% of the voting stock of FBA. Pursuant to the terms of the Merger Agreement, First Banks, Inc. has executed a guarantee of FBA's ability to fund the acquisition. The Merger Agreement also contains provisions intended to assure that both FBA and Sunrise complete the transaction. Additionally, FBA obtained irrevocable proxies of the directors of Sunrise assuring that their shares would be voted for approval of the merger. The Merger Agreement and the Joint Press Release appear as exhibits to the Report on Form 8-K as filed by FBA with the Securities and Exchange Commission on July 8, 1996. Sunrise is headquartered in Roseville, California and operates from two full-service banking offices in Roseville and Citrus Heights, California and one loan production office in San Francisco, California. At June 30, 1996, Sunrise had total assets of $113.5 million, consisting primarily of cash and cash equivalents and investment securities of $46.9 million and $62.5 million, respectively. Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations General FBA is a registered bank holding company, incorporated in Delaware and headquartered in Houston, Texas. At June 30, 1996, FBA had approximately $287.6 million in total assets; $160.9 million in total loans, net of unearned discount; $245.5 million in total deposits; and $35.4 million in total stockholders' equity. FBA operates through its subsidiary bank, BankTEXAS N.A. (Bank). Through the Bank, FBA offers a broad range of commercial and personal banking services including certificate of deposit accounts, individual retirement and other time deposit accounts, checking and other demand deposit accounts, interest checking accounts, savings accounts and money market accounts. Loans include commercial, financial, agricultural, real estate construction and development, residential real estate and consumer and installment loans. Other financial services include credit-related insurance, automatic teller machines and safe deposit boxes. Financial Condition FBA's total assets were $287.6 million and $296.6 million at June 30, 1996 and December 31, 1995, respectively. The primary changes from December 31, 1995 were an increase in investment securities of $59.4 million which was funded principally by a decrease in cash and cash equivalents of $32.8 million and a reduction of the loan portfolio of $31.7 million. The increase in the investment security portfolio, consisting of shorter term securities designated as available for sale, is consistent with the securities restructuring plan implemented in September 1994. Results of Operations Net Income Net income was $438,000 for the three months ended June 30, 1996, compared to $48,000 for the same period in 1995. Net income for the six months ended June 30, 1996 was $899,000 compared to $440,000 for the same period in 1995. The improved net income, as more fully described below, is attributable to the reductions in the provision for possible loan losses and noninterest expenses for the three and six month periods ended June 30, 1996, in comparison to the same periods in 1995, partially offset by reductions in net interest income and noninterest income. Net Interest Income Net interest income was $2.53 million, or 3.83% of average interest earning assets for the three months ended June 30, 1996, compared to $3.03 million, or 4.10% of average interest earning assets, for the same period in 1995. Net interest income for the six months ended June 30, 1996 was $5.06 million, or 3.83% of average interest earning assets, compared to $6.0 million, or 4.05% of average interest earning assets, for the same period in 1995. The decrease is attributable to the reduction in average interest earning assets to $264.7 million and $265.1 million for the three and six month periods ended June 30, 1996, respectively, from $297.2 million and $297.1 million for the three and six month periods ended June 30, 1995, respectively. The decrease is also attributable to the lower yields earned within the restructured investment security portfolio, which coincide with the overall reduction of interest rate risk in that portfolio. The following table sets forth, on a tax-equivalent basis, certain information relating to FBA's average balance sheet, and reflects the average yield earned on interest-earning assets, the average cost of interest-bearing liabilities and the resulting net interest income for the three and six month periods ended June 30:
Three months ended June 30, Six months ended June 30, 1996 1995 1996 1995 ----------------------- --------------------- ------------------------ --------------------- Interest Interest Interest Interest Average income/ Yield/ Average income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ balance expense rate balance expense rate balance expense rate balance expense rate ------- ------- ----- ------- ------ ---- -------- ------ ---- ------- ------- ----- (dollars expressed in thousands) Assets Interest-earning assets: Loans $168,873 3,650 8.67% $211,462 4,474 8.48% $ 178,664 7,629 8.56% $206,021 8,732 8.50% Investment securities 49,796 718 5.76 81,351 1,433 7.05 44,328 1,243 5.61 76,897 2,658 6.91 Federal funds sold and other 46,008 614 5.36 4,362 57 5.24 42,143 1,118 5.32 14,173 323 4.57 -------- ----- ------- ------ ------- ----- -------- ------ Total interest-earning assets 264,677 4,982 7.55 297,175 5,964 8.05 265,135 9,990 7.56 297,091 11,713 7.91 ----- ----- ----- ------ Nonearning assets 29,375 30,008 29,659 25,749 --------- ------- ------- --------- Total assets $ 294,052 $327,183 $294,794 $ 322,840 ======== ======= ======= ======== Liabilities and Stockholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits $21,340 100 1.87% $ 23,742 173 2.91% $ 21,089 198 1.89% $24,699 236 1.91% Savings deposits 53,993 426 3.16 57,054 486 3.41 53,932 862 3.21 56,119 1,108 3.96 Time deposits of $100 or more 26,044 363 5.62 21,562 296 5.49 25,025 706 5.66 21,660 569 5.27 Other time deposits 100,964 1,390 5.53 99,128 1,328 5.36 101,892 2,823 5.56 97,037 2,398 4.95 ------- ----- ------ ----- ------- ----- ------- ------ Total interest-bearing deposits 202,341 2,279 4.52 201,486 2,283 4.54 201,938 4,589 4.56 199,515 4,311 4.33 Notes payable and other 5,837 173 11.86 37,856 648 6.85 6,709 337 10.05 37,877 1,397 7.38 --------- ----- ------- ----- ------- ----- ------- ----- Total interest-bearing liabilities 208,178 2,452 4.72 239,342 2,931 4.91 208,647 4,926 4.73 237,392 5,708 4.82 ----- ----- ----- ----- Noninterest-bearing liabilities: Demand deposits 46,569 43,132 46,603 45,662 Other liabilities 3,959 5,679 4,153 495 -------- ------- ------- ------- Total liabilities 258,706 288,153 259,403 283,549 Stockholders' equity 35,346 39,030 35,391 39,291 -------- ------- ------- ------- Total liabilities and stockholders' equity $294,052 $327,183 $294,794 $322,840 ======= ======= ======= ======= Net interest income 2,530 3,033 5,064 6,005 ===== ===== ===== ===== Net interest margin 3.83% 4.10% 3.83% 4.05% ==== ==== ===== =====
Provision for Possible Loan Losses The provision for possible loan losses was $250,000 and $350,000 for the three and six month periods ended June 30, 1996, respectively, in comparison to $650,000 and $1.1 million for the same periods in 1995, respectively. Net loan charge-offs were $921,000 and $1.5 million for the three and six month periods ended June 30, 1996, respectively, compared to $1.2 million and $1.6 million for the same periods in 1995. The reduced provisions in 1996 are the result of several factors, including the gradual reduction in the level of loan charge-offs, the overall reduction in the size of the loan portfolio and the more stringent lending standards implemented in 1995. The provisions made for the year ended December 31, 1995, which totaled $5.83 million, were higher than normal in recognition of increasing charge-offs and delinquencies which were then being experienced within the portfolio of indirect automobile loans. In addition, the current provision for possible loan losses reflects management's evaluation of the credit quality of the loans in the portfolio and its assessment of the adequacy of the allowance for possible loan losses. Noninterest Income Noninterest income was $436,000 and $874,000 for the three and six months ended June 30, 1996, respectively, in comparison to $489,000 and $1.8 million for the same periods in 1995. The decrease is associated with non-recurring income of $802,000 received by FBA from the termination of a self-insurance trust during the six months ended June 30, 1995. Loan servicing fees, net decreased to $12,000 and $33,000 for the three and six month periods ended June 30, 1996, respectively, in comparison to $43,000 and $180,000 for the same periods in 1995, respectively, reflecting the continued reduction in the amount of loans serviced for others. Noninterest income also includes a gain of $75,000 recognized upon the sale of an investment security for the six month period ended June 30, 1996. Noninterest Expenses Noninterest expenses were $2.0 million and $4.1 million for the three and six month periods ended June 30, 1996, respectively, compared to $2.8 million and $6.0 million for the same periods in 1995. The decrease is attributable to salaries and employee benefits which decreased by $383,000 and $861,000 for the three and six month periods ended June 30, 1996, respectively, compared to the same periods in 1995. Data processing fees also decreased by $337,000 for the six months ended June 30, 1996, as compared to the same period in 1995. These decreases are consistent with cost savings anticipated by the data processing conversion and centralization of various bank operating functions to First Banks' systems which commenced during the first quarter of 1995. Contributing further to the decrease in noninterest expense was a reduction in Federal Deposit Insurance Corporation premiums by $134,000 and $269,000 to $19,000 from $37,000 for the three and six months ended June 30, 1996, respectively, compared to the same periods in 1995. These decreases resulted from premium rate reductions instituted by the FDIC effective June 1, 1995 and January 1, 1996. Lending and Credit Management Interest earned on the loan portfolio is the primary source of income of FBA. Total loans, net of unearned discount, represented 55.96% and 64.93% of total assets as of June 30, 1996 and December 31, 1995, respectively. Total loans, net of unearned discount, were $160.9 million and $192.6 million at June 30, 1996 and December 31, 1995, respectively. The decrease is primarily due to the consumer automobile loan portfolio reflecting the more stringent lending practices implemented during 1995. As the size of the consumer automobile loan portfolio continues to decline, FBA is evaluating its lending programs, including purchasing loans from affiliated banks, with the objective to increase loans as a percentage of total assets and to further diversify the credit risk profile of FBA. The following is a summary of nonperforming assets and past due loans at the dates indicated:
June 30, December 31, 1996 1995 ---- ---- (dollars expressed in thousands) Nonperforming assets: Nonperforming loans $ 453 549 Other real estate 949 1,013 -------- ----- Total nonperforming assets $ 1,402 1,562 ======== ===== Loans past due: Over 30 days to 90 days $ 7,262 6,649 Over 90 days and still accruing 549 517 --------- ------ Total past due loans $ 7,811 7,166 ======== ===== Loans, net of unearned discount $160,907 192,573 ======= ======= Allowance for possible loan losses to loans 2.56% 2.71% Nonperforming loans to loans 0.28 0.29 Allowance for possible loan losses to nonperforming loans 908.61 952.28 Nonperforming assets to loans and foreclosed assets 0.87 0.81 ==== ====
As of June 30, 1996 and December 31, 1995, approximately $3.0 million and $5.2 million, respectively, of loans not included in the table above were identified by management as having potential credit problems which raised doubts as to the ability of the borrowers to comply with the present loan repayment terms. Impaired loans, consisting of certain nonaccrual loans and consumer and installment loans which were 60 days or more past due, were $2.0 million at June 30, 1996 and $1.6 million at December 31, 1995. The allowance for possible loan losses is based on past loan loss experience, on management's evaluation of the quality of the loans in the portfolio and on the anticipated effect of national and local economic conditions relative to the ability of loan customers to repay. Each month, the allowance for possible loan losses is reviewed relative to FBA's internal watch list and other data utilized to determine its adequacy. The provision for possible loan losses is management's estimate of the amount necessary to maintain the allowance at a level consistent with this evaluation. As adjustments to the allowance for possible loan losses are considered necessary, they are reflected in the results of operations. The following is a summary of the loan loss experience for the three and six month periods ended June 30:
Three months ended Six months ended 1996 1995 1996 1995 ---- ---- ---- ---- (dollars expressed in thousands) Allowance for possible loan losses, beginning of period $ 4,787 2,789 5,228 2,756 Loans charged-off (1,298) (1,347) (2,049) (1,872) Recoveries of loans previously charged-off 377 178 587 286 ------ ------ ------- ------ Net loan (charge-offs) recoveries (921) (1,169) (1.462) (1,586) ------ ----- ------- ------ Provision for possible loan losses 250 650 350 1,100 ------ ------ ------- ------ Allowance for possible loan losses, end of period $ 4.116 2,270 4,116 2,270 ====== ====== ====== ======
Liquidity The liquidity of FBA and the Bank is the ability to maintain a cash flow which is adequate to fund operations, service its debt obligations and meet other commitments on a timely basis. The primary sources of funds for liquidity are derived from customer deposits, loan payments, maturities, sales of investments and operations. In addition, FBA and the Bank may avail themselves of more volatile sources of funds through issuance of certificates of deposit in denominations of $100,000 or more, federal funds borrowed, securities sold under agreements to repurchase and borrowings from the Federal Home Loan Bank. The aggregate funds acquired from those sources were $29.9 million at June 30, 1996 and December 31, 1995. At June 30, 1996, FBA's more volatile sources of funds mature as follows: 1996 ---- (dollars expressed in thousands) Three months or less $ 12,442 Over three months through six months 4,606 Over six months through twelve months 4,615 Over twelve months 8,226 ------- Total $ 29,889 ======= Management believes the available liquidity and earnings of the Bank will be sufficient to provide funds for FBA's operating and debt service requirements both on a short-term and long-term basis. Capital Risk-based capital guidelines for financial institutions are designed to relate regulatory capital requirements to the risk profiles of the specific institutions and to provide more uniform requirements among the various regulators. FBA and the Bank are required to maintain a minimum risk-based capital to risk-weighted assets ratio of 8.00%, with at least 4.00% being "Tier 1" capital. Tier 1 capital is composed of total stockholders' equity excluding the net fair value adjustment for securities available for sale and excess net deferred tax assets, as defined by regulation. In addition, a minimum leverage ratio (Tier 1 capital to total assets) of 3.00% plus an additional cushion of 100 to 200 basis points is expected. At June 30, 1996 and December 31, 1995, FBA's and the Bank's capital ratios were as follows: Risk-based capital ratios ------------------------- Total Tier 1 Leverage Ratio ----- ------ -------------- 1996 1995 1996 1995 1996 1995 ----- ---- ---- ----- ---- ---- FBA 14.18% 11.69% 12.92% 10.43% 8.61% 8.38% Bank 10.54 8.01 9.28 6.74 6.53 5.38 PART II - OTHER INFORMATION Item 6 - Exhibit and Reports on Form 8-K (a) These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K. Exhibit Number Description 27 Article 9 - Financial Data Schedule (EDGAR only) (b) A current report on Form 8-K was filed by FBA on July 8, 1996. Items 5 and 7 of the Report described the execution by FBA on June 24, 1996 of a definitive agreement for the acquisition of Sunrise Bancorp by FBA. No financial statements were filed with the Report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST BANKS AMERICA, INC. Registrant Date: August 8, 1996 By: /s/James F. Dierberg -------------------- James F. Dierberg Chairman, President and Chief Executive Officer Date: August 8, 1996 By: /s/Allen H. Blake ----------------- Allen H. Blake Vice President, Chief Financial Officer and Secretary (Principal Financial Officer) EX-27 2 FDS --
9 1,000 6-mos Dec-31-1996 Jan-01-1996 Jun-30-1996 7,868 146 125 0 98,738 0 0 160,907 (4,116) 287,554 245,462 2,854 2,649 0 0 0 586 34,854 287,554 3,650 718 614 4,982 2,279 2,452 2,530 250 0 1,994 722 722 0 0 438 .11 .11 7.55 453 549 0 3,060 5,228 (2,049) 587 4,116 4,116 0 0
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