-----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, HnsD0UXxuuXgugRim4Q1eqwdulzXo6mczqaY2AfzA2YG8w4X8xVFFLoH5WsTfV3E jj7PpbpRVofWL2aFHCSJ3g== 0000310979-96-000007.txt : 19961118 0000310979-96-000007.hdr.sgml : 19961118 ACCESSION NUMBER: 0000310979-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96664077 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 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 September 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 October 31, 1996 ----- ---------------- Common Stock, $.15 par value 1,214,931 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 September 30, 1996 and December 31, 1995 -2- Consolidated Statements of Income for the three and nine month periods ended September 30, 1996 and 1995 -4- Consolidated Statements of Cash Flows for the nine month periods ended September 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)
September 30, December 31, 1996 1995 ---- ---- ASSETS ------ Cash and cash equivalents: Cash and due from banks...................................... $ 6,808 25,072 Interest-bearing deposits with other financial institutions- with maturities of three months or less................... 722 11,050 Federal funds sold........................................... 600 4,800 -------- ------- Total cash and cash equivalents........................ 8,130 40,922 ------- ------ Investment securities - available for sale, at fair value........ 71,144 39,337 Loans: Real estate construction and development...................... 35,157 15,055 Commercial.................................................... 15,399 26,048 Real estate mortgage: Residential............................................... 3,912 4,529 Commercial................................................ 17,998 8,144 Consumer and installment...................................... 101,401 140,757 ------- ------- Total loans............................................ 173,867 194,533 Unearned discount.............................................. (1,129) (1,960) Allowance for possible loan losses............................. (3,907) (5,228) -------- ------- Net loans.............................................. 168,831 187,345 ------- ------- Bank premises and equipment, net of accumulated depreciation..................................... 6,192 6,540 Receivable from sale of investment securities.................... - 4,915 Accrued interest receivable...................................... 1,581 665 Other real estate owned.......................................... 890 1,013 Deferred income taxes............................................ 13,557 14,605 Other assets..................................................... 1,375 1,241 -------- ------- Total assets........................................... $ 271,700 296,583 ======= =======
FIRST BANKS AMERICA, INC. Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data) (continued)
September 30, December 31, 1996 1995 LIABILITIES Deposits: Demand: Non-interest bearing.......................................... $ 43,451 49,822 Interest bearing.............................................. 18,512 21,151 Savings......................................................... 54,652 53,046 Time: Time deposits of $100 or more................................. 21,149 23,509 Other time deposits........................................... 91,654 101,735 -------- -------- Total deposits............................................. 229,418 249,263 Federal Home Loan Bank advances...................................... 1,967 5,663 Securities sold under agreements to repurchase....................... 728 711 Deferred income taxes................................................ 1,242 1,362 Accrued and other liabilities........................................ 2,989 4,326 --------- ---------- Total liabilities.......................................... 236,344 261,325 ------- -------- STOCKHOLDERS' EQUITY Common Stock: Common stock, $.15 par value; 10,866,667 shares authorized; 1,409,567 and 1,214,931 shares issued and outstanding, respectively, at September 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...................................................... 39,304 39,271 Retained deficit since elimination of accumulated deficit of $259,117 effective December 31, 1994......................... (2,464) (3,820) Treasury stock....................................................... (1,968) (828) Net fair value adjustment for securities available for sale.......... (102) 50 -------- ------- Total stockholders' equity................................. 35,356 35,258 ------- ------- Total liabilities and stockholders' equity................. $ 271,700 296,583 ======= =======
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 Nine months ended September 30, September 30, ------------- ------------- 1996 1995 1996 1995 Interest income: Interest and fees on loans....................................... $ 4,024 4,472 11,653 13,204 Investment securities............................................ 1,101 1,050 2,344 3,708 Federal funds sold and other..................................... 174 69 1,292 392 ------- ------- ------- -------- Total interest income...................................... 5,299 5,591 15,289 17,304 ------ ----- ------ ------ Interest expense: Deposits: Interest-bearing demand....................................... 70 115 268 351 Savings....................................................... 438 493 1,300 1,601 Time deposits of $100 or more................................. 330 376 1,036 945 Other time deposits........................................... 1,316 1,347 4,139 3,745 Federal Home Loan Bank advances, securities sold under agreements to repurchase and federal funds purchased.......... 76 562 369 1,880 Notes payable and other.......................................... 3 40 47 119 --------- ------- ------- -------- Total interest expense..................................... 2,233 2,933 7,159 8,641 ------- ----- ------ ----- Net interest income........................................ 3,066 2,658 8,130 8,663 Provision for possible loan losses................................... 250 4,425 600 5,525 ------- ----- ------ ----- Net interest income after provision for possible loan losses .................................. 2,816 (1,767) 7,530 3,138 ------- ------ ------ ----- Noninterest income: Service charges on deposit accounts and customer service fees............................... 371 384 1,108 1,087 Loan servicing fees, net...................................... 13 30 46 138 Gain (loss) on sales of investment securities, net............ - (99) 75 (99) Other income.................................................. 45 271 74 1,232 -------- ------- ------- ----- Total noninterest income................................... 429 586 1,303 2,358 ------- ------ ------ ----- Noninterest expenses: Salaries and employee benefits................................ 654 1,000 2,040 3,247 Occupancy, net of rental income............................... 237 429 638 989 Furniture and equipment....................................... 152 155 456 501 Federal Deposit Insurance Corporation premiums................ 59 (17) 96 289 Postage, printing and supplies................................ 42 26 184 240 Data processing fees.......................................... 79 81 236 575 Legal, examination and professional fees...................... 339 331 900 884 Communications................................................ 102 121 305 415 Losses and expenses on foreclosed real estate, net of gains............................................... 38 23 55 151 Other expenses................................................ 833 450 1,712 1,319 ------- ------ ------- ----- Total noninterest expenses................................. 2,535 2,599 6,622 8,610 ------ ----- ------- ----- Income before provision for income taxes................... 710 (3,780) 2,211 (3,114) Provision for income taxes........................................... 253 (1,061) 855 (835) ------ ------- ------ ------ Net income (loss).......................................... $ 457 (2,719) 1,356 (2,279) ====== ======= ====== ====== Earnings (loss) per common share..................................... $ .12 (0.66) .34 (0.56) ======= ======== ======= ======= Weighted average shares of common stock and common stock equivalents outstanding (in thousands)..................................... 3,927 4,107 3,969 4,106 ===== ===== ===== =====
See accompanying notes to consolidated financial statements FIRST BANKS AMERICA, INC. Consolidated Statements of Cash Flows (unaudited) (dollars expressed in thousands)
Nine months ended September 30, ------------- 1996 1995 ---- ---- Cash flows from operating activities: Net income (loss)............................................................. $ 1,356 (2,279) Adjustments to reconcile net income (loss) to net cash: Depreciation and amortization of bank premises and equipment............... 407 276 Amortization, net of accretion............................................. (571) (347) Provision for possible loan losses......................................... 600 5,525 (Increase) decrease in accrued interest receivable......................... (916) (93) Interest accrued on liabilities............................................ 7,159 8,641 Payments of interest on liabilities........................................ (7,294) (8,547) Provision for income taxes................................................. 855 (835) (Gain) loss on sales of securities, net.................................... (75) 99 Other...................................................................... (137) (116) ------- ------ Net cash provided by (used in) operating activities.................... 1,384 2,324 ------ ----- Cash flows from investing activities: Sales of investment securities............................................... 10,513 13,149 Maturities of investment securities.......................................... 134,417 44,278 Purchases of investment securities........................................... (171,084) (67,057) Net decrease (increase) in loans............................................. 17,002 (1,854) Recoveries of loans previously charged off................................... 857 504 Purchases of bank premises and equipment..................................... (145) (328) Other investing activities................................................... 300 (4,676) -------- ------- Net cash provided by (used in) investing activities.................... (8,140) (15,984) -------- ------ Cash flows from financing activities: Increase (decrease) in deposits............................................. (19,845) 505 Decrease in borrowed funds................................................... (5,085) (22,683) Purchase of treasury stock................................................... (1,140) ( 144) Other financing activities................................................... 34 98 -------- -------- Net cash provided by (used in) financing activities.................... (26,036) (22,224) -------- ------- Net increase (decrease) in cash and cash equivalents................... (32,792) (35,884) Cash and cash equivalents, beginning of period................................... 40,922 47,071 -------- ------- Cash and cash equivalents, end of period......................................... $ 8,130 11,187 ======== ======= Noncash investing and financing activities: Loans transferred to other real estate....................................... $ 55 - 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 nine month periods ended September 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. On October 1, 1996, FBA purchased an outstanding warrant to acquire 131,336 shares of FBA Common Stock at $ .75 per share from the Federal Deposit Insurance Corporation (FDIC), resulting in a reduction of capital surplus, for an aggregate of $1.28 million. The warrant had been granted by the former BancTEXAS Group Inc. to the FDIC in connection with its recapitalization in 1987. Certain reclassifications of 1995 amounts have been made to conform with the 1996 presentation. (2) Transactions with Related Party BankTEXAS N.A. (Bank), a wholly owned subsidiary of FBA, operates under a data processing agreement and a management fee agreement with First Banks, Inc. (First Banks). First Banks acquired the Class B Common Stock of FBA issued on August 31, 1994, and consequently owns 67.3% of the outstanding common stock of FBA. Fees paid under data processing and management fee agreements were $269,000 and $744,000 for the three and nine month periods ended September 30, 1996 compared to $185,000 and $602,000 for the three and nine month periods ended September 30, 1995, respectively. The Bank also participates in loans with other affiliated banks of First Banks. At September 30, 1996, $9.8 million of purchased loan participations and $9.5 million of sold loan participations were outstanding to affiliated entities. 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 bank. (3) Business Combinations On November 1, 1996, FBA completed its acquisition of Sunrise Bancorp, a California corporation ("Sunrise"), and its wholly owned subsidiary, Sunrise Bank of California, a state chartered bank, in exchange for $17.5 million in cash. Accordingly, that transaction is not reflected in the consolidated financial information as of September 30, 1996. The transaction will be accounted for under the purchase method of accounting and financial statements for future periods will include the financial position and results of operations of Sunrise for the period subsequent to the acquisition date. The excess of cost over the net assets of Sunrise was approximately $2.50 million and will be amortized over 10 years on a straight-line basis. FBA funded the acquisition from available cash and an advance under a $15 million Revolving Note Agreement (Note) with First Banks of $3.5 million and $14 million, respectively. The borrowings under the Note bear interest at an annual rate of one-quarter percent less than the "Prime Rate" as reported in the Wall Street Journal. Principal and accrued interest outstanding under the Note are due and payable on October 31, 2001, but may be paid by FBA at anytime prior thereto. 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 September 30, 1996, Sunrise had total assets of $112.4 million, consisting primarily of cash and cash equivalents and investment securities of $48.2 million and loans of $61.1 million. 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 September 30, 1996, FBA had approximately $271.7 million in total assets; $172.7 million in total loans, net of unearned discount; $229.4 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 $271.7 million and $296.6 million at September 30, 1996 and December 31, 1995, respectively. The primary changes from December 31, 1995 were an increase in investment securities of $31.8 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 $19.8 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 $457,000 for the three months ended September 30, 1996, compared to a net loss of $2.72 million for the same period in 1995. Net income for the nine months ended September 30, 1996 was $1.36 million, compared to a net loss of $2.28 million 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 for the three and nine month periods ended September 30, 1996, in comparison to the same periods in 1995, partially offset by reductions in noninterest income. Net Interest Income Net interest income was $3.07 million, or 4.84% of average interest earning assets for the three months ended September 30, 1996, compared to $2.66 million, or 3.63% of average interest earning assets, for the same period in 1995. Net interest income for the nine months ended September 30, 1996 was $8.13 million, or 4.16% of average interest earning assets, compared to $8.66 million, or 3.96% of average interest earning assets, for the same period in 1995. The improved net interest income for the three months ended September 30, 1996 is attributable to the higher yields within the loan and investment security portfolios in comparison to the same period in 1995 and the reduction of higher costs, more volatile deposits, which tended to produce only marginal net interest income. The improved yield within the loan portfolio is primarily attributable to the change in the composition of the portfolio and pricing practices within the indirect automobile lending program. The decrease in net interest income for the nine months ended September 30, 1996 as compared to the same period in 1995 is primarily attributable to the reduction in average interest earning assets to $260.5 million from $296.1 million, respectively. 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 nine month periods ended September 30:
Three months ended September 30, Nine months ended September 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 $166,487 4,024 9.59% $211,285 4,472 8.49% $ 174,563 11,653 8.89% $207,600 13,204 8.50% Investment securities 71,920 1,101 6.13 78,241 1,050 5.36 53,620 2,344 5.83 77,300 3,708 6.40 Federal funds sold and other 12,975 174 5.29 4,290 69 6.37 32,349 1,292 5.32 11,209 392 4.67 --------- ------ -------- ----- --------- ------ ------- ------ Total interest-earning assets 251,382 5,299 8.36 293,816 5,591 7.63 260,532 15,289 7.82 296,109 17,304 7.81 ------ ----- ------ ------ Nonearning assets 26,345 32,823 28,547 27,871 --------- -------- -------- -------- Total assets $ 277,727 $326,639 $ 289,079 $ 323,980 ======== ======= ======= ======= Liabilities and Stockholders' Equity ------------------------------------ Interest-bearing liabilities: Interest-bearing demand deposits $ 18,160 70 1.53% $ 22,790 115 2.04% $ 20,105 268 1.76%$ 24,128 351 1.95% Savings deposits 54,169 438 3.21 57,687 493 3.42 54,008 1,300 3.21 56,590 1,601 3.78 Time deposits of $100 or more 24,022 330 5.44 26,107 376 5.76 24,696 1,036 5.59 22,994 945 5.49 Other time deposits 95,184 1,316 5.48 97,638 1,347 5.54 99,645 4,139 5.53 97,215 3,745 5.15 -------- ----- -------- ----- -------- ------ -------- ------ Total interest-bearing deposits 191,535 2,154 4.46 204,222 2,331 4.58 198,454 6,743 4.53 200,927 6,642 4.42 Notes payable and other 2,861 79 10.88 34,839 602 6.90 5,417 416 10.24 36,966 1,999 7.21 --------- ------ ------- ----- -------- ----- -------- ----- Total interest-bearing liabilities 194,396 2,233 4.55 239,061 2,933 4.92 203,871 7,159 237,893 8,641 4.86 ----- ----- ----- ----- Noninterest-bearing liabilities: Demand deposits 44,070 42,215 45,758 44,628 Other liabilities 3,920 7,468 4,076 2,587 --------- -------- --------- --------- Total liabilities 242,386 288,744 253,705 285,108 Stockholders' equity 35,341 37,895 35,374 38,872 -------- -------- -------- -------- Total liabilities and stockholders' equity $ 277,727 $326,639 $ 289,079 $323,980 ======== ======= ======== ======= Net interest income 3,066 2,658 8,130 8,663 ===== ===== ===== ===== Net interest margin 4.84% 3.63% 4.16% 3.96% ==== ==== ===== =====
Provision for Possible Loan Losses The provision for possible loan losses was $250,000 and $600,000 for the three and nine month periods ended September 30, 1996, respectively, in comparison to $4.43 million and $5.53 million for the same periods in 1995, respectively. Net loan charge-offs were $459,000 and $1.9 million for the three and nine month periods ended September 30, 1996, respectively, compared to $742,000 and $2.33 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. 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 $429,000 and $1.30 million for the three and nine months ended September 30, 1996, respectively, in comparison to $586,000 and $2.36 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 nine months ended September 30, 1995. In addition, other income for the three months ended September 30, 1995 included $179,000 from the termination of the Directors' Retirement Plan. FBA had previously adopted a noncontributory defined benefit pension plan covering non-employee directors of FBA and the Bank. The Directors' Retirement Plan was terminated by the Board of Directors on September 11, 1995. The income represented the nonvested portion previously expensed by FBA under the Directors' Retirement Plan. Loan servicing fees, net, decreased to $13,000 and $46,000 for the three and nine month periods ended September 30, 1996, respectively, in comparison to $30,000 and $138,000 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 nine month period ended September 30, 1996, in comparison to a net loss of $99,000 for the same period in 1995. Noninterest Expenses Noninterest expenses were $2.54 million and $6.62 million for the three and nine month periods ended September 30, 1996, respectively, compared to $2.60 million and $8.61 million for the same periods in 1995. Included within the reduction of noninterest expenses are decreases in salaries and employee benefits of $346,000 and $1.21 million for the three and nine month periods ended September 30, 1996, respectively, compared to the same periods in 1995, occupancy, net of rental income, of $192,000 and $351,000 for the three and nine months ended September 30, 1996, respectively, compared to the same periods in 1995, and data processing fees of $2,000 and $339,000, respectively, for the three and nine months ended September 30, 1996, as compared to the same periods 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 $193,000 for the nine months ended September 30, 1996, compared to the same period in 1995. This decrease resulted from premium rate reductions instituted by the FDIC effective June 1, 1995 and January 1, 1996. Offsetting the decrease in noninterest expenses for the three months ended September 30, 1996 was an increase in other expense of $383,000. This increase is primarily attributable to a non-credit provision for possible losses within the indirect automobile dealer lending operation. 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 63.6% and 64.9% of total assets as of September 30, 1996 and December 31, 1995, respectively. Total loans, net of unearned discount, were $172.7 million and $192.6 million at September 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 declined, FBA has expanded its corporate lending function, including purchasing commercial loans from affiliated banks. The following is a summary of nonperforming assets and past due loans at the dates indicated:
September 30, December 31, 1996 1995 ---- ---- (dollars expressed in thousands) Nonperforming assets: Nonperforming loans $ 421 549 Other real estate 890 1,013 ---------- ------- Total nonperforming assets $ 1,311 1,562 ========= ======= Loans past due: Over 30 days to 90 days $ 6,229 6,649 Over 90 days and still accruing 751 517 ---------- ------- Total past due loans $ 6,980 7,166 ========= ======= Loans, net of unearned discount $ 172,738 192,573 ======== ======= Allowance for possible loan losses to loans 2.26% 2.71% Nonperforming loans to loans 0.24 0.29 Allowance for possible loan losses to nonperforming loans 928.03 952.28 Nonperforming assets to loans and foreclosed assets 0.76 0.81 ==== ====
As of September 30, 1996 and December 31, 1995, approximately $3.3 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 $1.9 million at September 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 nine month periods ended September 30:
Three months ended Nine months ended 1996 1995 1996 1995 ---- ---- ---- ---- (dollars expressed in thousands) Allowance for possible loan losses, beginning of period $ 4,116 2,270 5,228 2,756 ----- ----- ----- ----- Loans charged-off (729) (960) (2,778) (2,832) Recoveries of loans previously charged-off 270 218 857 504 ------- ------ ------- ------ Net loan (charge-offs) recoveries (459) (742) (1,921) (2,328) ------- ----- ------ ----- Provision for possible loan losses 250 4,425 600 5,525 ------- ----- -------- ----- Allowance for possible loan losses, end of period $ 3,907 5,953 3,907 5,953 ====== ===== ====== =====
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 $23.8 million and $29.9 million at September 30, 1996 and December 31, 1995, respectively. At September 30, 1996, FBA's more volatile sources of funds mature as follows: (dollars expressed in thousands) Three months or less $ 7,795 Over three months through six months 3,614 Over six months through twelve months 4,564 Over twelve months 7,871 -------- Total $ 23,844 ======= 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 September 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 13.99% 11.69% 12.73% 10.43% 9.64% 8.38% Bank 10.13 8.01 8.87 6.74 6.97 5.38 On October 1, 1996, FBA purchased an outstanding warrant to acquire 131,336 shares of FBA Common Stock at $ .75 per share from the FDIC, resulting in reduction of capital surplus, for an aggregate of $1.28 million. The warrant had been granted by the former BancTEXAS Group Inc. to the FDIC in connection with its recapitalization in 1987. On September 7, 1996, FBA completed the repurchase of 194,517 shares of its outstanding common stock pursuant to the initial stock repurchase plan approved by the Board of Directors. During 1996, the second stock repurchase plan was approved by the Board of Directors. The second repurchase plan provides for the purchase of up to an additional 184,791 shares. As of November 6, 1996, 8,719 shares were purchased under the second stock repurchase plan. Effects of New Accounting Standard In June 1995, the FASB issued SFAS 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125). SFAS 125 established accounting and reporting standards for transfers and servicing of financial assets and extinguishment of liabilities. The standards established by SFAS 125 are based on consistent applications of a financial-components approach that focuses on control. Under that approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. This statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. SFAS 125 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. FBA does not believe the implementation of SFAS 125 will have a material effect on its consolidated financial position or results of operation. 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: November 12, 1996 By: /s/James F. Dierberg -------------------- James F. Dierberg Chairman, President and Chief Executive Officer Date: November 12, 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 9-mos Dec-31-1996 Jan-01-1996 Sep-30-1996 6,808 722 600 0 71,144 0 0 172,738 (3,907) 271,700 229,418 2,695 4,231 0 0 0 586 34,770 271,700 11,653 2,344 1,292 15,289 6,743 7,159 8,130 600 75 6,622 2,211 2,211 0 0 1,356 .34 .34 7.82 421 751 0 3,327 5,228 (2,778) 857 3,907 3,907 0 0
EX-27 3 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 3,798 0 0 0 586 34,854 287,554 7,629 1,243 1,118 9,990 4,589 4,926 5,064 350 75 4,087 1,501 1,501 0 0 899 .23 .23 7.56 453 549 0 3,060 5,228 (2,049) 587 4,116 4,116 0 0
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