8-K 1 a08-20925_18k.htm 8-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report:  August 6, 2008

 

(Date of earliest event reported)

 

First Regional Bancorp

(Exact name of registrant as specified in its charter)

 

California

 

000-10232

 

95-3582843

(State of

 

(Commission File Number)

 

(IRS Employer

incorporation)

 

 

 

Identification No.)

 

1801 Century Park East, Suite 800

Los Angeles, California  90067

(Address of principal executive offices, including zip code)

 

(310) 552-1776

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


 

Item 7.01 Regulation FD Disclosure.

 

On July 24, 2008, First Regional Bancorp issued a press release announcing its financial results for the quarter ended June 30, 2008. Following the issuance of the press release, First Regional has received inquiries from shareholders, securities analysts, and others. First Regional thought it may be helpful to provide such information in more detailed form herein, even though much of this information has been provided in First Regional’s previous disclosure, including in the July 24 press release. The disclosure of information herein should not be deemed an indication that such information is material. In addition, First Regional undertakes no obligation following the date of this report to update or revise any such statements, whether as a result of new information, future events, or otherwise.

 

First Regional has stated that it meets all financial ratio requirements for “Well Capitalized” status.  Can you elaborate on what those standards are, and how First Regional’s capital ratios compare to the standards?

 

Banking regulators have established different levels of capital adequacy based on the capital ratios of financial institutions.  The highest capital level under this program is “Well Capitalized.”  As we previously reported, First Regional continues to exceed all financial ratio requirements under applicable regulations for “Well Capitalized” status. The detailed computation of the June 30, 2008 capital ratios of First Regional Bancorp and its subsidiary, First Regional Bank, along with the “Well Capitalized” ratio requirements are as follows:

 

 

 

 

 

First

 

First

 

Well

 

 

 

 

 

Regional

 

Regional

 

Capitalized

 

 

 

 

 

Bancorp

 

Bank

 

Standard

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Capital

 

159,305,000

 

230,741,000

 

 

 

 

 

Plus: Trust Preferred Securities

 

 

 

 

 

 

 

 

 

Qualifying as Tier I Capital

 

53,102,000

 

0

 

 

 

Line 1

 

Tier I Capital

 

212,407,000

 

230,741,000

 

 

 

 

 

Plus: Trust Preferred Securities

 

 

 

 

 

 

 

 

 

Qualifying as Tier II Capital

 

44,398,000

 

0

 

 

 

 

 

Plus: Portion of Loan Loss Reserve

 

 

 

 

 

 

 

 

 

Qualifying as Tier II Capital

 

32,507,000

 

32,757,000

 

 

 

Line 2

 

Total Capital

 

289,312,000

 

263,498,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Line 3

 

Average Total Assets

 

2,246,040,000

 

2,407,558,000

 

 

 

Line 4

 

Average Risk-weighted Assets

 

2,588,274,000

 

2,608,536,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier I Leverage Ratio

 

 

 

 

 

 

 

 

 

(Line 1 / Line 3)

 

9.46

%

9.58

%

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

Tier I Capital Ratio

 

 

 

 

 

 

 

 

 

(Line 1 / Line 4)

 

8.21

%

8.85

%

6.00

%

 

 

 

 

 

 

 

 

 

 

 

 

Total Capital Ratio

 

 

 

 

 

 

 

 

 

(Line 2 / Line 4)

 

11.18

%

10.10

%

10.00

%

 

In First Regional’s July 24 press release, First Regional reported its total “non-performing assets” and loans past due 30 to 89 days as of June 30, 2008.  Can you elaborate on what exactly “non-performing assets” are, and can you provide any additional details on these items?

 

Per banking industry convention, non-performing assets consist of loans past due 90 or more days and still accruing interest, loans on non-accrual status, and other real estate owned (“OREO”).  As of June 30, 2008 First Regional had no loans past due 90 or more days which were still accruing interest, and no OREO.  As previously reported, First Regional’s nonperforming assets consisted of just eleven loans as of June 30, 2008.  All such loans were on non-accrual status as of that date. The following includes certain details concerning such eleven loans:

 

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Amount

 

Status

 

Asset Type

 

Collateral

 

 

 

 

 

 

 

 

 

$

3,734,400

 

Non-accrual

 

Land Loan

 

105 acres of residential land in Riverside County, California

 

5,290,400

 

Non-accrual

 

Land Loan

 

18 acres of residential land in Riverside County, California

 

3,050,000

 

Non-accrual

 

Land Loan

 

23 acres of residential land in Silverdale, Washington

 

3,445,000

 

Non-accrual

 

Land Loan

 

Residential land (for 34 units) in Los Angeles County, California

 

12,025,000

 

Non-accrual

 

Land loan

 

162 acres of residential land in Riverside County, California

 

20,261,963

 

Non-accrual

 

Construction Loan

 

Condominium project in Spring Valley (San Diego County) California

 

1,384,051

 

Non-accrual

 

Construction Loan

 

Residence in Los Angeles (Los Angeles County) California

 

3,930,467

 

Non-accrual

 

Construction Loan

 

Luxury residence in Tarzana (Los Angeles County) California

 

8,081,850

 

Non-accrual

 

Construction Loan

 

Condominium conversion in San Diego County, California

 

3,647,800

 

Non-accrual

 

Construction Loan

 

Apartment building in San Diego County, California

 

2,000,000

 

Non-accrual

 

Loan to Individual

 

Unsecured

 

 

 

 

 

 

 

 

 

66,850,931

 

Gross Non-performing Assets

 

 

 

 

 

33,990,238

 

Less: write downs recorded

 

 

 

 

 

$

32,860,693

 

Reported Non-performing Assets

 

 

 

 

 

 

The following includes certain details concerning First Regional’s loans which were 30 to 89 days past due as of June 30, 2008:

 

Amount

 

Asset Type

 

Collateral

 

 

 

 

 

 

 

$

1,500,000

 

Land Loan

 

7 acres of residential land (for 240 units) in Riverside County, California

 

800,000

 

Land Loan

 

Residential land (for 20 homes) in Los Angeles County, California

 

2,125,000

 

Land Loan

 

Residential land (for 20+ units) in Los Angeles County, California

 

1,024,957

 

Construction Loan

 

Condominium project in Los Angeles County, California

 

3,383,567

 

Construction Loan

 

Condominium project in Los Angeles County, California

 

10,235,661

 

Construction Loan

 

Condominium project in Los Angeles County, California

 

3,360,837

 

Construction Loan

 

Condominium project in Los Angeles County, California

 

435,000

 

Loan to Individual

 

Unsecured

 

 

 

 

 

 

 

22,865,022

 

Gross Other Delinquent Loans

 

 

 

0

 

Less: prior write downs

 

 

 

$

22,865,022

 

Reported Other Delinquent Loans

 

 

 

 

It is evident from First Regional’s previous disclosures that First Regional’s time deposits experienced significant growth over the past twelve months, and particularly in the second quarter of 2008.  Can you elaborate on any reasons for this increase?

 

The second quarter growth in First Regional’s time deposits reflects the Company’s decision to increase deposits obtained from under-represented sources such as time deposits.  Historically, the Company has not competed aggressively for such deposits, since the cost of time deposits is typically higher than the costs of the Company’s other funding sources.  In the second quarter of 2008, however, the Company sought more time deposits in an effort to reduce the utilization of supplemental funding sources (such as advances from the Federal Home Loan Bank), so as to hold such supplemental funding sources in reserve for possible future funding needs.  While the cost of time deposits is higher than the supplemental funding sources which they replaced, the rates paid remained at the low end of the market for such deposits.

 

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This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical fact, included herein may constitute forward-looking statements.  Although First Regional believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from First Regional’s expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which First Regional conducts its operations.

 

Statements made herein are made as of the date hereof only.  First Regional undertakes no obligation following the date of this report to update or revise any forward-looking statements or other statements contained herein, whether as a result of new information, future events, or otherwise.

 

 

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SIGNATURE

 

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 hereunto duly authorized.

 

Dated:  August 6, 2008

 

 

 

FIRST REGIONAL BANCORP

 

 

 

 

 

By:

/s/ Thomas E. McCullough

 

Thomas E. McCullough

 

Corporate Secretary

 

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