-----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, OOP/RLId65EYiYb/X/JGujqGOs388HvtbmridDf2te9utoZshToVy2z1saF9B5gw +sW6IzouoxAAA3TnrUWAjA== 0000710507-97-000005.txt : 19971114 0000710507-97-000005.hdr.sgml : 19971114 ACCESSION NUMBER: 0000710507-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANKS INC CENTRAL INDEX KEY: 0000710507 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 431175538 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20632 FILM NUMBER: 97714085 BUSINESS ADDRESS: STREET 1: 135 N MERAMEC AVE CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148544600 MAIL ADDRESS: STREET 1: 135 N MERAMEC AVE CITY: ST LOUIS STATE: MO ZIP: 63105 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 September 30, 1997 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 0-20632 FIRST BANKS, INC. ----------------- (Exact name of registrant as specified in its charter) MISSOURI 43-1175538 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 135 NORTH MERAMEC, CLAYTON, MISSOURI 63105 ------------------------------------------ (address of principal executive offices) (Zip Code) (314) 854-4600 -------------- (Registrant's telephone number, including area code) 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, 1997 ----- ---------------- Common Stock, $250.00 par value 23,661 First Banks, Inc. INDEX Page PART I FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 -1- Consolidated Statements of Income for the three and nine months ended September 30, 1997 and 1996 -3- Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 -4- Notes to Consolidated Financial Statements -5- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations -8- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -17- Signatures -18- PART I - FINANCIAL INFORMATION Item 1. Financial Statements FIRST BANKS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data)
September 30, December 31, ASSETS 1997 1996 ------ ---- ---- Cash and cash equivalents: Cash and due from banks .............................................. $ 126,420 147,804 Interest-bearing deposits with other financial institutions-with maturities of three months or less ............................................................. 6,525 6,050 Federal funds sold ................................................... 104,300 74,100 ------------ ---------- Total cash and cash equivalents .................................. 237,245 227,954 ------------ ---------- Investment securities: Available for sale, at fair value .................................... 674,580 532,605 Held to maturity, at amortized cost (estimated fair value of $20,062 and $20,611 at September 30, 1997 and December 31,1996, respectively).................................... 19,507 20,196 Trading securities.................................................... 3,681 -- ------------ ---------- Total investment securities ...................................... 697,768 552,801 ------------ ---------- Loans: Commercial and industrial............................................. 576,528 457,186 Real estate construction and development ............................. 373,058 289,378 Real estate mortgage: Residential......................................................... 949,626 1,059,769 Other............................................................... 653,609 600,811 Consumer and installment ............................................. 297,515 341,154 Loans held for sale-residential mortgage ............................. 48,231 27,485 ------------ ---------- Total loans ...................................................... 2,898,567 2,775,783 Unearned discount .................................................... (8,049) (7,814) Allowance for possible loan losses ................................... (50,740) (46,781) ------------- ---------- Net loans ........................................................ 2,839,778 2,721,188 ------------ --------- Bank premises and equipment, net of accumulated depreciation ............................................. 47,983 48,078 Intangibles associated with the purchase of subsidiaries ...................................................... 22,857 23,303 Purchased mortgage servicing rights, net of amortization ...................................................... 8,935 10,230 Accrued interest receivable ............................................. 26,195 23,250 Other real estate owned ................................................. 8,170 10,607 Deferred income taxes ................................................... 45,590 43,406 Other assets ............................................................ 22,687 28,337 ------------ --------- Total assets ..................................................... $ 3,957,208 3,689,154 ============ =========
FIRST BANKS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data) (continued)
September 30, December 31, 1997 1996 ---- ---- LIABILITIES ----------- Deposits: Demand: Non-interest bearing ........................................... $ 436,514 418,193 Interest bearing ............................................... 323,766 337,618 Savings .......................................................... 846,091 671,286 Time: Time deposits of $100 or more .................................. 206,075 169,057 Other time deposits ............................................ 1,690,540 1,642,413 ----------- ----------- Total deposits ........................................ 3,502,986 3,238,567 Federal Home Loan Bank advances....................................... 2,346 39,277 Other borrowings...................................................... 47,548 30,705 Notes payable ........................................................ 5,155 76,330 Accrued interest payable ............................................. 9,274 10,288 Deferred income taxes ................................................ 12,184 6,194 Accrued and other liabilities ........................................ 12,016 23,521 Minority interest in subsidiaries..................................... 13,083 12,883 Guaranteed preferred beneficial interest in First Banks' subordinated debentures, net of issuance costs ................................................... 83,156 -- ----------- --------- Total liabilities ..................................... 3,687,748 3,437,765 ----------- ----------- STOCKHOLDERS' EQUITY -------------------- Preferred stock: Class C 9.00% increasing rate, redeemable, cumulative, $1.00 par value, $25.00 stated value; 5,000,000 shares authorized; 1,884,500 shares and 2,155,500 shares issued and outstanding at September 30, 1997 and December 31, 1996, respectively............................... 47,113 53,887 Class A, convertible, adjustable rate, $20.00 par value; 750,000 shares authorized; 641,082 shares issued and outstanding ...... 12,821 12,822 Class B, adjustable rate, $1.50 par value; 200,000 shares authorized; 160,505 shares issued and outstanding ............ 241 241 Common stock, $250.00 par value; 25,000 shares authorized; 23,661 shares issued and outstanding .................. 5,915 5,915 Capital surplus ...................................................... 2,729 3,289 Retained earnings .................................................... 191,678 171,182 Net fair value adjustment for securities available for sale ................................................ 8,963 4,053 ----------- ----------- Total stockholders' equity ............................ 269,460 251,389 ----------- ----------- Total liabilities and stockholders' equity ............ $ 3,957,208 3,689,154 =========== =========== See accompanying notes to consolidated financial statements
FIRST BANKS, INC. AND SUBSIDIARIES Consolidated Statements of Income (unaudited) (dollars expressed in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, ------------------ ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Interest income: Interest and fees on loans................................. $ 64,334 59,414 187,431 175,941 Investment securities...................................... 8,508 4,742 24,988 17,966 Federal funds sold and other............................... 1,898 958 4,400 3,782 --------- -------- --------- ------- Total interest income................................ 74,740 65,114 216,819 197,689 --------- -------- --------- ------- Interest expense: Deposits: Interest-bearing demand.................................. 1,409 1,117 4,214 3,530 Savings.................................................. 7,221 5,578 18,260 16,953 Time deposits of $100 or more............................ 2,668 2,113 7,536 6,960 Other time deposits...................................... 23,881 21,721 70,910 66,060 Federal Home Loan Bank advances............................ 44 711 410 1,954 Securities sold under agreements to repurchase............. 490 323 1,232 762 Interest rate exchange agreements, net .................... 3,227 1,838 5,610 6,035 Notes payable and other.................................... 70 1,311 832 4,326 First Banks' subordinated debentures....................... 2,083 -- 5,462 -- --------- -------- --------- ------- Total interest expense............................... 41,093 34,712 114,466 106,580 --------- -------- --------- ------- Net interest income.................................. 33,647 30,402 102,353 90,109 Provision for possible loan losses.............................. 3,100 2,570 9,125 8,774 --------- -------- --------- ------- Net interest income after provision for possible loan losses........................... 30,547 27,832 93,228 82,335 --------- -------- --------- ------- Noninterest income: Service charges on deposit accounts and customer service fees................................... 3,208 3,154 9,176 9,411 Credit card fees........................................... 788 663 2,248 1,897 Loan servicing fees, net................................... 398 534 1,262 1,346 Gain (loss) on mortgage loans sold and held for sale....... 162 (119) 370 (7) Gain (loss) on sale of securities, net..................... 2,241 (625) 2,241 (421) Gain on trading securities, net............................ 91 -- 113 -- Other income............................................... 1,941 1,688 4,335 2,891 --------- -------- --------- ------- Total noninterest income............................. 8,829 5,295 19,745 15,117 --------- -------- --------- ------- Noninterest expenses: Salaries and employee benefits............................. 10,756 9,724 31,684 30,085 Occupancy, net of rental income............................ 2,711 2,310 7,924 7,245 Furniture and equipment.................................... 1,654 1,734 5,704 5,404 Federal Deposit Insurance Corporation premiums............. 264 9,479 579 11,355 Postage, printing and supplies............................. 803 985 3,044 3,660 Data processing fees....................................... 2,323 1,130 5,844 3,479 Legal, examination and professional fees................... 967 1,098 3,136 3,620 Credit card expenses....................................... 863 713 2,503 2,149 Communications............................................. 594 712 1,849 1,992 Advertising and business development expense............... 1,098 299 2,711 1,253 (Gain)loss on sales of foreclosed real estate, net of expenses (273) 460 (180) 951 Other expenses............................................. 4,080 3,513 10,598 10,044 --------- -------- --------- ------- Total noninterest expenses........................... 25,840 32,157 75,396 81,237 --------- -------- --------- ------- Income before provision (benefit) for income taxes and minority interest in income of subsidiaries....... 13,536 970 37,577 16,215 Provision (benefit) for income taxes............................ 4,632 (814) 12,397 4,304 --------- --------- --------- ------- Income before minority interest in income of subsidiaries................................... 8,904 1,784 25,180 11,911 Minority interest in income of subsidiaries..................... (363) (252) (940) (472) ----------- --------- ---------- ------- Net income........................................... 8,541 1,532 24,240 11,439 Preferred stock dividends....................................... 1,256 1,434 3,744 4,237 --------- -------- --------- ------- Net income available to common shareholders.......... $ 7,285 98 20,496 7,202 ========= ======== ========= ======= Earnings per share: Primary.................................................... $ 307.89 4.12 866.22 304.39 Fully Diluted.............................................. 295.42 11.37 830.02 302.68 ========= ======== ========= ======= Weighted average shares of common stock outstanding............. 23,661 23,661 23,661 23,661 ========= ======== ========= ======= See accompanying notes to consolidated financial statements
FIRST BANKS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited) (dollars expressed in thousands, except per share data)
Nine months ended September 30, --------------------- 1997 1996 ---- ---- Cash flows from operating activities: Net income............................................................. $ 24,240 11,439 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of bank premises and equipment..................................................... 4,396 4,314 Amortization, net of accretion..................................... 3,505 3,360 Originations and purchases of loans held for sale.................. (121,137) (104,923) Proceeds from sales of loans held for sale ........................ 94,716 91,336 Provision for possible loan losses................................. 9,125 8,774 Provision for income taxes......................................... 12,397 4,304 Payments of income taxes........................................... (11,169) (5,018) Increase in accrued interest receivable ........................... (5,015) (824) Net increase in trading securities................................. (3,681) -- Interest accrued on liabilities.................................... 114,230 106,579 Payments of interest on liabilities................................ (115,480) (107,665) Other, net......................................................... (7,303) 9,938 Minority interest in income of subsidiaries........................ 940 472 -------- --------- Net cash provided by (used in) operating activities........... (236) 22,086 -------- --------- Cash flows from investing activities: Cash and cash equivalents received from acquisitions................... 82,234 -- Other sales of investment securities................................... -- 83,616 Maturities of investment securities.................................... 261,934 308,411 Purchases of investment securities..................................... (394,448) (338,631) Net increase in loans.................................................. (111,317) (4,566) Recoveries of loans previously charged-off ............................ 7,544 5,229 Purchases of bank premises and equipment............................... (4,062) (2,550) Other investing activities............................................. 4,652 7,547 -------- --------- Net cash provided by (used in) investing activities........... (153,463) 59,056 -------- --------- Cash flows from financing activities: Other increases (decreases) in deposits: Demand and savings deposits........................................ 166,754 (41,067) Time deposits...................................................... 14,929 (87,883) Decrease in Federal funds purchased ................................... -- 12,000 (Decrease) increase in Federal Home Loan Bank advances................. (36,931) 21,693 Increase in other borrowings........................................... 16,843 24,565 Decrease in notes payable.............................................. (71,175) (22,772) Purchase and retirement of Class C preferred stock..................... (6,774) (230) Proceeds from sale of cumulative preferred trust securities, net of issuance costs................................... 83,086 -- Payment of preferred stock dividends................................... (3,742) (4,237) --------- --------- Net cash provided by (used in) financing activities .......... 162,990 (97,931) -------- --------- Net increase (decrease) in cash and cash equivalents ......... 9,291 (16,789) Cash and cash equivalents, beginning of period ............................. 227,954 199,213 -------- --------- Cash and cash equivalents, end of period.................................... $237,245 182,424 ======== ========= Noncash investing and financing activities: Loans transferred to foreclosed real estate............................ $ 3,062 7,332 ======== ========= See accompanying notes to consolidated financial statements
FIRST BANKS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying consolidated financial statements of First Banks, Inc. and subsidiaries (First Banks) are unaudited and should be read in conjunction with the consolidated financial statements contained in the 1996 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, 1997 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 1997. First Banks' primary subsidiaries (Subsidiary Banks) are: First Bank, headquartered in St. Louis County, Missouri (First Bank Missouri) First Bank, headquartered in O'Fallon, Illinois (First Bank Illinois) First Bank FSB, headquartered in St. Louis County, Missouri (First Bank FSB) First Banks America, Inc., headquartered in St. Louis County, Missouri (FBA) CCB Bancorp, Inc., headquartered in Irvine, California (CCB) First Commercial Bancorp, Inc., headquartered in Sacramento, California (FCB) First Bank Missouri and First Bank Illinois are wholly owned banking subsidiaries. First Bank FSB is a wholly owned thrift subsidiary. CCB, a wholly owned bank holding company subsidiary, operates through First Bank & Trust, headquartered in Irvine, California (FB&T). FBA, a majority-owned bank holding company subsidiary, operates through two banking subsidiaries, BankTEXAS N.A., headquartered in Houston, Texas (BTX) and Sunrise Bank of California, headquartered in Roseville, California (Sunrise Bank). FCB, a majority-owned bank holding company subsidiary, operates through First Commercial Bank, headquartered in Sacramento, California (First Commercial). First Banks' ownership interest in FBA was 70.23% and 68.82% at September 30, 1997 and December 31, 1996, respectively. First Banks' ownership interest in FCB was 61.48% and 61.46% at September 30, 1997 and December 31, 1996, respectively. The consolidated financial statements include the accounts of First Banks, Inc. and its subsidiaries, net of minority interests. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications of 1996 amounts have been made to conform with the 1997 presentation. (2) Mergers and Acquisitions On March 27, 1997, First Banks completed its assumption of the deposits and purchase of selected assets of two Long Beach, California banking locations of Highland Federal Bank, FSB. The transaction resulted in the acquisition of $40.4 million in deposits and two offices which will operate as branches of FB&T. On September 25, 1997, First Banks completed its assumption of the deposits and purchase of selected assets of the Woodland Hills, California banking location of Highland Federal Bank, FSB. The transaction resulted in the acquisition of $42.4 million in deposits and one office which will operate as a branch of FB&T. On July 28, 1997, FBA and Surety Bank entered into an Agreement and Plan of Reorganization (Surety Agreement) providing for the acquisition of Surety Bank by FBA. Under the terms of the Surety Agreement, which is conditioned upon receipt of regulatory approvals and the approval of Surety shareholders Surety Bank shareholders will receive FBA common stock and cash valued at approximately $8.31 million as of September 30, 1997. Surety Bank, along with Sunrise Bank, will be merged into a newly formed commercial bank charter of FBA (the Northern California Bank). Surety Bank operates banking offices in Vallejo and Fairfield, California. At September 30, 1997, Surety Bank had total assets of $75.21 million, and reported net income of $239,000 for the nine month period then ended. The transaction will be accounted for using the purchase method of accounting and is expected to be completed by December 31, 1997. On September 22, 1997, FBA and Pacific Bay Bank, San Pablo, California (Pacific Bay), announced the signing of a Definitive Agreement and Plan of Merger (Pacific Bay Agreement) providing for the acquisition of Pacific Bay by FBA. Under the terms of the Pacific Bay Agreement, Pacific Bay shareholders will receive $14.00 per share in cash for their stock, an aggregate of $4.2 million. Pacific Bay operates a banking office in San Pablo, California and a loan production office in Lafayette, California. At September 30, 1997, Pacific Bay had total assets of $37.5 million, and reported net income of $35,000 for the nine month period then ended. Pacific Bay will merge into the Northern California Bank. The transaction, which is subject to regulatory approvals and the approval of the shareholders of Pacific Bay, is expected to be completed during the first quarter of 1998 and will be accounted for using the purchase method of accounting. On October 3, 1997, FBA and FCB executed an Agreement and Plan of Merger (Agreement) providing for the merger of the two companies. Under the terms of the Agreement, FCB will be merged into FBA, with FCB shareholders receiving .8888 shares of FBA common stock for each share of FCB common stock held. As soon as practicable thereafter, First Commercial will be merged into the Northern California Bank. The transaction, which is subject to the approval of regulatory authorities and the shareholders of both FBA and FCB, also provides for First Banks to receive 804,000 shares of FBA common stock in exchange for $10 million of FBA's note payable to First Banks, and the exchange of FCB convertible debentures of $6.5 million, which are owned by First Banks, for comparable debentures of FBA. The agreement was negotiated and approved by special committees of the Boards of Directors of FCB and FBA comprised solely of independent directors of the two respective Boards of Directors. The transaction is expected to be completed by December 31, 1997. The merger of FBA and FCB will not have a significant impact on the financial condition or results of operation of First Banks. (3) Cumulative Trust Preferred Securities of First Preferred Capital Trust On February 4, 1997, First Preferred Capital Trust (First Capital), a newly-formed Delaware business trust subsidiary of First Banks, issued 3.45 million shares of 9.25% Cumulative Trust Preferred Securities (Preferred Securities) at $25 per share in an underwritten public offering, and issued 106,702 shares of common securities to First Banks at $25 per share. First Banks owns all of First Capital's common securities. The gross proceeds of the offering were used by First Capital to purchase $88.9 million of 9.25% Subordinated Debentures (Subordinated Debentures) from First Banks. The Subordinated Debentures are the sole asset of First Capital. In connection with the issuance of the Preferred Securities, First Banks made certain guarantees and commitments that, in the aggregate, constitute a full and unconditional guarantee by First Banks of the obligations of First Capital under the Preferred Securities. First Banks' proceeds from the issuance of the Subordinated Debentures to First Capital, net of underwriting fees and offering expenses, were $83.1 million. Distributions payable on the Preferred Securities were $2.1 million and $5.5 million for the three and nine month periods ended September 30, 1997 and are recorded as interest expense in the accompanying consolidated financial statements. The proceeds from the offering were used for general corporate purposes, including the reduction of borrowings under a credit agreement with a group of unaffiliated banks (Credit Agreement) and the repurchase of 284,000 shares of Class C 9.00% Increasing Rate, Redeemable, Cumulative Preferred Stock (Class C Preferred Stock) for $7.3 million. The remaining proceeds have been temporarily invested. (4) Redemption of the Class C 9.00% Preferred Stock On October 17, 1997, First Banks announced its intent to redeem the remaining outstanding Class C Preferred Stock at its aggregate par value of $47.1 million, effective December 1, 1997. The Class C Preferred Stock was issued and sold in a public offering in September, 1992. First Banks will fund the redemption through an advance under its Credit Agreement. (5) Regulatory Capital First Banks and the Subsidiary Banks are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on First Banks' and the Subsidiary Banks' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Subsidiary Banks must meet specific capital guidelines that involve quantitative measures of the Subsidiary Banks' assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Subsidiary Banks' capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulations to ensure capital adequacy require the Subsidiary Banks to maintain certain minimum ratios. The Subsidiary Banks are required to maintain a minimum risk-based capital to risk-weighted assets ratio of 8.0%, with at least 4.0% being "Tier 1" capital (as defined in the regulations) and a minimum leverage ratio (Tier 1 capital to total assets) of 3.0%. An additional cushion of 100 to 200 basis points is required to be considered well capitalized. As of September 30, 1997, the date of the most recent notification from First Banks' primary regulator, First Bank Missouri was categorized as well capitalized under the regulatory framework for prompt corrective action. There have been no conditions or events since that notification that management believes have changed the First Bank Missouri category. Management believes that, as of September 30, 1997, all of the Subsidiary Banks are well capitalized as defined by the Federal Deposit Insurance Corporation Improvement Act of 1991. At September 30, 1997 and December 31, 1996, First Banks' and the subsidiary depository institutions' capital ratios were as follows:
Risk based capital ratios ------------------------- Total Tier 1 Leverage Ratio ----- ------ -------------- 1997 1996 1997 1996 1997 1996 ---- ---- ---- ---- ---- ---- First Banks 12.28% 9.23% 8.52% 7.92% 6.56% 5.99% First Bank FSB 10.77 11.00 9.66 9.75 7.08 6.45 First Bank Missouri 10.29 10.47 9.04 9.21 7.36 7.25 First Bank Illinois 11.58 11.06 10.33 9.88 7.73 7.17 FB&T 14.96 16.45 13.69 15.18 9.50 11.43 BTX 12.21 10.29 10.95 9.04 8.76 7.53 Sunrise Bank 14.85 17.67 13.58 16.39 12.49 10.88 First Commercial 12.80 13.13 11.52 11.84 8.90 8.87
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations General First Banks is a registered bank holding company, incorporated in Missouri in 1978 and headquartered in St. Louis County, Missouri. At September 30, 1997, First Banks had $3.96 billion in total assets; $2.89 billion in total loans, net of unearned discount; $3.50 billion in total deposits; and $269.46 million in total stockholders' equity. Through the Subsidiary Banks, First Banks 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, commercial and residential real estate and consumer and installment loans. Other financial services include mortgage banking, discount brokerage, credit-related insurance, automatic teller machines, safe deposit boxes, cash management, lockbox and trust services offered by certain Subsidiary Banks.
The following table lists the Subsidiary Banks at September 30, 1997: Loans, net Percent of No. of of unearned Total Subsidiary Banks ownership locations Total assets discount deposits - ---------------- --------- --------- ------------ -------- -------- (dollars expressed in thousands) First Bank FSB 100.00% 40 $ 1,032,910 881,917 932,751 First Bank Missouri 100.00% 31 901,359 689,309 805,230 First Bank Illinois 100.00% 27 848,910 630,299 774,317 CCB 100.00% 17 615,379 334,397 541,767 FBA 70.23% 8 376,547 248,462 311,848 FCB 61.48% 6 178,861 106,133 161,372
Financial Condition First Banks' total assets increased by $270 million to $3.96 billion from $3.69 billion at September 30, 1997 and December 31, 1996, respectively. The increase is primarily attributable to the increase in loans, net of unearned discount, of $123 million and the increase in investment securities of $145 million. The composition of the increase in net loans is discussed under "--Lending and Credit Management" of this Form 10-Q. The increase in total assets was funded by deposits, which increased by $260 million to $3.50 billion and $3.24 billion at September 30, 1997 and December 31, 1996, respectively. Results of Operations Net Income Net income for the three months ended September 30, 1997 was $8.5 million, compared to $1.5 million for the same period in 1996, an increase of 466.7%. Net income for the nine months ended September 30, 1997 was $24.2 million compared to $11.4 million for the same period in 1996. The results of operations for the three and nine months ended September 30, 1996 were adversely affected by the $8.6 million charge ($5.6 million after the applicable income tax benefit) assessed against all deposits insured by the Savings Association Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation (FDIC). As more fully described below, the improvement in net income is attributable to increases in net interest income and noninterest income and a decrease in noninterest expense, as compared to the same periods in 1996. Net Interest Income Net interest income (expressed on a tax-equivalent basis) improved to $33.8 million, or 3.74% of average interest earning assets, for the three months ended September 30, 1997, from $30.5 million, or 3.71% of average interest earning assets, for the same period in 1996. Net interest income (expressed on a tax-equivalent basis) improved to $103.0 million, or 3.94% of average interest earning assets, for the nine months ended September 30, 1997, from $91.3 million, or 3.69% of average interest earning assets, for the same period in 1996. The increased net interest income for 1997 is attributable to the increase in average interest earning assets of $322.7 million and $194.7 million for the three and nine month periods ended September 30, 1997, respectively, compared to the same periods in 1996. The increase is attributable to loans which increased on average by $163.5 million and $109.3 million for the three and nine month periods ended September 30, 1997, respectively, over the same periods in 1996. Contributing further to the improved net interest income is the increase in the yield of the loan portfolio to 8.89% for the three and nine month periods ended September 30, 1997, from 8.72% and 8.64% for the three and nine month periods ended September 30,1996, respectively. The improved yield reflects the continual process of realigning the loan portfolio from residential real estate loans to other types of loans, such as commercial and construction loans, which generally provide a higher level of net interest income. Offsetting the increase in net interest income is the amortization and periodic costs of hedging the interest rate risk position of First Banks. The cost of hedging totaled $3.2 million and $5.6 million for the three and nine month periods ended September 30, 1997, respectively, compared $3.4 million and $8.8 million for the same periods in 1996. As more fully discussed under "-- Interest Rate Risk Management," the cost of hedging for the three months ended September 30, 1997 includes $2.1 million of additional amortization of deferred losses. The decrease in the cost of hedging for the nine months of 1997 compared with the same period in 1996 is attributable to the reduced level of interest rate risk resulting from the realignment of the loan portfolio combined with the gradual changes in the composition of the investment securities portfolios, from mortgage-backed securities to U.S. Treasury and generic U.S. government agencies securities, and the distribution of interest-bearing liabilities. The following table sets forth, on a tax-equivalent basis, certain information relating to First Banks' 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, --------------------------------------------- ----------------------------------------- 1997 1996 1997 1996 ---------------------- ---------------------- ------------------- ------------------- 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 $2,870,094 64,418 8.90% $2,706,607 59,314 8.72% $2,822,754 187,695 8.89% $2,713,444 175,611 8.64% Investment securities 583,551 8,619 5.86 491,325 4,908 3.97 567,645 25,371 5.98 494,470 18,483 4.99 Federal funds sold and other 137,474 1,898 5.48 70,516 959 5.41 106,678 4,400 5.51 94,418 3,782 5.35 ---------- ------- ---------- ------ ---------- ------ ---------- --------- Total interest-earning assets 3,591,119 74,935 8.28 3,268,448 65,181 7.93 3,497,077 217,466 8.31 3,302,332 197,876 8.00 ------ ------ ------- ------- Nonearning assets 201,766 222,544 218,238 222,692 ---------- ---------- ---------- ---------- Total assets $3,792,885 $3,490,992 $3,715,315 $3,525,024 ========== ========== ========== ========== Liabilities and Stockholders' Equity ------------------------------------ Interest-bearing liabilities: Interest-bearing demand deposits $ 327,616 1,409 1.71% 292,153 1,117 1.52% $330,529 4,214 1.70% $ 298,990 3,530 1.58% Savings deposits 779,690 7,221 3.68 676,200 5,578 3.28 715,656 18,260 3.41 684,640 16,953 3.31 Time deposits of $100 or more (1)186,424 2,987 6.36 154,995 2,291 5.88 178,194 8,063 6.05 169,889 7,545 5.93 Other time deposits (1) 1,660,059 26,720 6.40 1,575,117 23,327 5.89 1,677,714 75,858 6.05 1,590,836 71,332 5.99 ---------- ------- ---------- ------ ---------- ------ --------- ------- Total interest-bearing deposits 2,953,789 38,328 5.16 2,698,465 32,313 4.76 2,902,093 106,395 4.90 2,744,355 99,360 4.84 Notes payable and other (1) 137,927 2,765 7.98 148,540 2,398 6.42 138,571 8,071 7.79 140,694 7,219 6.85 ---------- ------- ---------- ----- ---------- ------- ---------- ------- Total interest-bearing liabilities 3,091,716 41,093 5.27 2,847,005 34,711 4.85 3,040,664 114,466 5.03 2,885,049 106,579 4.93 ------- ------ ------- ------- Noninterest-bearing liabilities: Demand deposits 399,745 366,954 381,784 365,413 Other liabilities 37,610 35,431 37,300 36,252 ---------- ---------- ---------- ---------- Total liabilities 3,529,071 3,249,390 3,459,748 3,286,714 Stockholders' equity 263,814 241,602 255,567 238,310 ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $3,792,885 $3,490,992 $3,715,315 $3,525,024 ========== ========== ========== ========== Net interest income 33,842 30,470 103,000 91,297 ======= ====== ======= ======= Net interest margin 3.74% 3.71% 3.94% 3.69% ===== ===== ===== ===== (1) Includes the effects of interest rate exchange agreements.
Provision for Possible Loan Losses The provision for possible loan losses was $3.1 million compared to $2.6 million for the three months ended September 30, 1997 and 1996, respectively. For the nine months ended September 30, 1997 and 1996, the provisions for possible loan losses were $9.1 million and $8.8 million, respectively. The provision in 1997 reflects the overall growth and realignment of the loan portfolio. While the provision for possible loan losses for the 1997 periods was not substantially different from those of the preceding year, the adequacy of the allowance for possible loan losses improved as a result of the lower level of net charge-offs in 1997. Net loan charge-offs were $67,000 and $5.2 million for the three and nine month periods ended September 30, 1997, respectively, compared to $3.1 million and $16.1 million for the three and nine month periods ended September 30, 1996, respectively. Following various acquisitions during 1994 and 1995, First Banks pursued aggressive problem loan work out procedures which included conservatively re-valuing loans through charge-offs. While these adjustments were anticipated prior to the acquisitions and adequate reserves for loan losses had been established to provide for them, loan charge-offs increased in 1996. However, as this work-out program progressed, loan charge-offs have declined while recoveries of loans previously charged-off have increased. Tables summarizing nonperforming assets, past due loans and charge-off experience are presented under "--Lending and Credit Management" of this Form 10-Q. Noninterest Income Noninterest income was $8.8 million and $19.7 million for the three and nine month periods ended September 30, 1997, respectively, in comparison to $5.3 million and $15.1 million for the same periods in 1996. Noninterest income consists primarily of service charges on deposit accounts and other non-yield customer service fees. In addition, noninterest income includes gains and losses upon sales of assets. The increase in noninterest income is primarily attributable to a $2.24 million net gain on sale of securities for the three and nine month periods ended September 30, 1997, compared to net losses of $625,000 and $421,000 for the three and nine month periods ended September 30, 1996, respectively. Service charges on deposit accounts and customer service fees were $3.2 million and $9.2 million for the three and nine month periods ended September 30, 1997, respectively, compared to $3.2 and $9.4 million for the same periods in 1996. The decrease for the nine month period ended September 30, 1997 is attributable to the development of First Banks' "aggregate balance pricing structure" whereby customers maintaining specified deposit balances, determined on an aggregate basis of any deposit relationship with First Banks, may avoid certain service charges. For the three month period ended September 30, 1997, as compared to the same period in 1996, the decrease has been offset by an increase in the demand deposit accounts subject to such service charges. The gain on sale of securities, net of $2.24 million for the three and nine month periods ended September 30, 1997 is attributable to the sales of certain residual securities which had been acquired by First Banks through an acquisition completed in 1995. These residuals, which had been written-down to diminimous values at the date of acquisition, entitled First Banks to the remaining cash flows of certain collateralized mortgage-backed securities (CMOs) available upon redemption of the CMOs. However, the combination of the unique structure of the CMOs and changes in interest rate and mortgage markets operated to significantly enhance their value in 1997. This compares to net losses of $625,000 and $421,000 for the three and nine months ended September 30, 1996, respectively. The securities sold were classified as available for sale within the investment security portfolio. Noninterest Expenses Noninterest expenses were $25.8 million and $32.2 million for the three month periods ended September 30, 1997 and 1996, respectively. For the nine month periods ended September 30, 1997 and 1996, noninterest expenses were $75.4 million and $81.2 million, respectively. The decrease is attributable to the 1996 special assessment to recapitalize the SAIF and the overall reduction in the deposit insurance assessment rate for 1997. Partially offsetting this decrease are the noninterest expenses of Sunrise Bank, which was acquired by First Banks on November 1, 1996, of $1.02 million and $3.31 million for the three and nine month periods ended September 30, 1997, respectively, and increased advertising and business development expenses. Advertising and business development expense was $1.1 million and $299,000 for the three months ended September 30, 1997 and 1996, respectively. For the nine months ended September 30, 1997 and 1996, advertising and business development expense was $2.71 million and $1.25 million, respectively. The increase is primarily attributable to media advertising campaigns which were instituted beginning in the third quarter of 1996. FDIC premiums decreased by $9.21 million and $10.78 million for the three and nine month periods ended September 30, 1997 and 1996, respectively, as a result of the reduction in the assessment rate charged on deposits insured by the SAIF of the FDIC. The reduction in the assessment rate was effective upon the recapitalization of the SAIF, accomplished by a one-time special deposit insurance charge assessed to all financial institutions with deposits insured by the SAIF. First Banks' one-time charge totaled $8.6 million and was reflected in the operating results during the third quarter of 1996. Lending and Credit Management Interest earned on the loan portfolio is the primary source of income of First Banks. Total loans, net of unearned discount, represented 73.0% and 75.0% of total assets as of September 30, 1997 and December 31, 1996, respectively. Total loans, excluding loans held for sale and net of unearned discount, increased by $100 million to $2.84 billion at September 30, 1997 from $2.74 billion at December 31, 1996. The increase reflects continued growth within corporate lending of $256 million, offset by the decrease of the residential mortgage and consumer and installment loan portfolios of $110 million and $44 million, respectively, at September 30, 1997 in comparison to December 31, 1996. These decreases are attributable to the reductions of new loan origination volumes that are held for investment and the continued repayment of principal on the existing portfolios.
The following is a summary of nonperforming assets by category: September 30, December 31, 1997 1996 ---- ---- (dollars expressed in thousands) Commercial, financial and agricultural $ 5,237 4,243 Real estate construction and development 2,942 817 Real estate mortgage 19,147 24,764 Consumer and installment 104 445 ----------- ----------- Total nonperforming loans 27,430 30,269 Other real estate 8,170 10,607 ----------- ----------- Total nonperforming assets $ 35,600 40,876 =========== =========== Loans, net of unearned discount $ 2,890,518 2,767,969 =========== =========== Loans past due 90 days or more and still accruing $ 2,018 3,779 =========== =========== Asset Quality Ratios: Allowance for possible loan losses to loans 1.76% 1.69% Nonperforming loans to loans .95 1.09 Allowance for possible loan losses to nonperforming loans 184.98 154.55 Nonperforming assets to loans and other real estate 1.23 1.47 ====== ======
Impaired loans, consisting of nonaccrual loans, were $27.4 million and $30.3 million at September 30, 1997 and December 31, 1996, respectively. The following is a summary of loan loss experience for the three and nine month periods ended September 30:
Three months ended Nine months ended September 30, September 30, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- (dollars expressed in thousands) Allowance for possible loan losses, beginning of period $ 47,708 45,921 46,781 52,665 --------- ------ ------ ------- Loans charged-off (2,062) (4,869) (12,710) (21,303) Recoveries of loans previously charged-off 1,994 1,743 7,544 5,229 --------- ------ -------- ------- Net loan (charge-offs) recoveries (68) (3,126) (5,166) (16,074) --------- ------ -------- ------- Provision for possible loan losses 3,100 2,570 9,125 8,774 --------- ------ -------- ------- Allowance for possible loan losses, end of period $ 50,740 45,365 50,740 45,365 ========= ====== ======== =======
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 revised relative to First Banks' 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. Interest Rate Risk Management Derivative financial instruments held by First Banks for purposes of managing interest rate risk are summarized as follows:
September 30, 1997 December 31, 1996 ---------------------- -------------------- Notional Credit Notional Credit amount exposure amount exposure ------ -------- ------ -------- (dollars expressed in thousands) Interest rate swap agreements $ -- -- 70,000 -- Interest rate floor agreements 70,000 19 105,000 141 Interest rate cap agreements 10,000 262 10,000 335 Forward commitments to sell mortgage-backed securities 53,000 -- 35,000 308
The notional amounts of derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a measure of First Banks' credit exposure through its use of derivative financial instruments. The amounts exchanged are determined by reference to the notional amounts and the other terms of the derivatives. Interest rate swap agreements were utilized to extend the repricing characteristics of certain interest-bearing liabilities to correspond more closely with the assets of First Banks, with the objective of stabilizing net interest income over time. The net interest expense for these agreements was $3.2 million and $5.6 million for the three and nine month periods ended September 30, 1997, respectively, in comparison to $1.7 million and $5.8 million for the same period in 1996. The maturity dates, notional amounts, interest rates paid and received, and fair values of interest rate swap agreements outstanding as of December 31, 1996 are summarized as follows: Notional Interest Rate Fair Value Maturity date Amount Paid Received Gain (Loss) ------------- ------ ---- -------- ----------- (dollars expressed in thousands) September 30, 1997 $ 35,000 7.04% 5.59% $ (417) September 30, 1999 35,000 7.32 5.59 (1,160) --------- ------- $ 70,000 7.18 5.59 $(1,577) ========= ===== ===== ======== First Banks shortened the effective maturity of its interest-bearing liabilities through the termination of interest rate swap agreements of $225 million during July 1995, $75 million during November 1996 and $35 million during August 1997 at losses of $13.5 million, $5.3 million and $1.4 million, respectively. These losses were deferred and are being amortized over the remaining lives of the swap agreements. If all or any portion of the underlying liabilities are repaid, the related deferred losses will be charged to operations. At September 30, 1997 and December 31, 1996, the unamortized balance of these losses was $10.3 million and $13.4 million, respectively, and was included in other assets. The amortization of the deferred losses included in interest expense was $2.9 million and $4.4 million for the three and nine month periods ended September 30, 1997 including $2.1 million resulting from a reduction in the underlying liabilities. This compares to interest expense of $1.0 million and $3.3 million for the same periods in 1996. First Banks also has interest rate cap and floor agreements to limit the interest expense associated with certain interest-bearing liabilities and the net interest expense of certain interest rate swap agreements, respectively. At September 30, 1997 and December 31, 1996, the unamortized costs for these agreements were $322,000 and $433,000, respectively, and were included in other assets. The net interest expense of the interest rate cap and floor agreements was $37,000 and $111,000 for the three and nine month periods ended September 30, 1997, respectively, in comparison to $72,000 and $215,000 for the same periods in 1996. There are no amounts receivable under these agreements. Derivative financial instruments issued by First Banks consist of commitments to originate fixed-rate loans. Commitments to originate fixed-rate loans consist primarily of residential real estate loans. These loan commitments, net of estimated underwriting fallout, and loans held for sale are hedged with forward contracts to sell mortgage-backed securities. Liquidity The liquidity of First Banks and its Subsidiary Banks is the ability to maintain a cash flow which is adequate to fund operations, service 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 earnings. In addition, First Banks and its Subsidiary Banks 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, borrowings from the Federal Home Loan Bank (FHLB), and other borrowings, including First Banks' $90 million credit agreement with a group of unaffiliated financial institutions. The aggregate funds acquired from those sources were $261.1 million at September 30, 1997 and $315.4 million at December 31, 1996. The decrease is primarily attributable to the reduction in notes payable from the proceeds received from the sale of the Preferred Securities. See note 3 to the accompanying consolidated financial statements. At September 30, 1997, First Banks' more volatile sources of funds mature as follows: (dollars expressed in thousands) Three months or less $ 125,698 Over three months through six months 43,152 Over six months through twelve months 55,446 Over twelve months 36,828 --------- Total $ 261,124 ========= Management believes the future earnings of its Subsidiary Banks will be sufficient to provide funds for growth and to permit the distribution of dividends to First Banks sufficient to meet First Banks' operating and debt service requirements both on a short-term and long-term basis and to pay the dividends on the Class C Preferred Stock and the Preferred Securities. Effects of New Accounting Standards First Banks adopted the provisions of SFAS 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125) prospectively on January 1, 1997. 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 application 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. SFAS 125 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The implementation of SFAS 125 did not have a material effect on the consolidated financial position or results of operation of First Banks. In February 1997, the FASB issued SFAS 128, Earnings Per Share (SFAS 128). SFAS 128 supersedes Accounting Principles Board Opinion No. 15, Earnings Per Share (APB 15) and specifies the computation, presentation, and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. SFAS 128 was issued to simplify the computation of EPS and to make the U.S. standard more compatible with the EPS standards of other countries and that of the International Accounting Standards Committee. It replaces the presentation of primary EPS with a presentation of basic EPS and replaces fully diluted EPS with diluted EPS. SFAS 128 also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS, unlike primary EPS, excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS under APB 15. SFAS 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. Earlier application is not permitted. After adoption, all prior-period EPS data presented shall be restated to conform with SFAS 128. First Banks does not believe the implementation of SFAS 128 will have a material effect on its computation of earnings per share. In February 1997, the FASB issued SFAS 129, Disclosure of Information about Capital Structure (SFAS 129). SFAS 129 establishes standards for disclosing information about an entity's capital structure and applies to all entities. SFAS 129 continues the previous requirements to disclose certain information about an entity's capital structure found in APB 10, Omnibus Opinion-1966, APB 15 and SFAS 47, Disclosure of Long-Term Obligations, for entities that were subject to the requirements of those standards. SFAS 129 eliminates the exemption of nonpublic entities from certain disclosure requirements of APB 15 as provided by SFAS 21, Suspension of the Reporting of Earnings Per Share and Segment Information by Nonpublic Enterprises. It supersedes specific disclosure requirements of APB 10, APB 15 and SFAS 47 and consolidates them in SFAS 129 for ease of retrieval and for greater visibility to nonpublic entities. SFAS 129 is effective for financial statements for periods ending after December 15, 1997. It contains no change in disclosure requirements for First Banks as it was previously subject to the requirements of APB 10 and 15 and SFAS 47. In June 1997, the FASB issued SFAS 130, Reporting Comprehensive Income. (SFAS 130). SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners." SFAS 130 requires all items recognized under accounting standards as components of comprehensive income to be reported in a financial statement that is displayed with the same prominence as other financial statements. It also requires publicly traded companies to report a total for comprehensive income in condensed financial statements of interim periods issued to shareholders. SFAS 130 requires an entity to: (1) classify items of other comprehensive income by their nature in a statement of financial performance and (2) display the accumulated balances of items of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. First Banks' management is in the process of analyzing SFAS 130 and its impact on First Banks' financial position and results of operations. In June 1997, the FASB issued SFAS 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131). SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS 131 requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. SFAS 131 need not be applied to interim financial statements in the initial year of application, but comparative information for interim periods in the initial year of application is to be reported in financial statements for interim periods in the second year of application. First Banks' management is in the process of analyzing SFAS 131 and its impact on First Banks' financial position and results of operations. Part II- OTHER INFORMATION Item 6. Exhibits 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 11 Calculation of Earnings per Share. 27 Financial Data Schedule (EDGAR only). (b) First Banks filed no reports on Form 8-K during the three month period ended September 30, 1997. 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, INC. Registrant Date: November 12, 1997 By: /s/ James F. Dierberg --------------------- James F. Dierberg Chairman, President and Chief Executive Officer Date: November 12, 1997 By: /s/ Allen H. Blake ------------------ Allen H. Blake Executive Vice President and Chief Financial Officer (Principal Financial Officer) Exhibit 11 Exhibit 11 FIRST BANKS, INC. Calculation of Earnings per Share
For the three months ended For the nine months ended September 30, September 30, ------------------------------ ---------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Average shares outstanding: Class C preferred stock 1,885,543 2,200,000 1,927,101 2,200,000 Class A preferred stock 641,082 641,082 641,082 641,082 Class B preferred stock 160,505 160,505 160,505 160,505 Common Stock 23,661 23,661 23,661 23,661 =========== =========== =========== ========== Net income $ 8,541,574 1,531,434 24,240,374 11,438,682 Preferred stock dividends: Class C preferred stock (1,060,032) (1,237,500) (3,220,594) (3,712,501) Class A preferred stock (192,325) (192,325) (512,866) (512,866) Class B preferred stock (4,214) (4,213) (11,235) (11,235) ----------- ----------- ------------ ---------- Income available to common stockholders $ 7,285,004 97,396 20,495,679 7,202,080 =========== ====== ========== ========= Primary earnings per share $ 307.89 4.12 866.22 304.39 =========== =========== =========== ========== Fully diluted earnings per share: Dividends per share: Class C preferred stock $ 0.5622 0.5625 1.6712 1.6875 Class A preferred stock 0.3000 0.3000 0.8000 0.8000 Class B preferred stock 0.0263 0.0263 0.0700 0.0700 =========== =========== =========== ========== Class A preferred stock outstanding 641,082 641,082 641,082 641,082 Book value/share of common stock, beginning of year $ 7,795.06 7,038.67 7,795.06 7,038.67 Dilution of common equity upon exercise of options and warrants of subsidiary bank (26.29) (24.88) (26.29) (24.88) ----------- ----------- ----------- ---------- 7,768.77 7,013.79 7,768.77 7,013.79 =========== =========== =========== ========== Common stock issuable upon conversion 1,650 1,828 1,650 1,828 Shares of common stock outstanding 23,661 23,661 23,661 23,661 ----------- ----------- ----------- ---------- 25,311 25,489 25,311 25,489 =========== =========== =========== ========== Net income $ 8,541,574 1,531,434 24,240,374 11,438,682 Class C preferred dividends (1,060,032) (1,237,500) (3,220,594) (3,712,501) Class B preferred dividends (4,213) (4,213) (11,235) (11,235) ----------- ----------- ----------- ----------- Fully-diluted net income $ 7,477,329 289,721 21,008,545 7,714,946 =========== =========== =========== =========== Fully-diluted earnings per share $ 295.42 11.37 830.02 302.68 =========== =========== =========== ===========
EX-27 2 FDS --
9 0000710507 First Banks, Inc. 1,000 9-mos Dec-31-1997 Jan-01-1997 Sep-30-1997 126,420 6,525 104,300 3,681 674,580 19,507 0 2,890,518 (50,740) 3,957,208 3,502,986 55,049 46,557 83,156 0 60,175 5,915 203,370 3,957,208 187,431 24,988 4,400 216,819 100,920 114,466 102,353 9,125 0 75,396 37,577 37,577 0 0 24,240 866.22 830.02 8.31 27,430 2,018 0 32,209 46,781 12,710 7,544 50,740 50,740 0 0
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