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 March 31, 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 0-8937
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 April 30, 1997
----- --------------
Common Stock, $.15 par value 1,103,652
Class B Common Stock, $.15 par value 2,500,000
<PAGE>
First Banks America, Inc.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 -1-
Consolidated Statements of Income for the three
months ended March 31, 1997 and 1996 -3-
Consolidated Statements of Cash Flows
for the three months ended March 31, 1997
and 1996 -4-
Notes to Consolidated Financial Statements -5-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -7-
PART II OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K -12-
SIGNATURES -13-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
ASSETS
------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks...................................... $ 13,238 12,343
Interest-bearing deposits with other financial institutions-
with maturities of three months or less................... 756 146
Federal funds sold........................................... 11,400 9,475
-------- --------
Total cash and cash equivalents........................ 25,394 21,964
-------- --------
Investment securities - available for sale, at fair value........ 90,546 86,910
Loans:
Real estate construction and development...................... 43,344 48,025
Commercial and financial...................................... 50,005 44,238
Real estate mortgage.......................................... 55,290 54,761
Consumer and installment...................................... 86,820 96,096
-------- --------
Total loans............................................ 235,459 243,120
Unearned discount.............................................. (1,222) (1,246)
Allowance for possible loan losses............................. ( 6,146) (6,147)
-------- --------
Net loans.............................................. 228,091 235,727
-------- --------
Bank premises and equipment, net of
accumulated depreciation..................................... 6,293 6,369
Intangible asset associated with the purchase of a
subsidiary................................................... 3,240 3,127
Accrued interest receivable...................................... 2,015 2,348
Other real estate owned.......................................... 671 785
Deferred income taxes............................................ 15,956 15,519
Other assets..................................................... 1,681 2,433
-------- --------
Total assets........................................... $ 373,887 375,182
======== ========
</TABLE>
<PAGE>
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
LIABILITIES
-----------
Deposits:
Demand:
<S> <C> <C>
Non-interest bearing.......................................... $ 53,458 56,161
Interest bearing.............................................. 50,387 53,310
Savings......................................................... 68,210 66,523
Time:
Time deposits of $100 or more................................. 30,505 31,679
Other time deposits........................................... 111,283 112,133
------- -------
Total deposits............................................. 313,843 319,806
Short term borrowings................................................ 6,613 2,092
Note payable......................................................... 14,000 14,000
Deferred income taxes................................................ 1,527 909
Accrued and other liabilities........................................ 4,597 4,877
------- -------
Total liabilities.......................................... 340,580 341,684
------- -------
STOCKHOLDERS' EQUITY
Common Stock:
Common stock, $.15 par value; 6,666,666 shares
authorized; 1,412,900 shares issued and outstanding........... 212 212
Class B common stock, $.15 par value; 4,000,000 shares
authorized; 2,500,000 shares issued and outstanding........... 375 375
Capital surplus...................................................... 38,040 38,036
Retained deficit since elimination of accumulated deficit
of $259,117, effective December 31, 1994........................ (1,874) (2,251)
Common treasury stock, at cost; 311,748 shares and 280,430
shares at March 31, 1997 and December 31, 1996,
respectively.................................................... (3,169) (2,838)
Net fair value adjustment for securities available for sale.......... (277) (36)
------- -------
Total stockholders' equity................................. 33,307 33,498
------- -------
Total liabilities and stockholders' equity................. $ 373,887 375,182
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST BANKS AMERICA, INC.
Consolidated Statements of Income (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
Interest income:
<S> <C> <C>
Interest and fees on loans.................................................... $ 5,193 3,979
Investment securities......................................................... 1,248 525
Federal funds sold and other.................................................. 196 504
-------- --------
Total interest income................................................... 6,637 5,008
-------- --------
Interest expense:
Deposits:
Interest-bearing demand.................................................... 298 98
Savings.................................................................... 545 436
Time deposits of $100 or more.............................................. 421 343
Other time deposits........................................................ 1,513 1,433
Federal Home Loan Bank advances................................................ 30 64
Securities sold under agreements to repurchase, federal funds
purchased and other borrowings.............................................. 14 76
Long-term debt................................................................. 276 24
-------- --------
Total interest expense.................................................. 3,097 2,474
-------- --------
Net interest income..................................................... 3,540 2,534
Provision for possible loan losses................................................ 550 100
-------- --------
Net interest income after provision for possible loan losses............ 2,990 2,434
-------- --------
Noninterest income:
Service charges on deposit accounts and customer service fees.............. 415 345
Gain on sales of securities, net........................................... - 75
Other income............................................................... 240 18
-------- --------
Total noninterest income................................................ 655 438
-------- --------
Noninterest expense:
Salaries and employee benefits............................................. 1,034 725
Occupancy, net of rental income............................................ 398 196
Furniture and equipment.................................................... 186 167
Federal Deposit Insurance Corporation premiums............................. 34 18
Postage, printing and supplies............................................. 99 74
Data processing fees....................................................... 236 80
Legal, examination and professional fees................................... 478 284
Communications............................................................. 129 110
Losses and expenses on foreclosed real estate, net of gains................ (31) 6
Other expenses............................................................. 468 433
-------- --------
Total noninterest expense............................................... 3,031 2,093
-------- --------
Income before provision for income taxes ............................... 614 779
Provision for income taxes........................................................ 237 318
-------- --------
Net income.............................................................. $ 377 461
======== ========
Earnings per common share......................................................... $ .10 .12
======== ========
Weighted average shares of common stock and common stock
equivalents outstanding (in thousands)......................................... 3,676 4,008
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST BANKS AMERICA, INC.
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
Cash flows from operating activities:
<S> <C> <C>
Net income................................................................ $ 377 461
Adjustments to reconcile net income to net cash:
Depreciation and amortization of bank premises and equipment........... 158 161
Amortization, net of accretion......................................... (142) (219)
Provision for possible loan losses..................................... 550 100
(Increase) decrease in accrued interest receivable..................... 333 64
Interest accrued on liabilities........................................ 3,097 2,474
Payments of interest on liabilities.................................... (2,802) (2,449)
Provision for income taxes............................................. 237 318
Gain on sales of securities, net....................................... - (75)
Other.................................................................. 36 (247)
--------- ---------
Net cash provided by (used in) operating activities................ 1,844 588
--------- ---------
Cash flows from investing activities:
Sales of investment securities........................................... - 10,513
Maturities of investment securities...................................... 23,324 28,748
Purchases of investment securities....................................... (27,126) (77,700)
Net decrease in loans.................................................... 6,859 11,126
Recoveries of loans previously charged off............................... 347 210
Purchases of bank premises and equipment................................. (82) (109)
Other investing activities............................................... 34 36
--------- ----------
Net cash provided by (used in) investing activities................ 3,356 27,176)
--------- ----------
Cash flows from financing activities:
Increase (decrease) in deposits.......................................... (5,963) (2,032)
Increase (decrease) in borrowed funds.................................... 4,520 (697)
Repurchase of common stock for treasury.................................. (331) (150)
Other financing activities............................................... 4 24
--------- ----------
Net cash provided by (used in) financing activities................ (1,770) (2,855)
--------- ----------
Net increase (decrease) in cash and cash equivalents............... 3,430 (29,443)
Cash and cash equivalents, beginning of period............................... 21,964 40,922
--------- ---------
Cash and cash equivalents, end of period..................................... $ 25,394 11,479
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
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 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 period presented herein, have been included.
Operating results for the three months ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. Certain reclassifications of 1996 amounts have been made to conform with
the 1997 presentation.
The consolidated financial statements include the accounts of FBA and
its subsidiaries, all of which are wholly owned. All significant intercompany
accounts and transactions have been eliminated.
FBA operates through two banking subsidiaries, BankTEXAS N.A.,
headquartered in Houston, Texas (BankTEXAS) and Sunrise Bank of California,
headquartered in Roseville, California (Sunrise Bank) collectively referred to
as Subsidiary Banks. Sunrise Bank was acquired on November 1, 1996. The
acquisition was accounted for under the purchase method of accounting and,
accordingly, the consolidated financial statements include the financial
position and results of operations for the period subsequent to the acquisition
date.
(2) Transactions with Related Party
Following the private placement of Class B common stock in August 1994,
FBA began purchasing certain services and supplies from or through its majority
shareholder, First Banks, Inc. (First Banks). FBA's financial position and
operating results could significantly differ from those that would be obtained
if FBA's relationship with First Banks did not exist.
First Banks provides data processing and other management services to
FBA and the Subsidiary Banks. Under the data processing agreement, a subsidiary
of First Banks provides data processing and various related services to FBA. The
management fee agreement provides that FBA compensate First Banks on an hourly
basis for its use of personnel for various functions including internal
auditing, loan review income tax preparation and assistance, accounting,
asset/liability and investment services, loan servicing and other management and
administrative services. Fees paid under these agreements were $483,000 for the
three months ended March 31, 1997 compared to $223,000 for the three months
ended March 31, 1996. The fees for such services are significantly lower than
FBA was paying its nonaffiliated vendors.
The Subsidiary Banks have $25.7 million and $21.4 million in whole
loans and loan participations outstanding at March 31, 1997 and December 31,
1996, respectively, that were purchased from banks affiliated with First Banks.
In addition, the Subsidiary Banks have sold $14.5 million and $26.7 million in
whole loans and loan participations to affiliates of First Banks at March 31,
1997 and December 31, 1996, respectively. These loan and loan participations
were acquired and sold at interest rates and terms prevailing at the dates of
their purchase or sale and under standards and policies followed by the
Subsidiary Banks.
FBA borrowed $14.0 million from First Banks under a $15.0 million note
payable agreement to fund the acquisition of Sunrise. The borrowings under the
note agreement bear interest at an annual rate of one-quarter percent less than
the "Prime Rate" as reported in the Wall Street Journal. The interest expense
was $276,000 for the three months ended March 31, 1997. The principal and
accrued interest under the note agreement are due and payable on October 31,
2001. The accrued and unpaid interest under the note agreement was $470,000 and
$194,000 at March 31, 1997 and December 31, 1996, respectively.
<PAGE>
(3) Regulatory Capital
The Subsidiary Banks are subject to various regulatory capital
requirements administered by 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 the Subsidiary Banks' assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices. The
Subsidiary Banks' capital amounts and regulatory classification are also subject
to qualitative judgments by the regulators about components, risk weighting, and
other factors which may affect possible regulatory actions.
Quantitative measures established by regulations to ensure capital
adequacy require the Subsidiary Banks to maintain certain minimum capital
ratios. The Subsidiary Banks 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. In order to be well capitalized under
Prompt Corrective Action provisions, the bank is required to maintain a risk
weighted assets ratio of at least 10%, a Tier 1 to risk weighted assets ratio of
a least 6%, and a leverage ratio of at least 5%. As of August 31, 1995, the date
of the most recent notification from FBA's primary regulator, BankTEXAS was
categorized as adequately capitalized under the regulatory framework for prompt
corrective action. Management believes, as of March 31, 1997, the Subsidiary
Banks are well capitalized as defined by the FDIC Act.
At March 31, 1997 and December 31, 1996, FBA's and the Subsidiary Banks
capital ratios were as follows:
Risk-based capital ratios
-------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
FBA 7.96% 7.64% 6.69% 6.38% 4.92% 5.31%
BankTEXAS 11.01 10.29 9.75 9.04 7.92 7.53
Sunrise Bank 18.81 17.67 17.53 16.39 11.32 10.88
<PAGE>
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 March 31, 1997, FBA had approximately $373.9
million in total assets; $234.2 million in total loans, net of unearned
discount; $313.8 million in total deposits; and $33.3 million in total
stockholders' equity. FBA operates through its Subsidiary Banks.
Through the Subsidiary Banks' six locations in Texas and three
locations in California, 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 and industrial, real estate construction and
development, commercial and residential real estate and consumer loans. Other
financial services include credit-related insurance, automatic teller machines
and safe deposit boxes.
The following table lists the Subsidiary Banks at March 31, 1997:
Loans, net of
Number of Total unearned Total
locations assets discount deposits
--------- -------- -------- --------
BankTEXAS 6 $266,901 175,228 229,046
Sunrise Bank 3 103,179 59,010 85,283
Financial Condition
FBA's total assets were $373.9 million and $375.2 million at March 31,
1997 and December 31, 1996, respectively. The primary fluctuation from December
31, 1996 was the continued decrease in the consumer and installment loan
portfolio, which consists primarily of indirect automobile loans, of $9.3
million. The funds generated from this decrease were temporarily invested in
shorter term investment securities and cash and cash equivalents.
Results of Operations
Net Income
Net income was $377,000 and $461,000 for the three months ended March
31, 1997 and 1996, respectively. Earnings for the first quarter reflect the
anticipated impact from the acquisition of Sunrise Bank, which includes $276,000
of interest expense attributable to the borrowings incurred in connection with
the funding of the acquisition, as well as certain nonrecurring costs of
converting to FBA's systems and procedures and staff reductions. Offsetting this
impact to earnings is the continued improvement in the operating results of
BankTEXAS, which earned $629,000 for the three months ended March 31, 1997, in
comparison to $492,000 for the same period in 1996.
Net Interest Income
Net interest income was $3.54 million, or 4.30% of average interest
earning assets for the three months ended March 31, 1997, compared to $2.53
million, or 3.83% of average interest earning assets, for the same period in
1996. The improved net interest income is reflective of the repositioning of the
loan and investment security portfolios of BankTEXAS and the acquisition of
Sunrise Bank. In addition, the cost of interest bearing liabilities decreased to
4.48% for the three months ended March 31, 1997 from 4.73% for the same period
in 1996.
<PAGE>
The following table sets forth 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 months ended March 31:
<TABLE>
<CAPTION>
1997 1996
--------------------------------- ------------------------------
Interest Interest
Average income/ Yield/ Average income/ Yield/
balance expense rate balance expense rate
------- ------- ---- ------- ------- ----
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans.................................... $ 233,671 5,193 9.01% $ 188,473 3,979 8.47%
Investment securities.................... 85,258 1,248 5.94 39,038 525 5.38
Federal funds sold and other............. 15,037 196 5.28 38,061 504 5.30
------ -------- --------- ------
Total interest-earning assets...... 333,966 6,637 8.06 265,572 5,008 7.56
-------- ------
Nonearning assets........................... 36,599 29,969
------- --------
Total assets....................... $ 370,565 $ 295,541
======= ========
Liabilities and Stockholders'
-----------------------------
Equity Interest-bearing liabilities:
Interest-bearing demand deposits......... $ 51,893 298 2.33% $ 20,836 98 1.88%
Savings deposits......................... 67,851 545 3.25 53,881 436 3.24
Time deposits of $100 or more............ 31,072 421 5.49 24,008 343 5.71
Other time deposits...................... 112,374 1,513 5.46 102,813 1,433 5.58
------- ----- -------- -----
Total interest-bearing deposits.... 263,190 2,777 4.23 201,538 2,310 4.58
Federal funds purchased,
repurchase agreements and
Federal Home Loan Bank advances........ 3,277 44 5.45 6,092 140 9.19
Notes payable and other ................. 14,000 276 8.00 1,477 24 6.50
-------- ----- -------- -------
Total interest-bearing liabilities. 280,467 3,097 4.48 209,107 2,474 4.73
----- -----
Noninterest-bearing liabilities:
Demand deposits.......................... 50,197 46,639
Other liabilities........................ 6,313 4,356
------ ---------
Total liabilities.................. 336,977 260,102
Stockholders' equity........................ 33,588 35,439
-------- ---------
Total liabilities and
stockholders' equity........... $ 370,565 $ 295,541
======== =======
Net interest income................ 3,540 2,534
===== =====
Net interest margin................ 4.30% 3.83%
==== ====
</TABLE>
Provision for Possible Loan Losses
The provision for possible loan losses was $550,000 for the three
months ended March 31, 1997, compared to $100,000 for the same period in 1996.
Net loan charge-offs were $551,000 for the three months ended March 31, 1997
compared to $541,000 for the same period in 1996. Nonperforming loans were $1.93
million at March 31, 1997 in comparison to $2.10 million and $568,000 at
December 31, 1996 and March 31, 1996, respectively. The increase in
nonperforming loans during 1996 is attributable to the acquisition of Sunrise
Bank. 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 increased by $217,000 to $655,000 for the three
months ended March 31, 1997, from $438,000 for the same period in 1996.
Noninterest income consists primarily of service charges on deposit accounts and
customer service fees.
<PAGE>
Service charges on deposit accounts and customer service fees
increased by $70,000 to $415,000 from $345,000 for the three months ended March
31, 1997 and 1996, respectively. This increase is attributable to the
acquisition of Sunrise Bank.
Other income increased by $222,000 to $240,000 from $18,000 for the
three months ended March 31, 1997 and 1996, respectively. The increase is
comprised of a $127,000 legal settlement received by Sunrise Bank and a net gain
of $24,000 realized upon disposition of repossessed and other assets for the
three months ended March 31, 1997, compared to a net loss of $50,000 for the
same period in 1996.
Offsetting the increase in noninterest income for the three months
ended March 31, 1997, was a gain of $75,000 recognized upon the sale of an
investment security during the three months ended March 31, 1996.
Noninterest Expense
Noninterest expense was $3.0 million for the three months ended March
31, 1997 compared to $2.1 million for the same period in 1996. The increase is
attributable to the noninterest expense of Sunrise Bank, which was acquired by
FBA on November 1, 1996, of $1.2 million, partially offset by a reduction in the
noninterest expense of BankTEXAS.
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 62.6% and 64.5% of
total assets as of March 31, 1997 and December 31, 1996, respectively. Total
loans, net of unearned discount, were $234.2 million and $241.9 million at March
31, 1997 and December 31, 1996, respectively. The decrease is primarily due to
the consumer automobile loan portfolio reflecting the more stringent lending
practices implemented during 1995 and 1996. As the size of the consumer
automobile loan portfolio declines, FBA has expanded its corporate lending
function, including purchasing loans from affiliated banks.
FBA's nonperforming loans consist of loans on a nonaccrual status and
loans on which the original terms have been restructured. Impaired loans,
consisting of nonaccrual and consumer and installment loans 60 days or more past
due were $2.7 million and $3.7 million at March 31, 1997 and December 31, 1996,
respectively.
<PAGE>
The following is a summary of nonperforming assets and past due loans
at the dates indicated:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
(dollars expressed in thousands)
Nonperforming assets:
<S> <C> <C>
Nonperforming loans.................................... $ 1,930 2,095
Other real estate...................................... 671 785
------- -------
Total nonperforming assets.......................... $ 2,601 2,880
======= =======
Loans past due:
Over 30 days to 90 days................................ $ 4,651 6,471
Over 90 days and still accruing........................ 656 583
------- -------
Total past due loans................................ $ 5,307 7,054
======= =======
Loans, net of unearned discount.......................... $ 234,237 241,874
======= =======
Asset quality ratios:
Allowance for possible loan losses to loans............ 2.62% 2.54%
Nonperforming loans to loans .......................... .82 .87
Allowance for possible loan losses to
nonperforming loans ................................ 318.45 293.41
Nonperforming assets to loans and other real estate.... 1.11 1.19
======== ========
</TABLE>
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 months
ended March 31:
1997 1996
---- ----
(dollars expressed
in thousands)
Allowance for possible loan losses, beginning of period $ 6,147 5,228
Loans charged-off (898) (751)
Recoveries of loans previously charged-off 347 210
------ -----
Net loan (charge-offs) recoveries (551) (541)
------ -----
Provision for possible loan losses 550 100
------ -----
Allowance for possible loan losses, end of period $ 6,146 4,787
====== =====
Liquidity
The liquidity of FBA and the 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 operations. In addition, FBA and the
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 and
borrowings from the Federal Home Loan Bank. The aggregate funds acquired from
those sources were $37.1 million and $33.8 million at March 31, 1997, and
December 31, 1996, respectively.
<PAGE>
At March 31, 1997, FBA's more volatile sources of funds mature as
follows:
(dollars expressed in thousands)
Three months or less $ 16,179
Over three months through six months 6,032
Over six months through twelve months 6,630
Over twelve months 8,277
-------
Total $ 37,118
=======
Management believes the available liquidity and earnings of the
Subsidiary Banks will be sufficient to provide funds for FBA's operating and
debt service requirements both on a short-term and long-term basis.
Effects of New Accounting Standard
FBA 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
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.
The implementation of SFAS 125 did not have a material effect on the
consolidated financial position or results of operation of FBA.
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
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 APB15.
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.
FBA does not believe the implementation of SFAS 128 will have a
material effect on its computation of earnings per share.
<PAGE>
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. It 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 entities
that were previously subject to the requirements of APB 10 and 15 and SFAS 47.
PART II - OTHER INFORMATION
Item 6 - Exhibit and Reports on Form 8-K
(a) The exhibit is 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)
<PAGE>
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: May 12, 1997 By: /s/James F. Dierberg
--------------------
James F. Dierberg
Chairman, President
and Chief Executive
Officer
Date: May 12, 1997 By: /s/Allen H. Blake
-----------------
Allen H. Blake
Vice President,
Chief Financial Officer
and Secretary
(Principal Financial Officer)
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