SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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.)
135 North Meramec, St. Louis, Missouri 63105
--------------------------------------------
(Address of principal executive offices) (Zip code)
(314) 854-4600
--------------
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class October 31, 1998
----- ----------------
Common Stock, $.15 par value 2,607,773
Class B Common Stock, $.15 par value 2,500,000
<PAGE>
The registrant is filing this amendment solely for the purpose of
correcting an error which appears on the filed version of the Consolidated
Balance Sheets in the original Form 10-Q.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
(unaudited)
ASSETS
------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks................................................... $ 26,077 32,257
Interest-bearing deposits with other financial institutions -
with maturities of three months or less................................. 26,902 690
Federal funds sold........................................................ 6,000 2,215
----------- ---------
Total cash and cash equivalents....................................... 58,979 35,162
----------- ---------
Investment securities:
Available for sale, at fair value......................................... 128,577 148,181
Held to maturity, at amortized cost (estimated fair value of
$2,032 at September 30, 1998)........................................... 2,032 --
----------- ---------
Total investment securities........................................... 130,609 148,181
----------- ---------
Loans:
Real estate construction and development.................................. 134,884 93,454
Commercial and financial.................................................. 134,373 109,763
Real estate mortgage...................................................... 156,392 149,951
Consumer and installment.................................................. 68,241 75,023
Loans held for sale....................................................... -- 5,708
----------- ---------
Total loans........................................................... 493,890 433,899
Unearned discount......................................................... (2,494) (2,444)
Allowance for possible loan losses........................................ (12,449) (11,407)
----------- ---------
Net loans............................................................. 478,947 420,048
----------- ---------
Bank premises and equipment, net of
accumulated depreciation.................................................. 11,622 10,697
Intangibles associated with the purchase of subsidiaries....................... 8,559 7,189
Accrued interest receivable.................................................. 4,209 4,819
Other real estate............................................................ 270 601
Deferred tax assets.......................................................... 12,270 14,164
Other assets................................................................. 16,734 2,803
----------- ---------
Total assets.......................................................... $ 722,199 643,664
=========== =========
</TABLE>
<PAGE>
FIRST BANKS AMERICA, INC.
Consolidated Balance Sheets
(dollars expressed in thousands, except per share data)
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
(unaudited)
LIABILITIES
-----------
Deposits:
Demand:
<S> <C> <C>
Non-interest-bearing.................................................... $ 104,150 97,393
Interest-bearing........................................................ 70,335 73,199
Savings.................................................................. 171,974 147,623
Time deposits:
Time deposits of $100 or more........................................... 53,382 52,472
Other time deposits..................................................... 196,253 185,840
----------- ---------
Total deposits........................................................ 596,094 556,527
Short-term borrowings........................................................ 9,513 3,687
Promissory note payable...................................................... -- 14,900
Accrued interest payable..................................................... 3,143 4,185
Deferred tax liabilities..................................................... 1,401 1,092
Payable to former shareholders of Surety Bank................................ -- 3,829
Accrued expenses and other liabilities....................................... 4,623 5,058
12% convertible debentures................................................... 6,500 6,500
Minority interest in subsidiary.............................................. -- 2,795
----------- ---------
Total liabilities..................................................... 621,274 598,573
----------- ---------
Guaranteed preferred beneficial interest in First Banks
America Inc.'s subordinated debenture.................................... 44,140 --
----------- ---------
STOCKHOLDERS' EQUITY
--------------------
Common Stock:
Common stock, $.15 par value; 6,666,666 shares
authorized; 3,243,140 and 2,144,865 shares issued
at September 30, 1998 and December 31, 1997, respectively............... 486 322
Class B common stock, $.15 par value; 4,000,000 shares
authorized; 2,500,000 shares issued and outstanding..................... 375 375
Capital surplus.............................................................. 60,165 47,329
Retained earnings since elimination of accumulated deficit
of $259,117, effective December 31, 1994................................. 4,724 1,083
Common treasury stock, at cost; 631,167 shares and 386,458
shares at September 30, 1998 and December 31, 1997,
respectively............................................................. (9,718) (4,350)
Accumulated other comprehensive income....................................... 753 332
----------- ---------
Total stockholders' equity............................................ 56,785 45,091
----------- ---------
Total liabilities and stockholders' equity............................ $ 722,199 643,664
=========== =========
</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 Nine months ended
September 30, September 30,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans................................................ $ 11,923 8,751 33,493 24,085
Investment securities..................................................... 2,012 1,899 6,167 5,698
Federal funds sold and other.............................................. 307 317 979 1,004
-------- ------- -------- --------
Total interest income................................................. 14,242 10,967 40,639 30,787
-------- ------- -------- --------
Interest expense:
Deposits:
Interest-bearing demand................................................. 311 349 994 1,050
Savings................................................................. 1,638 894 4,587 2,447
Time deposits of $100 or more........................................... 717 541 2,278 1,581
Other time deposits..................................................... 2,762 2,372 8,437 6,958
Promissory note payable and other borrowings.............................. 319 636 1,385 1,824
-------- ------- -------- --------
Total interest expense................................................ 5,747 4,792 17,681 13,860
-------- ------- -------- --------
Net interest income................................................... 8,495 6,175 22,958 16,927
Provision for possible loan losses........................................... 225 465 725 1,750
-------- ------- -------- --------
Net interest income after provision for possible loan losses.......... 8,270 5,710 22,233 15,177
-------- ------- -------- --------
Noninterest income:
Service charges on deposit accounts and customer service fees............. 771 526 2,114 1,675
Gain on sales of securities, net.......................................... 240 -- 341 --
Other income.............................................................. 296 129 881 873
-------- ------- -------- --------
Total noninterest income.............................................. 1,307 655 3,336 2,548
-------- ------- -------- --------
Noninterest expense:
Salaries and employee benefits............................................ 2,076 1,446 6,367 4,565
Occupancy, net of rental income........................................... 551 442 1,617 1,537
Furniture and equipment................................................... 424 269 1,251 825
Postage, printing and supplies............................................ 201 91 607 363
Data processing........................................................... 520 233 1,426 800
Legal, examination and professional fees.................................. 1,122 573 3,191 1,734
Communications............................................................ 157 181 584 473
(Gain) loss on sale of other real estate, net of expenses................. (89) 6 (2) (213)
Guaranteed preferred debenture expense.................................... 765 -- 765 --
Other..................................................................... 1,205 975 3,524 2,733
-------- ------- -------- --------
Total noninterest expense............................................. 6,932 4,216 19,330 12,817
-------- ------- -------- --------
Income before provision for income taxes and minority interest
in income of subsidiary............................................ 2,645 2,149 6,239 4,908
Provision for income taxes................................................... 1,125 1,023 2,598 2,093
-------- ------- -------- --------
Income before minority interest in income of subsidiary............... 1,520 1,126 3,641 2,815
Minority interest in income of subsidiary.................................... -- 83 -- 303
-------- ------- -------- --------
Net income............................................................ $ 1,520 1,043 3,641 2,512
======== ======= ======== ========
Earnings per common share:
Basic................................................................. $ 0.30 .26 0.72 .62
Diluted............................................................... 0.29 .26 0.71 .61
======== ======= ======== ========
Weighted average shares of common stock outstanding (in thousands)........... 5,151 4,039 5,090 4,059
======== ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST BANKS AMERICA, INC.
Consolidated Statements of Changes in Stockholders'
Equity (unaudited) Nine months ended September 30, 1998 and 1997,
and three months ended December 31, 1997
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Accu-
mulated
other Total
Class B Compre- Retained Common compre- stock-
Common common Capital hensive earnings treasury hensive holders'
stock stock surplus income (deficit) stock income equity
----- ----- ------ ------- --------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated balances, January 1, 1997........... $ 282 375 42,862 -- (2,450) (2,838) (36) 38,195
Nine months ended September 30, 1997:
Comprehensive income:
Net income.................................. -- -- -- $ 2,512 2,512 -- -- 2,512
Other comprehensive income, net of tax (1) -
Unrealized gains on securities, net of
reclassification adjustment (2)......... -- -- -- 271 -- -- 271 271
-------
Comprehensive income........................ $ 2,783
=======
Exercise of stock options..................... -- -- 9 -- -- -- 9
Compensation paid in common stock............. -- -- 13 -- -- -- 13
Repurchases of common stock................... -- -- -- -- (979) -- (979)
Redemption of stock options................... -- -- (290) -- -- -- (290)
------- ---- -------- ----- ----- ---- -------
Consolidated balances, September 30, 1997........ 282 375 42,594 62 (3,817) 235 39,731
Three months ended December 31, 1997:
Comprehensive income:
Net income.................................. -- -- -- $ 1,021 1,021 -- -- 1,021
Other comprehensive income, net of tax (1) -
Unrealized gains on securities net of
reclassification adjustment (2)......... -- -- -- 97 -- -- 97 97
-------
Comprehensive income........................ $ 1,118
=======
Issuance of common stock for purchase
accounting acquisition...................... 40 -- 4,723 -- -- -- 4,763
Exercise of stock options..................... -- -- 6 -- -- -- 6
Repurchases of common stock................... -- -- -- -- (533) -- (533)
Pre-merger transactions of FCB................ -- -- 6 -- -- -- 6
------- ---- ------- ----- ----- ---- -------
Consolidated balances, December 31, 1997......... 322 375 47,329 1,083 (4,350) 332 45,091
Nine months ended September 30, 1998:
Comprehensive income:
Net income.................................. -- -- -- $ 3,641 3,641 -- -- 3,641
Other comprehensive income, net of tax (1) -
Unrealized gains on securities, net
of reclassification adjustment (2)...... -- -- -- 421 -- -- 421 421
-------
Comprehensive income........................ $ 4,062
=======
Issuance of common stock for acquisition
of entity under common control.............. 43 -- 2,965 -- -- -- 3,008
Exercise of stock options..................... -- -- 13 -- -- -- 13
Compensation paid in stock.................... -- -- 27 -- -- -- 27
Redemption of stock options................... -- -- (48) -- -- -- (48)
Conversion of promissory note payable......... 121 -- 9,879 -- -- -- 10,000
Repurchases of common stock................... -- -- -- -- (5,368) -- (5,368)
------- ---- ------- ----- ------ ---- -------
Consolidated balances, September 30, 1998........ $ 486 375 60,165 4,724 (9,718) 753 56,785
======= ==== ======= ===== ====== ==== =======
</TABLE>
- ---------
(1) Components of other comprehensive income are shown net of tax.
(2) Disclosure of reclassification adjustment:
<PAGE>
<TABLE>
<CAPTION>
Nine months Three months
ended September 30, ended
1998 1997 December 31, 1997
---- ---- -----------------
<S> <C> <C> <C>
Unrealized gains arising during the period................................ $199 271 21
Less: reclassification adjustment for gains included in net income........ 222 -- 76
---- ----- ---
Unrealized gains on securities............................................ $421 271 97
==== ===== ===
</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>
Nine months ended
September 30,
------------------
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income......................................................................... $ 3,641 2,512
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and accretion, net.................................... 1,326 593
Provision for possible loan losses............................................... 725 1,750
Decrease in accrued interest receivable.......................................... 709 (79)
Interest accrued on liabilities.................................................. 17,681 13,860
Payments of interest on liabilities.............................................. (18,787) (12,351)
Provision for income taxes....................................................... 2,598 2,093
Payments of income taxes......................................................... (226) (888)
Gain on sales of securities, net................................................. (341) --
Other operating activities, net.................................................. 466 (1,962)
--------- ----------
Net cash provided by operating activities...................................... 7,281 5,528
--------- ----------
Cash flows from investing activities:
Cash received from acquired entities, net of cash paid............................. 3,241 --
Sales of investment securities..................................................... 23,306 --
Maturities of investment securities................................................ 51,968 69,181
Purchases of investment securities................................................. (56,373) (76,245)
Net increase in loans.............................................................. (33,433) (20,915)
Recoveries of loans previously charged off......................................... 1,930 1,653
Purchases of bank premises and equipment........................................... (1,576) (341)
Other investing activities, net.................................................... (13,289) 833
--------- ----------
Net cash provided by (used in) investing activities............................ (23,715) (25,834)
--------- ----------
Cash flows from financing activities:
Increase (decrease) in deposits.................................................... 4,406 17,278
Increase (decrease) in borrowed funds.............................................. (2,903) 6,904
Repurchases of common stock for treasury........................................... (5,368) (979)
Proceeds from issuance of guaranteed
preferred subordinated debenture................................................. 44,124 --
Other financing activities, net ................................................... (8) (276)
--------- ----------
Net cash provided by (used in) financing activities............................ 40,251 22,927
--------- ----------
Net increase (decrease) in cash and cash equivalents........................... 23,817 2,621
Cash and cash equivalents, beginning of period........................................ 35,162 42,874
--------- ----------
Cash and cash equivalents, end of period.............................................. $ 58,979 45,495
========= ==========
Noncash investing and financing activities:
Issuance of common stock in purchase accounting acquisition........................ $ 3,008 --
Conversion of promissory note payable to common stock.............................. 10,000 --
========= ==========
</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. and subsidiaries (FBA or the Company) are unaudited and should be
read in conjunction with the consolidated financial statements contained in the
1997 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, 1998 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998.
In connection with FBA's acquisition of First Commercial Bancorp, Inc.
(FCB) and its wholly owned subsidiary, First Commercial Bank (First Commercial),
as of February 2, 1998, FBA's financial information for the periods prior to the
acquisition has been restated to include the 61.48% ownership interest of First
Banks, Inc. (First Banks), FBA's majority shareholder, in FCB consistent with
the accounting treatment applicable to entities under common control. The
remaining interest in FCB acquired by FBA, or 38.52%, is reflected in the
consolidated financial statements as minority interest for the periods prior to
the acquisition. First Banks owned 73.7% of FBA as of September 30, 1998.
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. In addition to the
aforementioned restatement of 1997 financial information, certain
reclassifications of 1997 amounts have been made to conform with the 1998
presentation.
FBA operates through two banking subsidiaries, BankTEXAS N.A.,
headquartered in Houston, Texas (BankTEXAS) and First Bank of California,
headquartered in Roseville, California (FB California), collectively referred to
as the Subsidiary Banks.
(2) Transactions with Related Party
FBA purchases certain services and supplies from or through its
majority shareholder, 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. Fees payable to First Banks, as
discussed in the following paragraphs, generally increase as FBA expands through
acquisitions and internal growth, reflecting the higher levels of service
required to operate the Subsidiary Banks.
First Banks provides management services to FBA and the Subsidiary
Banks. Management services are provided under a management fee agreement whereby
FBA compensates 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 management and
investment services, loan servicing and other management and administrative
services. Fees paid under this agreement were $528,000 and $1.5 million for the
three and nine months ended September 30, 1998, compared to $388,000 and $1.1
million for the three and nine months ended September 30, 1997, respectively.
Because of its affiliation through First Banks and the geographic
proximity of certain of their banking offices, FB California and First Bank &
Trust (FB&T), a wholly owned subsidiary of First Banks, share the cost of
certain personnel and services used by the banks. This includes the salaries and
benefits of certain loan and administrative personnel. The allocation of the
shared costs are charged and/or credited among the banks under the terms of a
cost sharing agreement. Expenses associated with loan origination personnel are
allocated based on the relative loan volume between the banks. Costs of most
other personnel are allocated on an hourly basis. Because this involves
distributing essentially fixed costs over a larger asset base, it allows each
<PAGE>
bank to receive the benefit of personnel and services at a reduced cost. Fees
paid under the cost sharing agreement were $288,000 and $811,000 for the three
and nine month periods ended September 30, 1998, and $183,000 and $515,000 for
the same periods in 1997, respectively.
First Services L.P., a limited partnership indirectly owned by First
Banks' Chairman and his children through its General Partners and Limited
Partners, provides data processing and various related services to FBA under the
terms of data processing agreements. Fees paid under these agreements were
$515,000 and $1.3 million for the three and nine months ended September 30,
1998, compared to $230,000 and $461,000 for the same periods in 1997,
respectively.
The Subsidiary Banks had $84.8 million and $66.9 million in whole loans
and loan participations outstanding at September 30, 1998 and December 31, 1997,
respectively, that were purchased from banks affiliated with First Banks. In
addition, the Subsidiary Banks had sold $141.8 million and $54.7 million in
whole loans and loan participations to affiliates of First Banks at September
30, 1998 and December 31, 1997, respectively. These loans 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 $14.9 million from First Banks at December 31, 1997 under
a $20.0 million promissory note payable. The borrowings under the note bear
interest at an annual rate of one-quarter percent less than the "Prime Rate" as
reported in the Wall Street Journal. The interest expense was $53,000 and
$302,000 for the three months ended September 30, 1998 and 1997, respectively,
and $599,000 and $874,000 for the nine months ended September 30, 1998 and 1997,
respectively. Future borrowings under the promissory note payable are available
with any principal and accrued interest due and payable on October 31, 2001. The
accrued and unpaid interest under the note was $1.4 million at December 31,
1997. As more fully discussed in Note 4, on February 2, 1998, FBA exchanged
804,000 shares of its common stock for $10.0 million outstanding under the
promissory note payable. In addition, during July 1998, the remaining balance of
$11.3 million under the $20.0 million promissory note payable was repaid from
the proceeds of the sale of 8.50% Cumulative Trust Preferred Securities
(Preferred Securities). See Note 5 for further discussion of the Preferred
Securities.
In connection with FBA's acquisition of FCB, FBA issued convertible
debentures to First Banks of $6.5 million. These debentures replaced similar FCB
debentures previously owned by First Banks. The related interest for these
debentures was $604,000 and $647,000 for the nine months ended September 30,
1998 and 1997, respectively. FBA is not required to pay interest on the
debentures prior to maturity. At maturity in 2000, principal and accrued
interest are payable in FBA common stock (at a conversion rate of $14.06 per
share), unless FBA elects to pay cash and First Banks does not exercise its
right to convert principal and interest into FBA common stock. The accrued
interest payable for these debentures was $2.2 million and $1.6 million at
September 30, 1998 and December 31, 1997, respectively.
(3) Regulatory Capital
FBA and 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 FBA 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 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
<PAGE>
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 (as defined in the regulations). In addition, a minimum leverage
ratio (Tier 1 capital to average assets) of 3.00% plus an additional cushion of
100 to 200 basis points is expected. In order to be considered well capitalized
under Prompt Corrective Action provisions, a bank is required to maintain a risk
weighted asset ratio of at least 10%, a Tier 1 to risk weighted assets ratio of
at least 6%, and a leverage ratio of at least 5%. As of December 31, 1997, the
date of the most recent notification from FBA's primary regulator, each of the
Subsidiary Banks was categorized as well capitalized under the regulatory
framework for Prompt Corrective Action.
At September 30, 1998 and December 31, 1997, FBA's and the Subsidiary
Banks' capital ratios were as follows:
<TABLE>
<CAPTION>
Risk-based capital ratios
-------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FBA.......................................... 16.03% 6.88% 10.13% 5.62% 8.64% 4.96%
BankTEXAS.................................... 12.33 12.26 11.07 11.00 9.15 8.90
FB California................................ 10.93 13.03 9.67 11.77 8.47 13.80
</TABLE>
(4) Acquisitions
As previously announced, FBA and Redwood Bancorp executed an agreement
on September 3, 1998 providing for the acquisition of Redwood Bancorp, and its
wholly-owned subsidiary, Redwood Bank, for cash consideration of $26.0 million.
Redwood Bank is headquartered in San Francisco, California and operates four
banking locations in the San Francisco Bay area. Redwood Bank had $168.5 million
in total assets, $126.4 million in loans, net of unearned discount, and $148.6
million in deposits at September 30, 1998. FBA anticipates that the transaction,
which is subject to regulatory approval, will be completed on or about December
31, 1998.
On February 2, 1998, FBA completed its acquisition of FCB and its
wholly owned subsidiary, First Commercial. In the transaction, the FCB
shareholders received .8888 shares of FBA common stock for each share of FCB
common stock. Cash was paid in lieu of issuing fractional shares. In total, FCB
shareholders received approximately 752,000 shares of FBA common stock in the
transaction, including 462,176 shares received by First Banks in exchange for
its 61.48% ownership interest in FCB. The transaction also provided for First
Banks to receive 804,000 shares of FBA common stock in exchange for $10.0
million of FBA's promissory note payable to First Banks, and for the exchange of
FCB convertible debentures of $6.5 million, which were 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. These special
committees were comprised solely of independent directors of the two respective
Boards of Directors.
First Commercial had six banking offices located in Sacramento,
Roseville (2), San Francisco, Concord and Campbell, California. At February 2,
1998, FCB had total assets of $192.5 million, investment securities of $64.4
million, loans, net of unearned discount of $118.9 million and deposits of
$173.1 million. The transaction was accounted for as a business combination of
entities under common control. Accordingly, FBA assumed First Banks' 61.48%
interest in FCB at its historical cost basis. The remaining 38.52%, or minority
interest, owned by unaffiliated parties was recorded at fair value. The excess
of the cost over the fair value of the minority interest's share in the fair
value of the net assets acquired was $1.6 million and is being amortized over 15
years. First Commercial was merged into FB California.
On February 2, 1998, FBA also completed its acquisition of Pacific Bay
Bank, San Pablo, California (Pacific Bay). Under the terms of the Pacific Bay
Agreement, Pacific Bay shareholders received $14.00 per share in cash for their
stock, an aggregate of $4.2 million. The transaction was accounted for using the
<PAGE>
purchase method of accounting. The excess of the cost over the fair value of the
net assets acquired was $1.5 million and is being amortized over 15 years. This
transaction was funded from an advance under the promissory note payable to
First Banks.
Pacific Bay operated a banking office in San Pablo, California and a
loan production office in Lafayette, California. At February 2, 1998, Pacific
Bay had total assets of $38.3 million, investment securities of $232,000, loans,
net of unearned discount, of $29.7 million and deposits of $35.2 million.
Pacific Bay was merged into FB California.
(5) Cumulative Trust Preferred Securities of First America Capital Trust
During July 1998, First America Capital Trust (First Capital), a
newly-formed Delaware business trust subsidiary of FBA, issued 1.84 million
shares of Preferred Securities at $25.00 per share in an underwritten public
offering. FBA made certain guarantees and commitments relating to the Preferred
Securities. FBA's proceeds from the issuance of the Preferred Securities, net of
underwriting fees and offering expenses, were approximately $44.0 million.
Distributions payable on the Preferred Securities are payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year
commencing on September 30, 1998. Distributions payable on the Preferred
Securities were $765,000 for the three months ended September 30, 1998 and are
recorded as noninterest expense in the accompanying consolidated financial
statements.
Proceeds from the offering were used to repay outstanding indebtedness
to First Banks under the terms of the $20.0 million promissory note payable,
support possible repurchases of common stock from time to time and for general
corporate purposes. The remaining proceeds have been temporarily invested in
interest-bearing deposits and will be used to fund the pending acquisition of
Redwood Bancorp.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANKS AMERICA, INC.
Registrant
Date: November 16, 1998 By: /s/Allen H. Blake
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Allen H. Blake
Vice President,
Chief Financial Officer
and Secretary
(Principal Financial Officer)
