SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20632
-------
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, 1996
----- -----------------
Common Stock, $250.00 par value 23,660.86
<PAGE>
First Banks, Inc.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 -2-
Consolidated Statements of Income for the three
and nine month periods ended September 30, 1996 and 1995 -4-
Consolidated Statements of Cash Flows for the nine month
periods ended September 30, 1996 and 1995 -5-
Notes to Consolidated Financial Statements -6-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -8-
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K -18-
Signatures -19-
<PAGE>
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)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
ASSETS
------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks ......................................... $ 121,788 128,553
Interest-bearing deposits with other financial institutions-
with maturities of three months or less ...................... 9,436 16,860
Federal funds sold .............................................. 51,200 53,800
------- -------
Total cash and cash equivalents ........................... 182,424 199,213
------- -------
Investment securities:
Available for sale, at fair value ................................ 473,275 471,791
Held to maturity, at amortized cost (estimated fair
value of $25,839 and $37,021 at September 30, 1996
and December 31,1995, respectively) ........................... 25,510 36,532
-------- -------
Total investment securities ............................... 498,785 508,323
-------- -------
Loans:
Commercial........................................................ 443,750 364,018
Real estate construction and development ......................... 259,607 209,802
Real estate mortgage:
Residential.................................................... 1,082,705 1,191,236
Commercial..................................................... 579,902 523,816
Consumer and installment ......................................... 351,853 419,894
Residential mortgage loans held for sale.......................... 23,687 45,035
--------- ---------
Total loans ............................................... 2,741,504 2,753,801
Unearned discount ................................................. (8,478) (9,582)
Allowance for possible loan losses ................................ (45,365) (52,665)
--------- ---------
Net loans ................................................. 2,687,661 2,691,554
--------- ---------
Bank premises and equipment, net of accumulated depreciation ........ 48,521 50,278
Intangibles associated with the purchase of subsidiaries ............ 20,882 23,841
Purchased mortgage servicing rights, net of amortization ............ 10,678 12,122
Accrued interest receivable ......................................... 22,851 22,027
Receivable from sales of investment securities....................... - 41,265
Other real estate owned ............................................. 10,298 7,753
Deferred income taxes ............................................... 41,898 41,576
Other assets ........................................................ 22,156 25,010
--------- ---------
Total assets .............................................. $3,546,154 3,622,962
========= =========
</TABLE>
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
LIABILITIES
-----------
Deposits:
Demand:
<S> <C> <C>
Non-interest bearing .......................................... $ 393,401 389,658
Interest bearing .............................................. 289,535 307,584
Savings ......................................................... 664,142 690,902
Time:
Time deposits of $100 or more ................................. 149,695 201,025
Other time deposits ........................................... 1,557,968 1,594,522
--------- ---------
Total deposits ............................................. 3,054,741 3,183,691
Federal Home Loan Bank advances....................................... 71,576 49,883
Federal funds purchased .............................................. 15,000 3,000
Securities sold under agreements to repurchase ....................... 41,745 17,180
Notes payable ........................................................ 66,840 88,135
Accrued interest payable ............................................. 9,641 10,726
Deferred income taxes ................................................ 9,991 6,517
Accrued and other liabilities ........................................ 19,172 16,788
Minority interest in subsidiaries .................................... 13,856 12,437
--------- -----------
Total liabilities .......................................... 3,302,562 3,388,357
--------- ---------
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; 2,191,000 shares and 2,200,000 shares issued
and outstanding at September 30, 1996 and December 31, 1995,
respectively.................................................. 54,775 55,000
Class A, convertible, adjustable rate, $20.00
par value; 750,000 shares authorized; 641,082
shares issued and outstanding ................................ 12,822 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 ...................................................... 4,237 4,307
Retained earnings .................................................... 163,894 156,692
Net fair value adjustment for securities available for sale .......... 1,708 (372)
--------- ---------
Total stockholders' equity ................................. 243,592 234,605
--------- ---------
Total liabilities and stockholders' equity ................. $3,546,154 3,622,962
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
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,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans................................. $ 59,199 56,807 175,260 161,912
Investment securities...................................... 4,742 7,856 17,966 27,562
Federal funds sold and other............................... 958 1,380 3,782 2,577
------- -------- --------- --------
Total interest income................................ 64,899 66,043 197,008 192,051
------ ------ ------- -------
Interest expense:
Deposits:
Interest-bearing demand................................. 1,117 1,466 3,530 4,238
Savings................................................. 5,578 6,414 16,953 16,675
Time deposits of $100 or more........................... 2,113 2,646 6,960 6,381
Other time deposits..................................... 21,721 20,462 66,060 55,718
Federal Home Loan Bank advances............................. 711 2,323 1,954 10,699
Securities sold under agreements to repurchase.............. 323 379 762 2,190
Interest rate exchange agreements, net ..................... 1,838 1,791 6,035 5,168
Notes payable and other..................................... 1,311 1,551 4,326 5,281
------- ------- ------- --------
Total interest expense............................... 34,712 37,032 106,580 106,350
------- ------ ------- -------
Net interest income.................................. 30,187 29,011 90,428 85,701
Provision for possible loan losses............................. 2,570 5,439 8,774 8,449
------- ------- ------- -------
Net interest income after provision for possible
loan losses........................................ 27,617 23,572 81,654 77,252
------- ------ ------- -------
Noninterest income:
Service charges on deposit accounts and customer
service fees........................................ 3,154 2,766 9,411 7,634
Credit card fees........................................ 663 570 1,897 1,615
Loan servicing fees, net................................ 749 510 2,027 2,286
Gain (loss) on mortgage loans sold and held for sale.... (119) (78) (7) (622)
Gain (loss) on sale of securities, net.................. (625) 886 (421) 2,765
Gain on sale of mortgage loan servicing rights.......... - - - 3,843
Loss on cancellation of interest rate exchange agreement - - - (3,342)
Other income............................................ 1,688 714 2,891 3,463
------- ----- ------- ------
Total noninterest income............................. 5,510 5,368 15,798 17,642
------- ----- ------- ------
Noninterest expenses:
Salaries and employee benefits.......................... 9,724 10,157 30,085 27,938
Occupancy, net of rental income......................... 2,310 2,398 7,245 6,244
Furniture and equipment................................. 1,734 1,814 5,404 4,982
Federal Deposit Insurance Corporation premiums.......... 9,479 582 11,355 3,810
Postage, printing and supplies.......................... 985 900 3,660 3,360
Data processing fees.................................... 1,130 1,216 3,479 3,560
Legal, examination and professional fees................ 1,098 1,502 3,620 3,975
Credit card expenses.................................... 713 620 2,149 1,762
Communications.......................................... 712 554 1,992 1,744
Advertising............................................. 299 389 1,253 1,473
Losses and expenses on foreclosed real estate, net of gains 460 236 951 539
Other expenses.......................................... 3,513 1,074 10,044 7,314
------ ------ ------- ------
Total noninterest expenses........................... 32,157 21,442 81,237 66,701
------ ------ ------- ------
Income before provision (benefit) for income taxes and
minority interest in income of subsidiaries......... 970 7,498 16,215 28,193
Provision (benefit) for income taxes........................... (814) 2,523 4,304 9,414
------ ----- ------ ------
Income before minority interest in (income) loss
of subsidiaries ................................... 1,784 4,975 11,911 18,779
Minority interest in (income) loss of subsidiaries............. (252) 972 ( 472) 816
------ ----- ------ ------
Net income........................................... 1,532 5,947 11,439 19,595
Preferred stock dividends...................................... 1,434 1,434 4,237 4,237
------ ----- ------ ------
Net income available to common shareholders.......... $ 98 4,513 7,202 15,358
======= ===== ====== ======
Earnings per share:
Primary..................................................... $ 4.12 190.72 304.39 649.08
Fully Diluted............................................... 11.37 183.03 302.68 617.39
======== ====== ====== ======
Weighted average shares of common stock outstanding............ 23,661 23,661 23,661 23,661
======== ====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income .............................................................. $ 11,439 19,595
Adjustments to reconcile net income to net cash:
Depreciation and amortization of bank premises and equipment ......... 4,314 3,997
Amortization, net of accretion ....................................... 3,360 3,107
Originations and purchases of loans held for sale .................... (104,923) (33,434)
Proceeds from sales of loans held for sale ........................... 91,336 173,873
Provisions for possible loan losses .................................. 8,774 8,449
Provisions for income taxes currently payable ........................ 4,304 9,414
Payments of income taxes ............................................. (5,018) (385)
(Increase) decrease in accrued interest receivable ................... (824) 568
Interest accrued on liabilities ...................................... 106,579 106,450
Payments of interest on liabilities .................................. (107,665) (106,350)
Other ................................................................ 7,028 (2,545)
Minority interest in income of subsidiaries .......................... 453 (815)
-------- ---------
Net cash provided by (used in) operating activities .............. 19,157 181,924
-------- -------
Cash flows from investing activities:
Cash paid for acquired entities, net of cash and cash equivalents
received............................................................... - 51,275
Sales of securities of acquired entities ............................... - 86,723
Other sales of investment securities ................................... 83,616 170,270
Maturities of investment securities .................................... 308,411 142,350
Purchases of investment securities ..................................... (338,575) (177,357)
Purchases of mortgage servicing rights ................................. (56) -
Net (increase) decrease in loans ....................................... (4,566) (103,938)
Recoveries of loans previously charged-off ............................. 5,229 3,247
Purchases of bank premises and equipment ............................... (2,550) (4,056)
Other investing activities ............................................. 10,476 (32,042)
-------- --------
Net cash provided by (used in) investing activities .............. 61,985 136,472
-------- -------
Cash flows from financing activities:
Other increases (decreases) in deposits:
Demand and savings deposits ........................................ (41,067) (82,306)
Time deposits ...................................................... (87,883) 51,862
Increase (decrease) in Federal funds purchased ......................... 12,000 (70,300)
Increase (decrease) in Federal Home Loan Bank advances ................. 21,693 (84,157)
Increase (decrease) in securities sold under agreements to repurchase . 24,565 (55,496)
Increase (decrease) in notes payable and other borrowings .............. (22,772) 17,639
Retirement of preferred stock........................................... (230) -
Payment of preferred stock dividends ................................... (4,237) (4,237)
-------- --------
Net cash provided by (used in) financing activities .............. (97,931) (226,995)
-------- --------
Net increase (decrease) in cash and cash equivalents ............. (16,789) 91,401
Cash and cash equivalents, beginning of period ............................. 199,213 131,296
-------- -------
Cash and cash equivalents, end of period ................................... $ 182,424 222,697
======== =======
Noncash investing and financing activities:.................................
Loans transferred to foreclosed real estate ............................ $ 7,332 1,893
Loans to facilitate sale of foreclosed real estate ..................... 168 213
Loans transferred to held for sale...................................... - 146,991
======== =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
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 1995 annual report
on Form 10-K. In the opinion of management, all adjustments, consisting of
normal recurring accruals considered necessary for a fair presentation of the
results of operations for the interim periods presented herein, have been
included. Operating results for the three and nine month periods ended September
30, 1996 are not necessarily indicative of the results that may be expected for
any other interim period or for the year ending December 31, 1996.
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 Houston, Texas
(FBA)
CCB Bancorp, Inc., headquartered in Irvine, California (CCB)
First Commercial Bancorp, Inc., headquartered in
Sacramento, California (FCB)
St. Charles Federal Savings and Loan Association,
headquartered in St. Charles, Missouri (St. Charles Federal).
CCB, a wholly owned bank holding company subsidiary, operates through
First Bank & Trust, headquartered in Irvine, California (FB&T). On January 16,
1996, La Cumbre Federal Savings Bank F.S.B., previously operating as a thrift
subsidiary of CCB, was merged into FB&T. In addition, on April 15, 1996, Queen
City Bank, N.A. was merged into FB&T. The mergers of these entities did not have
a significant impact on the consolidated operations of First Banks.
FBA, a majority owned bank holding company subsidiary, operates through
BankTEXAS N.A., headquartered in Houston, Texas. First Banks' ownership interest
in FBA was 67.30% and 65.41% at September 30, 1996 and December 31, 1995,
respectively.
FCB, a majority owned bank holding company subsidiary, operates through
First Commercial Bank, headquartered in Sacramento, California. First Banks'
ownership interest in FCB was 61.46% and 93.29% at September 30, 1996 and
December 31, 1995, 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 1995 amounts have been made to conform with the
1996 presentation.
(2) Business Combinations
On June 24, 1996, First Banks' majority owned subsidiary, FBA, executed
a definitive agreement under which FBA will acquire Sunrise Bancorp, Inc.
(Sunrise), Roseville, California, and its wholly owned subsidiary, Sunrise Bank
of California, in an all-cash transaction. Sunrise is headquartered in
Roseville, California and operates two full-service banking offices in Roseville
and Citrus Heights, California and one loan production office in San Francisco,
California. At September 30, 1996, Sunrise had total assets of $112.4 million,
consisting primarily of cash and cash equivalents and investment securities of
$48.2 million and loans of $61.1 million. The transaction was completed on
November 1, 1996.
(3) Capital Stock of First Commercial Bancorp, Inc.
During the second quarter of 1996, FCB completed an offering to its
shareholders other than First Banks an aggregate of 59.69 million shares of
newly-issued FCB common stock at $.10 per share. The common stock subscribed
under the offering totaled 36.09 million shares. As a result of the offering,
First Banks ownership interest in FCB was reduced to 61.46% at September 30,
1996 from 93.29% at December 31, 1995. This reduction in the ownership interest
in FCB did not have a material impact on the financial condition or results of
operations of First Banks.
<PAGE>
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, 1996, First Banks had $3.5 billion in total assets; $2.7 billion in total
loans, net of unearned discount; $3.1 billion in total deposits; and $244
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,
municipal and industrial development, real estate construction and development,
residential real estate and consumer and installment loans. Other financial
services include mortgage banking, credit-related insurance, automatic teller
machines, safe deposit boxes, merchant credit card, corporate cash management,
and corporate and individual trust services offered by certain Subsidiary Banks.
The following table lists the Subsidiary Banks at September 30, 1996
ranked by asset size:
<TABLE>
<CAPTION>
Loans, net
Percent of No. of of unearned Total
Subsidiary Banks ownership locations Total Assets discounts deposits
- ---------------- --------- --------- ------------ --------- --------
(dollars expressed in thousands)
<S> <C> <C> <C> <C> <C>
First Bank FSB 100.00% 39 $ 1,013,966 841,206 817,133
First Bank (Missouri) 100.00% 29 837,561 655,790 733,230
First Bank (Illinois) 100.00% 28 832,082 595,856 763,945
CCB 100.00% 13 410,970 308,109 338,044
FBA 67.30% 6 271,700 172,737 229,418
FCB 61.46% 6 148,980 94,299 133,656
St. Charles Federal 100.00% 1 76,313 65,069 60,320
</TABLE>
Financial Condition
First Banks' total assets decreased by $70 million to $3.55 billion
from $3.62 billion at September 30, 1996 and December 31, 1995, respectively.
The decrease is primarily attributable to the reduction in net loans of $11
million and the settlement in January 1996 of the sale of $41 million of
investment securities carried as a receivable at December 31, 1995. In addition,
cash and cash equivalents and investment decreased by $17 million and $10
million as of September 30, 1996 in comparison to December 31, 1995. The funds
generated from the reduction in total assets were utilized to reduce
rate-sensitive deposits. The composition of the decrease in loans, net of
unearned discount, is discussed in the "Lending and Credit Management" section
of this Form 10-Q.
Results of Operations
Net Income
Net income was $1.5 million for the three months ended September 30,
1996, compared to $5.9 million for the same period in 1995. Net income for the
nine months ended September 30, 1996 was $11.4 million compared to $19.6 million
for the same period in 1995.
The results of operations for the three months ended September 30, 1996
were adversely affected by an $8.6 million charge for the one-time special
deposit insurance assessment passed by Congress and signed by President Clinton
on September 30, 1996. This special assessment will be used to recapitalize the
Savings Association Insurance Fund (SAIF) of the Federal Deposit Insurance
Corporation (FDIC) in order to bring it into parity with the Bank Insurance Fund
(BIF) of the FDIC. As a result of this special assessment, First Banks' cost of
deposit insurance is expected to decrease by approximately $2.0 million for the
<PAGE>
year ended December 31, 1997 compared to its deposit insurance cost for the year
ended December 31, 1996, excluding the affect of the special assessment. The
expected decrease in the cost of deposit insurance is based on an overall
assessment rate for 1997 of 1.3 basis points and 6.4 basis points for each
$100.00 of assessable deposits of BIF and SAIF deposits, respectively, in
comparison to the current assessment rate, applicable only to SAIF deposits, of
23 basis points.
The operating results for 1996 also reflect the negative effect on
earnings of the seven acquisitions completed during 1995. First Banks is
restructuring the composition of acquired assets and liabilities, working to
improve the quality of the acquired loans, building loan loss reserves to First
Banks' standards, and integrating these entities into its systems and cultures.
First Banks expects this restructuring process to be substantially completed
during 1996.
In addition, included in income for the three and nine month periods
ended September 30, 1995 included net securities gains of $866,000 and $2.8
million, respectively, compared to net securities losses of $625,000 and
$421,000 for the same periods in 1996
Net Interest Income
Net interest income (expressed on a tax-equivalent basis) was $30.5
million, or 3.73% of average interest earning assets, for the three months ended
September 30, 1996, compared to $29.4 million, or 3.54% of average interest
earning assets, for the same period in 1995. Net interest income (expressed on a
tax-equivalent basis) for the nine months ended September 30, 1996 was $91.3
million, or 3.69% of average interest earning assets, compared to $86.7 million,
or 3.58% of average interest earning assets, for the same period in 1995.
The increased net interest income for 1996 is principally attributable
to the increase in average interest-earning assets provided primarily by
acquisitions. The increase was partially offset by the interest expense on the
debt incurred in First Banks' acquisition program and the costs associated with
the use of derivative financial instruments in the management of First Banks'
interest rate risk exposure. The expense of such derivative financial
instruments was $3.4 million and $8.8 million for the three and nine month
periods ended September 30, 1996, respectively, in comparison to $2.6 million
and $6.2 million for the same periods in 1995.
<PAGE>
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:
<PAGE>
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------------------------------------------ -----------------------------------------
Interest Interest Interest Interest
Average income/ Yield/ Average income/ Yield/ Average income/ Yield/ Average income/ Yield/
balance expense rate balance expense rate balance expense rate balance expense rate
------- ------------ ------- ------ ----- ------- ------- ---- ------- ------ -----
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $2,706,607 59,314 8.77% $2,653,321 56,948 8.59% $2,713,444 175,611 8.63% $2,551,896 2,325 8.48%
Investment securities 491,325 4,908 4.00 577,172 8,063 5.59 494,470 18,483 4.98 620,063 28,163 6.06
Federal funds sold and other 70,516 959 5.44 83,382 1,380 6.62 94,418 3,782 5.34 55,591 2,577 6.18
--------- ------ --------- ------ --------- ------ -------- ------
Total interest-earning
assets 3,268,448 65,181 7.98 3,313,875 66,391 8.01 3,302,332 197,876 7.99 3,227,550 193,065 7.98
Nonearning assets 222,544 223,909 222,692 210,314
------- --------- --------- ---------
Total assets $3,490,992 $ 3,537,784 $3,525,024 $3,437,864
========= ========= ========= =========
Liabilities and Stockholders' Equity Interest-bearing liabilities:
------------------------------------------------------------------
Interest-bearing demand
deposits $ 292,153 1,117 1.53% $ 279,725 1,466 2.10% $ 298,990 3,530 1.57% $275,788 4,238 2.05%
Savings deposits 676,200 5,578 3.30 695,101 6,414 3.69 684,640 16,953 3.30 645,951 16,675 3.44
Time deposits of $100
or more(1) 154,995 2,291 5.91 182,009 2,823 6.20 169,889 7,545 5.92 153,274 6,810 5.92
Other time deposits (1) 1,575,117 23,327 5.92 1,466,057 21,887 5.97 1,590,836 71,332 5.98 1,398,234 59,630 5.69
--------- ------ --------- ------- --------- ------ --------- ------
Total interest-bearing
deposits 2,698,465 32,313 4.79 2,622,892 32,59 4.97 2,744,355 99,360 4.83 2,473,247 87,353 4.71
Notes payable and other (1) 148,540 2,398 6.45 286,495 4,442 6.20 140,694 7,219 6.84 375,939 18,997 6.74
--------- ------- --------- ----- --------- ------ ------- ------
Total interest-bearing
liabilities 2,847,005 34,711 4.88 2,909,387 37,032 5.09 2,885,049 106,579 4.93 2,849,186 106,350 4.98
------- ------ ------- -------
Noninterest-bearing liabilities:
Demand deposits 366,954 361,754 365,413 331,067
Other liabilities 35,431 36,978 36,252 32,585
--------- --------- --------- ----------
Total liabilities 3,249,390 3,308,119 3,286,714 3,212,838
Stockholders' equity 241,602 229,665 238,310 225,026
--------- --------- --------- ----------
Total liabilities and
stockholders' equity $3,490,992 $3,537,784 $ 3,525,024 $ 3,437,864
========= ========= ========= ==========
Net interest income 30,470 29,359 91,297 86,715
====== ====== ====== ======
Net interest margin 3.73% 3.54% 3.69% 3.58%
===== ===== ===== ====
</TABLE>
(1) Includes the effects of interest rate exchange agreements
Provision for Possible Loan Losses
The provision for possible loan losses was $2.6 million compared to
$5.4 million for the three months ended September 30, 1996 and 1995,
respectively. For the nine months ended September 30, 1996 and 1995, the
provision for possible loan losses was $8.8 million and $8.4 million,
respectively. Net loan charge-offs were $3.1 million and $16.1 million for the
three and nine month periods ended September 30, 1996, respectively, in
comparison to $7.0 million and $9.6 million for the three and nine month periods
ended September 30, 1995, respectively.
<PAGE>
Several of the First Banks' acquisitions in 1995 includes significant
portfolios of problem assets. Following these acquisitions, 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, this has caused loan charge-offs to increase
during 1995 and 1996.
The reduction in the provision for possible loan losses to $2.8 million
for the three months ended September 30, 1996, compared to $5.4 million the same
period in 1995, reflects a special provision of $3.7 million recorded during the
three month period ended September 30, 1995. This special provision related to
FBA's portfolio of automobile loans which had experienced increased levels of
loan charge-offs and loans past due 30 days or more within that portfolio.
The provision for possible loan losses for the nine month period ended
September 30, 1996, reflects the additional provision requirement attributable
to a single commercial loan of approximately $3.7 million which was fully
charged-off. The loan was identified in 1995 as having potential problems
creating uncertainty as to its collectibility. During the nine months ended
September 30, 1996, the borrower failed to meet certain previously-agreed
financial measures and principal reductions. As a result, it became apparent the
loan could not be collected in the normal course of business and was
charged-off.
Tables summarizing nonperforming assets, past due loans and charge-off
experience are presented in the "Lending and Credit Management" section of this
Form 10-Q.
Noninterest Income
Noninterest income was $5.5 million and $15.8 million for the three and
nine month periods ended September 30, 1996, respectively, in comparison to $5.4
million and $17.6 million for the same periods in 1995. The decrease for the
nine months ended September 30, 1996 is primarily attributable to net security
losses of $625,000 and $421,000 for the three and nine month periods ended
September 30, 1996 in comparison to net securities gains of $886,000 and $2.8
million for the same periods in 1995, partially offset by the additional
noninterest income generated from the seven acquisitions completed throughout
1995.
An increase of $481,000 and $2.1 million in service charges, customer
service fees and credit card fees for the three and nine month periods ended
September 30, 1996, compared to the same periods in 1995, relates primarily to
the aforementioned acquisitions completed during 1995.
Loan servicing fees, net increased by $239,000 for the three month
period ended September 30, 1996, in comparison to the same period in 1995,
primarily from additional loan servicing revenues provided by acquisitions
completed during 1995. For the nine months ended September 30, 1996, loan
servicing fees, net decreased by $259,000, in comparison to the same period in
1995, due to the sale of $427 million of mortgage loan servicing rights during
July 1995.
During the three months ended September 30, 1995, First Banks decided
to sell $427 million of mortgage servicing rights due to favorable pricing
available in the marketplace at that time. This sale resulted in a gain of $3.8
million.
In addition, First Banks sold $147 million of residential mortgage
loans during the nine months ended September 30, 1995, resulting in a loss of
$284,000. In connection with the sale of these loans, First Banks terminated an
interest rate exchange agreement, resulting in a loss of $3.3 million for the
nine months ended September 30, 1995.
<PAGE>
Noninterest income also includes net security losses of $625,000 and
$421,000 for the three and nine months ended September 30, 1996, respectively,
in comparison to net security gains of $886,000 and $2.8 million for the same
periods in 1995. The securities sold were classified as available for sale
within the investment security portfolio. Gross gains and losses were $450,000
and $166,000, respectively, for the nine months ended September 30, 1996. For
the nine months ended September 30, 1995, the gross gains and losses were $8.0
million and $1.2 million, respectively. The net security losses include the
recognition of $700,000 and $4.0 million of realized hedging losses for the nine
month periods ended September 30, 1996 and 1995, respectively
The increase in other income for the three months ended September 30,
1996 relates primarily to a non-recurring gain of $795,000 realized from the
termination of leveraged lease and related sale of the underlying leased assets.
Included in other income for the nine months ended September 30, 1995 was
$802,000 from the termination of a self-insurance trust.
Noninterest Expenses
Noninterest expenses were $32.2 million and $21.4 million for the three
month periods ended September 30, 1996 and 1995, respectively. Noninterest
expenses for the three months ended September 30, 1996 include the special
assessment to recapitalize the SAIF of $8.6 million as further described below.
Excluding this special assessment, noninterest expenses totaled $23.6 million
for the three months ended September 30, 1996 in comparison to the prior
quarters ended June 30, 1996 and March 31, 1996 of $24.0 million and $25.0
million, respectively. These decreases are consistent with the cost savings
expected upon the integration of the entities acquired throughout 1995 into
existing systems and cultures of First Banks.
Noninterest expense was $81.2 million and $66.7 million for the nine
months ended September 30, 1996 and 1995, respectively. The increase of $14.5
million is primarily attributable to the one-time special assessment discussed
below and incremental operating expenses of the seven acquisitions completed
throughout 1995. In particular, salaries and employee benefits increased by $2.2
million to $30.1 million from $27.9 million for the nine month periods ended
September 30, 1996 and 1995, respectively. In addition, occupancy and furniture
and equipment expenses increased by $1.4 million to $12.6 million from $11.2
million for the nine month periods ended September 30, 1996 and 1995,
respectively.
FDIC expense for the three and nine month periods ended September 30,
1996 includes an $8.6 million charge for the one-time special deposit insurance
assessment passed by Congress and signed by President Clinton on September 30,
1996. This special assessment will be used to recapitalize the SAIF of the FDIC
and bring it into parity with the BIF of the FDIC. As a result of this special
assessment, First Banks' cost of deposit insurance for SAIF insured deposits is
expected to decrease by approximately $2.0 million for the year ended December
31, 1997 in comparison to December 31, 1996. The expected decrease in the cost
of deposit insurance is based on an overall assessment rate for 1997 of 6.4
basis points for each $100.00 of assessable SAIF deposits, in comparison to the
current assessment rate of 23 basis points. First Banks currently has $1.2
billion of SAIF insured deposits.
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 77.1% and
75.7% of total assets as of September 30, 1996 and December 31, 1995,
respectively. Total loans, excluding loans held for sale and net of unearned
discount, increased by $10.0 million to $2.71 billion at September 30, 1996 from
$2.70 billion at December 31, 1995. The increase reflects continued growth
within corporate lending of $135.8 million, substantially offset by the decrease
of the residential mortgage and consumer and installment loan portfolios of
$108.5 million and $68.0 million, respectively, at September 30, 1996 in
comparison to December 31, 1995. These changes reflect a restructuring of the
<PAGE>
loan portfolio which was initiated in early 1995. In accordance with than plan,
First Banks has sold substantially all of its conforming residential mortgage
production in the secondary mortgage market and has significantly reduced its
origination of indirect automobile loans.
The following is a summary of nonperforming assets by category:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(dollars expressed in thousands)
<S> <C> <C>
Commercial $ 5,009 9,930
Real estate construction and development 2,093 2,002
Real estate mortgage:
Residential 12,437 11,143
Commercial 13,338 16,016
Consumer and installment 515 300
---------- ---------
Total nonperforming loans 33,392 39,391
Other real estate 10,298 7,753
---------- ---------
Total nonperforming assets $ 43,690 47,144
========= =========
Loans, net of unearned discount $ 2,733,026 2,744,219
========= =========
Loans past due 90 days or more and still accruing $ 5,988 8,474
========= =========
Allowance for possible loan losses to loans 1.66% 1.92%
Nonperforming loans to loans 1.22 1.44
Allowance for possible loan losses to nonperforming loans 135.86 133.70
Nonperforming assets to loans and foreclosed assets 1.59 1.71
============ ============
</TABLE>
Impaired loans, consisting of certain nonaccrual loans and consumer and
installment loans 60 days or more past due, were $19.0 million and $31.5 million
at September 30, 1996 and December 31, 1995, respectively.
The following is a summary of the loan loss experience for the three and
nine month periods ended September 30:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
Allowance for possible loan losses, beginning of period $ 45,921 45,540 52,665 28,410
Acquired allowances for possible loan losses - 7,059 - 23,761
------ ------ ------ ------
45,921 52,599 52,665 52,171
Loans charged-off (4,869) (8,010) (21,303) (12,856)
Recoveries of loans previously charged-off 1,743 983 5,229 3,247
------ ------ ------ ------
Net loan (charge-offs) recoveries (3,126) (7,027) (16,074) (9,609)
------ ------ ------ ------
Provision for possible loan losses 2,570 5,439 8,774 8,449
------ ------ ------ -----
Allowance for possible loan losses, end of period $ 45,365 51,011 45,365 51,011
====== ====== ====== ======
</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 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.
<PAGE>
Interest Rate Risk Management
For financial institutions, the maintenance of a satisfactory level
of net interest income is a primary factor in achieving acceptable income
levels. However, the maturity and repricing characteristics of the institution's
loan and investment portfolios, relative to those within its deposit structure,
may differ significantly. Furthermore, the ability of borrowers to repay loans
and depositors to withdraw funds prior to stated maturity dates introduces
divergent option characteristics which operate primarily as interest rates
change. This causes various elements of the institution's balance sheet to react
in different manners and at different times relative to changes in interest
rates, thereby leading to increases or decreases in net interest income over
time. Depending upon the amount and velocity of interest rate movements and
their effect on the specific components of the institution's balance sheet, the
effects on net interest income can be substantial. Consequently, a fundamental
requirement in managing a financial institution is establishing effective
control of the exposure of the institution to changes in interest rates.
First Banks manages its interest rate risk by: (1) maintaining an
Asset Liability Committee (ALCO) responsible to First Banks' Board of Directors
to review the overall interest rate risk management activity and approve actions
taken to reduce risk; (2) maintaining an effective monitoring mechanism to
determine First Banks' exposure to changes in interest rates; (3) coordinating
the lending, investing and deposit-generating functions to control the
assumption of interest rate risk; and (4) employing various off-balance sheet
financial instruments to offset inherent interest rate risk when it becomes
excessive. The objective of these procedures is to limit the adverse impact
which changes in interest rates may have on net interest income.
The ALCO has overall responsibility for the effective management of
interest rate risk and the approval of policy guidelines. The ALCO includes the
Chairman and Chief Executive Officer, the senior executives of investments,
credit, retail banking and finance, and certain other officers. The ALCO is
supported by the Asset Liability Management Group which monitors interest rate
risk, prepares analyses for review by the ALCO and implements actions which are
either specifically directed by the ALCO or established by policy guidelines. To
measure the effect of interest rate changes, First Banks calculates its net
income over one and two year horizons on a pro forma basis assuming
instantaneous, permanent parallel and non-parallel shifts in the yield curve, in
varying amounts both upward and downward.
Derivative financial instruments held by First Banks for purposes of
managing interest rate risk are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1996 December 31,1995
------------------ ----------------
Notional Credit Notional Credit
amount exposure amount exposure
------ -------- ------ --------
(dollars expressed in thousands)
<S> <C> <C>
Interest rate swap agreements $ 145,000 - 145,000 -
Interest rate floor agreements 105,000 131 105,000 608
Interest rate cap agreements 20,000 437 30,000 292
Forward commitments to sell
mortgage-backed securities 31,000 - 42,000 -
</TABLE>
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.
Prior to 1996, First Banks sold interest rate futures contracts and
purchased options on interest rate futures contracts to hedge the interest rate
risk of its available for sale securities portfolio. The unamortized balance of
net deferred losses on interest rate futures contracts of $1.2 million and $4.6
million at September 30, 1996 and December 31, 1995, respectively, was applied
to the carrying value of the available for sale securities portfolio as part of
the mark-to-market valuation.
<PAGE>
Interest rate swap agreements are 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
$1.7 million and $5.8 million for the three and nine month periods ended
September 30, 1996, respectively, in comparison to $1.5 million and $4.9 million
for the same periods in 1995. The maturity dates, notional amounts, interest
rates paid and received, and fair values of interest rate swap agreements
outstanding as of the dates indicated are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1996:
Notional Interest Rate Fair Value
------------- ----------
Maturity date Amount Paid Received Gain (loss)
------------- ------ ---- -------- -----------
(dollars expressed in thousands)
<S> <C> <C> <C> <C>
September 30, 1997 $ 35,000 7.04% 5.55% $ (364)
December 8, 1997 15,000 7.90 5.66 (333)
September 30, 1999 35,000 7.32 5.55 (744)
September 30, 2001 35,000 7.65 5.55 (1,250)
January 30, 2005 25,000 8.13 5.63 (1,753)
------- ------
$145,000 7.53 5.58 $ (4,444)
======= ==== ==== ======
December 31, 1995:
Notional Interest Rate Fair Value
Maturity date Amount Paid Received Gain (loss)
------------- ------ ---- -------- -----------
(dollars expressed in thousands)
September 30, 1997 $ 35,000 7.04% 5.69% $ (932)
December 8, 1997 15,000 7.90 5.81 (711)
September 30, 1999 35,000 7.32 5.69 (2,073)
September 30, 2001 35,000 7.65 5.69 (3,207)
January 30, 2005 25,000 8.13 5.94 (3,703)
------- ---------
$145,000 7.53 5.74 $(10,626)
======= ==== ==== ========
</TABLE>
During July 1995, First Banks shortened the effective maturity of its
interest-bearing liabilities through the termination of $225 million of interest
rate swap agreements at a loss of $13.5 million. This loss has been deferred and
is being amortized over the remaining lives of the swap agreements. At September
30, 1996 and December 31, 1995, the unamortized balance of this loss was $8.4
million and $11.6 million, respectively, and was included in other assets. The
amortization of the deferred loss included in interest expense was $1.0 million
and $3.3 million for the three and nine month periods ended September 30, 1996,
in comparison to $923,000 for the three and nine months ended September 30,
1995.
First Banks also has interest rate cap and floor agreements to limit
the interest expense associated with certain of its interest-bearing liabilities
and the net interest expense of certain interest rate swap agreements,
respectively. At September 30, 1996 and December 31, 1995, the unamortized costs
for these agreements were $470,000 and $685,000, respectively, and were included
in other assets. The net interest expense of the interest rate cap and floor
agreements was $72,000 and $215,000 for the three and nine month periods ended
September 30, 1996, respectively, in comparison to $127,000 and $233,000 for the
same periods in 1995. 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 its debt
obligations and meet other commitments on a timely basis. The primary sources of
funds for liquidity are derived from customer deposits, loan payments,
maturities, sales of investments and earnings.
<PAGE>
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 $345 million at September 30, 1996 and $359 million at
December 31, 1995. The decrease is primarily attributable to the reduction in
certificates of deposit in denominations of $100,000 or more of $51.3 million,
substantially offset by increases in FHLB advances of $21.7 million and
securities sold under agreements to repurchase of $24.6 million.
At September 30, 1996, First Banks' more volatile sources of funds
mature as follows:
(dollars expressed in thousands)
Three months or less $ 178,871
Over three months through six months 35,839
Over six months through twelve months 100,904
Over twelve months 29,242
--------
Total $ 344,856
=======
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 9% Increasing Rate, Redeemable, Cumulative Preferred
Stock (Class C Shares).
Capital
Risk-based capital guidelines for financial institutions are designed
to relate regulatory capital requirements to the risk profiles of the specific
institutions and to provide more uniform requirements among the various
regulators. First Banks and 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 common stockholders'
equity, qualifying perpetual preferred stock and minority interests in equity
accounts of consolidated subsidiaries, less intangibles associated with the
purchase of subsidiaries, net losses on financial futures contracts deferred for
financial reporting purposes, and the excess of net deferred tax assets, as
defined by regulation. Consistent with regulatory reporting, Tier 1 capital also
excludes the fair value adjustment for available for sale investment securities.
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. All classes
of First Banks' preferred stock qualify as Tier 1 capital under the risk-based
guidelines.
At September 30, 1996 and December 31, 1995, First Banks' and the
Subsidiary Banks' capital ratios were as follows:
<TABLE>
<CAPTION>
Risk based capital ratios
-------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Banks 9.56% 9.34% 8.23% 7.77% 6.13% 5.32%
First Bank FSB 10.15 11.90 8.90 10.80 6.00 6.74
First Bank (Illinois) 11.40 12.91 10.15 11.66 7.15 7.22
First Bank (Missouri) 10.26 10.03 9.01 8.78 7.22 7.01
FBA 13.99 11.69 12.73 10.43 9.64 8.38
CCB 18.86 15.25 17.58 13.96 11.96 9.58
FCB 6.61 4.99 5.33 3.68 3.95 2.14
St. Charles Federal 14.80 18.95 14.17 18.46 7.69 8.73
</TABLE>
<PAGE>
FCB's capital has improved to "undercapitalized" at September 30, 1996
from "significantly undercapitalized" at December 31, 1995 for regulatory
purposes as a result of the offering of newly-issued common stock as more fully
described in note 3 to the accompanying consolidated financial statements. The
risk based total and Tier 1 capital ratios and leverage ratio for First
Commercial Bank were 12.65%, 11.37% and 8.41%, respectively, at September 30,
1996 and is considered "adequately capitalized" for regulatory purposes.
Effects of New Accounting Standards
First Banks adopted the provisions of Statement of Financial Accounting
Standards (SFAS) 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (SFAS 121), on January 1, 1996. SFAS 121
established accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles to
be disposed of.
SFAS 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for recoverability, the entity
should estimate the future cash flows expected to result from the use of the
asset and its eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Otherwise, an impairment loss is
not recognized. Measurement of an impairment loss for long-lived assets and
identifiable intangibles that an entity expects to hold and use should be based
on the fair value of the asset.
First Banks adopted the provisions of SFAS 122, Accounting for Mortgage
Servicing Rights (SFAS 122), on January 1, 1996. SFAS 122 amends SFAS 65,
Accounting for Certain Mortgage Banking Activities. SFAS 122 requires that a
mortgage banking enterprise recognize as separate assets rights to service
mortgage loans for others, regardless of how those servicing rights are
acquired.
A mortgage banking enterprise that acquires mortgage servicing rights
through either the purchase or origination of mortgage loans and sells or
securitizes those loans with servicing rights retained should allocate the total
cost of the mortgage loans to the servicing rights and the loans (without the
mortgage servicing rights), based on their relative fair values if it is
practicable to estimate those fair values. If it is not practicable to estimate
the fair values of the mortgage servicing rights and the mortgage loans (without
the mortgage servicing rights), the entire cost of purchasing or originating the
loans should be allocated to the mortgage loans (without the mortgage servicing
rights) and no cost should be allocated to the mortgage servicing rights.
SFAS 122 requires that a mortgage banking enterprise assess its
capitalized mortgage servicing rights for impairment based on the fair value of
those rights. The entity should stratify its mortgage servicing rights that are
capitalized after the adoption of this statement based on one or more of the
predominate risk characteristics of the underlying loans. Impairment should be
recognized through a valuation allowance for each impaired stratum.
The implementation of SFAS 121 and SFAS 122 did not have a material
effect on First Banks' consolidated financial statements.
In June 1995, the FASB issued SFAS 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities (SFAS 125). SFAS
125 established accounting and reporting standards for transfers and servicing
of financial assets and extinguishment of liabilities.
<PAGE>
The standards established by SFAS 125 are based on consistent
applications of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
SFAS 125 is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively. Earlier or retroactive application is not permitted.
First Banks does not believe the implementation of SFAS 125 will have a
material effect on its consolidated financial position or results of operation.
Part II- OTHER INFORMATION
Item 6. 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 Calculations of Earnings per Common Share
27 Financial Data Schedule (EDGAR only)
(b) First Banks, Inc. filed no reports on Form 8-K during the three month
and nine month periods ended September 30, 1996.
<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, INC.
Registrant
Date: November 12, 1996 By: /s/ James F. Dierberg
---------------------
James F. Dierberg
Chairman, President and
Chief Executive Officer
Date: November 12, 1996 By: /s/ Allen H. Blake
-------------------
Allen H. Blake
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
Exhibit 11
<PAGE>
Exhibit 11
FIRST BANKS, INC.
Calculation of Earnings per Share
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine months Ended
September 30, September 30,
------------------------------------ ---------------------
1996 1995 1996 1995
----- ----- ---- ----
<S> <C> <C> <C> <C>
Average shares outstanding:
Class C preferred stock 2,200,000 2,200,000 2,200,000 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 $ 1,531,434 5,946,692 11,438,682 19,594,539
Preferred stock dividends:
Class C preferred stock (1,237,500) (1,237,500) (3,712,501) (3,712,501)
Class A preferred stock (192,325) (192,325) (512,866) (512,866)
Class B preferred stock (4,213) (4,213) (11,235) (11,235)
------------- ----------- ------------ -----------
Income available to common
stockholders $ 97,396 4,512.654 7,202,080 15,357,937
============= ========= ========= ==========
Primary earnings per share $ 4.12 190.72 304.39 649.08
===== ====== ====== ======
Fully diluted earnings per share:
Dividends per share:
Class C preferred stock $ 0.5625 0.5625 1.6875 1.6875
Class A preferred stock 0.3000 0.3000 0.8000 0.8000
Class B preferred stock 0.0263 0.0262 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 $ 7,038.74 6,307.84 7,038.74 6,307.84
Dilution of common equity upon
exercise of options and
warrants of subsidiary bank (24.88) (39.42) (24.88) (39.42)
--------- -------- -------- --------
$ 7,013.86 6,268.42 7,013.86 6,268.42
======== ======== ======== ========
Common stock issuable upon conversion 1,828 2,045 1,828 2,045
Shares of common stock outstanding 23,661 23,661 23,661 23,661
--------- ----------- --------- ---------
25,489 25,706 25,489 25,706
======== =========== ========= ========
Net income $1,531,434 5,946,692 11,438,682 19,594,539
Class C preferred dividends (1,237,500) (1,237,500) (3,712,501) (3,712,501)
Class B preferred dividends (4,213) (4,213) (11,235) (11,235)
----------- ----------- ----------- ----------
Fully-diluted net income $ 289,721 4,704,979 7,714,946 15,870,803
========== =========== ========== ==========
Fully-diluted earnings per share $ 11.37 183.03 302.68 617.39
====== ====== ======= ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 121,788
<INT-BEARING-DEPOSITS> 9,436
<FED-FUNDS-SOLD> 51,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 473,275
<INVESTMENTS-CARRYING> 25,510
<INVESTMENTS-MARKET> 0
<LOANS> 2,733,026
<ALLOWANCE> (45,365)
<TOTAL-ASSETS> 3,546,154
<DEPOSITS> 3,054,741
<SHORT-TERM> 195,161
<LIABILITIES-OTHER> 52,660
<LONG-TERM> 0
0
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