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 June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20632
FIRST BANKS, INC.
-----------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1175538
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
135 NORTH MERAMEC, CLAYTON, MISSOURI 63105
------------------------------------------
(address of principal executive offices) (Zip Code)
(314) 854-4600
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X_ No ____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class July 31, 1997
----- -------------
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 June 30, 1997
and December 31, 1996 -1-
Consolidated Statements of Income for the three
and six months ended June 30, 1997 and 1996 -3-
Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1996 -4-
Notes to Consolidated Financial Statements -5-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -8-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K -15-
Signatures -17-
<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>
June 30, December 31,
ASSETS 1997 1996
------ ---- ----
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks .............................................. $ 111,701 147,804
Interest-bearing deposits with other financial
institutions-with maturities of three months
or less ............................................................. 3,646 6,050
Federal funds sold ................................................... 133,900 74,100
---------- ---------
Total cash and cash equivalents .................................. 249,247 227,954
---------- ---------
Investment securities:
Available for sale, at fair value .................................... 530,598 532,605
Held to maturity, at amortized cost
(estimated fair value of $20,141
and $20,611 at June 30, 1997 and
December 31,1996, respectively)...................................... 19,597 20,196
Trading securities.................................................... 2,298 --
---------- ---------
Total investment securities ...................................... 552,493 552,801
---------- ---------
Loans:
Commercial and industrial............................................. 548,112 457,186
Real estate construction and development ............................. 342,560 289,378
Real estate mortgage:
Residential......................................................... 996,362 1,059,769
Other............................................................... 651,279 600,811
Consumer and installment ............................................. 305,230 341,154
Loans held for sale-residential mortgage ............................. 24,097 27,485
---------- ---------
Total loans ...................................................... 2,867,640 2,775,783
Unearned discount .................................................... (7,722) (7,814)
Allowance for possible loan losses ................................... (47,708) (46,781)
---------- ---------
Net loans ........................................................ 2,812,210 2,721,188
---------- ---------
Bank premises and equipment, net of
accumulated depreciation ............................................. 47,741 48,078
Intangibles associated with the purchase
of subsidiaries ...................................................... 23,041 23,303
Purchased mortgage servicing rights, net
of amortization ..................................................... 9,287 10,230
Accrued interest receivable ............................................. 24,518 23,250
Other real estate owned ................................................. 9,185 10,607
Deferred income taxes ................................................... 45,096 43,406
Other assets ............................................................ 21,202 28,337
---------- ---------
Total assets .................................................. $ 3,794,020 3,689,154
========== =========
</TABLE>
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(dollars expressed in thousands, except per share data)
(continued)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
LIABILITIES
-----------
Deposits:
Demand:
<S> <C> <C>
Non-interest bearing ........................................... $ 441,135 418,193
Interest bearing ............................................... 324,935 337,618
Savings .......................................................... 721,594 671,286
Time:
Time deposits of $100 or more .................................. 189,752 169,057
Other time deposits ............................................ 1,670,964 1,642,413
---------- ---------
Total deposits ........................................ 3,348,380 3,238,567
Federal Home Loan Bank advances....................................... 2,876 39,277
Other borrowings...................................................... 42,685 30,705
Notes payable ........................................................ 7,655 76,330
Accrued interest payable ............................................. 9,312 10,288
Deferred income taxes ................................................ 11,971 6,194
Accrued and other liabilities ........................................ 13,853 23,521
Minority interest in subsidiaries..................................... 12,962 12,883
Guaranteed preferred beneficial interest in
First Banks' subordinated debentures, net of
issuance costs .................................................... 83,130 --
---------- ----------
Total liabilities ..................................... 3,532,824 3,437,765
---------- ----------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock:
Class C 9.00% increasing rate, redeemable, cumulative, $1.00 par
value, $25.00 stated value; 5,000,000 shares authorized; 1,892,500
shares and 2,155,500 shares issued and outstanding at June 30, 1997
and December 31, 1996, respectively............................ 47,312 53,887
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 ...................................................... 2,852 3,289
Retained earnings .................................................... 184,394 171,182
Net fair value adjustment for securities
available for sale ................................................ 7,660 4,053
---------- -----------
Total stockholders' equity .................................... 261,196 251,389
---------- -----------
Total liabilities and stockholders' equity ................... $3,794,020 3,689,154
========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
Interest income: ---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and fees on loans................................. $ 62,873 58,006 123,097 116,520
Investment securities...................................... 8,499 6,382 16,480 13,224
Federal funds sold and other............................... 1,407 1,298 2,502 2,824
--------- --------- --------- -------
Total interest income................................ 72,779 65,686 142,079 132,568
--------- --------- --------- -------
Interest expense:
Deposits:
Interest-bearing demand.................................. 1,400 1,127 2,805 2,413
Savings................................................ 5,641 5,580 11,039 11,375
Time deposits of $100 or more.......................... 2,596 2,313 4,868 4,847
Other time deposits.................................... 23,844 21,889 47,029 44,339
Federal Home Loan Bank advances............................ 93 358 366 1,243
Securities sold under agreements to repurchase............. 423 232 742 439
Interest rate exchange agreements, net .................... 1,176 2,387 2,383 4,197
Notes payable and other.................................... 65 1,431 762 3,015
First Banks' subordinated debentures....................... 2,121 -- 3,379 --
--------- -------- --------- -------
Total interest expense............................... 37,359 35,317 73,373 71,868
--------- -------- --------- -------
Net interest income.................................. 35,420 30,369 68,706 60,700
Provision for possible loan losses.............................. 3,175 3,100 6,025 6,204
--------- -------- --------- -------
Net interest income after provision
for possible loan losses........................... 32,245 27,269 62,681 54,496
--------- -------- --------- -------
Noninterest income:
Service charges on deposit accounts and
customer service fees................................... 3,010 3,129 5,968 6,257
Credit card fees........................................... 686 635 1,460 1,234
Loan servicing fees, net................................... 441 419 864 819
Gain on mortgage loans sold and held for sale............. 87 9 208 112
Gain on sale of securities, net............................ -- 88 -- 204
Gain on trading securities, net............................ 22 -- 22 --
Other income............................................... 1,460 656 2,394 1,203
--------- -------- --------- -------
Total noninterest income............................. 5,706 4,936 10,916 9,829
--------- -------- --------- -------
Noninterest expenses:
Salaries and employee benefits............................. 10,571 10,028 20,928 20,361
Occupancy, net of rental income............................ 2,610 2,642 5,213 4,935
Furniture and equipment.................................... 1,885 1,794 4,050 3,670
Federal Deposit Insurance Corporation premiums............. 293 974 315 1,876
Postage, printing and supplies............................. 1,021 1,303 2,241 2,675
Data processing fees....................................... 2,392 1,140 3,521 2,349
Legal, examination and professional fees................... 1,066 1,046 2,169 2,522
Credit card expenses....................................... 821 711 1,640 1,436
Communications............................................. 566 635 1,255 1,280
Advertising................................................ 965 418 1,613 954
Losses and expenses on foreclosed real
estate, net of (gains)................................. (20) 141 93 491
Other expenses............................................. 3,491 3,211 6,518 6,531
--------- -------- --------- -------
Total noninterest expenses........................... 25,661 24,043 49,556 49,080
--------- -------- --------- -------
Income before provision for income
taxes and minority interest in income
of subsidiaries................................... 12,290 8,162 24,041 15,245
Provision for income taxes...................................... 4,051 2,554 7,765 5,118
--------- -------- --------- -------
Income before minority interest in income
of subsidiaries................................... 8,239 5,608 16,276 10,127
Minority interest in income of subsidiaries..................... (376) (138) (577) (220)
--------- -------- --------- -------
Net income........................................... 7,863 5,470 15,699 9,907
Preferred stock dividends....................................... 1,209 1,369 2,488 2,803
--------- -------- --------- -------
Net income available to common shareholders.......... $ 6,654 4,101 13,211 7,104
========= ======== ========= =======
Earnings per share:
Primary.................................................... $ 281.23 173.34 558.33 300.27
Fully Diluted.............................................. 267.97 165.91 534.61 291.26
========= ======== ========= =======
Weighted average shares of common stock outstanding............. 23,661 23,661 23,661 23,661
========= ======== ========= =======
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FIRST BANKS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
(dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income............................................................. $ 15,699 9,907
Adjustments to reconcile net income to net cash:
Depreciation and amortization of bank premises
and equipment..................................................... 2,938 3,053
Amortization, net of accretion..................................... 1,685 1,683
Originations and purchases of loans held for sale.................. (55,669) (85,143)
Proceeds from sales of loans held for sale ........................ 54,952 58,728
Provision for possible loan losses................................. 6,025 6,204
Provision for income taxes currently payable....................... 7,765 5,118
Payments of income taxes........................................... (5,035) (5,018)
Increase in accrued interest receivable ........................... (3,504) (726)
Net decrease (increase) in trading securities...................... (2,298) --
Interest accrued on liabilities.................................... 73,373 71,868
Payments of interest on liabilities................................ (74,348) (72,942)
Other, net......................................................... (2,875) 2,293
Minority interest in income of subsidiaries........................ 577 220
-------- ---------
Net cash provided by (used in) operating activities........... 19,285 (4,755)
-------- ---------
Cash flows from investing activities:
Cash and cash equivalents received from acquisitions................... 40,361 --
Other sales of investment securities................................... -- 46,478
Maturities of investment securities.................................... 206,941 214,441
Purchases of investment securities..................................... (197,698) (245,342)
Net (increase) decrease in loans....................................... (103,828) 51,069
Recoveries of loans previously charged-off ............................ 5,550 3,486
Purchases of bank premises and equipment............................... (2,601) (1,774)
Other investing activities............................................. 2,901 6,461
-------- ---------
Net cash provided by (used in) investing
activities................................................ (48,374) 74,819
-------- ---------
Cash flows from financing activities:
Other increases (decreases) in deposits:
Demand and savings deposits........................................ 53,224 (26,389)
Time deposits...................................................... 16,228 (41,436)
Decrease in Federal funds purchased ................................... -- (3,000)
Decrease in Federal Home Loan Bank advances............................ (36,401) (12,079)
Increase in other borrowings........................................... 11,980 6,132
Decrease in notes payable.............................................. (68,675) (13,705)
Purchase and retirement of Class C preferred stock..................... (6,575) --
Proceeds from sale of cumulative preferred trust
securities, net of issuance costs................................... 83,086 --
Payment of Class C preferred stock dividends........................... (2,485) (2,802)
-------- ---------
Net cash provided by (used in) financing
activities ................................................. 50,382 (93,279)
-------- ---------
Net increase (decrease) in cash and
cash equivalents ........................................... 21,293 (23,215)
Cash and cash equivalents, beginning of period ............................. 227,954 199,213
-------- ---------
Cash and cash equivalents, end of period.................................... $249,247 175,998
======== =========
Noncash investing and financing activities:
Loans transferred to foreclosed real estate............................ $ 2,303 5,986
======== ==========
</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 1996 annual report
on Form 10-K. In the opinion of management, all adjustments, consisting of
normal recurring accruals considered necessary for a fair presentation of the
results of operations for the interim periods presented herein, have been
included. Operating results for the three and six month periods ended June 30,
1997 are not necessarily indicative of the results that may be expected for any
other interim period or for the year ending December 31, 1997.
First Banks' primary subsidiaries (Subsidiary Banks) are:
First Bank, headquartered in St. Louis County, Missouri (First Bank
Missouri)
First Bank, headquartered in O'Fallon, Illinois (First Bank Illinois)
First Bank FSB, headquartered in St. Louis County, Missouri (First
Bank FSB)
First Banks America, Inc., St. Louis County, Missouri (FBA)
CCB Bancorp, Inc., headquartered in Irvine, California (CCB)
First Commercial Bancorp, Inc., headquartered in Sacramento, California
(FCB)
First Bank Missouri and First Bank Illinois are wholly owned banking
subsidiaries. First Bank FSB is a wholly owned thrift subsidiary. CCB, a wholly
owned bank holding company subsidiary, operates through First Bank & Trust,
headquartered in Irvine, California (FB&T). FBA, a majority-owned bank holding
company subsidiary, operates through two banking subsidiaries, BankTEXAS N.A.,
headquartered in Houston, Texas (BTX) and Sunrise Bank of California,
headquartered in Roseville, California (Sunrise). FCB, a majority-owned bank
holding company subsidiary, operates through First Commercial Bank,
headquartered in Sacramento, California (First Commercial).
First Banks' ownership interest in FBA was 69.67% and 68.82% at June
30, 1997 and December 31, 1996, respectively. First Banks' ownership interest in
FCB was 61.46% at June 30, 1997 and December 31, 1996.
The consolidated financial statements include the accounts of First
Banks, Inc. and its subsidiaries, net of minority interests. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Certain reclassifications of 1996 amounts have been made to conform with the
1997 presentation.
(2) Mergers and Acquisitions
On March 27, 1997, First Banks completed its assumption of the
deposits and purchase of selected assets of two Long Beach, California banking
locations of Highland Federal Bank, FSB. The transaction resulted in the
acquisition of $40.4 million in deposits and two offices which will operate as
branches of FB&T.
On July 25, 1997, FBA and FCB jointly announced an agreement in
principle providing for the merger of the two companies. Under the terms of the
agreement, FCB will be merged into FBA, and FCB's wholly owned subsidiary, First
Commercial, will be merged into Sunrise Bank. The transaction provides for First
Banks to receive 804,000 shares of FBA common stock in exchange for $10 million
of FBA's note payable to First Banks. In addition the transaction provides for
the exchange of FCB convertible debentures, which are owned by First Banks, for
comparable debentures of FBA. The agreement was negotiated and approved by
special committees of the boards of directors of FCB and FBA comprised solely of
independent directors of the two respective boards of directors. The transaction
<PAGE>
is expected to be completed by December 31, 1997. The merger of FBA and FCB will
not have a significant impact on the financial condition or results of operation
of First Banks.
On July 28, 1997, FBA and Surety Bank entered into an Agreement and
Plan of Reorganization (Agreement) providing for the acquisition of Surety Bank
by FBA. Under the terms of the Agreement, Surety Bank will be merged into a
subsidiary of FBA.
Surety Bank operates banking offices in Vallejo and Fairfield,
California. At June 30, 1997, Surety Bank had total assets of $72.7 million, and
reported net income of $154,000 for the six month period then ended. The
transaction will be accounted for using the purchase method of accounting and is
expected to be completed by December 31, 1997.
(3) Cumulative Trust Preferred Securities of First Preferred Capital Trust
On February 4, 1997, First Preferred Capital Trust (First Capital), a
newly-formed Delaware business trust subsidiary of First Banks, issued 3.45
million shares of 9.25% Cumulative Trust Preferred Securities (Preferred
Securities) at $25 per share in an underwritten public offering and issued
106,702 shares of Common Securities to First Banks at $25 per share. First Banks
owns all of First Capital's Common Securities. The gross proceeds of the
offering were used by First Capital to purchase $88,917,550 of 9.25%
Subordinated Debentures (Subordinated Debentures) from First Banks. The
Subordinated Debentures are the sole asset of First Capital. In connection with
the issuance of the Preferred Securities, First Banks made certain guarantees
and commitments that, in the aggregate, constitute a full and unconditional
guarantee by First Banks of the obligations of First Capital under the Preferred
Securities. First Banks' proceeds from the issuance of the Subordinated
Debentures to First Capital, net of underwriting fees and offering expenses,
were $83.1 million. Distributions payable on the Preferred Securities were $2.1
million and $3.4 million for the three and six month periods ended June 30, 1997
and are recorded as interest expense in the accompanying consolidated financial
statements.
The proceeds from the offering were used for general corporate
purposes, including the reduction of borrowings under a credit agreement with a
group of unaffiliated banks (Credit Agreement) and the repurchase of 284,000
shares of Class C Increasing Rate, Redeemable, Cumulative Preferred Stock (Class
C Preferred Stock) for $7.3 million. The remaining proceeds have been
temporarily invested.
(4) Regulatory Capital
First Banks and the Subsidiary Banks are subject to various regulatory
capital requirements administered by the federal and state banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on First Banks' and the Subsidiary Banks'
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Subsidiary Banks must meet specific
capital guidelines that involve quantitative measures of the Subsidiary Banks'
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Subsidiary Banks' capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulations to ensure capital
adequacy require the Subsidiary Banks to maintain certain minimum ratios. The
Subsidiary Banks are required to maintain a minimum risk-based capital to
risk-weighted assets ratio of 8.0%, with at least 4.0% being "Tier 1" capital
(as defined in the regulations) and a minimum leverage ratio (Tier 1 capital to
total assets) of 3.0%. An additional cushion of 100 to 200 basis points is
required to be considered well capitalized. As of June 30, 1997, the date of the
most recent notification from First Banks' primary regulator, First Bank
Missouri was categorized as well capitalized under the regulatory framework for
prompt corrective action. There have been no conditions or events since that
notification that management believes have changed First Banks Missouri
<PAGE>
category. Management believes that, as of June 30, 1997, all of the Subsidiary
Banks are well capitalized as defined by the Federal Deposit Insurance
Corporation Act.
At June 30, 1997 and December 31, 1996, First Banks' and the Subsidiary
Banks' capital ratios were as follows:
Risk based capital ratios
------------------------------
Total Tier 1 Leverage Ratio
----- ------ --------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
First Banks 12.25% 9.23% 8.31% 7.92% 6.39% 5.99%
First Bank FSB 10.91 11.00 9.77 9.75 6.92 6.45
First Bank Missouri 10.00 10.47 8.75 9.21 7.37 7.25
First Bank Illinois 11.46 11.06 10.21 9.88 7.56 7.17
FB&T 15.57 16.45 14.31 15.18 10.03 11.43
BankTEXAS 11.17 10.29 9.92 9.04 8.38 7.53
Sunrise 16.32 17.67 15.04 16.39 11.97 10.88
First Commercial 13.72 13.13 12.43 11.84 9.03 8.87
<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 June 30,
1997, First Banks had $3.79 billion in total assets; $2.86 billion in total
loans, net of unearned discount; $3.35 billion in total deposits; and $261.2
million in total stockholders' equity.
Through the Subsidiary Banks, First Banks offers a broad range of
commercial and personal banking services including certificate of deposit
accounts, individual retirement and other time deposit accounts, checking and
other demand deposit accounts, interest checking accounts, savings accounts and
money market accounts. Loans include commercial, financial, agricultural, real
estate construction and development, commercial and residential real estate and
consumer and installment loans. Other financial services include mortgage
banking, discount brokerage, credit-related insurance, automatic teller
machines, safe deposit boxes and trust services offered by certain Subsidiary
Banks.
<TABLE>
<CAPTION>
The following table lists the Subsidiary Banks at June 30, 1997:
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% 40 $ 1,017,145 858,178 916,069
First Bank Missouri 100.00% 31 872,597 690,816 782,424
First Bank Illinois 100.00% 27 824,049 632,471 751,918
CCB 100.00% 13 540,932 331,493 469,995
FBA 69.67% 8 373,592 247,574 312,819
FCB 61.46% 6 159,215 99,385 141,625
</TABLE>
Financial Condition
First Banks' total assets increased by $100 million to $3.79 billion
from $3.69 billion at June 30, 1997 and December 31, 1996, respectively. The
increase is primarily attributable to the increase in loans, net of unearned
discount, of $92 million and the increase in cash and cash equivalents of $21
million. The composition of the increase in net loans is discussed under
"--Lending and Credit Management" of this Form 10-Q. The increase in total
assets was funded by deposits, which increased by $110 million to $3.35 billion
and $3.24 billion at June 30, 1997 and December 31, 1996, respectively.
Results of Operations
Net Income
Net income for the three months ended June 30, 1997 was $7.86 million,
compared to $5.47 million for the same period in 1996, an increase of 44%. Net
income for the six months ended June 30, 1997 was $15.70 million compared to
$9.91 million for the same period in 1996. This represents a return on average
stockholders' equity and return on average assets ratios of 12.44% and .85% for
the three month period ended June 30, 1997, in comparison to 9.19% and .62% for
the same period in 1996. For the six month periods ended June 30, 1997 and 1996,
the return on average stockholders' equity and return on average assets ratios
improved to 12.49% and .85% from 8.37% and .56%, respectively. This further
compares to a return on average stockholders' equity and average assets for the
year ended December 31, 1996 of 8.43% and .57%, respectively. The improved
<PAGE>
earnings is primarily attributable to the increase in net interest income of
$5.05 million and $8.01 million for the three and six month periods ended June
30, 1997, respectively, compared to the same periods in 1996.
Net Interest Income
Net interest income (expressed on a tax-equivalent basis) improved to
$35.6 million, or 4.10% of average interest earning assets, for the three months
ended June 30, 1997, from $30.7 million, or 3.74% of average interest earning
assets, for the same period in 1996. Net interest income (expressed on a
tax-equivalent basis) improved to $69.2 million, or 4.04% of average interest
earning assets, for the six months ended June 30, 1997, from $61.3 million, or
3.71% of average interest earning assets, for the same period in 1996.
The increased net interest income for 1997 is attributable to the
increase in average interest earning assets of $187.0 million and $130.2 million
for the three and six month periods ended June 30, 1997, respectively, compared
to the same periods in 1996. The increase is attributable to loans which
increased by $108.3 million and $81.8 million for the three and six month
periods ended June 30, 1997 and 1996, respectively, over the same periods in
1996. Contributing further to the improved net interest income is the increase
in the yield of the loan portfolio to 8.96% and 8.88% from 8.62% and 8.64% for
the three and six month periods ended June 30, 1997 and 1996, respectively. The
improved yield reflects the continual process of realigning the loan portfolio
from residential real estate loans to other types of loans, such as commercial
and construction loans, which generally provide a higher level of net interest
income.
This realignment of the loan portfolio combined with the gradual shift
in the composition of the investment securities portfolios, from mortgage-backed
securities to U.S. Treasury and generic U.S. government agencies securities,
resulted in a reduction of the overall interest rate risk of First Banks. This
reduction of the interest rate risk profile contributed to net interest income
by reducing the need for hedging First Banks' position, and therefore its
associated cost, and by increasing the responsiveness of First Banks to the
generally increasing interest rates which occurred during the first quarter of
1997. Accordingly, the cost of hedging decreased to $1.18 million and $2.38
million for the three and six month periods ended June 30, 1997, respectively,
from $2.39 million and $4.20 million for the same periods in 1996.
<PAGE>
<TABLE>
<CAPTION>
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 six month periods ended June 30:
Three months ended June 30, Six months ended June 30,
1997 1996 1997 1996
---------------------- ---------------------- -------------------- ----------------------
Interest Interest Interest Interest
Average income/ Yield/ Average income/ Yield/ Average income/ Yield/ Average income/ Yield/
balance expense rate balance expense rate balance expense rate balance expense rate
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $2,818,728 62,957 8.96% $2,710,471 58,120 8.62% $2,798,761 123,277 8.88%$2,716,934 116,756 8.64%
Investment securities 564,395 8,633 6.14 489,709 6,552 5.38 559,550 16,752 6.04 496,015 13,575 5.50
Federal funds sold and other 102,653 1,407 5.50 98,549 1,299 5.30 91,263 2,502 5.53 106,413 2,824 5.34
---------- ------- ---------- ------ --------- ------ ---------- -------
Total interest-earning
assets 3,485,776 72,997 8.40 3,298,729 65,971 8.04 3,449,574 142,531 8.33 3,319,362 133,155 8.07
------- ------ ------- -------
Nonearning assets 219,363 221,313 226,733 222,754
---------- ---------- ---------- ----------
Total assets $3,705,139 $3,520,042 $3,676,307 $3,542,116
========== ========== ========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Interest-bearing liabilities:
Interest-bearing demand
deposits $ 330,058 1,400 1.71 299,157 1,127 1.52% $ 332,00 52,805 1.70% $ 302,450 2,413 1.60%
Savings deposits 685,316 5,641 3.31 687,091 5,580 3.27 683,355 11,039 3.26 688,869 11,375 3.32
Time deposits of $100
or more(1) 182,833 2,708 5.96 170,667 2,540 5.99 174,037 5,085 5.89 177,389 5,254 5.96
Other time deposits (1) 1,696,548 24,882 5.90 1,595,306 23,986 6.05 1,686,728 49,138 5.87 1,598,724 48,005 6.04
---------- ------- --------- ------ ---------- ------ ------
Total interest-bearing
deposits 2,894,755 34,631 4.81 2,752,221 33,233 4.86 2,876,125 68,067 4.77 2,767,432 67,047 4.87
Notes payable and other (1) 137,421 2,728 7.98 124,516 2,084 6.73 138,889 5,306 7.70 136,758 4,821 7.09
---------- ------- --------- ----- --------- ------ --------- ------
Total interest-bearing
liabilities 3,032,176 37,359 4.94 2,876,737 35,317 4.94 3,015,014 73,373 4.91 2,904,190 71,868 4.98
------- ------ ------ ------
Noninterest-bearing liabilities:
Demand deposits 382,355 368,565 372,741 364,598
Other liabilities 37,684 36,718 37,163 36,673
---------- ---------- ---------- ----------
Total liabilities 3,452,215 3,282,020 3,424,918 3,305,461
Stockholders' equity 252,924 238,022 251,389 236,655
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $3,705,139 $3,520,042 $3,676,307 $3,542,116
========== ========== ========== ==========
Net interest income 35,638 30,654 69,158 61,287
======= ====== ====== ======
Net interest margin 4.10 3.74% 4.04% 3.71%
==== ===== ===== =====
(1) Includes the effects of interest rate exchange agreements
</TABLE>
<PAGE>
Provision for Possible Loan Losses
The provision for possible loan losses was $3.18 million compared to
$3.10 million for the three months ended June 30, 1997 and 1996, respectively.
For the six months ended June 30, 1997 and 1996, the provision for possible loan
losses was $6.03 million and $6.20 million, respectively. The provision in 1997
reflects the overall growth and realignment of the loan portfolio. While the
provision for possible loan losses for the 1997 periods were not substantially
different from those of the preceding year, the adequacy of the allowance for
possible loan losses improved as a result of the lower level of net charge-offs
in 1997. Net loan charge-offs were $3.0 million and $5.1 million for the three
and six month periods ended June 30, 1997, respectively, compared to $7.2
million and $12.9 million for the three and six month periods ended June
30,1996, respectively.
Following various acquisitions during 1994 and 1995, First Banks
pursued aggressive problem loan work out procedures which included
conservatively re-valuing loans through charge-offs. While these adjustments
were anticipated prior to the acquisitions and adequate reserves for loan losses
had been established to provide for them, loan charge-offs began to increase
during 1996. However, as this work-out program progressed, loan charge-offs have
declined while recoveries of loans previously charged-off have increased.
Tables summarizing nonperforming assets, past due loans and charge-off
experience are presented under "--Lending and Credit Management" of this Form
10-Q.
Noninterest Income
Noninterest income was $5.7 million and $10.9 million for the three and
six month periods ended June 30, 1997, respectively, in comparison to $4.9
million and $9.8 million for the same period in 1996. Noninterest income
consists primarily of service charges on deposit accounts and other non-yield
customer service fees.
Service charges on deposit accounts and customer service fees decreased
to $3.0 million and $6.0 million for the three and six month periods ended June
30, 1997, respectively, from $3.1 million and $6.3 million for the same periods
in 1996. The decrease is attributable to the development of First Banks'
"aggregate balance pricing structure" whereby customers maintaining specified
deposit balances, determined on an aggregate basis of any deposit relationship
with First Banks, may avoid certain service charges.
Noninterest Expenses
Noninterest expense was $25.7 million and $24.0 million for the three
month periods ended June 30, 1997 and 1996, respectively. For the six month
periods ended June 30, 1997 and 1996, noninterest expense was $49.6 million and
$49.1 million, respectively. The increase is attributable to the acquisition of
Sunrise Bank, which incurred noninterest expense of $1.08 million and $2.29
million for the three and six month periods ended June 30, 1997 and 1996,
respectively, and to increased advertising and business development expenses.
The increase was substantially offset by cost savings realized upon the
integration of the entities acquired throughout 1994 and 1995 into existing
systems and cultures of First Banks and the decrease in Federal Deposit
Insurance Corporation (FDIC) premiums.
Advertising and business development expense was $965,000 and $418,000
for the three months ended June 30, 1997 and 1996, respectively. For the six
months ended June 30, 1997 and 1996, advertising and business development
expense was $1.61 million and $954,000, respectively. The increase is primarily
attributable to media advertising campaigns which were instituted during the
third quarter of 1996.
FDIC premiums decreased by $681,000 and $1.56 million for the three and
six month periods ended June 30, 1997 and 1996, respectively, as a result of the
reduction in the assessment rate charged on deposits insured by the Savings
Association Insurance Fund (SAIF) of the FDIC. The reduction in the assessment
rate was effective upon the recapitalization of the SAIF, accomplished by a
<PAGE>
one-time special deposit insurance charge assessed to all financial institutions
with deposits insured by the SAIF. First Banks' one-time charge totaled $8.2
million and was reflected in the operating results during the third quarter of
1996.
Lending and Credit Management
Interest earned on the loan portfolio is the primary source of income
of First Banks. Total loans, net of unearned discount, represented 75.4% and
75.0% of total assets as of June 30, 1997 and December 31, 1996, respectively.
Total loans, excluding loans held for sale and net of unearned discount,
increased by $100 million to $2.84 billion at June 30, 1997 from $2.74 billion
at December 31, 1996. The increase reflects continued growth within corporate
lending of $194.6 million, offset by the decrease of the residential mortgage
and consumer and installment loan portfolios of $63.4 million and $35.8 million,
respectively, at June 30, 1997 in comparison to December 31, 1996. These
decreases are attributable to the reductions of new loan origination volumes
that are held for investment and the continued repayment of principal on the
existing portfolios.
The following is a summary of nonperforming assets by category:
June 30, December 31,
1997 1996
---- ----
(dollars expressed in thousands)
Commercial, financial and agricultural $ 4,680 4,243
Real estate construction and development 2,990 817
Real estate mortgage 19,327 24,764
Consumer and installment 220 445
----------- ----------
Total nonperforming loans 27,217 30,269
Other real estate 9,185 10,607
----------- ----------
Total nonperforming assets $ 36,402 40,876
=========== ==========
Loans, net of unearned discount $ 2,859,918 2,767,969
=========== ==========
Loans past due 90 days or more
and still accruing $ 6,127 3,779
=========== ==========
Asset Quality Ratios:
Allowance for possible loan
losses to loans 1.67% 1.69%
Nonperforming loans to loans .95 1.09
Allowance for possible loan losses
to nonperforming loans 175.29 154.55
Nonperforming assets to loans and
other real estate 1.27 1.47
====== ====
Impaired loans, consisting of nonaccrual loans, were $27.2 million and
$30.3 million at June 30, 1997 and December 31, 1996, respectively.
<TABLE>
<CAPTION>
The following is a summary of the loan loss experience for the three
and six month periods ended June 30:
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for possible loan losses,
<S> <C> <C> <C> <C>
beginning of period $ 47,523 50,045 46,781 52,665
--------- ------ -------- -------
Loans charged-off (5,907) (9,583) (10,648) (16,434)
Recoveries of loans previously charged-off 2,917 2,359 5,550 3,486
--------- ------ -------- -------
Net loan (charge-offs) recoveries (2,990) (7,224) (5,098) (12,948)
---------- ------- -------- -------
Provision for possible loan losses 3,175 3,100 6,025 6,204
--------- ------ -------- -------
Allowance for possible loan losses, end of period $ 47,708 45,921 47,708 45,921
========= ====== ======== =======
</TABLE>
<PAGE>
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 quarter, the
allowance for possible loan losses is revised relative to First Banks' internal
watch list and other data utilized to determine its adequacy. The provision for
possible loan losses is management's estimate of the amount necessary to
maintain the allowance at a level consistent with this evaluation. As
adjustments to the allowance for possible loan losses are considered necessary,
they are reflected in the results of operations.
Interest Rate Risk Management
Derivative financial instruments held by First Banks for purposes of
managing interest rate risk are summarized as follows:
June 30, 1997 December 31,1996
----------------- ----------------
Notional Credit Notional Credit
amount exposure amount exposure
------ -------- -------- --------
dollars expressed in thousands)
Interest rate swap agreements $70,000 -- 70,000 --
Interest rate floor agreements 105,000 42 105,000 141
Interest rate cap agreements 10,000 332 10,000 335
Forward commitments to sell
mortgage-backed securities 38,000 -- 35,000 308
The notional amounts of derivative financial instruments do not
represent amounts exchanged by the parties and, therefore, are not a measure of
First Banks' credit exposure through its use of derivative financial
instruments. The amounts exchanged are determined by reference to the notional
amounts and the other terms of the derivatives.
Interest rate swap agreements 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
$1.1 million and $2.3 million for the three and six month periods ended June 30,
1997, respectively, in comparison to $2.3 million and $4.1 million for the same
period in 1996. The maturity dates, notional amounts, interest rates paid and
received, and fair values of interest rate swap agreements outstanding as of the
dates indicated are summarized as follows:
Notional Interest Rate Fair Value
Maturity date Amount Paid Received Gain (loss)
------------- ------ ---- -------- -----------
(dollars expressed in thousands)
June 30, 1997:
September 30, 1997 $ 35,000 7.04% 5.78% $ (120)
September 30, 1999 35,000 7.32 5.78 (805)
--------- --------
$ 70,000 7.18 5.78 $ (925)
======== ==== ==== ========
December 31, 1996:
September 30, 1997 $ 35,000 7.04% 5.59% $ (417)
September 30, 1999 35,000 7.32 5.59 (1,160)
--------- --------
$ 70,000 7.18 5.59 $ (1,577)
======== ==== ==== ========
First Banks shortened the effective maturity of its interest-bearing
liabilities through the termination of interest rate swap agreements of $225
million during July 1995 and $75 million during November 1996 at a loss of $13.5
million and $5.3 million, respectively. These losses have been deferred and are
being amortized over the remaining life of the swap agreements. At June 30, 1997
and December 31, 1996, the unamortized balance of these losses was $11.9 million
and $13.4 million, respectively, and was included in other assets. The
amortization of the deferred loss included in interest expense was $776,000 and
$1.5 million for the three and six month periods ended June 30, 1997, in
<PAGE>
comparison to $1.0 million and $2.3 million for the same periods in 1996. In
addition, on July 31, 1997 First Banks shortened the effective maturity of its
interest-bearing liabilities through the termination of interest rate swap
agreement of $35 million which was to mature on September 30, 1999. The deferred
loss totaled $1.44 million which will be amortized over the remaining live of
the swap agreement.
First Banks also has interest rate cap and floor agreements to limit
the interest expense associated with certain interest-bearing liabilities and
the net interest expense of certain interest rate swap agreements, respectively.
At June 30, 1997 and December 31, 1996, the unamortized costs for these
agreements were $359,000 and $433,000, respectively, and were included in other
assets. The net interest expense of the interest rate cap and floor agreements
was $37,000 and $74,000 for the three and six month periods ended June 30, 1997,
respectively, in comparison to $72,000 and $143,000 for the same periods in
1996. There are no amounts receivable under these agreements.
Derivative financial instruments issued by First Banks consist of
commitments to originate fixed-rate loans. Commitments to originate fixed-rate
loans consist primarily of residential real estate loans. These loan
commitments, net of estimated underwriting fallout, and loans held for sale are
hedged with forward contracts to sell mortgage-backed securities.
Liquidity
The liquidity of First Banks and its Subsidiary Banks is the ability to
maintain a cash flow which is adequate to fund operations, service debt
obligations and meet other commitments on a timely basis. The primary sources of
funds for liquidity are derived from customer deposits, loan payments,
maturities, sales of investments and earnings.
In addition, First Banks and its Subsidiary Banks may avail themselves
of more volatile sources of funds through issuance of certificates of deposit in
denominations of $100,000 or more, federal funds borrowed, securities sold under
agreements to repurchase, borrowings from the Federal Home Loan Bank (FHLB), and
other borrowings, including First Banks' $90 million credit agreement with a
group of unaffiliated financial institutions. The aggregate funds acquired from
those sources were $243.0 million at June 30, 1997 and $315.4 million at
December 31, 1996. The decrease is primarily attributable to the reduction in
notes payable from the proceeds received from the sale of the Preferred
Securities. See note 3 to the accompanying consolidated financial statements.
At June 30, 1997, First Banks' more volatile sources of funds mature as
follows:
(dollars expressed in thousands)
Three months or less $ 107,184
Over three months through six months 50,536
Over six months through twelve months 52,065
Over twelve months 33,183
---------
Total $ 242,968
=========
Management believes the future earnings of its Subsidiary Banks will be
sufficient to provide funds for growth and to permit the distribution of
dividends to First Banks sufficient to meet First Banks' operating and debt
service requirements both on a short-term and long-term basis and to pay the
dividends on the Class C Preferred Stock and the Preferred Securities.
Effects of New Accounting Standards
First Banks adopted the provisions of SFAS 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
(SFAS 125) prospectively on January 1, 1997. SFAS 125 established accounting and
reporting standards for transfers and servicing of financial assets and
extinguishment of liabilities.
The standards established by SFAS 125 are based on consistent
applications of a financial-components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
<PAGE>
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. SFAS 125 provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.
The implementation of SFAS 125 did not have a material effect on the
consolidated financial position or results of operation of First Banks.
In February 1997, the FASB issued SFAS 128, Earnings Per Share (SFAS
128). SFAS 128 supersedes Accounting Principles Board Opinion No. 15, Earnings
Per Share (APB 15) and specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with publicly held common
stock or potential common stock. SFAS 128 was issued to simplify the computation
of EPS and to make the U.S. standard more compatible with the EPS standards of
other countries and that of the International Accounting Standards Committee. It
replaces the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS. SFAS 128 also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities with
complex capital structures, and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
Basic EPS, unlike primary EPS, excludes dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised and converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Diluted EPS is
computed similarly to fully diluted EPS under APB 15.
SFAS 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. After adoption, all prior-period EPS data presented shall be restated
to conform with SFAS 128.
First Banks does not believe the implementation of SFAS 128 will have
a material effect on its computation of earnings per share.
In February 1997, the FASB issued SFAS 129, Disclosure of Information
about Capital Structure (SFAS 129). SFAS 129 establishes standards for
disclosing information about an entity's capital structure. It applies to all
entities. SFAS 129 continues the previous requirements to disclose certain
information about an entity's capital structure found in APB 10, Omnibus
Opinion-1966, APB 15 and SFAS 47, Disclosure of Long-Term Obligations, for
entities that were subject to the requirements of those standards. SFAS 129
eliminates the exemption of nonpublic entities from certain disclosure
requirements of APB 15 as provided by SFAS 21, Suspension of the Reporting of
Earnings Per Share and Segment Information by Nonpublic Enterprises. It
supersedes specific disclosure requirements of APB 10, APB 15 and SFAS 47 and
consolidates them in SFAS 129 for ease of retrieval and for greater visibility
to nonpublic entities.
SFAS 129 is effective for financial statements for periods ending after
December 15, 1997. It contains no change in disclosure requirements for entities
that were previously subject to the requirements of APB 10 and 15 and SFAS 47.
<PAGE>
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 Share
27 Financial Data Schedule (EDGAR only)
(b) First Banks, Inc. filed no reports on Form 8-K during the three month
period ended June 30, 1997.
<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: August 12, 1997 By: /s/ James F. Dierberg
---------------------
James F. Dierberg
Chairman, President and
Chief Executive Officer
Date: August 12, 1997 By: /s/ Allen H. Blake
------------------
Allen H. Blake
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
FIRST BANKS, INC.
Calculation of Earnings per Share
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Average shares outstanding:
<S> <C> <C> <C> <C>
Class C preferred stock 1,910,632 2,200,000 1,948,224 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 $ 7,862,983 5,469,943 15,698,800 9,907,247
Preferred stock dividends:
Class C preferred stock (1,077,750) (1,237,500) (2,160,563) (2,475,000)
Class A preferred stock (128,216) (128,216) (320,541) (320,541)
Class B preferred stock (2,809) (2,809) (7,022) (7,022)
----------- ----------- ----------- ----------
Income available to common
stockholders $ 6,654,208 4,101,418 13,210,674 7,104,684
=========== =========== ========== ==========
Primary earnings per share $ 281.23 173.34 558.33 300.27
=========== =========== =========== ==========
Fully diluted earnings per share:
Dividends per share:
Class C preferred stock $ 0.5641 0.5625 1.1090 1.1250
Class A preferred stock 0.2000 0.2000 0.5000 0.5000
Class B preferred stock 0.0175 0.0175 0.0438 0.0437
=========== =========== =========== ==========
Class A preferred stock outstanding 641,082 641,082 641,082 641,082
Book value/share of common stock,
beginning of year $ 7,795.11 7,038.74 7,795.11 7,038.74
Dilution of common equity upon
exercise of options and
warrants of subsidiary bank (20.98) (41.32) (20.98) (41.32)
----------- ------------ ----------- ---------
7,774.13 6,997.42 7,774.13 6,997.42
=========== =========== =========== ==========
Common stock issuable upon conversion 1,649 1,832 1,649 1,832
Shares of common stock outstanding 23,661 23,661 23,661 23,661
----------- ----------- ----------- ----------
25,310 25,493 25,310 25,493
=========== =========== =========== ==========
Net income $ 7,862,983 5,469,943 15,698,800 9,907,247
Class C preferred dividends (1,077,750) (1,237,500) (2,160,563) (2,475,000)
Class B preferred dividends (2,809) (2,809) (7,022) (7,022)
----------- ----------- ----------- -----------
Fully-diluted net income $ 6,782,424 4,229,634 13,531,215 7,425,225
=========== =========== =========== ===========
Fully-diluted earnings per share $ 267.97 165.91 534.61 291.26
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000710507
<NAME> First Banks, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 111,701
<INT-BEARING-DEPOSITS> 3,646
<FED-FUNDS-SOLD> 133,900
<TRADING-ASSETS> 2,298
<INVESTMENTS-HELD-FOR-SALE> 530,598
<INVESTMENTS-CARRYING> 19,597
<INVESTMENTS-MARKET> 0
<LOANS> 2,859,918
<ALLOWANCE> (47,708)
<TOTAL-ASSETS> 3,794,020
<DEPOSITS> 3,348,380
<SHORT-TERM> 53,216
<LIABILITIES-OTHER> 48,098
<LONG-TERM> 83,130
0
60,375
<COMMON> 5,915
<OTHER-SE> 194,906
<TOTAL-LIABILITIES-AND-EQUITY> 3,794,020
<INTEREST-LOAN> 123,097
<INTEREST-INVEST> 16,480
<INTEREST-OTHER> 2,502
<INTEREST-TOTAL> 142,079
<INTEREST-DEPOSIT> 65,741
<INTEREST-EXPENSE> 73,373
<INTEREST-INCOME-NET> 68,706
<LOAN-LOSSES> 6,025
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 49,556
<INCOME-PRETAX> 24,041
<INCOME-PRE-EXTRAORDINARY> 24,041
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,699
<EPS-PRIMARY> 558.33
<EPS-DILUTED> 534.61
<YIELD-ACTUAL> 8.33
<LOANS-NON> 27,217
<LOANS-PAST> 6,127
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 28,915
<ALLOWANCE-OPEN> 46,781
<CHARGE-OFFS> 10,648
<RECOVERIES> 5,550
<ALLOWANCE-CLOSE> 47,708
<ALLOWANCE-DOMESTIC> 47,708
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
