Quarterly Highlights Include: -- Second quarter net income highest quarterly profit in history -- First half net income advances 56% over same period in 2005 -- Total assets climb 38% to their highest level ever -- Total deposits rise 27% to all time high -- Net loans increase 32% to a new record
CENTURY CITY, Calif., July 18, 2006 (PRIMEZONE) -- First Regional Bancorp (Nasdaq:FRGB) today reported continued profitable growth in the second quarter ended June 30, 2006, with net income for the quarter surging more than 50% for the company's best quarterly earnings performance in history.
For the three months ended June 30, 2006, net income totaled $9.6 million, up from $6.4 million in the corresponding quarter of 2005, and easily surpassed the previous all-time profit record achieved in this year's first quarter. Diluted earnings per share advanced to $2.22, an increase of 49% from the $1.49 per diluted share recorded in the year-earlier period. Net income for the first half of 2006 rose 56% to $18.1 million from $11.6 million in the prior year, while earnings per diluted share advanced 54% to $4.18 from $2.72 in the first six months of 2005.
Jack A. Sweeney, chairman and chief executive officer, stated: "First Regional's continued outstanding performance is truly gratifying. We are successfully managing a period of sustained growth without parallel in our 27-year history. Quarterly earnings once again exceeded those of the corresponding prior-year period, marking a period of exceptional consistency. Moreover, earnings have again risen on a sequential basis from the preceding quarter, and set new quarterly earnings high marks for our company. Fueling our progress in the most recent quarter, assets at June 30, 2006 rose 38% to a record $1.999 billion from $1.452 billion a year ago, while deposits grew 27% to $1.537 billion from $1.211 billion in 2005. Net loans climbed 32% to $1.755 billion from $1.328 billion."
Mr. Sweeney continued: "First Regional's strong second quarter results reflected our continued successful implementation of the solid strategic plan that has served us well. We are adding quality earning assets at a steady pace. Average earning assets grew to $1.824 billion from $1.319 billion at this point last year, while our average yield on those assets was 8.76%, in the second quarter of 2006 compared with 7.38% a year ago. Second-quarter revenues from earnings assets grew 64%, to $39.8 million from $24.3 million in the prior year. We also continue to work diligently to keep operating costs in check while increasing our operating efficiency. In key measures of productivity, assets per employee were 13 percent higher than one year ago, and our efficiency ratio improved to 37.60% in the second quarter from 40.90% in the same period a year earlier.
"We have benefited from the strength and resiliency of the Southern California economy, and from the Federal Reserve's current policy of raising interest rates, which has resulted in increased interest income for First Regional. However, we are mindful of the challenges in the current situation, including pressure on our interest costs due to rising rates and the possible softening of the industries we serve. Moreover, no one can predict the impact of national and global challenges, such as soaring fuel prices and a troubling international scene. Therefore we continue our traditional conservative posture with respect to growth, placing prime emphasis on asset quality. At June 30, 2006, nonperforming assets amounted to only $62,000, enabling us to moderate our loan loss provisions while maintaining our loan loss reserves at levels that we regard as conservative and ample. Such reserves amounted to $20.3 million at the close of the quarter."
Mr. Sweeney concluded: "We have growing financial strength, a proven and flexible business plan, and the experienced and talented managers and employees required to execute it effectively. Through our successful financings and the retention of earnings, we have expanded total capital to $125.5 million at June 30, 2006, a 40% increase from $89.7 million a year ago. We believe that First Regional is solidly positioned for further success, and we will continue to carefully manage our business in order to further maximize long-term values for our shareholders."
First Regional Bancorp is a bank holding company headquartered in Century City, California. Its subsidiary, First Regional Bank, specializes in providing businesses and professionals with the management expertise of a major bank and the personalized service of an independent.
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
(000's omitted)
------------------------
As of June 30 2006 2005
---------- ----------
ASSETS:
Cash and due from banks $ 167,224 $ 63,006
Federal funds sold 0 0
---------- ----------
Cash and cash equivalents 167,224 63,006
Investment securities 17,646 18,560
Federal Home Loan Bank stock - at cost 12,581 9,017
Federally guaranteed loans 6,174 4,651
Other loans, net 1,754,757 1,327,935
Premises and equipment - net 3,821 3,674
Other real estate owned 0 0
Accrued interest receivable
and other assets 37,741 25,211
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Total assets $1,999,944 $1,452,054
========== ==========
LIABILITIES AND CAPITAL:
Demand deposits $ 482,458 $ 420,282
Savings deposits 50,160 38,817
Money market deposits 816,585 581,584
Time deposits 188,170 170,129
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Total deposits 1,537,373 1,210,812
Funds purchased 0 0
Federal Home Loan Bank advances 230,000 100,000
Subordinated debentures 92,785 41,238
Accrued interest payable and
other liabilities 14,317 10,261
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Total liabilities 1,874,475 1,362,311
Stated capital 50,974 48,108
Retained earnings 74,611 41,626
Net unrealized gains (losses)
on available-for-sale securities (116) 9
---------- ----------
Total capital 125,469 89,743
---------- ----------
Total liabilities and capital $1,999,944 $1,452,054
========== ==========
Book value per share outstanding $ 30.94 $ 22.32
========== ==========
Total shares outstanding 4,055,390 4,020,146
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted) (000's omitted)
----------------- -----------------
Three Months Ended Six Months Ended
June 30 June 30
----------------- -----------------
2006 2005 2006 2005
------- ------- ------- -------
Interest on loans $39,669 $24,130 $76,176 $44,584
Interest on federal funds
sold 43 27 75 129
Interest on investment
securities 129 114 197 151
------- ------- ------- -------
Total interest income 39,841 24,271 76,448 44,864
Interest on deposits 8,839 2,927 16,212 5,158
Interest on subordinated
debentures 1,641 595 2,684 1,120
Interest on FHLB advances 2,459 1,022 4,895 1,716
Interest on other borrowings 1 1 4 1
------- ------- ------- -------
Total interest expense 12,940 4,545 23,795 7,995
------- ------- ------- -------
Net interest income 26,901 19,726 52,653 36,869
Provision for loan losses 1,500 1,500 3,891 2,700
------- ------- ------- -------
Net interest income after
provision for loan losses 25,401 18,226 48,762 34,169
Other operating income 2,498 1,575 4,450 3,056
Salaries and related benefits 6,983 5,573 13,779 10,890
Occupancy expenses 682 598 1,304 1,394
Other expenses 3,389 2,542 6,372 4,751
------- ------- ------- -------
Total other operating expenses 11,054 8,713 21,455 17,035
------- ------- ------- -------
Income before provision
for income taxes 16,845 11,088 31,757 20,190
Provision for income taxes 7,252 4,713 13,680 8,573
------- ------- ------- -------
Net income $ 9,593 $ 6,375 $18,077 $11,617
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted) (000's omitted)
Three Months Ended Six Months Ended
June 30 June 30
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net income per
share
Basic $ 2.37 $ 1.59 $ 4.47 $ 2.90
Diluted $ 2.22 $ 1.49 $ 4.18 $ 2.72
Average shares
outstanding 4,052,311 4,015,855 4,047,018 4,008,446
Diluted average
shares 4,331,094 4,285,387 4,322,628 4,277,036
Average equity $ 119,992 $ 86,723 $ 115,267 $ 83,517
Average assets $1,926,284 $1,398,707 $1,897,332 $1,341,453
Return on average
equity (%) 32.07 29.48 31.63 28.05
Return on average
assets (%) 2.00 1.83 1.92 1.75
Efficiency
ratio (%) 37.60 40.90 37.57 42.67
Number of
employees 243 199
Assets per
employee (000s) $ 8,230 $ 7,297
CREDIT QUALITY
Beginning reserve
for loan
losses (000s) $ 18,975 $ 13,355 $ 17,577 $ 11,825
Loan loss
provisions 1,500 1,500 3,891 2,700
Loan recoveries 0 0 0 130
Loan chargeoffs 0 35 941 35
Net change in
allowance for
unfunded loan
commitments (162) (3) (214) 197
---------- ---------- ---------- ----------
Ending reserve
for loan losses
(000s) $ 20,313 $ 14,817 $ 20,313 $ 14,817
========== ========== ========== ==========
Nonperforming
assets (000s) $ 62 $ 853
Nonperforming
assets/gross
loans (%) 0.00 0.06
Reserve for loan
losses/nonper-
forming assets (%) 32762.90 1737.05
Reserve for loan
losses/gross
loans (%) 1.14 1.10
(000s omitted)
For the Three Months Ended June 30,
-----------------------------------
2006
------------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- ---------
Gross loans $1,806,214 $ 39,669 8.81
Funds sold 3,620 43 4.76
Investment securities 13,762 129 3.76
---------- ----------
Total earning assets $1,823,596 $ 39,841 8.76
Deposits $1,507,316 $ 8,839 2.35
Federal Home Loan
Bank advances 197,341 2,459 5.00
Subordinated debentures 92,785 1,641 7.09
Funds purchased 99 1 4.05
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Total bearing liabilities $1,797,541 $ 12,940 2.89
Net interest spread (a) 5.88
Net interest margin (b) 5.92
2005
------------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- ---------
Gross loans $1,297,410 $ 24,130 7.46
Funds sold 3,561 27 3.04
Investment securities 18,390 114 2.49
---------- ----------
Total earning assets $1,319,361 $ 24,271 7.38
Deposits $1,128,476 $ 2,927 1.04
Federal Home Loan
Bank advances 135,275 1,022 3.03
Subordinated debentures 41,238 595 5.79
Funds purchased 272 1 1.47
---------- ----------
Total bearing liabilities $1,305,261 $ 4,545 1.40
Net interest spread (a) 5.98
Net interest margin (b) 5.93
(a) Net interest spread represents the average yield earned on
earning assets less the average cost of bearing liabilities.
(b) Net interest margin represents net interest income divided by
average earning assets.
(000s omitted)
For the Six Months Ended June 30,
---------------------------------
2006
-----------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- ---------
Gross Loans $1,780,873 $ 76,176 8.63
Funds Sold 3,483 75 4.34
Investment Securities 11,367 197 3.49
---------- ----------
Total Earning Assets $1,795,723 $ 76,448 8.59
Deposits $1,486,307 $ 16,212 2.20
Federal Home Loan
Bank Advances 207,746 4,895 4.75
Subordinated Debentures 77,577 2,684 6.98
Other Borrowings 90 4 8.96
---------- ----------
Total Bearing Liabilities $1,771,720 $ 23,795 2.71
Net Interest Spread (a) 5.88
Net Interest Margin (b) 5.91
2005
-----------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- ---------
Gross Loans $1,243,090 $ 44,584 7.23
Funds Sold 10,528 129 2.47
Investment Securities 13,060 151 2.33
---------- ----------
Total Earning Assets $1,266,678 $ 44,864 7.14
Deposits $1,086,713 $ 5,158 0.96
Federal Home Loan
Bank Advances 123,612 1,716 2.80
Subordinated Debentures 41,238 1,120 5.48
Other Borrowings 182 1 1.11
---------- ----------
Total Bearing Liabilities $1,251,745 $ 7,995 1.29
Net Interest Spread (a) 5.85
Net Interest Margin (b) 5.87
(a) Net interest spread represents the average yield earned on
earning assets less the average cost of bearing liabilities.
(b) Net interest margin represents net interest income divided by
average earning assets.
This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein may constitute forward-looking statements. Although First Regional believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from First Regional's expectations include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which First Regional conducts its operations.