Financial Highlights Include:
-- First-period net income rises 62% from year earlier
to new quarterly high
-- Total Assets climb 41% to $1.9 billion from $1.4 billion
last year
-- Total deposits grow by $369 million, or 34%, to $1.5 billion
-- Net loans reach $1.8 billion, an increase of 45% from
one-year earlier
CENTURY CITY, Calif., April 18, 2006 (PRIMEZONE) -- First Regional Bancorp (Nasdaq:FRGB) today announced that net income for the three months ended March 31, 2006 represented the highest quarterly profit in the company's history. Total assets, total deposits, net loans, and equity capital all reached new highs.
Net income for the quarter ended March 31, 2006 totaled $8.5 million, equal to $1.96 per diluted share, compared with $5.2 million, or $1.23 per diluted share one year ago. Net income per diluted share advanced by 59% from the prior year quarter and increased significantly from the previous quarterly earnings record established in the immediately preceding fourth quarter of 2005.
Jack A. Sweeney, chairman and chief executive officer, stated: "First Regional recorded another banner quarter, continuing the positive momentum that characterizes our business. First quarter revenue from earning assets rose 78% to $36.6 million from $20.6 million in the corresponding period last year. These higher revenues reflect our strong growth in assets combined with today's higher interest rate environment, and more than offset increases in our cost of funds as well as the newly-required recognition of stock option-related expenses of $144,000 for the quarter."
He noted that First Regional added $559 million in new assets since the first quarter of 2005, as total assets rose to $1.925 billion at March 31, 2006 for an increase of 41% from $1.367 billion one year ago. Over the same period total deposits rose by $369 million, or 34%, to $1.468 billion from $1.099 billion, and the bank added $551 million in net loans, an increase of 45%. Net loans grew to $1.789 billion from $1.238 billion twelve months earlier.
Mr. Sweeney stated: "High asset quality has always been a hallmark of First Regional, and our nonperforming assets totaled just $69,000 at March 31, 2006. This achievement in part reflects our successful resolution of two nonperforming assets through the sale of these notes in arms-length transactions, with a one-time special provision to our reserve for loan losses of approximately $150,000. In addition, we have continued to make significant regular provisions to our reserve for loan losses in order to keep pace with the growth of First Regional's loan portfolio."
Mr. Sweeney continued: "We are continuing to add high quality new loans to our portfolio, supported by strong deposit growth and generally higher net interest margins. At the same time, we remain focused on further improving our operating efficiency. We have enjoyed considerable success in this area, as our staffing and other non-interest expenses rose at a slower pace than did our assets. Assets per employee, a key measure of productivity, grew 16% to $8.4 million from $7.3 million in the prior year, and our efficiency ratio improved to 38% in the first quarter of 2006."
He noted: "First Regional continues to strengthen its capital base to support its ongoing growth. At March 31, 2006, shareholders' equity was $115 million, an increase of 38% from $83 million in 2005. Further demonstrating First Regional's solid performance, our return on average equity was 31% for the quarter. In addition, at the close of the first quarter First Regional added to its financial strength with the successful completion of a $30 million pooled 'trust preferred' securities offering. Listed as subordinated debentures on our balance sheet, trust preferred securities are treated as capital for regulatory purposes but bear interest that is deductible for income tax purposes.
"The year is off to an excellent start," Mr. Sweeney concluded, "and we will be working hard to maintain our growth momentum. We are registering strong, profitable growth as our team effectively executes our business strategy, which is based on our ability to add quality assets while consistently delivering responsive, innovative services to an expanding customer base.
"At the same time, we have an experienced and conservative management team. All of us remain constantly attuned to economic events which may signal changing business conditions, and we are prepared to take swift and appropriate action to meet whatever challenges may lie ahead."
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 March 31 2006 2005
----------- -----------
ASSETS:
Cash and due from banks $ 72,195 $ 61,184
Federal funds sold 0 12,450
----------- -----------
Cash and cash equivalents 72,195 73,634
Investment securities 9,376 18,328
Federal Home Loan Bank stock - at cost 13,677 8,304
Federally guaranteed loans 6,952 5,464
Other loans - net 1,781,910 1,232,511
Premises and equipment - net 3,579 3,632
Other real estate owned 0 0
Accrued interest receivable and
other assets 37,686 24,691
----------- -----------
Total assets $ 1,925,375 $ 1,366,564
=========== ===========
LIABILITIES AND CAPITAL:
Demand deposits $ 460,311 $ 428,534
Savings deposits 47,912 35,513
Money market deposits 776,670 463,816
Time deposits 183,545 171,183
----------- -----------
Total deposits 1,468,438 1,099,046
Funds purchased 0 0
Federal Home Loan Bank advances 230,000 130,000
Subordinated debentures 92,785 41,238
Accrued interest payable and
other liabilities 19,124 13,222
----------- -----------
Total liabilities 1,810,347 1,283,506
Stated capital 50,077 47,809
Retained earnings 65,018 35,251
Net unrealized losses on available-
for-sale securities (67) (2)
----------- -----------
Total capital 115,028 83,058
----------- -----------
Total liabilities and capital $ 1,925,375 $ 1,366,564
=========== ===========
Book value per share outstanding $ 28.41 $ 20.72
=========== ===========
Total shares outstanding 4,048,433 4,008,339
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted)
Three Months Ended
March 31
2006 2005
------- -------
Interest on loans $36,507 $20,454
Interest on federal funds sold 32 102
Interest on securities 68 37
------- -------
Total interest income 36,607 20,593
Interest on deposits 7,373 2,231
Interest on subordinated debentures 1,043 525
Interest on FHLB advances 2,436 694
Interest on funds purchased 3 0
------- -------
Total interest expense 10,855 3,450
------- -------
Net interest income 25,752 17,143
Provision for loan losses 2,391 1,200
------- -------
Net interest income after provision
for loan losses 23,361 15,943
Other operating income 1,952 1,481
Salaries and related benefits 6,796 5,317
Occupancy expenses 622 796
Other expenses 2,983 2,209
------- -------
Total other operating expenses 10,401 8,322
------- -------
Income before provision for income taxes 14,912 9,102
Provision for income taxes 6,428 3,860
------- -------
Net income $ 8,484 $ 5,242
======= =======
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted)
Three Months Ended
March 31
2006 2005
---------- ----------
Net income per share
Basic $ 2.10 $ 1.31
Diluted $ 1.96 $ 1.23
Average shares outstanding 4,042,079 4,001,010
Diluted average shares 4,317,893 4,270,887
Average Equity $ 110,082 $ 80,528
Average Assets $1,868,059 $1,283,563
Return on Average Equity (%) 31.26 26.40
Return on Average Assets (%) 1.84 1.66
Efficiency Ratio (%) 37.54 44.68
Number of Employees 229 188
Assets per Employee (000s) $ 8,408 $ 7,269
CREDIT QUALITY
Beginning Reserve for Loan Losses (000s) $ 17,577 $ 11,825
Loan Loss Provisions 2,391 1,200
Loan Recoveries 0 130
Loan Chargeoffs -941 0
Net Change in Allowance for Unfunded
Loan Commitments -52 200
---------- ----------
Ending Reserve for Loan Losses (000s) $ 18,975 $ 13,355
========== ==========
Nonperforming Assets (000s) $ 69 $ 603
Nonperforming Assets /
Gross Loans (%) 0.00 0.05
Reserve for Loan Losses /
Nonperforming Assets (%) 27500.00 2214.76
Reserve for Loan Losses /
Gross Loans (%) 1.05 1.07
(000's Omitted)
For the Three Months Ended March 31,
------------------------------------
2006
-----------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- --------
Gross Loans $1,755,251 $ 36,507 8.44
Funds Sold 3,344 32 3.88
Investment Securities 11,945 68 2.31
---------- ----------
Total Earning Assets $1,770,540 $ 36,607 8.39
Deposits $1,465,064 $ 7,373 2.04
Federal Home Loan Bank Advances 218,267 2,436 4.53
Subordinated Debentures 62,201 1,043 6.80
Funds Purchased 81 3 15.02
---------- ----------
Total Bearing Liabilities $1,745,613 $ 10,855 2.52
Net Interest Spread (a) 5.86
Net Interest Margin (b) 5.83
2005
-----------------------------------
Average
Average Yield/
Balance Interest Cost (%)
---------- ---------- --------
Gross Loans $1,188,165 $ 20,454 6.98
Funds Sold 17,572 102 2.35
Investment Securities 7,671 37 1.96
---------- ----------
Total Earning Assets $1,213,408 $ 20,593 6.88
Deposits $1,044,485 $ 2,231 0.87
Federal Home Loan Bank Advances 111,821 694 2.52
Subordinated Debentures 41,238 525 5.16
Funds Purchased 91 0 0.00
---------- ----------
Total Bearing Liabilities $1,197,635 $ 3,450 1.17
Net Interest Spread (a) 5.71
Net Interest Margin (b) 5.67
(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.