CENTURY CITY, Calif., April 17 /PRNewswire-FirstCall/ -- First Regional Bancorp today reported record first quarter financial results for the three months ended March 31, 2007. Continuing to generate positive results, the company posted increases in net income, as well as total assets, total deposits, net loans and total capital.
Net income for the first three months of 2007 was $8,991,000, equal to 69 cents per diluted share, an increase of 6% from $8,484,000, or 65 cents per diluted share in the corresponding quarter of 2006. Results have been adjusted to reflect the 3-for-1 stock split effected in August, 2006.
Revenues from earning assets rose 13% to $41,325,000 from $36,607,000 in the previous year. Average total earning assets of $1.866 billion were approximately 5% above $1.771 billion in 2006. Operating results benefited from an improved yield on earning assets, reflecting generally higher prevailing interest rates in the current year. However, net interest margin was modestly lower due to interest expense resulting from the higher level of interest bearing liabilities.
At March 31, 2007, total assets were $2.027 billion, approximately 5% higher than the $1.925 billion total of a year earlier. Total deposits grew 8% to $1.587 billion from $1.468 billion on the same date in 2006. Net loans were $1.824 billion, compared with $1.789 billion in the prior year. Total capital rose 37% to $157.1 million from $115.0 million, primarily reflecting the retention of earnings.
Jack A. Sweeney, chairman and chief executive officer, commented: "It is gratifying to report another strong and profitable quarter as we made further progress toward our key objectives of sound growth, increased profitability and financial strength. Our team of experienced banking professionals continues to secure quality lending opportunities, and in line with our conservative philosophy, we are keeping prime emphasis on maintaining our excellent credit quality."
Reflecting the quality of the loan portfolio, no increases in reserves for loan losses were required during the quarter. The reserve for loan losses totaled $20.7 million at March 31, 2007, and nonperforming loans amounted to just $63,000 on that date.
Mr. Sweeney added: "First Regional continues to benefit from a generally robust southern California economy and in particular from ongoing opportunities within the areas served by our network of regional offices. Obviously, turmoil in the residential real estate market, particularly the troubled sub-prime lending segment, has generated much attention of late. Fortunately, First Regional has never been involved in sub-prime or other mortgage lending products that have recently been the subject of much adverse publicity. While real estate finance has always been a key focus for us due to our considerable expertise in this area, First Regional Bank has a large and diversified client base, and we serve the loan and deposit needs of a variety of market segments including manufacturers, professional firms, wholesalers and others."
He concluded: "We remain alert and vigilant, and are prepared to take the steps necessary to meet whatever economic challenges may emerge. In this regard, we benefit greatly from our strong capital and liquid financial position, giving us the flexibility to react quickly to changing conditions. We remain optimistic based on our continued momentum, our portfolio of high-quality earning assets, our financial strength and our solid market position. As always, our primary objective remains clear -- to maintain profitable growth on a prudent basis and, thereby, build further value 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 March 31 2007 2006
ASSETS:
Cash and due from banks $108,118 $72,195
Federal funds sold 0 0
Cash and cash equivalents 108,118 72,195
Investment securities 30,577 9,376
Federal Home Loan Bank stock - at cost 10,947 13,677
Loans - net 1,823,526 1,788,862
Premises and equipment - net 4,345 3,579
Other real estate owned 0 0
Accrued interest receivable and other assets 49,722 37,686
Total assets $2,027,235 $1,925,375
LIABILITIES AND CAPITAL:
Demand deposits $412,788 $460,311
Savings deposits 53,500 47,912
Money market deposits 890,999 776,670
Time deposits 229,642 183,545
Total deposits 1,586,929 1,468,438
Funds purchased 0 0
Federal Home Loan Bank advances 170,000 230,000
Subordinated debentures 92,785 92,785
Accrued interest payable and other
liabilities 20,400 19,124
Total liabilities 1,870,114 1,810,347
Stated capital 53,063 50,077
Retained earnings 103,858 65,018
Net unrealized gain (losses) on
available-for-sale securities 200 (67)
Total capital 157,121 115,028
Total liabilities and capital $2,027,235 $1,925,375
Book value per share outstanding $12.84 $9.47
Total shares outstanding 12,234,656 12,147,399
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted)
Three Months Ended
March 31
2007 2006
Interest on loans $40,938 $36,507
Interest on federal funds sold 91 32
Interest on securities 296 68
Total interest income 41,325 36,607
Interest on deposits 11,523 7,373
Interest on subordinated debentures 1,683 1,043
Interest on FHLB advances 1,595 2,436
Interest on funds purchased 6 3
Total interest expense 14,807 10,855
Net interest income 26,518 25,752
Provision for loan losses 0 2,391
Net interest income after provision
for loan losses 26,518 23,361
Other operating income 2,367 1,952
Salaries and related benefits 9,021 6,796
Occupancy expenses 819 622
Other expenses 3,479 2,983
Total other operating expenses 13,319 10,401
Income before provision for income taxes 15,566 14,912
Provision for income taxes 6,575 6,428
Net income $8,991 $8,484
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's omitted)
Three Months Ended
March 31
2007 2006
Net income per share
Basic $0.74 $0.70
Diluted $0.69 $0.65
Average shares outstanding 12,215,675 12,126,237
Diluted average shares 13,079,261 12,953,679
Average Equity $156,921 $110,489
Average Assets $1,977,349 $1,868,059
Return on Average Equity (%) 23.24 31.14
Return on Average Assets (%) 1.84 1.84
Efficiency Ratio (%) 46.11 37.54
Number of Employees 271 229
Assets per Employee (000s) $7,481 $8,408
CREDIT QUALITY
Beginning Reserve for Loan Losses (000s) $20,624 $17,577
Loan Loss Provisions 0 2,391
Loan Recoveries 79 0
Loan Chargeoffs 0 -941
Net Change in Allowance for Unfunded Loan
Commitments (9) (52)
Ending Reserve for Loan Losses (000s) $20,694 $18,975
Nonperforming Assets (000s) $63 $69
Nonperforming Assets /
Gross Loans (%) 0.00 0.00
Reserve for Loan Losses /
Nonperforming Assets (%) 32847.62 27500.00
Reserve for Loan Losses /
Gross Loans (%) 1.12 1.05
(000's Omitted)
For the Three Months Ended March 31,
2007
Average Average
Balance Interest Yield/Cost(%)
Gross Loans $1,831,040 $40,938 9.07
Funds Sold 6,765 91 5.46
Investment Securities 28,554 296 4.20
Total Earning Assets $1,866,359 $41,325 8.98
Deposits $1,598,369 $11,523 2.92
Federal Home Loan Bank Advances 118,578 1,595 5.46
Subordinated Debentures 92,785 1,683 7.36
Funds Purchased 407 6 5.98
Total Bearing Liabilities $1,810,139 $14,807 3.32
Net Interest Spread (1) 5.66
Net Interest Margin (2) 5.76
(1) Net interest spread represents the average yield earned on Earning
Assets less the average cost of Bearing Liabilities.
(2) Net interest margin represents Net Interest Income divided by average
Earning Assets.
(000's Omitted)
For the Three Months Ended March 31,
2006
Average Average
Balance Interest Yield/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 (1) 5.86
Net Interest Margin (2) 5.90
(1) Net interest spread represents the average yield earned on Earning
Assets less the average cost of Bearing Liabilities.
(2) Net interest margin represents Net Interest Income divided by average
Earning Assets.
The following is a schedule of new loans booked (not including loan renewals) by First Regional's subsidiary, First Regional Bank, during each month of the first quarter of 2007:
New Loans Booked
Month (000's omitted)
January $140,531
February 85,927
March 116,121
First Quarter Total $342,579
The following is a schedule describing the primary components of First Regional Bank's loan portfolio as of March 31, 2007 and 2006:
Disbursed Disbursed
Balance Balance
as of as of
March 31, March 31,
2007 2006
(000's Percentage (000's Percentage
omitted) of Total omitted) of Total
Commercial Real Estate
Loans
Construction Loans $426,684 23.0% $265,064 14.6%
Mini-Perm Loans 277,016 15.0% 310,479 17.1%
Bridge Loans 868,212 46.9% 1,049,841 57.8%
Other 38,217 2.1% 24,846 1.4%
1,610,129 86.9% 1,650,230 90.9%
Commercial Non-Real
Estate
Secured Loans $241,864 13.1% $165,804 9.1%
Total loans $1,851,993 100.0% $1,816,034 100.0%
Less - Allowance for
loan losses 20,694 18,975
- Deferred
loan fees 7,773 8,197
Net Loans 1,823,526 1,788,862
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.
