First Bancshares, Inc. Announces: Fiscal Year 2003 Financial Results; Restatement of Fiscal Year 2002 Financial Results.Business Editors SAN LUIS OBISPO San Luis Obispo (săn l  `ĭs ōbĭs`pō), city (1990 pop. 41,958), seat of San Luis Obispo co., S Calif., near San Luis Obispo Bay; inc. 1856. , Calif.--(BUSINESS WIRE)--April 6, 2004
Financial Condition DataFirst Bancshares, Inc. ("Company") (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :FSLO), the holding company for First Bank of San Luis Obispo ("Bank"), today reported net income of $2.5 million, equivalent to $1.98 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , for the year 2003, compared to restated net income of $0.8 million, equivalent to $0.63 diluted earnings per share, for the year 2002. Earnings for 2002, the Company's stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. at December December: see month. 31, 2002 and 2001, and other financial information for the year 2002 and as of December 31, 2002 were restated as a result of several factors. These factors included the determination that (i) certain securities held by the Company at December 31, 2002 had suffered significant other than temporary impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. ; (ii) the amortization of purchase premiums and discounts for certain securities in 2002 had been misstated; (iii) the market values utilized for certain securities classified as available for sale at December 31, 2002 were overstated o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o ; (iv) Employee Stock Ownership Plan ("ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). ") debt and unearned ESOP shares were omitted from the Company's statement of financial condition; and (v) various other accounting corrections were appropriate. As a result of the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. , consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: stockholders' equity at December 31, 2002 was reduced from $20.6 million to $18.4 million. During the fourth quarter of 2003 and the first quarter of 2004, the Company undertook multiple steps in response to the need to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state 2002 financial results and to address the issues underlying the restatement: -- The Company's investment portfolio was reduced in size and complexity through the maturity of certain securities and through sales of complex securities not meeting the Company's revised investment criteria criteria (krītēr´ē  ),n. . -- Enhanced internal controls, including new internal policies and procedures, were implemented to significantly improve the evaluation and approval process for security purchases. -- A new Chief Financial Officer with extensive experience in that position at other California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). financial institutions was recruited and joined the Company in early 2004. -- A comprehensive review of the Company's accounting records was performed by Company personnel, augmented by contributions from external professionals. In addition, the Company retained a new independent audit firm with particular expertise in and a significant resource commitment to the community banking industry. Commenting on the 2002 restatement, David R. Booker, the Company's Chief Executive Officer, stated: "Once the problems were identified, the Board of Directors and Management responded quickly and thoroughly. We successfully addressed the issues, combining our internal resources with those of outside professionals. However, as described in the Company's 2003 Annual Report, which will be distributed to stockholders this week, the Bank may become subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. enforcement action as a result of the issues underlying the restatement. At this time, we do not know what, if any, enforcement action might be imposed. Note that these problems primarily impacted 2002 financial results. The Company achieved historically strong earnings in 2003 and the Bank ended 2003 with regulatory capital ratios significantly in excess of federal statutory requirements." The Company generated a return on equity of 13.6% in 2003 and paid cash dividends of $1.00 per common share. The Company has paid cash dividends for 23 consecutive years. Total net loans and total deposits increased during 2003 to record year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. levels, as the Company continued to support businesses, organizations, families, and individuals in San Luis Obispo County with a wide range of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. delivered by local bankers with a commitment to knowing their customer and providing superior customer service. The Company's Mortgage Center, located adjacent to its Edna Valley branch, enjoyed a strong year in 2003, as the low interest rate environment helped more customers refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. their existing homes or purchase new homes. The Company also continued to serve both existing and new local businesses through its participation in a wide range of U.S. Small Business Association ("SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government ") loan programs as a preferred lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. . The Company experienced more credit recoveries than charge-offs in 2003, resulting in net recoveries of $27 thousand for the year. In addition, the Company ended 2003 with just two loans on non-accrual status. While the performance of the Company's credit portfolio has been positive, the continued growth in the loan portfolio warranted the provision of additional reserves. Accordingly, the Company's ratio of allowance for loan losses to loans outstanding increased from 1.33% at December 31, 2002 to 1.51% at December 31, 2003. The Company had no foreclosed real estate at December 31, 2003 or 2002. In reviewing the Company's 2003 performance and looking forward to 2004, Reese REESE Research and Evaluation on Education in Science and Engineering (National Science Foundation) T. Davies Da·vies , Arthur Bowen 1862-1928. American painter who was the chief organizer of the revolutionary Armory Show in 1913. , the Company's President, commented: "The Company enjoyed many successes in 2003, including record gains on the sale of loans into the secondary market, a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. credit experience, and growth in our core lines of business. I am also pleased with the Bank's contributions to its local community in 2003, as the Bank's Directors and employees volunteered countless hours toward making San Luis Obispo County an even better place to live. The Bank complemented those personal efforts with direct financial support to a large number of non-profit and charitable organizations This article is about charitable organizations. For other uses of the word charity, see Charity. A charitable organization (also known as a charity) is an organization with charitable purposes only. . In 2004, the Bank plans to continue its strategy of providing an increasing array of financial services and products augmented by rapid and local decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from . At this time, we anticipate that 2004 will be a year of progress, profit, and growth for the Company. I would like to thank our customers, stockholders, employees, and Directors for their enthusiastic support of our community bank." The Bank's regulatory capital ratios at December 31, 2003 were 8.52% Leverage Ratio, 12.97% Tier One Risk Based Capital Ratio, and 14.22% Total Risk Based Capital Ratio. These ratios are well in excess of the federal statutory criteria for the Bank to be classified in the highest regulatory capital category of "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. ." The Company paid a cash dividend of $0.25 per share during the first quarter of 2004 to stockholders of record as of February February: see month. 17, 2004. The Company plans to soon announce the date of its 2004 Annual Meeting of Stockholders and the record date for voting Company shares at that Meeting. The Company's common stock is listed on the NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on OTC Market Noun 1. OTC market - a stock exchange where securities transactions are made via telephone and computer rather than on the floor of an exchange over-the-counter market under the symbol "FSLO." The Company and the Bank are headquartered in San Luis Obispo, California San Luis Obispo (IPA: [sæn 'luɪs ə'bɪspoʊ]; Spanish for St. Louis, the Bishop) is a city in California, located roughly midway between San Francisco and Los Angeles on the Central Coast. . The Bank's deposits are insured The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. insured n. by the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. ("FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). ") to the maximum extent allowed by law. Certain of the statements contained herein that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and . Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "target," "plans," "may increase," "may fluctuate," "may result in," "are projected," and similar expressions. The Company's actual results may differ materially from those included in the forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to, the economic, business, and real estate market conditions in the Company's market areas, competition, regulatory and legislative actions, the possibility that the Company will not be successful in achieving its strategic objectives, the performance and contributions of employees and Directors, and other factors. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of such statements. This news release is available at the www.firstbankslo.com Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site for no charge.
FIRST BANCSHARES, INC.
(NASDAQ OTC: FSLO)
Consolidated Financial Highlights
(Dollars In Thousands)
December December
Financial Condition Data 31, 2003 31, 2002
------------------------ --------- ---------
Cash and due from banks $11,083 $8,242
Federal funds sold 13,242 --
Interest bearing deposits 9,479 44
Securities available for sale, at estimated fair
value:
US Agency bonds -- 1,507
Obligations of states and political
subdivisions 7,696 17,805
Mortgage backed securities 16,204 37,016
Collateralized mortgage obligations 44,609 70,844
Interest-only stripped mortgage securities -- 907
Loans held for sale, at lower of cost or market 4,637 6,025
Loans receivable held for investment:
Residential one to four unit real estate
loans 16,852 14,364
Home equity lines of credit 12,730 13,595
Multifamily five or more units real estate
loans 7,533 5,589
Commercial and industrial real estate loans 69,208 61,634
Construction loans 10,908 14,321
Land / lot loans 17,317 10,852
Farm real estate loans 2,737 4,194
Farm business loans 688 856
Commercial business loans 20,022 15,736
Consumer loans 5,813 4,497
--------- ---------
Sub-total gross loans held for investment 163,808 145,638
Less:
Deferred loan fees (665) (530)
Allowance for loan losses (2,531) (2,004)
--------- ---------
Loans receivable held for investment, net 160,612 143,104
Investment in capital stock of the Federal Home
Loan Bank, at cost 3,916 3,423
Accrued interest receivable 1,062 1,810
Premises and equipment, net 964 927
Bank owned life insurance 5,078 4,856
Other assets 3,712 2,126
--------- ---------
Total assets $282,294 $298,636
========= =========
Non-interest bearing demand deposits $51,885 $46,245
Interest bearing NOW checking accounts 19,868 14,873
Savings accounts 14,010 11,264
Money market accounts 60,520 53,650
Certificates of deposit 60,056 66,775
--------- ---------
Total deposits 206,339 192,807
Advances from the Federal Home Loan Bank 46,908 65,065
ESOP debt 38 127
Other borrowings -- 11,311
Junior subordinated debentures 8,052 7,992
Accrued interest payable 477 820
Other liabilities 2,005 2,153
--------- ---------
Total liabilities 263,819 280,275
--------- ---------
Stockholders' equity 18,475 18,361
--------- ---------
Total liabilities and stockholders' equity $282,294 $298,636
========= =========
FIRST BANCSHARES, INC.
(NASDAQ OTC: FSLO)
Consolidated Financial Highlights, Continued
(Dollars In Thousands Except Per Share Amounts)
Year Ended December 31,
--------------------------------
Operating Data 2003 2002 2001
-------------- ---------- ---------- ----------
Interest and dividend income $15,425 $17,545 $19,100
Interest expense 4,286 5,499 9,342
---------- ---------- ----------
Net interest income before provision
for loan losses 11,139 12,046 9,758
Provision for loan losses 500 840 1,555
---------- ---------- ----------
Net interest income after provision
for loan losses 10,639 11,206 8,203
---------- ---------- ----------
Non-interest income:
Gain on sale of loans 1,286 339 175
Customer service charges 875 737 646
Income from bank owned life
insurance 222 251 230
Income from loan servicing 108 58 39
Credit card fees 45 37 42
Gains (losses) on sales of
securities, net 23 (3) 688
Commissions from sales of non-
insured products 22 5 --
Impairment on interest-only
stripped mortgage securities -- (3,959) --
Foreclosed real estate
operations -- (2) --
Other income 25 164 66
---------- ---------- ----------
Total non-interest income 2,606 (2,373) 1,886
---------- ---------- ----------
Non-interest expense:
Compensation and employee
benefits 5,823 5,053 4,242
Data and item processing 652 574 556
Occupancy 481 530 442
Equipment 414 312 378
Accounting, legal, and
consulting 336 192 206
Advertising and promotion 255 267 239
Supplies, printing, and postage 232 216 188
Director fees 204 216 213
Deposit insurance premiums 18 29 31
Other expenses 984 731 842
---------- ---------- ----------
Total non-interest expense 9,399 8,120 7,337
---------- ---------- ----------
Income before provision for (benefit
from) income taxes 3,846 713 2,752
Provision for (benefit from) income
taxes 1,342 (82) 741
---------- ---------- ----------
Net income $2,504 $795 $2,011
========== ========== ==========
Shares applicable to basic and
diluted earnings per share 1,263,533 1,259,787 1,257,718
Basic and diluted earnings per share $1.98 $0.63 $1.60
========== ========== ==========
FIRST BANCSHARES, INC.
(NASDAQ OTC: FSLO)
Selected Ratios And Other Data
Unaudited
(Dollars In Thousands Except Per Share Amounts)
Year Ended December 31,
-------------------------------
2003 2002 2001
---------- ---------- ---------
Profitability Ratios
--------------------
Return on average assets 0.82% 0.28% 0.76%
Return on average equity 13.60% 4.31% 11.69%
Net interest income / average total
assets 3.63% 4.24% 3.67%
Efficiency ratio 68.38% 83.95% 63.01%
Other Information
-----------------
Average total assets $306,790 $283,917 $265,808
Cash dividends per share $1.00 $0.75 $0.50
December December
31, 2003 31, 2002
---------- ----------
Asset Quality Information
-------------------------
Non-accrual loans $1,335 $1,381
Allowance for loan losses $2,531 $2,004
Non-accrual loans /
total assets 0.47% 0.46%
Allowance for loan losses /
loans outstanding 1.51% 1.33%
Allowance for loan losses /
non-accrual loans 189.59% 145.11%
Company Consolidated
Regulatory Capital Ratios
-------------------------
Leverage capital ratio 7.99% 7.56%
Tier one risk based capital ratio 12.14% 11.22%
Total risk based capital ratio 14.32% 13.41%
Bank Regulatory Capital Ratios
------------------------------
Leverage capital ratio 8.52% 8.32%
Tier one risk based capital ratio 12.97% 12.40%
Total risk based capital ratio 14.22% 13.40%
Other Information
-----------------
Full-service customer facilities 2 2
Number of ATM's 3 3
Net loans to deposits ratio 80.09% 77.35%
Nominal and tangible book value per
share $14.58 $14.49
Shares of common stock outstanding 1,267,278 1,267,278
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