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First Banks, Inc. Announces Second Quarter 2010 Results

^{Published on 2010-07-30 13:20:53 - Market Wire}
 

ST. LOUIS--([ BUSINESS WIRE ])--First Banks, Inc. (aFirst Banksa or the aCompanya) (NYSE: FBSPrA), the holding company of First Bank, today announced a net loss of $64.9 million for the three months ended June 30, 2010 as compared to a net loss of $93.3 million for the three months ended June 30, 2009. For the six months ended June 30, 2010, First Banks recorded a net loss of $92.5 million as compared to a net loss of $182.7 million for the six months ended June 30, 2009. The net loss for the three and six months ended June 30, 2010 includes a provision for loan losses of $83.0 million and $125.0 million, respectively, as compared to $112.0 million and $220.0 million for the three and six months ended June 30, 2009, respectively.

"Throughout the current economic downturn, we have been focused on achieving the objectives outlined in our Capital Optimization Plan in an effort to maintain First Banka™s regulatory capital ratios in excess of awell capitalized"

Terrance M. McCarthy, President and Chief Executive Officer of First Banks, said, aWe are encouraged with the continued improvement in our financial results as compared to the prior year. While we continue to experience losses primarily due to asset quality related issues in our construction and commercial real estate loan portfolios, we were able to increase First Banka™s regulatory capital ratios, improve our overall liquidity position and significantly decrease the level of our nonaccrual loans during the second quarter of 2010. These accomplishments represent continued achievement of our business planning strategies and will significantly assist us as we emerge out of the current economic downturn.a

Key Points for the Quarter:

• Maintained First Banka™s regulatory capital ratios at awell capitalizeda levels, reflecting improvement in each of the regulatory capital ratios, including an increase in First Banka™s Total Capital Ratio to 12.11% at June 30, 2010 from 11.53% at March 31, 2010 and 10.39% at December 31, 2009. Regulatory capital ratios for First Bank and First Banks, Inc. are summarized in the table below:

• Reduced the level of nonaccrual loans by $166.3 million at June 30, 2010 as compared to March 31, 2010. Certain asset quality results as of or for the quarterly periods are summarized in the following table:

• Maintained cash and cash equivalents at $1.47 billion and unpledged investment securities at $631.3 million at June 30, 2010 resulting in total available liquidity in excess of $2.10 billion.

• Sold 144 other real estate properties during the quarter ended June 30, 2010 resulting in the receipt of gross proceeds of $26.4 million and the recording of a net gain on the sale of the properties of $2.0 million.
• Completed the sale of $96.7 million of loans and $492.2 million of deposits in the Companya™s Texas region on April 30, 2010, resulting in a pre-tax gain on sale of approximately $5.0 million and a total regulatory capital benefit of approximately $35.0 million.
• Announced the signing of two agreements providing for the sale of approximately $150.0 million of loans and $375.0 million of deposits associated with the Companya™s Peoria, Galesburg, Quincy, Bartonville, Knoxville, Bloomington and Jacksonville, Illinois branches. The transactions, which are subject to regulatory approvals and certain closing conditions, are expected to be completed during the third quarter of 2010.

Mr. McCarthy continued, aThroughout the current economic downturn, we have been focused on achieving the objectives outlined in our Capital Optimization Plan in an effort to maintain First Banka™s regulatory capital ratios in excess of awell capitalizeda levels. As a result of these successful initiatives, we have built First Banka™s total risk-based capital ratio to 12.11% at June 30, 2010 in comparison to 10.17% at June 30, 2009. Over the course of the next several quarters, we plan to maintain a strong focus on certain corporate initiatives while more specifically focusing on underlying objectives for restoring our profitability by exiting problem credit relationships, deploying excess liquidity into higher-yielding loans and investment securities and focusing on becoming a more efficient, smaller company.a

Net Interest Income:

• The net interest margin was 3.06% for the second quarter of 2010, in comparison to 2.76% for the first quarter of 2010 and 3.16% for the second quarter of 2009. The net interest margin continues to be negatively impacted by a high average balance of short-term investments, which was $1.24 billion, $1.95 billion and $522.9 million for the second quarter of 2010, first quarter of 2010 and second quarter of 2009, respectively. These short-term investments are currently yielding 25 basis points. The high average balance of short-term investments for the first and second quarters of 2010 was necessary to fund the sales of the Companya™s Chicago and Texas regions which utilized short-term investments of approximately $832.5 million and $352.9 million, respectively, as well as the Companya™s desire to maintain significant on balance sheet liquidity in the current economic downturn.
• The average yield on loans was 5.16% for the second quarter of 2010, in comparison to 5.12% for the first quarter of 2010 and 5.27% for the second quarter of 2009.
• The average cost of interest-bearing deposits was 1.14% for the second quarter of 2010, in comparison to 1.26% for the first quarter of 2010 and 1.97% for the second quarter of 2009.

Provision for Loan Losses:

• The provision for loan losses was $83.0 million for the second quarter of 2010, in comparison to $42.0 million for the first quarter of 2010 and $112.0 million for the second quarter of 2009. The decrease in the provision for loan losses for the second quarter of 2010 as compared to the second quarter of 2009 was primarily attributable to less severe asset quality migration. The increase in the provision for loan losses for the second quarter of 2010 as compared to the first quarter of 2010 was primarily attributable to higher net charge-offs and potential problem loans.
• Net loan charge-offs were $91.0 million for the second quarter of 2010, compared to $58.1 million for the first quarter of 2010 and $81.2 million for the second quarter of 2009.
• Nonaccrual loans decreased $166.3 million during the second quarter of 2010 and $199.5 million during the first six months of 2010 to $491.6 million at June 30, 2010 compared to $657.9 million at March 31, 2010 and $691.1 million at December 31, 2009.

Noninterest Income:

• Noninterest income was $26.4 million for the second quarter of 2010, in comparison to $27.0 million for the first quarter of 2010 and $27.2 million for the second quarter of 2009.
• Noninterest income for the second quarter of 2010 includes a gain on sale of the Companya™s Texas region of approximately $5.0 million, net of a reduction in goodwill and intangible assets of $20.0 million allocated to the Texas region. Noninterest income for the first quarter of 2010 includes a gain on sale of the Companya™s Chicago region of approximately $8.4 million, net of a reduction in goodwill and intangible assets of $26.3 million allocated to the Chicago region.

Noninterest Expense:

• Noninterest expense decreased to $70.9 million for the second quarter of 2010 compared to $76.8 million for the first quarter of 2010 and $83.5 million for the second quarter of 2009.

• Noninterest expense includes expenses on other real estate properties of $9.6 million, $7.9 million and $3.0 million for the second quarter of 2010, first quarter of 2010 and second quarter of 2009, respectively. Noninterest expense includes FDIC insurance assessments of $6.5 million, $6.1 million and $10.0 million for the second quarter of 2010, first quarter of 2010 and second quarter of 2009, respectively.

Cash and Cash Equivalents:

• Cash and cash equivalents were $1.47 billion at June 30, 2010 and March 31, 2010, in comparison to $2.53 billion at December 31, 2009. During the second quarter of 2010, the Company funded the sale of its Texas region, resulting in a decrease in cash of approximately $352.9 million, and increased its investment securities portfolio by $106.6 million. These cash outflows were offset by substantial loan payoffs and sales of other real estate during the second quarter of 2010 thereby resulting in cash and cash equivalents remaining at the same level as March 31, 2010.

Investment Securities:

• Investment securities increased to $995.5 million at June 30, 2010 from $888.9 million at March 31, 2010 and $541.6 million at December 31, 2009. The Company is utilizing a portion of its higher level of cash and cash equivalents to fund gradual and planned increases in its investment securities portfolio.

Loans:

• Loans, net of unearned discount, decreased to $5.58 billion at June 30, 2010 from $6.30 billion at March 31, 2010 and $7.04 billion at December 31, 2009. The reduction in loan balances for the second quarter of 2010 reflects the sale of approximately $96.7 million of loans in the Companya™s Texas region, customer repayments, transfers to other real estate and loan charge-offs.
• One-to-four family construction loans decreased to $462.3 million at June 30, 2010 from $645.5 million at March 31, 2010 and $729.8 million at December 31, 2009.

Deposits and Other Borrowings:

• Deposits were $7.01 billion at June 30, 2010, in comparison to $7.52 billion at March 31, 2010 and $8.81 billion at December 31, 2009. The decrease in deposits of $513.5 million during the second quarter of 2010 was almost solely attributable to the sale of approximately $492.2 million of deposits in the Companya™s Texas region.
• Other borrowings were $577.8 million at June 30, 2010, in comparison to $570.8 million at March 31, 2010 and $777.0 million at December 31, 2009. The decrease during the first six months of 2010 primarily resulted from the payoff of $200.0 million of Federal Home Loan Bank advances during the first quarter of 2010.

About First Banks

First Banks had assets of $8.48 billion at June 30, 2010 and currently operates 165 branch banking offices in California, Florida, Illinois and Missouri. Through its subsidiary bank, First Bank, the Company offers a broad range of financial products and services to consumers, businesses and other institutions. Visit First Banks on the web at [ www.firstbanks.com ].

Financial Disclosures

The financial disclosures presented in this press release reflect numeric disclosures prior to the categorical reclassifications for Discontinued Operations. The Discontinued Operations reclassifications and related disclosures may be found in First Banksa™ Annual Report on Form 10-K as of and for the year ended December 31, 2009, as filed with the Securities and Exchange Commission (aSECa) and available at the SECa™s internet site ([ http://www.sec.gov ]), and such disclosures will also be presented in First Banksa™ Quarterly Report on Form 10-Q as of and for the three and six months ended June 30, 2010 upon filing with the SEC in August 2010.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about First Banksa™ plans, objectives, estimates or projections with respect to our future financial condition, expected or anticipated revenues with respect to our results of operations and our business, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of First Banksa™ management and are subject to significant risks and uncertainties which may cause actual results to differ materially from those contemplated in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: increased competition and its effect on pricing, spending, third-party relationships and revenues; changes in interest rates and overall economic conditions; and the risk of new and changing regulation. Additional factors which may cause First Banksa™ results to differ materially from those described in the forward-looking statements may be found in First Banksa™ Annual Report on Form 10-K, as filed with the SEC and available at the SECa™s internet site. The forward-looking statements in this press release speak only as of the date of the press release, and First Banks does not assume any obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contained in the forward-looking statements.