EX-99 2 fbix99012811.htm EXHIBIT 99 Unassociated Document
Exhibit 99

FIRST BANKS, INC.
ST. LOUIS, MISSOURI

NEWS RELEASE

Contacts:
Terrance M. McCarthy
Lisa K. Vansickle
 
President and
Executive Vice President and
 
Chief Executive Officer
Chief Financial Officer
 
First Banks, Inc.
First Banks, Inc.
 
(314) 854-4600
(314) 854-4600
 
Traded:
NYSE
Symbol:
FBSPrA – (First Preferred Capital Trust IV, an affiliated trust of First Banks, Inc.)

FOR IMMEDIATE RELEASE:

First Banks, Inc. Announces Fourth Quarter 2010 Results
 
St. Louis, Missouri, January 28, 2011.  First Banks, Inc. (“First Banks” or the “Company”), the holding company of First Bank, today announced a net loss of $51.4 million for the three months ended December 31, 2010 as compared to a net loss of $153.8 million for the three months ended December 31, 2009. For the year ended December 31, 2010, First Banks recorded a net loss of $191.7 million compared to a net loss of $427.6 million for the year ended December 31, 2009. The net loss for the three months and year ended December 31, 2010 includes a provision for loan losses of $52.0 million and $214.0 million, respectively, as compared to $63.0 million and $390.0 million for the three months and year ended December 31, 2009, respectively.
 
Terrance M. McCarthy, President and Chief Executive Officer of First Banks, said, “We had a very successful 2010 in terms of building First Bank’s capital ratios, sustaining our high level of liquidity, paying off our secured borrowings, significantly decreasing the overall level of our nonperforming assets and becoming a more efficient company. Of particular note was the reduction in nonaccrual loans by 42.3% and nonperforming assets by 34.0% in 2010. While we have not yet returned to profitability, these accomplishments represent significant progress with respect to action items in our Capital Optimization, Profit Improvement and Asset Quality Improvement Plans and will assist us as we emerge out of the economic downturn and related credit cycle.”
 
Key Points for the Quarter:
 
 
·
Maintained First Bank’s regulatory capital ratios at “well capitalized” levels, reflecting improvement in each of the regulatory capital ratios during the year, including an increase in First Bank’s Total Capital Ratio to 12.95% at December 31, 2010 from 10.39% at December 31, 2009. Regulatory capital ratios for First Bank and First Banks, Inc. are summarized in the table below:
 

 
   
December 31,
  
September 30,
  
December 31,
  
   
2010
  
2010
  
2009
  
                 
First Bank:
                
Total Capital Ratio                                
    
12.95
%
  
12.71
%
  
10.39
 %
 
Tier 1 Ratio                                
    
11.66
    
11.43
    
9.11
    
Leverage Ratio                                
    
7.40
    
7.49
    
6.56
    
                       
First Banks, Inc.:
                      
Total Capital Ratio                                
    
6.29
    
8.36
    
9.78
    
Tier 1 Ratio                                
    
3.15
    
4.18
    
4.89
    
Leverage Ratio                                
    
1.99
    
2.74
    
3.52
    

 
 
 
 

On October 15, 2010, First Banks initiated a Consent Solicitation to the holders of the trust preferred securities of First Preferred Capital Trust IV seeking the consent of the holders to amend certain Indentures and Agreements associated with the trust preferred securities. As previously disclosed in the Company’s Current Report on Form 8-K filed with the United States Securities and Exchange Commission on January 27, 2011, the Company obtained the requisite consents from holders and completed the amendments.
 
Mr. McCarthy added, “As a result of the successful completion of the Consent Solicitation, the Company believes it is better positioned to consider certain potential capital planning strategies to improve the First Banks, Inc. regulatory capital ratios and further strengthen the Company’s overall financial position.”
 
 
·
Reduced the overall level of nonperforming assets as compared to September 30, 2010 and December 31, 2009. Nonperforming assets, consisting of nonaccrual loans and other real estate and repossessed assets, decreased $103.2 million, or 16.1% during the fourth quarter and $278.4 million, or 34.0%, for the year. Certain asset quality results as of or for the quarterly periods are summarized in the following table:

   
December 31,
    
September 30,
    
December 31,
  
   
2010
    
2010
    
2009
  
                   
Provision for loan losses
  
$
52,000
      
37,000
      
63,000
  
Nonaccrual loans
    
398,908
      
471,806
      
691,104
  
Performing troubled debt restructurings
    
112,903
      
99,221
      
54,336
  
Other real estate and repossessed assets
    
140,665
      
171,011
      
126,911
  
Potential problem loans
    
363,281
      
382,384
      
323,724
  
Net loan charge-offs
    
77,018
      
52,918
      
82,565
  
                         
Allowance for loan losses as a percent of loans, net of unearned discount
    
4.43
%
    
4.46
      
3.79
  

 
·
Reduced the overall level of construction loans to $490.8 million at December 31, 2010 as compared to $697.5 million and $1.06 billion at September 30, 2010 and December 31, 2009, respectively. Construction loans decreased $206.6 million, or 29.6%, during the quarter and $566.5 million, or 53.6%, during the year.
 
 
·
Repaid $200.0 million of Federal Home Loan Bank advances and a $120.0 million term repurchase agreement, and maintained cash and cash equivalents at $996.6 million and unpledged investment securities of $1.22 billion at December 31, 2010 resulting in total available liquidity in excess of $2.22 billion. For the year, secured borrowings were reduced $745.3 million, or 95.9%, from $777.0 million at December 31, 2009 to $31.8 million at December 31, 2010.
 
Mr. McCarthy continued, “We strengthened our balance sheet significantly during the fourth quarter as a result of the significant decline in both nonperforming assets and construction loans, as well as the payoff of our remaining term secured borrowings. While these actions contributed to our net loss for the fourth quarter, we believe they better position us for earnings improvement in 2011.”
 
Net Interest Income:
 
 
·
The net interest margin was 2.84% for the fourth quarter of 2010, in comparison to 3.01% for the third quarter of 2010 and 2.92% for the fourth quarter of 2009. The net interest margin was 2.91% for the year ended December 31, 2010 as compared to 3.00% in 2009. The net interest margin continues to be negatively impacted by a high average balance of short-term investments, which was $1.11 billion, $1.32 billion and $1.79 billion for the fourth quarter of 2010, the third quarter of 2010 and the fourth quarter of 2009, respectively. These short-term investments are currently yielding 25 basis points. The high average balance of short-term investments during 2010 was necessary to fund the sales of the Company’s Chicago region, Texas region and 11 branches in the Company’s Northern Illinois region which required cash outlays of approximately $832.5 million, $352.9 million and $203.5 million, respectively, as well as the Company’s desire to maintain significant on balance sheet liquidity in the recent economic downturn.
 

 
 
 
 
 
·
The average yield on loans was 5.00% for the fourth quarter of 2010, in comparison to 5.29% for the third quarter of 2010 and 5.25% for the fourth quarter of 2009 and reflects a decrease in quarterly interest income of $1.9 million related to the expiration of the amortization period of the unrealized gain on certain terminated interest rate swap agreements in September 2010, partially offset by the lower level of nonaccrual loans.
 
 
·
The average cost of interest-bearing deposits was 0.96% for the fourth quarter of 2010, in comparison to 1.06% for the third quarter of 2010 and 1.46% for the fourth quarter of 2009 and reflects the continued repricing of certificates of deposit to current market interest rates upon maturity and certain product modifications designed to enhance overall product offerings to our customer base.
 
Provision for Loan Losses:
 
 
·
The provision for loan losses was $52.0 million for the fourth quarter of 2010, in comparison to $37.0 million for the third quarter of 2010 and $63.0 million for the fourth quarter of 2009. The provision for loan losses was $214.0 million for the year ended December 31, 2010, a decrease of $176.0 million, or 45.1%, from the prior year. The increase in the provision for loan losses for the fourth quarter of 2010 as compared to the third quarter was primarily due to the sale of certain nonperforming and potential problem loans during the quarter at a discount, resulting in an increase in net loan charge-offs for the quarter. The decrease in the provision for loan losses for the year ended December 31, 2010 was primarily attributable to the decrease in the overall level of nonaccrual loans, lower net charge-offs and less severe asset quality migration.
 
 
·
Net loan charge-offs were $77.0 million for the fourth quarter of 2010, compared to $52.9 million for the third quarter of 2010 and $82.6 million for the fourth quarter of 2009. Net loan charge-offs were $279.1 million for the year ended December 31, 2010 as compared to $339.0 million in 2009.
 
 
·
Nonaccrual loans decreased $72.9 million during the fourth quarter of 2010 and $292.2 million during the year to $398.9 million at December 31, 2010 compared to $471.8 million at September 30, 2010 and $691.1 million at December 31, 2009. The reductions in nonaccrual loans are reflective of continued progress regarding the implementation of the Company’s initiatives included in its Asset Quality Improvement Plan, such as sales and other actions designed to decrease the overall balance of nonaccrual and other potential problem loans and assets.
 
Noninterest Income:
 
 
·
Noninterest income was $25.9 million for the fourth quarter of 2010, in comparison to $24.2 million for the third quarter of 2010 and $5.6 million for the fourth quarter of 2009. Noninterest income was $103.5 million for the year ended December 31, 2010 as compared to $79.7 million in 2009.
 
 
·
Noninterest income for the fourth quarter of 2010 includes a gain on the sale of investment securities of $7.8 million. Noninterest income for the third quarter of 2010 includes a gain on sale of 11 branches in the Company’s Northern Illinois region of approximately $6.4 million, net of a reduction in goodwill and intangible assets of $9.7 million allocated to the Northern Illinois region. Noninterest income for the fourth quarter of 2009 includes a loss of $20.3 million on the sale of certain premium finance and other commercial loans.
 
Noninterest Expense:
 
 
·
Noninterest expense decreased to $84.3 million for the fourth quarter of 2010 compared to $90.6 million for the third quarter of 2010 and $185.4 million for the fourth quarter of 2009. Noninterest expense was $322.6 million for the year ended December 31, 2010 compared to $430.0 million in 2009.
 
 
·
Compensation expense was $20.4 million for the fourth quarter of 2010, a decrease of $3.6 million, or 14.9%, compared to $23.9 million for the third quarter of 2010, reflective of the implementation of certain measures throughout the third and fourth quarters of 2010 intended to improve efficiency in conjunction with the restructuring of the Company to a smaller footprint. These actions should positively impact overall earnings levels in future quarters.



 
 
 
 
 
·
Write-downs and expenses on other real estate properties were $12.7 million, $14.4 million and $37.1 million for the fourth quarter of 2010, the third quarter of 2010 and the fourth quarter of 2009, respectively. These expenses were $44.7 million for the year ended December 31, 2010 compared to $48.5 million in 2009.
 
 
·
Noninterest expense for the fourth quarter of 2010 includes prepayment penalties of $8.7 million associated with the early termination of a $100.0 million fixed rate Federal Home Loan Bank advance and a $120.0 million term repurchase agreement. Noninterest expense for the third quarter of 2010 includes a $13.6 million operating loss associated with a customer relationship. Noninterest expense for the fourth quarter of 2009 includes a $75.0 million goodwill impairment charge.
 
Cash and Cash Equivalents:
 
 
·
Cash and cash equivalents were $996.6 million at December 31, 2010 compared to $1.11 billion at September 30, 2010 and $2.53 billion at December 31, 2009. During the fourth quarter of 2010, the Company paid off $320.0 million of secured borrowings and increased its investment securities portfolio by $168.4 million. These cash outflows were partially offset by substantial loan payoffs during the fourth quarter of 2010.
 
 
·
Cash, cash equivalents and unpledged securities were $2.22 billion and comprise 30.1% of total assets at December 31, 2010, compared to $2.66 billion and 25.2% of total assets at December 31, 2009 and peer group average of approximately 15.0%.
 
Investment Securities:
 
 
·
Investment securities increased to $1.49 billion at December 31, 2010 from $1.33 billion at September 30, 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 $4.53 billion at December 31, 2010 from $5.07 billion at September 30, 2010 and $7.04 billion at December 31, 2009. The reduction in loan balances for the fourth quarter of 2010 reflects a substantial level of customer payments and the sale of certain nonperforming and potential problem loans, in addition to other activity such as foreclosures and charge-offs.
 
 
·
One-to-four family residential construction loans decreased to $317.0 million at December 31, 2010 from $393.1 million at September 30, 2010 and $729.8 million at December 31, 2009, reflecting the Company’s initiatives to reduce its overall risk exposure to these types of lending relationships.
 
 
·
The Company’s loan-to-deposit ratio was 68.94% at December 31, 2010, as compared to 76.32% at September 30, 2010 and 79.94% at December 31, 2009.
 
Total Assets:
 
 
 
·
Total assets decreased to $7.38 billion at December 31, 2010 from $7.89 billion at September 30, 2010 and $10.58 billion at December 31, 2009. The reduction in total assets during 2010 is reflective of the sale of $301.2 million of loans and $1.20 billion of deposits in our Chicago Region during February 2010, the sale of $96.7 million of loans and $492.2 million of deposits in our Texas Region in April 2010, the sale of $137.4 million of loans and $364.9 million of deposits in our Northern and Central Illinois Region in September 2010, and the payoff of $720.0 million of secured borrowings during the year.
 

 

 
 
 
 
Deposits and Other Borrowings:
 
 
·
Deposits were $6.58 billion at December 31, 2010, in comparison to $6.64 billion at September 30, 2010 and $8.81 billion at December 31, 2009. The decrease in deposits of $64.0 million during the fourth quarter of 2010 was primarily attributable to a decrease in time deposits of $142.2 million, partially offset by growth in money market and demand deposit accounts.
 
 
·
Other borrowings were $31.8 million at December 31, 2010, in comparison to $367.6 million at September 30, 2010 and $777.0 million at December 31, 2009. The decrease during the year ended December 31, 2010 primarily resulted from the payoff of $600.0 million of Federal Home Loan Bank advances, including $200.0 million during the fourth quarter of 2010, and a $120.0 million term repurchase agreement during the fourth quarter of 2010.
 


 
 
 

FINANCIAL SUMMARY
 
(dollars expressed in thousands, except per share data)
 
(UNAUDITED)
 
SELECTED OPERATING DATA

   
Three Months Ended
    
Year Ended
  
   
December 31,
    
September 30,
    
December 31,
    
December 31,
    
December 31,
  
   
2010
    
2010
    
2009
    
2010
    
2009
  
                               
Interest income
  
$
69,616
      
80,145
      
107,170
      
326,725
      
457,173
  
Interest expense
    
17,251
      
20,115
      
33,361
      
87,904
      
163,381
  
Net interest income
    
52,365
      
60,030
      
73,809
      
238,821
      
293,792
  
Provision for loan losses
    
52,000
      
37,000
      
63,000
      
214,000
      
390,000
  
Net interest income (loss)  after provision for loan losses
    
365
      
23,030
      
10,809
      
24,821
      
(96,208
)
Noninterest income
    
25,901
      
24,194
      
5,583
      
103,523
      
79,702
  
Noninterest expense
    
84,339
      
90,617
      
185,413
      
322,638
      
430,008
  
Loss before provision for income taxes
    
(58,073
)
    
(43,393
)
    
(169,021
)
    
(194,294
)
    
(446,514
)
(Benefit) provision for income taxes
    
(1,232
)
    
5,036
      
(94
)
    
3,957
      
2,422
  
Net loss
    
(56,841
)
    
(48,429
)
    
(168,927
)
    
(198,251
)
    
(448,936
)
Less: net loss attributable to noncontrolling interest in subsidiaries
    
(5,432
)
    
(618
)
    
(15,108
)
    
(6,514
)
    
(21,315
)
Net loss attributable to First Banks, Inc.
  
$
(51,409
)
    
(47,811
)
    
(153,819
)
    
(191,737
)
    
(427,621
)
                                         
Basic and diluted loss per common share
  
$
(2,391.77
)
    
(2,237.26
)
    
(6,709.64
)
    
(8,964.07
)
    
(18,911.10
)

SELECTED FINANCIAL DATA

   
December 31,
    
September 30,
    
December 31,
  
   
2010
    
2010
    
2009
  
                   
Total assets
  
$
7,378,128
      
7,887,116
      
10,581,996
  
Cash and cash equivalents
    
996,630
      
1,113,430
      
2,525,312
  
Investment securities
    
1,494,337
      
1,325,906
      
541,557
  
Loans, net of unearned discount
    
4,533,343
      
5,067,386
      
7,038,920
  
Allowance for loan losses
    
201,033
      
226,051
      
266,448
  
Goodwill and other intangible assets
    
131,112
      
131,942
      
191,674
  
Deposits
    
6,575,860
      
6,639,901
      
8,805,522
  
Other borrowings
    
31,761
      
367,615
      
777,041
  
Subordinated debentures
    
353,981
      
353,962
      
353,905
  
Stockholders’ equity
    
307,295
      
393,674
      
522,380
  
Nonperforming assets
    
539,573
      
642,817
      
818,015
  

SELECTED FINANCIAL RATIOS

   
Three Months Ended
    
Year Ended
  
   
December 31,
    
September 30,
    
December 31,
    
December 31,
    
December 31,
  
   
2010
    
2010
    
2009
    
2010
    
2009
  
                               
Net interest margin
    
2.84
%
    
3.01
%
    
2.92
%
    
2.91
%
    
3.00
%
Yield on loans
    
5.00
      
5.29
      
5.25
      
5.15
      
5.27
  
Cost of interest-bearing deposits
    
0.96
      
1.06
      
1.46
      
1.11
      
1.87
  
Loan-to-deposit ratio
    
68.94
      
76.32
      
79.94
      
68.94
      
79.94
  

About First Banks
First Banks had assets of $7.38 billion at December 31, 2010 and currently operates 154 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 Banks’ Annual Report on Form 10-K as of and for the year ended December 31, 2009, as filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s internet site (http://www.sec.gov), and such disclosures will also be presented in First Banks’ Annual Report on Form 10-K as of and for the year ended December 31, 2010 upon filing with the SEC in March 2011.

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 Banks’ 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 Banks’ 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 Banks’ results to differ materially from those described in the forward-looking statements may be found in First Banks’ Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC and available at the SEC’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.