Exhibit 99
First Banks, Inc.
St. Louis, Missouri
Contacts: Terrance M. McCarthy Lisa K. Vansickle
President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
First Banks, Inc. First Banks, Inc.
(314) 592-5000 (314) 592-5000
Traded: NYSE
Symbol: FBSPrA - (First Preferred Capital Trust IV, an affiliated trust of
First Banks, Inc.)
FOR IMMEDIATE RELEASE:
First Banks, Inc. Announces Completion of Planned Capital Raise,
Second Quarter Earnings and Issuance of Restated Financial Statements
St. Louis, Missouri, July 31, 2008. First Banks, Inc. ("First Banks" or the
"Company") announced today the completion of a $100.0 million capital raise
through First Capital America, Inc. ("FCA"), a corporation owned by First Banks'
Chairman of the Board and members of his immediate family. On May 14, 2008,
First Banks formed FB Holdings, LLC ("FB Holdings"). FB Holdings operates as a
majority-owned subsidiary of First Bank and was formed for the primary purpose
of holding and managing certain nonperforming loans and assets to allow the
liquidation of such assets at a time that is more economically advantageous to
First Bank. As of June 30, 2008, First Bank had contributed loans and assets of
approximately $88.6 million and FCA had contributed cash of $85.0 million to FB
Holdings. Subsequently, in late July, First Bank contributed assets of
approximately $15.5 million and FCA contributed additional cash of $15.0
million, bringing its total cash investment in FB Holdings to $100.0 million.
The contribution of cash by FCA is reflected as minority interest in the
Company's consolidated financial statements and, consequently, increased the
Company's total risk-based capital ratio.
Terrance M. McCarthy, President and Chief Executive Officer of First Banks,
said, "We are very pleased to have completed this recapitalization of First
Bank. As a family-owned financial institution, our affiliate, FCA, and the
Dierberg family, have demonstrated their extraordinary support for the Company
with this $100.0 million investment. The investment provides the Company with
the strength to manage through the current difficult economic cycle and
positions us to take advantage of future opportunities as the economy recovers."
The Company reported a net loss of $39.9 million for the three months ended
June 30, 2008, compared to a net loss of $4.9 million for the three months ended
March 31, 2008, and earnings of $17.4 million for the three months ended June
30, 2007. The Company reported a net loss of $44.8 million for the six months
ended June 30, 2008, compared to earnings of $34.8 million for the comparable
period in 2007. The net loss for the second quarter of 2008 was primarily
attributable to a significantly higher provision for loan losses, which
increased to $84.1 million for the three months ended June 30, 2008, from $45.9
million for the three months ended March 31, 2008, and $3.4 million for the
three months ended June 30, 2007. The provision for loan losses recorded in the
second quarter reflects increased levels of nonperforming loans, increased net
charge-offs and increased risk associated with deteriorating and unstable
economic conditions, primarily concentrated in the Company's one-to-four family
residential mortgage and real estate construction and development loan
portfolios.
Mr. McCarthy stated, "Our financial performance in the second quarter
reflected many of the required actions necessary to strengthen the Company's
balance sheet. Significant impacts from the severe national downturn in
residential real estate affected us in the quarter. We aggressively dealt with
those challenges by increasing our reserve for loan losses in the quarter by
$15.8 million. In spite of the loss for the quarter, we were able to increase
the Company's overall capital position and at June 30, 2008, the Company was
well capitalized under the financial industry regulatory guidelines."
The Company also reported that it has completed and filed the amendment to
its 2007 Annual Report on Form 10-K to restate its audited consolidated
financial statements as of December 31, 2007 and 2006 and for the years ended
December 31, 2007, 2006 and 2005, and each unaudited quarterly period in 2006
and 2007. The Company has also filed its Quarterly Report on Form 10-Q as of and
for the period ended March 31, 2008, thereby bringing all of its required
filings current with the U.S. Securities and Exchange Commission. The
restatement was made to properly reflect certain transactions that were entered
into by a former employee of the Company's mortgage banking division and
improperly recorded in the Company's consolidated financial statements due to
the circumvention of established internal controls (the "Transactions"). These
Transactions resulted in the omission of a repurchase agreement obligation,
including the related interest expense thereon, and the overstatement of
mortgage banking revenues. Net income (as restated) was $49.5 million, $106.8
million and $95.3 million for the years ended December 31, 2007, 2006 and 2005,
respectively.
Mr. McCarthy said, "While we remain highly disappointed about the
circumstances that caused the restatement, we have now restated and filed our
financial statements and are returning our corporate focus to our short-term and
long-term objectives. In addition, it is important to note that the Transactions
did not affect any of our customers or impact our ability to comply with the
payment obligations under our outstanding subordinated debentures in accordance
with the terms of the underlying trust indentures associated with our
outstanding trust preferred securities."
First Banks is privately held by the St. Louis based Dierberg family which
controls all of the voting stock of the Company through various trusts created
by and for the benefit of members of the Dierberg family. First Banks currently
operates 217 branch banking offices in California, Florida, Illinois, Missouri
and Texas.
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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' most recent
Annual Report on Form 10-K/A and subsequently filed Quarterly Report on Form
10-Q, as filed with the Securities and Exchange Commission ("SEC") and available
at the SEC's internet site (http://www.sec.gov). The forward-looking statements
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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.