First Banks' Deal to Sell Florida Branches Falls Through

First Banks of Clayton, Mo., said Friday that it has called off its plan to sell its Florida branch network to an unnamed bank after the two sides could not come to terms on a deal.

The $6.7 billion-asset company announced its decision in a regulatory filing in which it also reported its first profitable quarter in more than four years. In late March, First Banks said it would sell its 19 branches in Florida and roughly $346 million of deposits for a premium of 2.3%.

The deal would have helped First Banks, which has been operating under a written agreement with the Federal Reserve Board for more than two years, improve its capital ratios by shrinking its balance sheet.

First Banks entered Florida in 2007 when it acquired the troubled Coast Financial in Bradenton.

In its Securities and Exchange Commission filing Friday, the company said that the unnamed buyer "failed to meet certain conditions" of their agreement and, as result, it exercised its right to terminate the deal.

"We are considering our options with respect to the Florida Region based on this recent development," First Banks said.

Also on Friday, First Banks reported its first profitable quarter "since the beginning of the distressed credit cycle," Terrance M. McCarthy, president and chief executive, said in the filing.

Improved credit quality led to a $6.9 million profit in the first quarter, compared with a loss of $6.1 million a year earlier and a loss of $15.9 million in the fourth quarter. Its provision for loan losses fell 80%, to $2 million, year over year and nonaccrual loans totaled $185.1 million, down more than 51%.

The company's noninterest income increased 19%, to $17.2 million, year over year, while noninterest expense totaled $52.1 million, down 12% from a year earlier. McCarthy said that the bank will focus on "maintaining quarterly profitability, continuing to reduce nonperforming and potential problem loan levels and strengthening the capital levels of both the holding company and First Bank."

The bank's total risk-based capital ratio was 15.63% at March 31, up 185 basis points from a year earlier.