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First Banks, Inc. Announces Fourth Quarter 2012 Results

The net interest margin was 2.68% for the fourth quarter of 2012, in comparison to 2.79% for the third quarter of 2012 and 2.89% for the fourth quarter of 2011. The net interest margin continues to be negatively impacted by the change in the mix of our interest-earning assets, which have shifted from loans to cash and cash equivalents and investment securities, and a decrease in the average yield on loans and investment securities due to the historically low interest rate environment, partially offset by a decrease in the cost of interest-bearing deposits resulting from the continued change in the mix of our deposits from time deposits and money market deposits to demand and savings deposits, and the continued re-pricing of money market relationships and certificates of deposit to current market interest rates upon maturity. Yields on interest-earning assets and costs of interest-bearing liabilities are summarized in the following table:

 
Three Months Ended
December 31,   September 30,   December 31,
2012 2012 2011
 
Average yield on loans   4.51 % 4.62 % 4.83 %
Average yield on investment securities 1.97 2.10 2.17
Average yield on interest-earning assets 3.14 3.28 3.49
Average cost of interest-bearing deposits 0.30 0.34 0.52
Average cost of interest-bearing liabilities 0.59 0.63 0.75
 

Provision for Loan Losses:

The provision for loan losses was zero for the third and fourth quarters of 2012, in comparison to $17.0 million for the fourth quarter of 2011. The decrease in the provision for loan losses for the fourth quarter of 2012, as compared to the fourth quarter of 2011, was primarily attributable to the decrease in nonaccrual and potential problem loans, in addition to lower net charge-offs, which were $22.6 million for the fourth quarter of 2012 (including net charge-offs of $13.3 million associated with the sale of approximately $47.7 million of loans), $6.0 million for the third quarter of 2012 and $37.0 million for the fourth quarter of 2011.

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