Predicts Deal with Foreign Buyer, Maybe Within a Year
WASHINGTON - Ailing First American Bankshares Inc. could be sold within 12 months to a foreign buyer, according to George L. Davis, president and chief executive.
A sale by then would meet the U.S. government's target.
The buyer will probably come from "across the water," Mr. Davis said. Tuesday at a press conference, where he announced that the $6.5 billion-asset company had earned $8.2 million in the second quarter. The profit breaks a string of eight consecutive quarterly losses.
Mr. Davis said there were interested parties abroad as well as among domestic banks in the South and individual U.S. investors. He declined to name names. He recently hired Dillon Read Inc. to sell the company. No one is conducting due diligence at this point, he added.
Mr. Davis said the bank will put together a bidding book for potential buyers to review by fall.
The Federal Reserve ordered the sale of First American more than a year ago, after discovering that the Bank of Credit and Commerce International illegally owned the Washington-based company.
In May, First American's parent voted to place it in a trustee's hands to facilitate sale.
The second-quarter profit contrasts with a $59.3 million loss a year ago. For the first six months of the year, First American lost $23.6 million, compared to an $80 million loss in first-half 1991.
"I would not like to say we are out of the woods until we get a couple of [profitable] quarters back to back." said Mr. Davis, who became president of the bank in January. "Based on the second quarter ...life looks more promising."
Earnings were bolstered by the sale of the company's Georgia bank in May, which resulted in a $10.1 million gain. The company also made $7.4 million from the sales of securities.
Healthy Capital Levels
First American meets all its capital requirements, with total equity capital of $398.6 million. Its leverage ratio is 5.31%.
Nonperforming assets peaked in the first quarter, at $634.2 million. They fell to $584.5 million by June 30, compared to $595 million a year ago, and now represent 9% of the bank's total assets.
The company also reported that:
* Credit related expenses fell to $22.8 million, compared with $75 million a year ago.
* Net chargeoffs fell to $13.2 million, compared with $45.8 million in 1991.
* Assets shrank by nearly $4 billion, to $6.5 billion. The bank plans to reduce assets furthere by selling its New York bank, which has $1.2 billion in assets, and lost $3.2 million in the quarter.
* Loans fell to $4.2 billion, compared with $6.17 billion a year ago. Deposits slipped to $5.6 billion, compared with $8.7 billion a year ago.
MR. Davis said the deposit base has stabilized in the wake of the BCCI scandal. He said the banking subsidiaries have $700 million in liquid assets.
"BCCI now is history as far as we are concerned," he said.