First Banks in Clayton, Mo., reported its third consecutive profitable quarter.
The $6.5 billion-asset company posted third-quarter earnings of $8.5 million, compared with a net loss of $2.1 million a year earlier.
First Banks did not record a provision, primarily because of a decrease in nonaccrual and potential problem loans. The company recorded a $19 million provision a year earlier.
Net loan chargeoffs fell 73% from a year earlier, to $6 million. Potential problem loans dropped 38% from a year earlier, to $183.7 million. First Banks also reduced its overall level of nonperforming assets by almost 40% from a year earlier, to $241.9 million.
The company bought $141 million of performing one-to-four-family residential real estate loans from another institutional in September to put its on-balance sheet liquidity into higher earning alternatives. First Banks said that the loans should contribute to core earnings in the fourth quarter.
Loans, net of deferred loan fees, fell 13% from a year earlier, to $3.1 billion, but rose slightly from the second quarter because of the loan purchase. Loan runoff, mostly in nonperforming, potential problem and other loans, offset some of the gain from the portfolio acquisition.
Net interest income fell almost 6% from a year earlier, to $43 million. The net interest margin contracted 3 basis points from a year earlier, to 2.79%.
Noninterest income dropped almost 2% from a year earlier, to $16.8 million. Noninterest expense fell almost 12% from a year earlier, to $51.2 million, because of lower costs related to nonperforming assets and potential problems loans and the "implementation of certain measures intended to improve efficiency in conjunction with the restructuring of the Company to a smaller footprint," the company said.
First Banks entered into an agreement to sell its Florida branch network to an unnamed bank but that deal fell through earlier this year.