First Bank reports drop in Q4 earnings

First Banks Inc. said its earnings fell 78 percent to $3.3 million in the fourth quarter as the bank holding company struggled with the decline in the real estate market and a shrinking net interest margin.

For the year, earnings were down 49 percent to $57.2 million.

The bank’s provision for loan losses soared to $49 million in the fourth quarter from $4.0 million in the last quarter of 2006 due to net loan chargeoffs and a decline in asset quality. Its net interest margin eroded to 3.91 percent from 4.27 percent a year earlier.

Terrence M. McCarthy, president and chief executive, said, “Throughout 2007, we encountered considerable distress in our one- to four-family residential loan portfolio as a result of the unstable market conditions surrounding subprime loan products. We took aggressive steps throughout 2007 to mitigate our risk to subprime loans.”

The bank stopped making subprime loans early last year and it also sold $59.6 million of nonperforming loans.