First Banks, Inc. Announces Completion of Planned Capital Raise, Second Quarter Earnings...

First Banks, Inc. Announces Completion of Planned Capital Raise, Second Quarter Earnings and Issuance of Restated Financial Statements

ST. LOUIS--(Business Wire)--
First Banks, Inc. ("First Banks" or the "Company")(NYSE:FBSPrA)
announced today the completion of a $100.0 million capital raise
through First Capital America, Inc. ("FCA"), a corporation owned by
First Banks' Chairman of the Board and members of his immediate
family. On May 14, 2008, First Banks formed FB Holdings, LLC ("FB
Holdings"). FB Holdings operates as a majority-owned subsidiary of
First Bank and was formed for the primary purpose of holding and
managing certain nonperforming loans and assets to allow the
liquidation of such assets at a time that is more economically
advantageous to First Bank. As of June 30, 2008, First Bank had
contributed loans and assets of approximately $88.6 million and FCA
had contributed cash of $85.0 million to FB Holdings. Subsequently, in
late July, First Bank contributed assets of approximately $15.5
million and FCA contributed additional cash of $15.0 million, bringing
its total cash investment in FB Holdings to $100.0 million. The
contribution of cash by FCA is reflected as minority interest in the
Company's consolidated financial statements and, consequently,
increased the Company's total risk-based capital ratio.

Terrance M. McCarthy, President and Chief Executive Officer of
First Banks, said, "We are very pleased to have completed this
recapitalization of First Bank. As a family-owned financial
institution, our affiliate, FCA, and the Dierberg family, have
demonstrated their extraordinary support for the Company with this
$100.0 million investment. The investment provides the Company with
the strength to manage through the current difficult economic cycle
and positions us to take advantage of future opportunities as the
economy recovers."

The Company reported a net loss of $39.9 million for the three
months ended June 30, 2008, compared to a net loss of $4.9 million for
the three months ended March 31, 2008, and earnings of $17.4 million
for the three months ended June 30, 2007. The Company reported a net
loss of $44.8 million for the six months ended June 30, 2008, compared
to earnings of $34.8 million for the comparable period in 2007. The
net loss for the second quarter of 2008 was primarily attributable to
a significantly higher provision for loan losses, which increased to
$84.1 million for the three months ended June 30, 2008, from $45.9
million for the three months ended March 31, 2008, and $3.4 million
for the three months ended June 30, 2007. The provision for loan
losses recorded in the second quarter reflects increased levels of
nonperforming loans, increased net charge-offs and increased risk
associated with deteriorating and unstable economic conditions,
primarily concentrated in the Company's one-to-four family residential
mortgage and real estate construction and development loan portfolios.

Mr. McCarthy stated, "Our financial performance in the second
quarter reflected many of the required actions necessary to strengthen
the Company's balance sheet. Significant impacts from the severe
national downturn in residential real estate affected us in the
quarter. We aggressively dealt with those challenges by increasing our
reserve for loan losses in the quarter by $15.8 million. In spite of
the loss for the quarter, we were able to increase the Company's
overall capital position and at June 30, 2008, the Company was well
capitalized under the financial industry regulatory guidelines."

The Company also reported that it has completed and filed the
amendment to its 2007 Annual Report on Form 10-K to restate its
audited consolidated financial statements as of December 31, 2007 and
2006 and for the years ended December 31, 2007, 2006 and 2005, and
each unaudited quarterly period in 2006 and 2007. The Company has also
filed its Quarterly Report on Form 10-Q as of and for the period ended
March 31, 2008, thereby bringing all of its required filings current
with the U.S. Securities and Exchange Commission. The restatement was
made to properly reflect certain transactions that were entered into
by a former employee of the Company's mortgage banking division and
improperly recorded in the Company's consolidated financial statements
due to the circumvention of established internal controls (the
"Transactions"). These Transactions resulted in the omission of a
repurchase agreement obligation, including the related interest
expense thereon, and the overstatement of mortgage banking revenues.
Net income (as restated) was $49.5 million, $106.8 million and $95.3
million for the years ended December 31, 2007, 2006 and 2005,
respectively.

Mr. McCarthy said, "While we remain highly disappointed about the
circumstances that caused the restatement, we have now restated and
filed our financial statements and are returning our corporate focus
to our short-term and long-term objectives. In addition, it is
important to note that the Transactions did not affect any of our
customers or impact our ability to comply with the payment obligations
under our outstanding subordinated debentures in accordance with the
terms of the underlying trust indentures associated with our
outstanding trust preferred securities."

First Banks is privately held by the St. Louis based Dierberg
family which controls all of the voting stock of the Company through
various trusts created by and for the benefit of members of the
Dierberg family. First Banks currently operates 217 branch banking
offices in California, Florida, Illinois, Missouri and Texas.

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, statements about First
Banks' plans, objectives, estimates or projections with respect to our
future financial condition, expected or anticipated revenues with
respect to our results of operations and our business, expectations
and intentions and other statements that are not historical facts.
Such statements are based upon the current beliefs and expectations of
First Banks' management and are subject to significant risks and
uncertainties which may cause actual results to differ materially from
those contemplated in the forward-looking statements. The following
factors, among others, could cause actual results to differ from those
set forth in the forward-looking statements: increased competition and
its effect on pricing, spending, third-party relationships and
revenues; changes in interest rates and overall economic conditions;
and the risk of new and changing regulation. Additional factors which
may cause First Banks' results to differ materially from those
described in the forward-looking statements may be found in First
Banks' most recent Annual Report on Form 10-K/A and subsequently filed
Quarterly Report on Form 10-Q, as filed with the Securities and
Exchange Commission ("SEC") and available at the SEC's internet site
(http://www.sec.gov). The forward-looking statements in this press
release speak only as of the date of the press release, and First
Banks does not assume any obligation to update the forward-looking
statements or to update the reasons why actual results could differ
from those contained in the forward-looking statements.

First Banks, Inc.
Terrance M. McCarthy
President and Chief Executive Officer
314-592-5000
or
Lisa K. Vansickle
Senior Vice President and Chief Financial Officer
314-592-5000

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