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Net loss for the three-month period that ended Sept. 30 was $51.5 million. First State, which operates the First Community Bank system, lost $1.8 million in the third quarter of 2008. For the first nine months of this year the company lost $82.1 million, compared to a loss of $116.2 million in the first nine months of 2008.
The nine-month 2008 loss included a large, one-time write-off of goodwill, which is a non-cash charge that reflected the declining value of banks First State purchased years earlier.
First State CEO Michael R. Stanford said in a prepared statement that in the past six months the company has aggressively culled its loan portfolio of problem loans, which increased First State's provision for loan losses to $52.5 million in the quarter, up from $15.6 million in the same quarter last year. For the first nine months of 2009, the provision for loan losses increased to $116.9 million from $48.2 million a year ago. Loan loss provisions decrease a bank's earnings.
"We don't think this level of provisioning will be necessary in the future and believe that the worst may now be behind us," Stanford said.
Earlier this year, First State retained consultants to help it improve its finances and possibly to arrange the company's sale. Chief operating officer H. Patrick Dee told a conference call of investors and analysts Monday, "At this time we have no concrete plans we can report on."
Despite the ongoing losses, Dee said, "Actually there are a few bits of good news in the asset quality numbers."
Dee said that problem loans in some key sectors, including the bank's real estate portfolio, are declining. Loans and deposits have both declined. Loans as of Sept. 30 totaled $2.13 billion, compared to $2.76 billion on Sept. 30, 2008. Deposits over the same 12-month period declined from $2.5 billion to $2.15 billion.
First Bank said most of that decline was due to a decrease in brokered deposits and a seasonal drop in public entity deposits, mostly from counties and school districts.
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