First BancTrust Corporation Reports Fourth Quarter Unaudited Results and Declares Regular Quarterly Cash Dividend

- Loans Increase 15% for the Year

- Net Interest Income Improves

- Provision for Loan Losses Increased Significantly

- Fourth Quarter Net Income Declines

PARIS, Ill., March 4 /PRNewswire-FirstCall/ -- First BancTrust Corporation (Pink Sheets: FIRT) today reported a net loss for the fourth quarter of 2008 of $382,000 or 18 cents per diluted share. This compares with net income of $179,000, or 8 cents per diluted share in the fourth quarter a year ago. For the fiscal year ended December 31, 2008, the Company posted net income of $481,000, or 22 cents per diluted share, compared with net income of $1.06 million, or 47 cents per diluted share a year earlier.

"The year 2008 was an exceptionally challenging year for financial institutions, as well as the economy in general. Our earnings were significantly impacted by two major events during the past year, delisting and additions beyond original projections to the provision for loan losses. We increased the balance of our loan portfolio by $34.9 million from $234.9 million at year end 2007 to $269.8 million at year end 2008. We were able to improve Net Interest Income, before provision for loan losses, over the prior year from $8.2 million in 2007 to $9.7 million in 2008. The positive change in the loan balances, as well as the aggressive management of interest expense enhanced our efforts to improve net interest income," stated Jack R. Franklin, president and chief executive officer.

"The overall quality of our loan portfolio is continually being reviewed and as such management identified certain specific credits, weakened by both economic and non-economic events, which required the recognition of actual and anticipated losses in the fourth quarter. The total amount of the provision for loan losses for the fourth quarter of $1.32 million was $1.15 million greater than anticipated. As a result, net earnings for the fourth quarter were significantly reduced compared to net earnings for the same quarter last year. The amount of provision for loan losses of $1.3 million during the fourth quarter brought the total provision for 2008 to $2.6 million which is $1.8 million more than for all of 2007. Consequently, net earnings for all of 2008 were reduced to 46% of net earnings for 2007. The increase in the provision for loan losses is primarily attributable to a few, mature commercial credits, but we did seek to maintain sufficient reserves to provide for growth considerations and for unknown losses based on historical trends in each of our portfolios. As a result of the aggressive and prudent contribution to provision for loan losses, and given the current economic climate, the Allowance for Loan Losses to total loans increased from .88% at year end 2007 to 1.29% at year end 2008."

Total assets increased by $34.8 million or 10.6% to $361.7 million as of December 31, 2008 from $326.9 million as of December 31, 2007. This growth was funded primarily through increases of $26 million in core deposits and $7 million in DTC eligible certificates of deposit.

Net Interest Income

The increase in net interest income for the year was primarily the result of the increase in average interest earning assets of $38.0 million and interest expense management. Interest income grew by $1.5 million from $18.5 million in the prior year to $20.0 million in 2008. However, interest expense remained relatively stable at $10.3 million as a result of a vigorous funds management process in a falling rate environment.

Non-interest Income

Non-interest income for 2008 was $3.9 million compared to $3.8 million for 2007, an increase of $100,000. The increase was primarily a result of increases in account service fees, other service charges and fees, net realized gains on sales of available-for-sale securities, gains on loan sales, and an increase in cash surrender value of life insurance, partially offset by a decrease in net loan servicing fees.

Noninterest Expense

Noninterest expense for 2008 was $10.4 million compared to $9.9 million for 2007, an increase of $500,000, or 5%. The increase was primarily due to the costs associated with delisting, increases in FDIC premium expenses, and increases in salaries & benefits. The increase in salaries and benefits expense was the result of additional costs associated with the increased production of commercial loans through the addition of a high quality experienced lender in the Champaign market and the creation of a more robust credit analysis function. The enhancement of the credit analysis infrastructure was essential to properly evaluate the types and volumes of the credits that we service. The one-time cost of delisting in 2008 accounted for a substantial portion of this increase with significant future savings anticipated as a result of this action.

Outlook

"The outlook for 2009 would indicate considerable uncertainties in the financial sector and the economy in general. With this in mind, we continue to make progress in the areas of net interest income, non-interest income, deposit growth and loan growth. Operating expenses spiked for the year of 2008 as a result of previously mentioned events, but are expected to return to normalized levels in the future. Net interest income increased significantly during the year as a result of the continued growth of quality credits in our loan portfolio which serve to build a revenue base that will contribute to our future profitability. Funding for the asset growth is concentrated in gathering lower-cost local core deposits that assist in the ongoing growth of this income stream. We will continue our marketing efforts to attract lower-cost, core deposits and utilize other lower-cost sources of funds while growing," Franklin noted.

"We continue to believe in the advantages of the community bank model that benefits our customers, shareholders, and employees. During the upcoming year, we will build on the improvement we achieved in net interest income, based on an enhanced net interest margin. We will also continue to develop new products and services that provide value to our customers and revenue to our bank while continuing to keep operating expenses in check," Franklin concluded.

Quarterly Dividend

Franklin also announced that the Board of Directors had declared a regular quarterly cash dividend of 6 cents per common share, payable March 11, 2009 to stockholders of record at the close of business on February 23, 2009. This marks the 30th consecutive quarterly dividend the Company has paid.

About First BancTrust

First BancTrust Corporation is a holding company that owns all of the capital stock of First Bank & Trust, S. B., an Illinois-chartered savings bank that conducts business from its main office located in Paris, Illinois, and branch banks in Marshall, Savoy, Rantoul, and Martinsville, Illinois.

This press release contains forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company and its wholly-owned subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory provisions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality of composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market area; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

                               First BancTrust Corporation
                              Selected Financial Information
                       (in thousands of dollars except share data)


    Balance Sheet Data                         Dec. 31,      Dec. 31,
                                                 2008          2007
                                             (unaudited)
     Total Assets                              $361,655      $326,875
     Cash And Cash Equivalents                   12,796        10,339
     Investment Securities                       49,590        53,959
     FHLB Stock                                   3,749         3,749
     Loans Held For Sale                          1,457           394
     Loans, Net of Allowance for
      Loans Losses of $3,520 and $2,091         269,794       234,855
     Deposits                                   265,248       232,139
     Federal Home Loan Bank Advances             59,000        55,800
     Stockholders' Equity                        26,215        26,501

     Book Value Per Common Share                 $12.36        $12.07

    Summary Of                   3 Months Ended               Year Ended
     Operations                    December 31               December 31
                              2008             2007         2008       2007
                          (unaudited)                   (unaudited)
     Interest Income        $5,119           $4,846      $20,028    $18,489
     Interest Expense        2,555            2,740       10,334     10,274

     Net Interest
      Income                 2,564            2,106        9,694      8,215

     Provision For
      Loan Losses            1,319              329        2,590        775

     Net Interest
      Income After
      Provision For
      Loan Losses            1,245            1,777        7,104      7,440
     Noninterest
      Income                   988              966        3,884      3,783
     Noninterest
      Expense                2,830            2,545       10,361      9,872

     Income Before
      Income Tax              (597)             198          627      1,351
     Income Tax
      Expense                 (215)              19          146        295

     Net Income              $(382)            $179         $481     $1,056

    Share Data
     Weighted Avg.
      Shares Out. -
      Basic              2,056,868        2,120,031    2,094,561  2,146,063
     Weighted Avg.
      Shares Out. -
      Diluted            2,056,868        2,189,251    2,148,616  2,234,141

     Basic Earnings
      Per Share             $(0.18)           $0.08        $0.23      $0.49
     Diluted Earnings
      Per Share             $(0.18)           $0.08        $0.22      $0.47

    Ratios Based On
     Net Income
     Return on
      Average
     Stockholders'
      Equity                 -5.73%            2.70%        1.79%      4.00%
     Return On
      Average Assets         -0.43%            0.23%        0.14%      0.35%

SOURCE First BancTrust Corporation