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EXHIBIT 99.1
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NEWS RELEASE
FROM: FIRST SOUTHERN BANCSHARES, INC.
CONTACT: KAYE TOWNSEND
CORPORATE OFFICE: 102 S. COURT STREET
FLORENCE, ALABAMA 35631-0777
TELEPHONE: (256) 718-4215
FIRST SOUTHERN BANCSHARES, INC.
TO RECORD A ONE-TIME $925,000 CHARGE-OFF
Florence, Alabama, June 12, 2000 -- First Southern Bancshares, Inc.,
(NASDAQ: FSTH) the holding company for First Southern Bank, Florence, Alabama,
has announced that the Bank is pursuing an internal investigation of possibly
fraudulent loans to a commercial customer of the Bank as well as loans to
several persons affiliated with the customer. These transactions will require a
one- time charge-off against First Southern's loan loss reserve during the
quarter ended June 30, 2000.
Although investigation of the alleged fraudulent loans and the potential
for recovery is ongoing, First Southern currently estimates that its maximum
exposure for loss from these transactions is approximately $925,000, which
represents the estimated uncollected balance of the outstanding balances on the
subject loans. The Bank is also coordinating with the Federal Deposit Insurance
Corporation and the Superintendent of Banks of the State of Alabama regarding
these transactions and the ongoing investigation.
Based on preliminary estimates of its exposure due to the fraudulent
loans, First Southern has charged-off $925,000 during the second quarter ended
June 30, 2000 against its existing $1.5 million loan loss reserve. During this
same quarter, First Southern expects to restore its loan loss reserve to
approximately $1.5 million, or 0.96% of total loans. These transactions are
expected to negatively impact earnings after tax for the second quarter of
approximately $0.44 per share.
Charles L. Frederick, Jr., President of First Southern, said, "The
$925,000 appears to be the maximum potential charge-off in the eventuality that
no recovery is possible, but the facts are still being investigated." Frederick
continued, "We are currently evaluating all available remedies and intend to
aggressively pursue all avenues for restitution."
"In spite of this event, our overall financial condition remains solid and
our depositors' funds are secure. We must accept that we may have been
victimized by a fraudulent scheme and learn from the unfortunate experience. We
plan to tackle the issues raised by this situation head-on and move forward with
our current operating strategy of maximizing profits through an increase in our
average interest rate spread."
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At March 31, 2000, First Southern Bancshares, Inc. had assets of $180.7
million and stockholders' equity of $13.6 million. First Southern Bank is
headquartered in Florence, Alabama, and operates through its executive/branch
office in Florence and through five other full service branches located in
Lauderdale and Colbert Counties, Alabama. The Bank's deposits are insured by the
Federal Deposit Insurance Corporation.
Statements contained in this news release, which are not historical facts,
are forward looking statements, as the term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors, which include, but
are not limited to, factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time.
