November 02, 2008 at 18:30 PM EST
Franklin Bank Corp. Receives Non-Binding Proposals for the Recapitalization of Franklin Bank, S.S.B. Franklin Bank, S.S.B. Submits Call Report for Third Quarter 2008

HOUSTON, Nov. 2, 2008 (GLOBE NEWSWIRE) -- Franklin Bank Corp. (Nasdaq:FBTX) (AMEX:FBK-P) ("Franklin") announced today that it has received proposals regarding transactions that would strengthen the capital position of its subsidiary Franklin Bank, S.S.B. ("Bank"). Franklin is engaged in discussions with these parties about the terms and timing of any such transaction, and is keeping regulatory authorities informed of the progress of the discussions. Consummation of any one of the proposals would restore the Bank's capital category, for regulatory purposes, to the well capitalized category.

The proposals are nonbinding, subject to satisfactory completion of due diligence, approval of the final terms by the relevant boards of directors, execution of definitive agreements, receipt of certain approvals of or waivers by applicable regulatory authorities and other conditions customary in such transactions. It is expected that consummation of any transaction, which would be expected by year-end, also will require the approval of Franklin's stockholders. No assurance may be given that any agreement will be concluded or any transaction consummated.

"The challenges in the financial services industry we are facing today are without precedent," said Alan Master, CEO and President of Franklin. "Our announcement today is intended to inform stakeholders in Franklin that the board continues to seek the best opportunity for the Bank to meet and solve these challenges."

Call Report

The Bank is required to submit to the Federal Deposit Insurance Corporation (the "FDIC"), on a quarterly basis, its Consolidated Reports of Condition and Income, referred to herein as "call reports." The Bank's call reports are prepared in accordance with instructions issued by the Federal Financial Institutions Examination Council and include a balance sheet, income statement, changes in equity capital and other supporting schedules as of the end of the period covered by each call report. The publicly available portions of the Bank's call reports are available on the FDIC's website at http://www4.fdic.gov/call_tfr_rpts/.

On October 30, 2008, the Bank submitted to the FDIC a call report as of and for the nine months ended September 30, 2008 (the "September Call Report"). The September Call Report indicates that, as of September 30, 2008, the Bank's capital category for purposes of the prompt corrective action provisions of Section 38 of the Federal Deposit Insurance Act is significantly undercapitalized. Additionally, the Bank intends to submit to the FDIC an amended call report as of and for the six months ended June 30, 2008, which is expected to show that as of that date the Bank's capital category was significantly undercapitalized. The transactions contemplated by the proposals currently under discussion will return the Bank to the well capitalized category and provide additional excess capital.

The financial results reported in the Bank's call reports submitted to the FDIC reflect the operations of the Bank only, and do not include holding company operations of Franklin. In addition, financial information contained in the Bank's call reports is unaudited and has not been reviewed by Franklin's independent accountants. As previously reported, Franklin's filing of its annual report on Form 10-K, including its audited financial statements, for the year ended December 31, 2007 has been delayed. While the September Call Report reflects the best information available as of the time of its submission, the information in the September Call Report is subject to possible revision in connection with the audit of Franklin's financial statements since the books and records of Franklin for 2007 have not yet been closed. Accordingly, the information contained in the September Call Report is subject to these and the other qualifications contained in this press release.

Corporate Overview

Franklin, headquartered in Houston, Texas, was formed in April 2002. Franklin's common stock initiated trading on the Nasdaq Stock Market (the "Nasdaq") in December 2003 under the ticker symbol FBTX. In May 2006, Franklin raised additional capital through an offering of its Series A Non-Cumulative Perpetual Preferred Stock that is now trading on The American Stock Exchange (the "AMEX") under the ticker symbol FBK-P.LF.

Through the Bank, Franklin offers a wide variety of consumer and business products and services. The Bank focuses on providing high-quality personalized service through its "trusted financial advisors" and strives to meet all of the financial needs of its customers. In addition to various deposit and loan products, the Bank offers retail brokerage services through a third-party provider. For more information, you can visit its website at http://www.bankfranklin.com. The Bank is FDIC insured and an equal housing lender.

The Franklin Bank logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3366

Forward Looking Statements

This announcement includes forward-looking statements. These forward-looking statements include comments with respect to the goals, objectives, expectations, strategies, and the results of Franklin's operations and business. However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled. Franklin does not undertake, and hereby disclaims, any duty to update these forward-looking statements even though the situation and circumstances may change in the future. You are cautioned not to place undue reliance on these forward-looking statements as a number of factors could cause future results to differ materially from these statements.

Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates and stock indices, the effects of competition in the areas in which Franklin operates, and changes in economic, political, regulatory and technological conditions, including continuation for a prolonged period of current conditions in the housing, mortgage and credit markets. Other specific risks related to Franklin include the following: inability to consummate the transaction contemplated by the proposals discussed in this press release; continuation of adverse conditions in the secondary mortgage market; current and further deterioration in the housing market; the result of the Bank's regulatory examinations and actions by the Bank's regulators arising therefrom; the results of the final audit of Franklin's financial statements for 2007; Franklin's ability to effectively implement the recommendations of its Audit Committee arising out of the Audit Committee's previously disclosed investigation; the expenses and other effects of the Audit Committee investigation; the actions of the Nasdaq and AMEX concerning the continued listing of Franklin's securities for trading on such exchanges, and the actions of other regulatory agencies which may be taken in response to the Audit Committee's investigation and the findings thereof; potential inability to successfully implement its business strategy; the integration of businesses that may be acquired; the potential unavailability of external financing; reliance on brokered deposits; the geographic concentration of its business, commercial real estate and consumer loan portfolios, including a significant concentration in California; the potential unavailability of single family loans for bulk purchase; the portion of the single family loan portfolio that is less than one year old; fraud and negligence by loan applicants and others with whom Franklin does business; credit risk associated with smaller borrowers in its mortgage banker finance operation; the effect of changes in the extensive regulatory scheme to which Franklin or the Bank is subject; the possibility that allowance for credit losses may be insufficient to cover actual losses; interruption in or breach of the information systems; the potential inability to obtain the third-party information services on which it relies; and environmental risks associated with foreclosure on real estate properties. Franklin cautions that the foregoing list is not exhaustive. Investors should carefully consider the aforementioned factors as well as other uncertainties and events.

CONTACT:  Franklin Bank Corp.
          Glenn Mealey
          (713) 339-8999
Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here