First International Bancorp Reports Results For 2000

HARTFORD, Conn., March 29, 2001—First International Bancorp Inc. (NASDAQ: FNCE), parent of First International Bank, today reported net income of $5.8 million ($.69 per share on a diluted basis) for the fiscal year ended December 31, 2000, representing a 3% decrease from net income of $6.0 million ($.72 per share on a diluted basis) reported for 1999.

Net income for the fourth quarter of 2000 was impacted by the company’s early adoption of the provisions of EITF 99-20, a new accounting standard that requires the use of a market interest rate to test for impairment of loan securitization-related retained interests. As a result of the new standard, the company recognized a cumulative non-cash, after-tax charge of $2.2 million ($.26 per share on a diluted basis) for securitization-related retained interests in 2000. This charge was comprised of an after-tax charge of $1.7 million ($.20 per share on a diluted basis) for the cumulative effect of adopting this standard as of October 1, 2000 and an additional pre-tax charge of $754,000 or $471,000 after-tax ($.06 per share on a diluted basis) for the fourth quarter. These non-cash charges lowered net income in the fourth quarter of 2000 to $53,000 ($.01 per share on a diluted basis) compared with $1.6 million ($.19 per share on a diluted basis) in the fourth quarter of 1999.

Commenting on the accounting change made with respect to securitization-related assets, Leslie A. Galbraith, president and chief operating officer of First International Bank, explained, "In the fourth quarter we decreased the fair value of the unguaranteed SBA and term loan securitization-related retained interests to $29.0 million in the aggregate. Our current estimates of the aggregate loss and prepayment rates remain generally unchanged, and performance has been within expected ranges. In light of the weakening economy and interest rate volatility, however, we felt it was prudent to test these assets for impairment based on current market rates. In the absence of any other impairment, this change will serve to increase the yield on such assets in future periods."

Non-interest income, consisting primarily of gains on the sale of U.S. government guaranteed commercial loans, loan servicing income and fees, and gains from the securitization and sale of unguaranteed commercial loans, grew 22% to $32.1 million at December 31, 2000 from $26.3 million (excluding a one-time $8.9 million gain from the sale of a branch) the previous year. Total loans managed by the company rose to a record level of $1.3 billion at December 31, 2000, 18% higher than $1.1 billion recorded at December 31, 1999. The company's customer base grew by 18% during 2000 to 1,458 companies, with 22% of borrowers located outside the United States.

The company reported on balance sheet non-performing loans at December 31, 2000 of $4.2 million, a 16% reduction from $5.0 million at December 31, 1999. Net charge-offs for 2000 were $2.6 million compared with $2.5 million the previous year. Fourth quarter 2000 net charge-offs were $754,000 compared with $618,000 in the fourth quarter of 1999. The company made a provision for loan losses of $1.0 million during fourth quarter 2000, bringing the Allowance for Loan and Lease Losses to $5.6 million at December 31, 2000. The Allowance covered non-performing loans 133% at December 31, 2000, up from 92% at December 31, 1999.

Management attained its goal during 2000 of shifting the mix of originations toward government guaranteed loans in response to market demand from its core niche of small industrial companies, the slowing economy and heightened risk environment. Loan originations in 2000 exceeded $500 million for the second year in a row, with 62% carrying U.S. government guarantees compared with 56% in 1999.

For fiscal 2000 First International was again one of the world’s leading users of U.S. federal commercial and international loan guarantee programs, further confirming its strategy. The company finished first (for the fourth year in a row) in number of Export-Import Bank loan transactions, second in U.S. Department of Agriculture Business & Industry dollar loan volume, and 11th in U.S. Small Business Administration dollar loan volume.

On January 16, 2001, First International announced a definitive agreement to be acquired by United Parcel Service, Inc. (NYSE: UPS), expanding the supply chain financing solutions of UPS Capital Corp., the financial services subsidiary of UPS. The merger will supplement the core expertise of First International in government-guaranteed commercial lending and structured trade finance with UPS Capital’s portfolio of services, including asset-based lending, factoring, equipment leasing, payment solutions and global trade finance. The acquisition of the company is subject to several conditions, including receipt of stockholder approval and all regulatory approvals.

"Our pending merger, which is expected to close late in the second quarter of 2001, is a great opportunity for the continued growth of First International’s global small business financing franchise," stated Brett N. Silvers, CEO and chairman. "Clients will benefit from the powerful combination of extensive product offerings and the financial backing of UPS Capital’s AAA-rated parent, UPS, the world’s largest express carrier and package delivery company servicing more than 200 countries and territories," added Silvers.

Developments during the fourth quarter further strengthened First International’s capabilities as a global lender for small businesses. The company received delegated lending authority from Mexico’s development bank, Nacional Financiera, to finance loans for small and midsize Mexican companies. In addition, Canada’s Economic Development Corporation, the country’s export credit agency, granted its first guarantee to First International for a transaction involving a Canadian exporter.

"Our continued leadership in U.S. Ex-Im Bank-supported lending, together with the Mexico and Canada initiatives, have greatly enhanced First International’s ability to deliver true global financing," remarked Silvers.

First International Bank received accolades for its innovative use of government-guaranteed financing from the U.S. Department of Agriculture in support of the nation’s nascent rural cooperative energy industry. The company recently financed Southern New England’s first two cooperative energy projects, resulting in a front-page story in the January 12, 2001 issue of American Banker.

First International established its twentieth e-business alliance with the signing of six new contractual agreements during fourth quarter 2000. The bank reached agreements with Internet-based marketplaces eCarbon.com, Garmentrade, The Online Asset Exchange, RFQSolutions.com, TexWorld.Com, and ThreadExchange, extending its ThruCredit® online financing services to the thousands of companies that buy and sell industrial goods and services via these sites. ThruCredit® provides industrial e-marketplace participants with direct Internet access to First International’s menu of credit products, including working capital lines, equipment loans, industrial mortgages, and international trade, energy and barter financing in amounts up to $5 million per transaction.

On February 2, 2001, the Board of Directors of the company declared a dividend of $.03 per share to be paid on March 1, 2001 to stockholders of record as of February 19, 2001.

First International Bank (www.upscapital.com) – a world leader in the use of SBA, USDA and Export-Import Bank loans – provides innovative credit, trade and financial solutions for small and medium size industrial businesses. The company has more than 200 employees, including 95 experienced lenders, at offices coast-to-coast in the U.S. and international representatives at 29 locations worldwide in the Americas, Asia, Africa, the Middle East and Central Europe. In 2000, the company originated more than $500 million in loans primarily within its industrial niche, and closed the year with a managed loan portfolio of $1.3 billion. Established in 1955, the bank is a subsidiary of publicly traded First International Bancorp Inc. (NASDAQ: FNCE), with headquarters in Hartford, Connecticut.

Any statements contained in this press release, which are not historical facts, are forward-looking statements; and, therefore, many important factors could cause actual results to differ materially from those in the forward-looking statements. Such factors include, but are not limited to, changes (legislative, regulatory and otherwise) in the banking and commercial finance industries and those specifically relating to the continuation in their present form of the government guaranteed loan programs utilized by the company; the ability of the company to continue its recent growth in an increasingly competitive market for loan originations; disruption in the capital markets which may delay or prevent the company from receiving funding under warehouse lines of credit or completing loan sales; and other risks identified in the company’s Securities and Exchange Commission filings. In addition, with respect to the proposed merger of the company and UPS, investors should be aware of the following factors, among others: the possibility that the proposed merger will not be consummated as a result of failure of the company to satisfy certain conditions; the possibility that the proposed merger will be delayed substantially; the inability to obtain, or meet conditions imposed for, governmental approvals of the proposed merger and other transactions described in the merger agreement; the possibility that the announcement of the proposed merger will have an adverse impact on the company’s business; and the significance of costs relating to the proposed merger.

In connection with the proposed acquisition of the company by UPS, the company and UPS will file a proxy statement/prospectus with the SEC. STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain a free copy of the proxy statement/prospectus (when available) and other documents filed by the company or UPS with the SEC at the SEC’s web site at http://www.sec.gov. Free copies of the proxy statement/prospectus, once available, and other filings by the company with the SEC may also be obtained by directing a request to Leslie A. Galbraith, Telephone: 860-241-2529.

MEDIA CONTACT:

Michele Zommer
Vice President, Corporate Communications
(860) 241-4705
zommerm@firstinterbank.com

INVESTOR CONTACT: 

Brett N. Silvers
Chairman & CEO
(860) 241-2517
silversb@firstinterbank.com 

Leslie A. Galbraith
President & COO
(860) 241-2529
galbraithl@firstinterbank.com