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First Banks’ plan to sell its Texas banking operation fell through on Monday.

The Clayton-based bank and Sterling Bancshares announced that the deal was off. "This was a mutual decision by the parties after it was determined that the transaction could not be completed by Dec. 31," the banks said in a news release.

Troubled by large losses, largely in California development loans, First Banks has been trying to sell off assets in order to shore up its capital. First Banks, the holding company for First Bank, is based in Clayton.

The Texas deal involved 19 Texas branches, including $500 million in deposits and $230 million in loans. The sale represented 5.8 percent of the First Bank’s deposits and 2.8 percent of its loans. First Bank has also signed deals to sell its 24 Chicago bank branches and a St. Louis insurance operation.

Sterling Bancshares of Houston last month announced a $24 million loss for the third quarter as it sold off $51 million in troubled loans to investor groups.

First Banks lost $91 million in the third quarter, and $274 million through the first nine months of the year.

Sterling and First Banks said the sale of Texas branches "could still be beneficial." But they noted that the "current environment" makes regulatory approval a "longer than anticipated process."

No further details were disclosed.

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