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St. Louis bank to buy Coast Bank

The Bradenton bank has been hurt by housing loans.

By By James Thorner
Published August 4, 2007

A St. Louis bank eager to expand in Florida plans to acquire Coast Bank of Bradenton, whose mortgage lending business was walloped by the downturn in the housing industry.

According to a deal signed Friday, First Banks Inc. would merge with Coast by the end of the year, pending approval by shareholders and regulators. Coast has 20 branches, including 11 in Pinellas, Hillsborough and Pasco.

Since January, Coast has seen its stock plunge from about $16 to $2.28 after it disclosed more than $70-million worth of troubled loans to customers of bankrupt St. Petersburg builder Construction Compliance Inc.

First Banks has agreed to buy Coast for $22-million, a deeply discounted price for a bank listing assets of $834-million. Each stockholder would get $3.40 per share, more than $1 higher than Friday's closing price. But First Banks reserved the right to lower that amount if more of the nearly 500 CCI loans turn sour.

Coast has been operating under a reorganization plan put forward in May by the Federal Deposit Insurance Corp. Regulators followed merger negotiations but didn't force the sale, Coast adviser Tramm Hudson said.

"We're in a very, very tough market. When you look at the financial condition of the company, the large number of non-performing loans, this is a good price," Hudson said.

For Coast customers, it should remain business as usual. First Banks holds $10.5-billion in assets throughout 197 offices in Missouri, Illinois, Texas and California. Hudson suspects the new owners will keep Coast's branches open.

First Banks will honor all Coast deposits and pursue defaulting mortgage customers. "The borrowers will still be obligated, and First Banks will continue to try to work through those loans," Hudson said.

First Banks was founded by St. Louis banker James Dierberg, who tipped his hand last winter by buying about 10 percent of Coast's stock.

James Thorner can be reached at 813 226-3313 or thorner@sptimes.com.

[Last modified August 3, 2007, 23:03:57]