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Two views of Coast bank fallout
Hudson sees profitable outcome
Like so many other 50-something, type-A executives across the Gulf Coast, Tramm Hudson couldn't sit still in retirement. Recently removed from a distinguished banking career, as well as an unsuccessful bid for U.S. Congress, Hudson found himself out of work for the first time in more than 30 years last month.
Hudson is not easing his way back into banking, as his first post-retirement job is as an advisor, spokesman and public face of Coast Bank. The Bradenton-based operation has seen both a large drop in its stock price and its image since it announced in a Jan. 19 SEC filing that 482 home borrowers of $110 million worth of mortgages might not be able to repay debts because a builder failed to complete construction of the homes.
"The problems are reflective of our real estate market and not related to the (Coast) branches," Hudson, 54, tells Coffee Talk. "Their problems are really only related to this loan situation."
That loan situation set off a string of problems that culminated with Hudson's Feb. 2 appointment. Developments over the last three weeks include:
• The stock of the bank's parent company, Coast Financial Holdings, has lost as much as half of its value;
• Two high-ranking bank officials - Philip Coon, an executive vice president in charge of construction loans and his wife, Melissa Coon, who works in the same department - have been put on administrative leave, pending an investigation from an outside firm into how the loan breakdown happened;
• The chairman of the board of the holding company, Jim Toomey, was hospitalized with chest pains Feb. 2 and released a few days later. Michael Ruffino, who has been a board member since Coast was founded in 2000, is serving as interim chairman;
• New York City-based investment banking firm Sandler O'Neill & Partners has been hired to research a potential sale or merger.
With a barrage of bad news like that, Hudson spent much of his first few days putting a positive face on the situation in interviews with Sarasota and Bradenton reporters. He conceded to Coffee Talk he has recent experience in damage control, as his campaign for the Republican nomination for the 13th District congressional seat previously held by Katherine Harris was derailed when he was quoted as allegedly criticizing the swimming ability of blacks.
Hudson repeatedly apologized for the remark, pointing out his history of treating everyone fairly and without bias, as well as the context of why and how he made the comments in the first place. Hudson's opponent, Longboat Key entrepreneur Vern Buchanan, ultimately won the primary.
Hudson remains well-respected in the Gulf Coast banking community, and he hopes that respect gives Coast an edge with the public. Hudson co-founded Enterprise National Bank, which was bought by Provident bank before merging with RBC Centura. Hudson then ran RBC's West Florida branches until his late 2006 retirement.
Hudson declined to put a timetable on when he thinks Coast's problems would be resolved or what that resolution would even be. "This problem did not occur overnight," says Hudson, "and it won't be resolved overnight, either."
- Mark Gordon
COAST'S POSITIVES
Veteran Gulf Coast banker Tramm Hudson, hired as an advisor to the board and senior executives of Coast Bank, says there are several factors the bank has going for it that could lead to a positive outcome, including:
• The bank's franchise strategy, revolving around opening multiple locations in the Tampa and Bradenton markets, makes it attractive to out of state banking entities looking to gain entry into the Gulf Coast market. Coast has 20 branches in Manatee, Hillsborough, Pinellas and Pasco counties;
• The bank has a "solid-base of capital," Hudson says, including about $15 million the parent company raised last year;
• Its customers are fully protected by FDIC insurance regulations.
Bennett sees failure
Seems like everyone has an opinion on the financial woes tied to Coast Bank's $110 million in potentially bad residential loans, most of which were to customers of St. Petersburg-based Construction Compliance Inc.
State Sen. Mike Bennett, a longtime Sarasota developer and businessman, weighed in on the bank's problems and the ailing housing market in his usual candid way.
"More people are going to get burned," Bennett says, acknowledging he has his own bad investments, including lots in North Port that aren't worth nearly as much as he paid for them.
As for Bradenton-based Coast's problems, Bennett says, "That was driven by ignorance. It really was."
Bennett, never shy or retiring, was a bit harsh on the bank.
"Coast is going to get burnt," he says. "They're probably going to go down. And you know what? They probably deserve to go down."
- Janet Leiser
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