First Banks now under the gun

An agreement between the Federal Reserve Bank of St. Louis and a Missouri-based bank with Gulf Coast ties shows how the wheel can turn in just a few years.

First Banks, Inc., bought Bradenton-based Coast Bank in 2007 when it was collapsing under a fraud investigation cloud and growing bad loans. First Banks, at the time a healthy institution, was thought to have made a shrewd purchase for $12.1 million at the time.

But now, the $10.5-billion-asset First Banks is under its own federal order to take a series of actions to maintain its solvency.

Although the bank retained a “well-capitalized” designation at the end of 2009, the agreement with the Federal Reserve gives the bank 60 days to file a plan that outlines how it plans to raise adequate capital and to minimize its exposure to troublesome commercial real estate loans.

The agreement also requires stricter management accountability and oversight and puts in place fairly short timeframes for these to be accomplished.
First Banks operates 19 offices in Florida, all of them on the Gulf Coast. The bank lost $406 million in 2009.