Housing slump takes out high-profile victim: Coast Bank

In the end all they got was $1.86. That’s the price First Banks of St. Louis paid for shares of financially troubled Coast Financial Holdings, part of a fire sale that closed Friday.

A short history lesson: Bradenton-based Coast Bank lost tens of millions of dollars when St. Petersburg builder Construction Compliance Inc. collapsed before completing nearly 500 homes for Coast customers.

The builder had promised no-money down investment homes in Sarasota County that buyers would flip for a profit. Few had a chance to flip. Even fewer profited. The housing slump put the kibosh on that.

Before the troubles hit in January, Coast stock had been trading around $16 and it’s a tribute to how far its fortune had fallen that the $3.40 per share First Banks agreed to pay last summer was trimmed by bad loans to $1.86.

As Florida banking analyst Ken Thomas predicted earlier this year in reference to Coast: "It’s going to be like visiting the clearance rack."

No money down. Easy gains. Little risk. File the whole sorry chapter into the too-good-to-be-true file.

Comments

[john]

Key phrase here:

"The builder had promised..."

We allowed un-regulated investing without requiring a prospectus.

This would be like shutting down the SEC and allowing company's to make unsubstantiated promises to investors.

500 houses in Sarasota

[catherine]

this is exactly why I think Suntrust is done for.........they are and have always been known as the construction A and D company. They have millions and millions of acres of worthless land on their books and the builders and investment bankers are all next to fall. The builders are dead. The illegals that did the work are long gone and all you have left is a pretty building with goldenboys in the offices. They will start, if they haven't already, Bk-ing out of their agreements and Sun Trust is in the wrong region of the nation for that to happen. After Washington Mutual I think they are next.

[jamie]

Catherine, sorry to disagree with you, but SunTrust is far from even talking about BK. As a financial advisor, I would even suggest you buy their $69.00 a share stock. They are still posting profits, have hundreds of billions of dollars in deposits and multiple profitable divisions (ironically, no loosing ones, and that includes teir mortgage department). They are thriving in their conservative environment, have not over-expanded like WaMu, and still own free and clear tens of billions of Coke stock. They could just sell their coke stock, take the Cap Gains hit and exist off the proceeds for about a decade without making $1.00 in new profit. Sorry, but you are dead wrong. Now for others, WaMu, Regions, B of A, well, you might want to pull your deposits out now.

[TEHelms]

Hmm..as a SunTrust employee and a former WAMU employee let me put in my two cents worth...

As institutions, I feel SunTrust is run much better than WAMU, has far fewer problems and I agree the stock is a buy right now.

WAMU? Killinger should have been fired years ago when he lost a ton in capital markets! I sold my stock when it was +$40 and have never looked back.