Bradenton's Coast Bank still burns its buyer

Despite the best intentions, stronger banks that have recently bought up weaker banks frequently find the acquisitions continue to give them major indigestion. Consider the fate of First Banks of St. Louis, which in the fall of 2007 swooped into Florida and bought the heavily damaged Coast Bank of Bradenton.

Coast Bank, you may recall, had gotten mired after it disclosed more than $70-million worth of troubled loans to customers of bankrupt St. Petersburg builder Construction Compliance Inc. (CCI). Here's a longer history about how Coast Bank collapsed.

Now comes First Banks which, thanks to Coast Bank and other acquisitions in California, is starting to bleed red ink. First Banks also operated a mortgage affiliate that did business on Florida's west coast; it, too, has taken a financial hit. The chairman of the bank, Jim Dierberg, has thrown $100-million more of family money into First  Bank. And the banking company asked for, and received, $295-million more in funds from the federal government TARP fund. Those details and more are explained in a Sunday story in the St. Louis Post-Dispatch.

(Photo shows construction debris in 2007 next to a CCI home in North Port, south of Sarasota, that sits near completion, surrounded by overgrown lots all purchased from CCI. Photo by Melisa Followell, courtesy of the Bradenton Herald.)

-- Robert Trigaux, Times Business Columnist

Fraud plea by Coast Bank's top lender

Add a nail top the coffin of the ill-fated venture between Coast Bank of Bradenton and St. Petersburg builder Construction Compliance Inc. (CCI). The tale of these two is best told in St. Petersburg Times reporter James Thorner's story last year in which a willing Coast Bank helped bankroll CCI in a screwy "no-pain, all-gain" home-flipping gig that backfired big time when housing prices stopped soaring.

Now it's Philip W. Coon's day of reckoning. Coon exploited his position as a top executive at Coast Bank of Bradenton to launch an illegal conspiracy that netted him more than $1-million, according to his just-signed agreement to plead guilty to fraud charges, reports the Sarasota Herald-Tribune. That scheme helped cripple Coast, which became so swamped by bad loans that it was forced into a fire sale to First Banks Inc. of St. Louis that cost Coast stockholders millions of dollars. The story says Coon will lose his Bradenton home, a second house, brokerage accounts, jewelry and other items to pay $1.5-million under the plea agreement. He faces up to five years in prison, but prosecutors will recommend a sentence reduction for his guilty plea. He must also cooperate with the U.S Attorney's Office in its investigation and charges against "other persons." The plea agreement does not identify those people.

Coon, 55, reportedly conspired with John Robert Miller, the president of Tampa's American Mortgage Link, to charge the mortgage company’s client sellers an extra 1 percent fee. According to Department of Justice officials, the Bradenton Herald reports, Miller and Coon pocketed the 1 percent, with Coon receiving three quarters of the revenue translating to more than $1.2-million.

So, one partial fix to one mess among many in Florida's housing/mortgage market. Stay tuned.

-- Robert Trigaux, Times Business Columnist

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