Coast Bank Agrees to Regulatory Order
26 May 2007 - 7:21AM
PR Newswire (US)
Bank Outlines Plan For Working Toward Full Compliance BRADENTON,
Fla., May 25 /PRNewswire-FirstCall/ -- James K. Toomey, Chairman of
the Board of Coast Financial Holdings, Inc. (NASDAQ:CFHI) announced
today that Coast Bank has agreed to the entry of a "Cease &
Desist" order from the Federal Deposit Insurance Corporation (FDIC)
and the Florida Office of Financial Regulation (OFR) and reports
the bank is working toward full compliance with the order. Although
Coast Bank has agreed to the order, it has not admitted to or
denied any facts, any unsafe or unsound banking practices, or any
legal or regulatory violations. The Cease and Desist Order, or
C&D, is a formal action by the FDIC and OFR for the bank to
take corrective measures in a number of areas. According to Toomey,
"While a C&D order is a directive for the bank to take certain
actions, in many respects it may also enhance our plans to resolve
recent issues which have impacted the performance of the bank."
Toomey continued, "We are working diligently to achieve full
compliance with this order as quickly as possible." "Given the
broad enforcement powers of the banking regulators and difficulties
recently experienced by the bank, we believe the action taken today
is a positive development in moving the bank forward," said Toomey.
The order does not in any way restrict Coast Bank from transacting
banking business. The bank can continue to serve its customers in
all areas including making loans, establishing lines of credit,
accepting deposits and processing banking transactions. All
customer deposits remain fully insured to the highest limits set by
the FDIC. The order follows an on-site Safety and Soundness
examination of Coast Bank conducted by the FDIC and OFR after the
January 19th announcement of certain issues affecting the Coast
Bank residential construction-to-permanent loan portfolio. The
C&D order is based on the findings of this examination as of
January 29, 2007. According to Toomey, "From the day we discovered
issues regarding our residential construction loan program, our
management team has worked pro-actively with both the FDIC and the
OFR. As a result, we have already addressed a large number of the
corrective actions outlined in the C&D and several of these
issues have already been resolved." The FDIC order directs Coast
Bank to take certain measures in the areas of board oversight,
management planning and auditing, equity management, loan loss
allowance, loan portfolio review, liquidity management and
information technology. Throughout the regulatory examination
process, the Board of Directors has received direction from the
banking regulators. In response to concerns raised by the
regulators, the bank has appointed a Task Force to develop an
action plan for addressing areas of concern. Toomey stated, "In the
spirit of having a cooperative effort with the FDIC and OFR, Coast
Bank has been pro-active in working with these regulatory agencies
and has acted promptly on direction we have received from these
agencies during the past several months." Since February, the Coast
Bank Task Force has undertaken initiatives to study all areas of
bank operations and management. The Coast Bank Task Force includes
senior management personnel as well as board members. The Task
Force has worked closely with both regulatory agencies throughout
the past several months to address a number of issues. Among
others, these include: -- Conducting a comprehensive review of the
qualifications of management and existing staff and consideration
of potential changes that may be required; -- Engaging a management
consultant to assist in the management review effort; -- Appointing
an internal committee charged with developing a capital management
plan to improve capital ratios; -- Strengthening the monitoring of
our lending activities with particular emphasis on direct and
indirect borrowing concentrations and monitoring individual
lender/borrower relationships; -- Developing a more intensive loan
documentation policy in connection with our lending efforts; --
Developing a profitability plan designed to reduce operating
expenses and interest expenses while improving overall efficiency;
-- Engaging a management consultant to assist with the development
of a profitability plan; -- Developing a liquidity and funds
management plan to address anticipated funding needs; -- Developing
a comprehensive policy for managing potential loan loss liability
and enhancing our loan loss reserve; -- Increasing internal
controls over loan portfolio review; -- Enhancing our existing
policies relating to external loan reviews by third party firms; --
Establishing a communications policy and procedure for reporting
progress in all areas to the FDIC and OFR. A number of these
initiatives are complete and a number of policies and procedures
have been implemented. As a result, the bank has already acted upon
several items addressed by the Cease and Desist Order. Toomey
concluded by stating, "In the seven years since we opened our first
banking location, Coast Bank has built a loyal customer base and a
team of experienced banking professionals. Coast has the resources,
energy and expertise to remedy the issues associated with the
residential construction lending program and obtain full compliance
with the regulatory agencies." About Coast Financial Holdings,
Inc.: Coast Financial Holdings, Inc. through its banking
subsidiary, Coast Bank of Florida (http://www.coastfl.com/),
operates 20 full-service banking locations in Manatee, Pinellas,
Hillsborough and Pasco counties, Florida. Coast Bank of Florida is
a commercial bank that provides full-service banking operations to
its customers from its headquarters location and from branch
offices in Bradenton, Longboat Key, Seminole, Dunedin, Clearwater,
Kenneth City, Brandon, St. Petersburg, Lutz, Largo and Pinellas
Park. This press release and other statements to be made by the
Company contain certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act, including
but not limited to statements relating to projections and estimates
of earnings, revenues, cost-savings, expenses, or other financial
items; statements of management's plans, strategies, and objectives
for future operations, and management's expectations as to future
performance and operations and the time by which objectives will be
achieved; statements concerning proposed new products and services;
and statements regarding future economic, industry, or market
conditions or performance. Forward-looking statements are typically
identified by words or phrases such as "believe," "expect,"
"anticipate," "project," and conditional verbs such as "may,"
"could," and "would," and other similar expressions or verbs. Such
forward-looking statements reflect management's current
expectations, beliefs, estimates, and projections regarding the
Company, its industry and future events, and are based upon certain
assumptions made by management. These forward-looking statements
are not guarantees of future performance and necessarily are
subject to risks, uncertainties, and other factors (many of which
are outside the control of the Company) that could cause actual
results to differ materially from those anticipated. These risks,
uncertainties, and other factors include, among others: changes in
general economic or business conditions, either nationally or in
the State of Florida, changes in the interest rate environment, the
Company's ability to successfully open and operate new branches and
collect on delinquent loans, changes in the regulatory environment,
and other risks described in the Company's Form 10-Q for the
quarter ended March 31, 2007, and as described from time to time by
the Company in other reports filed by it with the Securities and
Exchange Commission. Any forward-looking statement speaks only to
the date on which the statement is made, and the Company disclaims
any obligation to update any forward-looking statement, whether as
a result of new information, future events or otherwise. If the
Company does update any forward-looking statements, no inference
should be drawn that the Company will make additional updates with
respect to that statement or any other forward-looking statements.
Further information may be obtained by contacting Tramm Hudson at
941/752- 5900. DATASOURCE: Coast Financial Holdings, Inc. CONTACT:
Tramm Hudson of Coast Financial Holdings, Inc., +1-941-752-5900 Web
site: http://www.coastfl.com/
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