Start-Up Banks: ‘Hog-Wild’ to Humble [South Florida]
The future looked bright when several small banks decided to open in this city along the Gulf of Mexico. Property values in southwest Florida were surging, and older start-up banks had sold themselves for handsome profits after just a few years in business.
Now, though, for-sale signs dot shopping centers, offices and vacant lots. Developers are desperately hawking vacant houses built on former farmland. In nearby coastal hamlets, some clusters of homes are half-built, with wires dangling from garage ceilings and pipes sticking out of the ground.
While just about every bank in town is suffering as a result, Bradenton’s latest crop of start-up banks has been hammered. At First Priority Bank, which opened in 2003, nonperforming assets have swelled to 16% of total assets, according to analysts. Coast Financial Holdings Inc., staggered by bad loans to out-of-state investors who hoped to flip homes, nearly failed before being sold to First Banks Inc. of St. Louis last year.
“They went hog-wild and made far too many of these loans,” said Tramm Hudson, a local banker who advised Coast before it was sold.