Missouri's First Banks to Unload Florida Operations

First Banks of Clayton, Mo., is exiting Florida roughly four years after it entered the state with the acquisition of the troubled Coast Financial Holdings.

The $6.6 billion-asset company said in a Securities and Exchange Commission filing Friday that it is selling its 19 branches in Florida and roughly $346 million of deposits for a premium of 2.3% to an unnamed buyer.

The planned sale is consistent with the company's stated goal of improving its capital ratios by shrinking its balance sheet.

The company, which has lost hundreds of millions of dollars in recent years on soured real estate loans, has been operating a written agreement with the Federal Reserve Board since March 2010 that required it to improve its underwriting practices, revise its credit administration procedures and maintain sufficient capital.

An active bank acquirer in the 1990s and early 2000s, First Banks has responded to the order by unloading business units and aggressively selling off branches in Illinois, Texas and other markets. Its assets have declined by more than one-third over the last three years.

The company's troubles stem, in part, from its acquisition of Bradenton-based Coast in 2007. More than 13% of the bank's loans were noncurrent at the time of the sale and the bank was steeped in legal troubles for allegedly steering borrowers to a homebuilder bank officials knew was bankrupt.

First Banks' condition has been improving of late as it continues to shed problem assets. According to its most recent earnings announcement, it narrowed its loss from $212.1 million in 2010 to $62.5 million in 2011 primarily due to improved asset quality.

At Dec. 31, its bank unit had a core capital ratio of 8.19%, up from 7.4% a year earlier, according to data from the Federal Deposit Insurance Corp.

The Tampa Bay Business Journal first reported that First Banks was selling its Florida operations.

The company gave no indication in the SEC filing who is buying the Florida franchise, saying only that it is an unaffiliated institution. It did not immediately return a phone call about the sale.