Federal action against Coast National Bank
April 29, 2010
By KAREN VELIE
The Federal Reserve Bank on Thursday announced a regulatory action taken against Coast Bancorp, in a move to maintain financial soundness at the bank, according to the federal order issued in San Francisco.
Under a written agreement, the parent company of San Luis Obispo-based Coast National Bank cannot declare or pay any dividends without prior approval from the Federal Reserve Bank of San Francisco and cannot directly or indirectly take dividends or any other form of payment that would represent a reduction in capital from its bank.
As part of the agreement signed between Coast National’s parent company and the reserve on April 22, federal regulators have ordered Coast Bancorp to submit a written report within 60 days explaining how it plans to maintain sufficient capital at the bank.
In a 2008 letter to customers and shareholders, bank chairman and CEO Jack Wauchope placed blame for the company’s financial woes on the “national fallout from the sub-prime mortgage debacle.”
However, the bank did not participate in the sub-prime mortgage industry, though the institution did provide loans to developers with ties to local hard-money lenders being investigated for alleged fraudulent activities.
Started in 1998, Coast National operates five branches in San Luis Obispo County.