Losses continue to mount at Coast Financial Holdings Inc. as the Bradenton, Fla., company reported a huge spike in nonperforming loans related to the bankruptcy of a home builder.
The $834 million-asset Coast, which lost more than $17 million last year, said late Wednesday that it lost another $2.4 million in the first quarter.
As of March 31 it had more than $38 million of nonperforming loans, compared with $6 million three months earlier and $922,000 in the first quarter of last year.
In January, Coast warned that it expected hundreds of customers would have trouble repaying loans for construction of their homes, because the builder, Construction Compliance Inc. of St. Petersburg, had filed for bankruptcy protection before the homes were finished.
Coast's shares have since lost more than 60% of their market value, and the company is facing a potential class action from shareholders who claim it misled them about the health of the loan portfolio and did not boost loss reserves adequately to reflect the risk in having 20% of its loans tied to a single builder.
As of March 31, Coast said, 4.59% of its loans were nonperforming, compared with 0.19% a year earlier.
