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Friday, February 09, 2007

Fear Of Failure

Coast Bank (Coast Financial) is allowing its holders of jumbo CD's ($100,000 plus) to re-title, i.e. make partial withdrawals without paying early withdrawal penalties. FDIC insurance covers up to $100,000 of regular accounts for each depositor, and now goes to $250,000 for IRAs. So the jumbo depositors, who get a higher rate, are pulling money out because they are afraid of losing it. Of course, if Coast fails, they'll only get access to part of their money initially even if it is FDIC-covered.

Coast Bank/Herald Herald/Tribune links. There is excellent information here which proves out my own, private, Super-Double Top Secret Early Retirement Program Index for banking. MOM-SDTSERP Index(TM).

I wonder if these indemnification agreements will be enforceable? Provisions such as this one would raise major questions about a sale, wouldn't they?
In the event of a Change in Control or a Potential Change in Control, the Corporation shall, upon written request by the Indemnitee, create a trust for the benefit of Indemnitee and from time to time upon written request of the Indemnitee shall fund the trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for participating in, and defending any Proceeding which is subject to indemnification under this Agreement. The amount or amounts to be deposited in the trust pursuant to the foregoing funding obligation shall be determined by the parties making the determination under Section 5(b) hereof. The terms of the trust shall provide that upon a Change in Control: (a) the trust shall not be revoked, or the principal thereof invaded, without the written consent of the Indemnitee; (b) the trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the trust under the same circumstances for which the Indemnitee would be required to reimburse the Corporation under Section 4(c) of this Agreement); (c) the trust shall continue to be funded by the Corporation in accordance with the funding obligation set forth above; (d) the trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (e) all unexpended funds in the trust shall revert to the Corporation upon a final determination by the parties making the determination provided under Section 5(b) hereof, or a final determination by a court of competent jurisdiction (as to which all rights of appeal therefrom have been exhausted or have lapsed), as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The trustee shall be chosen by the Indemnitee.
The (erstwhile) Chairman of the Board, James K Toomey, who was hospitalized with chest pains is something like 40 years old. All Filings. I think these guys are going to have to get in all the way or get out. Banking is a tough business these days.

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