Wednesday, June 3, 2009

Mayor pleads with FDIC over First Bank loans

Hopes to keep First Bank loans local

Express Staff Writer

Ketchum city officials are trying to persuade the Federal Depositors Insurance Corp. to keep the former First Bank of Idaho loans in Blaine County as a means of helping the community's economy.

Ketchum Mayor Randy Hall, along with Ketchum City Council members, wrote a letter to the FDIC last week asking that loans seized from the failed bank be offered to local investors before being sold elsewhere.

The letter, sent Tuesday to Brent Ciurlino, receiver-in-charge of the First Bank of Idaho, requested that nearly $250 million in loans from businesses and individuals in Blaine County be packaged and marketed within the Wood River Valley.

The FDIC received the loans on April 24 after the community bank was shut down on an order of the Office of Thrift Supervision, an agency of the Department of the Treasury that regulates federal savings associations.

According to the OTS, the bank was in an untenable financial situation, resulting from an average loss of $2.7 million per business day since April 9. Despite the fact that bank officials reported potential deals that would have brought the bank $25 million in capital, the OTS made the determination that First Bank of Idaho was in too much danger of running out of cash and not being able to meet customer demand.

While about $280 million in savings and checking deposits were purchased by U.S. Bank for $1.5 million, the loans are still under the control of the FDIC.

In the letter to the FDIC, Hall wrote that keeping the receivership of the loans local would benefit the county, as the lenders would have a vested interest in the business and individual borrowers.

"The typical 'opportunity fund' purchasers of [First Bank of Idaho] type assets have no such vested interest. They are merely looking for the chance for a quick profit," Hall wrote. "Conversely, we, as Ketchum, are looking for the chance to effectively rebuild our town."

The letter also stresses that the city is in the midst of a redevelopment, requiring that the vested parties have a knowledge of development in the community and an interest in its success.

Hall wrote that Ketchum is transitioning from a "ski town toward a diverse sustainable economic model."

In an interview, Hall said he didn't intend to imply that the city would cease being a destination resort area, but that it would be beneficial to work toward some independence from the model that has traditionally governed the local economy.

"Our base economy will always be tourism, but we're trying to diversify by reaching out to other sectors and businesses that can work from our area, create jobs and put money back into the local economy," Hall said. "This is necessary for a sustainable economy."

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