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The Federal Reserve is ordering Peoples Bank and Trust Co. to add capital and sort out its troubled commercial real estate loans.

In a written agreement with the bank, revealed Monday, the Fed also told the bank not to pay dividends without Fed permission or interest on its trust preferred securities, a form of long-term debt that allows temporary lapses in interest payments.

Peoples Bank and Trust is based in Troy, Mo., and has seven branches in Lincoln, St. Charles and Pike counties. It has $415 million in assets and lost $2.3 million in the first three months of the year. It holds less than half of one percent of the St. Louis region’s bank deposits. Peoples deposits are protected by the Federal Deposit Insurance Corp.

In the March quarter, the bank dropped slightly below the level that regulators consider "well capitalized," a red flag in banking. The bank still meets the "adequately capitalized" standard.

Peoples Bank ran into problems with commercial real estate lending. About 4 percent of all the bank’s loans were "non-performing," generally meaning that payments are far past due.

A written agreement with the Fed is considered a serious enforcement action indicating problems at the bank. The Fed told the bank to reduce concentrations in commercial real estate lending and write off loans that federal bank examiners believe can’t be rescued.

"The economic conditions have caused a challenge for many and we are no exception," the bank said in a written statement. "Loan defaults and past due loans have mounted and the bank is moving forward to meet those challenges. The bank believes that it is well on its way to correcting regulatory concerns and returning to its usual profitable position."

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Loose internal controls and a reliance on real estate development loans sunk The Buckhead Community Bank, the lender in Atlanta’s tony enclave founded by Aaron’s Inc. founder Charlie Loudermilk, according to a post-mortem of the bank’s collapse.

Buckhead Community, famously founded by Loudermilk, an Atlanta business legend, after a poor customer service experience at another bank, bet heavily on residential and commercial development loans in metro Atlanta.

The failure of the $896 million-in-assets Buckhead Community cost the government's deposit insurance fund $240 million.

Like many other Georgia banks, the sweet profits found in lending to developers soured with the fallout of the real estate market, and Buckhead Community burned through its capital as losses mounted, according to a report Friday by the Office of the Inspector General of the Federal Deposit Insurance Corp.

“(The bank) failed because the bank’s Board and management did not implement adequate controls to identify, measure, monitor, and control the risks associated with the bank’s significant (land acquisition and development loan) concentration,” the report stated. “Further, Buckhead relied on potentially volatile non-core liabilities such as higher-priced certificates of deposit, including brokered deposits, to fund loan growth.”

It’s a familiar story in Georgia, a state which leads the nation in bank failures with 38 since 2008, including eight this year.

Buckhead Community failed Dec. 4, 2009, along with two other banks. It and First Security National Bank were bundled and sold to State Bank & Trust Co. in a deal assisted by the FDIC.

Buckhead Community was founded in 1998 with $34 million in assets by investors, including Loudermilk, and featured some of the city’s business elite on its board, including and real estate developers David Allman, owner of Regent Partners LLC, and Julian LeCraw.

The bank tripled in size every three years from 1998 to 2007, propelled in part by an ultimately crippling decision in 2007 to acquire Allied Bancshares Inc., the parent company of First National Bank of Forsyth County.

In a December 2008 interview with Atlanta Business Chronicle, Loudermilk, Buckhead Community’s chairman, said he regretted the decision to acquire Allied at the height of the market.

The purchase contributed to soaring loan losses at the bank, with eight branches across the north metro.

“We wouldn’t buy that group again,” he said at the time. “It was a good thing at the time, but if we were presented with it today we’d pass.”

First National was also besieged by real estate loan problems when Buckhead Community acquired it for $53.8 million in stock and cash, capital that could have been used to protect against real estate losses.

Buckhead Community lost $59.8 million through the first three quarters of 2009, following a $35.8 million loss in 2008.

The bank was bullish with its loan growth from 2004 to 2007, ignoring declines in the housing market, the FDIC said.

“Weaknesses in the bank’s loan underwriting and credit administration practices, exacerbated by the precipitous economic decline in the Atlanta metropolitan real estate market that began in 2007, led to ADC loan losses that eroded the bank’s earnings and capital,” the Inspector General’s report said.

In 2008, Buckhead Community had nearly five times its total capital in real estate loans.

Soured loans began to mount in the second half of 2008. Problem loans—those delinquent, in default or in foreclosure—climbed to 9.8 percent in third quarter 2008 and more than tripled to 28.66 percent by the end of the first quarter of this year.

By the third quarter, 36.98 percent of its $648 million loan portfolio was in some form of trouble. A total of $173 million in loans were listed as non-accrual or foreclosed.

In December 2008, the held $277.7 million in wholesale deposits, volatile funding sources when a bank encounters trouble because the deposits are not from local core customers.

In its 2009 annual report, Buckhead Community’s auditors said they had doubts about the bank's ability to survive, and the bank was also subject to regulatory enforcement orders requiring the bank to raise capital and improve its balance sheet.

By January 2008, regulators reached an informal memorandum of understanding to correct problems. More restrictive enforcement action followed in August 2009, when the FDIC slapped the bank with a cease and desist order, directing the bank to make changes to its operations.

Bank insiders tried to save the bank, pursuing options to raise capital. It issued $10 million in subordinated notes in March 2008, and submitted an application in October 2008 for funding under the U.S. Treasury’s Troubled Asset Relief Program. That application was withdrawn several months later.

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Consumer confidence in the D.C. region has stalled, according to the results of the Greater Washington Board of Trade Mid-Year Consumer Confidence Survey.

Consumer confidence, which had been growing for the past year and a half is now stagnant, mostly because of concerns about the job market.

As measured by the biannual survey, consumer confidence has remained virtually unchanged over the past six months. Since the last survey in November 2009, the Consumer Confidence Index rose only two points. (The survey’s margin of error is +/- 2.83.)

Survey results show that concern about the employment market is holding back overall consumer confidence in the region, with 61 percent of the respondents saying that jobs in the area are “scarce” and hard to find.

When asked about the future, half the respondents predict that the job market will either stay the same or even get worse over the next six months.

“Consumer confidence in our region has barely moved since last November indicating that there is growing trepidation in the economy,” said Jim Dinegar, president and CEO of the Greater Washington Board of Trade bad credit payday loans. “There have been too many disruptions to the recovery to give people confidence through the recession, but confidence will return.”

The percentage of consumers saying it is a good time to make major purchases has remained the same as it was in November 2009, at 43 percent.

Data indicate that homeowners in the D.C. region are a little less optimistic about home values rising over the next six months, dropping from 33 percent to 30 percent.

In contrast to the Greater Washington Board of Trade’s Consumer Confidence Survey, the Business Outlook Survey, which is based on a survey of the region’s business executives, jumped a hefty 18 points, from 68 to 83, between December 2009 and April 2010.

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Wisconsin Power and Light Co., a subsidiary of Alliant Energy Corp., said Thursday it has priced a public offering of $150 million in debentures.

The debentures have an interest rate of 4.6 percent and will be due on June 15, 2020.

The Madison-based utility said it intends to apply the approximately $148.5 million in net proceeds from this offering initially to repay short-term debt, including that incurred to finance equipment purchases and construction expenditures on an interim basis. The net proceeds also will be used to invest in short-term assets and, thereafter, to fund capital expenditures principally consisting of wind farm and pollution control equipment, and for general working capital purposes no teletrek payday advance.

The offering was marketed through a group of underwriters, including RBS Securities Inc., UBS Securities LLC, Barclays Capital Inc., J.P. Morgan Securities Inc. and KeyBanc Capital Markets Inc. as joint book-running managers.

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BP sought to reassure both the general public and investors Friday, saying it has the money to spend whatever it takes to clean up the Gulf oil spill.

"Our first call on dollars is to ensure we do everything we can to get the Gulf Coast back to normal," BP Chief Executive Tony Hayward said on a conference call with investors. "But that still leaves us with plenty of dollars to spend on other things."

An executive on the call noted BP (BP) generated $30 billion in cash flow over the last four quarters.

The spill has so far cost BP just over $1 billion. Estimates as to how much it will ultimately cost range from $3 billion to $40 billion, although that amount would likely be paid out over a number of years.

Hayward said the amount the company is spending per day in the Gulf could be "diminished dramatically" if the cap they put over the well Thursday is successful in channeling most oil to the surface. The success of that cap should be known in the next 24 hours.

He also sought to reassure investors that the company will not only pay its current commitments, but still has enough money to invest in its core business - finding and selling new oil.

To that end, he said the firm is creating a separate organization to deal with the oil spill, so the rest of the company is not distracted.

Hayward expects deep water drilling and oil production to ultimately resume in the Gulf, albeit under stricter safety standards.

President Obama has issued a six month halt to new deepwater drilling pending an investigation into the accident April 20 that claimed 11 lives and a more thorough review of drilling safety and procedures in general.

Some have called on BP to suspend its dividend in the wake of the spill, saying the money should be set aside for clean-up costs and damages rather than returned to investors. Last year, the company returned more than $10 billion to shareholders.

But BP executives said the company has a commitment to not only the Gulf of Mexico and its residents, but to the company’s 80,000 employees, the hundreds of thousands of people that invest in the firm, and the millions who receive the dividend as part of pension plans.

"BP faces this situation as strong company," said Hayward. "We will stand behind all our commitments."

Carl-Henric Svanberg, BP’s chairman, said decisions on the size of the dividend will be made "how they’ve always been," which is based on the financial health of the company at the time. He said final decision on the dividend will be made in late July.

There have also been proposals by U.S. lawmakers to force BP to stop paying the dividend. Svanberg said those proposals are "something we’ll have to follow."

Earlier this week, Sen. Charles Schumer, D-N.Y., and Sen. Ron Wyden, D-Ore., said paying a dividend before the ultimate cost of the disaster has been tallied would be "unfathomable." 

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Private-sector employers added jobs for the fourth month in a row in May, according to a survey released Thursday by a payroll processor.

Automatic Data Processing, which processes paychecks for one in every six U.S. employees, said private-sector employers added 55,000 jobs to their payrolls in May, down from a upwardly revised 65,000 increase in April.

The May increase fell short of the 60,000 jobs economists surveyed by Briefing.com forecasted for the report.

From February to May, the report has shown a monthly average increase of 39,000 jobs, in line with a slow recovery economists are seeing from other surveys. Friday’s government jobs report is also expected to show modest job growth, after economists account for a large boost from temporary census hires, said Tim Quinlan, an economist with Wells Fargo Securities.

"It is a very slow recovery, but a recovery nonetheless," he said. "We’re growing jobs at a fast enough pace to keep unemployment rate where it is, or slightly lower, but we’re not looking at a quick, snapback recovery that many people were hoping for."

According to ADP, the service sector reported an increase of 78,000 jobs, its fifth consecutive monthly gain, while manufacturing payrolls grew by 15,000 jobs. Those gains were offset by losses in the goods-producing sector, which declined by 23,000 jobs.

Construction and financial services jobs showed big monthly declines, as they have for more than two years.

ADP breaks out job trends across categories for small, medium and large businesses — all three of which showed job growth in May.

The ADP report follows on the heels of a separate jobs number released Wednesday by outplacement firm Challenger, Gray & Christmas Inc.

According to Challenger, planned job cuts inched 1.3% higher in May, driven by shrinking government payrolls, but the pace of downsizing continued to slow. Employers announced plans to cut 38,810 jobs in May, up from April’s four-year low of 38,326.

Many economists view the Challenger and ADP reports as a preview of things to come from the government’s national unemployment number due on Friday. Economists are forecasting the government’s report to show employers added 500,000 jobs in May after expanding payrolls by 290,000 jobs the month before.

Unlike the ADP report, that number also includes government census hires, not just jobs created by private employers.

The national unemployment rate, based on a separate survey, is forecast to ease slightly to 9.8% from 9.9%. 

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Employees on the Deepwater Horizon oil rig that exploded April 20 all had the ability to stop the drilling process at any time but ignored red flags, BP and Transocean executives told lawmakers Thursday.

"Any employee, anywhere at any level, if they have any concern about safety, has the ability and, in fact, the responsibility to raise their hand and try to get the operations stopped, whether that’s our operations or a contractor’s operations," Lamar McKay, chairman and president of BP America, told the House Natural Resources Committee.

Transocean president and CEO Steve Newman said his company - which owned the oil rig - gives all its employees "stop work authority" to call a "time out for safety." He said the company even takes pictures of employees and distributes them across the entire organization, to recognize those who have called so-called time-outs.

But why then did no one say "stop?"

Lamar acknowledged that hours before an explosion sunk the rig, killing 11 workers and sending oil gushing into the Gulf of Mexico, there were warning signs that went ignored.

"I do think there is a significant period of time where there were signals and there was a cumulative effect of those signals that were not recognized," he said.

Lawmakers questioned both McKay and Newman about an alleged argument that took place between BP’s site manager and the Transocean team over a procedure hours before the blast payday advance lender.

But both McKay and Newman said they didn’t know anything about the argument, other than what was reported in the press Wednesday.

The hearing was one of several oil-related sessions on Capitol Hill this week as Congress investigates the cause of the Gulf Coast spill.

At a news conference Thursday, President Obama said the government will extend a moratorium on permits to drill any new deepwater wells for at least six months. Offshore drilling permits have been suspended since April, after the Deepwater Horizon explosion.

Newman said he would support a moratorium for six months, calling it a "prudent" pause while investigators still search for the cause of the explosion, but he still believes in the long-term importance of offshore drilling.

The hearing comes a day after BP started a so-called "top kill" procedure aimed at plugging the leak. McKay said at Thursday’s hearing that he does not know whether the procedure is working, but the company will continue to report on its progress. 

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RehabCare Group Inc. said Kevin Gross, senior vice president of hospital operations, plans to resign effective June 4.

Gross has accepted the position of president of the Oklahoma division of Ardent Health Services, a role he held prior to his tenures at Universal Health Services and RehabCare.

He has led RehabCare’s hospital division since July 2008.

Brock Hardaway, president and chief operating officer of Triumph HealthCare, which RehabCare recently bought for $570 million, has been promoted to RehabCare executive vice president, assuming leadership of the hospital division and reporting directly to RehabCare President and Chief Executive John Short.

Hardaway joined Triumph in 2005 and was appointed to manage the combined company’s long-term acute care hospital portfolio following RehabCare’s acquisition of Triumph in November 2009. He will oversee division operations from Triumph headquarters in Houston.

St. Louis-based RehabCare (NYSE: RHB) is the fourth-largest, post-acute hospital operator and the third-largest, long-term acute care hospital provider in the nation, with 28 long-term acute care hospitals and six inpatient rehabilitation facilities in 13 states. The company has more than 18,000 employees and reported $869.4 million in 2009 operating revenue.

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So now what do we do? How do we create a more entrepreneurial climate in St. Louis, and ensure the companies of the future grow here?

The short answer, the easy answer, is money, in the form of bank loans, seed funds, venture capital. But money is tight these days, and it has a tendency to follow results, not fertilize new ground. So here are a few other ideas — most already in play on a small scale — that St. Louis can build on to make its economic garden bloom.

Lower the barriers to entry — Most startups operate on a drum-tight budget. And any hurdle to opening the doors makes that budget even tighter.

Yet many entrepreneurs say they face a maze of paperwork, inspections, licenses and approvals. This takes precious time and money.

"Business assistance centers," like the one run by the city of St. Louis, try to help smooth the road for would-be business owners. More publicity for programs like these, and less paperwork in general, would be big step in the right direction.

Pull in the same direction — St. Louis has scads of people working on this problem. There are incubators and counseling programs and angel networks and mentor teams. Most do good work. But sometimes, they do the same work.

"It’s difficult sometimes for business support organizations to work together," said Eddie Davis, director of the Center for the Advancement of African-American Roundtable. "This impedes our growth."

And despite all these efforts, everyone has stories of small-business owners who don’t know the resources available to them. A more streamlined effort to steer people in the best direction would make the most of all of this.

Maybe it’s a regional clearinghouse. Maybe it’s (horrors!) a committee. Maybe it’s as simple as stronger informal networks among the many groups working on this. But more cooperation would go a long way.

Cash on the barrel — Yes, the kind of money needed to fuel lots of startups is probably too much to hope for. But small, well-targeted loan funds can make a difference. Like St. Louis County’s new Boost loan program.

Funded with a $5 million line of credit from PNC Bank, the Boost program is designed to help small businesses struggling to get bank loans, by offering funds with lower eligibility requirements, and county backing payday loans. Since January, the county has received more than 30 serious applications and will soon issue its first loans.

Small partnerships like this could augment bank lending and provide more support to startups at a relatively low cost.

Leverage our universities — Two years ago, a group of investors launched the Billiken Angel Network, a fund designed to provide seed capital to entrepreneurs with a tie to St. Louis University — students, alumni, faculty. They leverage their own money, plus $1 million in funding from SLU, to help fund startups, many of them here in St. Louis.

This region has a lot of universities. And they create a lot of ideas. Pooling investors around their ties to other local institutions, from Columbia to Rolla to Edwardsville, is a low-cost way to spark more companies that are born, and will stay, in St. Louis.

Pool Midwestern venture capital — Most of the Midwest — not just St. Louis — lags when it comes to creating high-powered, innovative startups. This is despite research universities that are among the nation’s best, and that win more than their share of federal grants, R&D funding and patents.

"But it’s not getting translated into new businesses," said John Austin, who heads the Great Lakes Economic Initiative at the Brookings Institution.

He co-authored a recent report detailing how the Midwest ships much of its venture capital to the coasts. Investing closer to home, he contends, would be profitable for all involved. More Midwest-specific funds, like the Clayton-based Mid America Healthcare Investors Network, would provide opportunity, and profit, in the region.

"We need more entrepreneurial investors," said Frank Samuel, the study’s other author.

The big steps — more state seed funding, a flood of venture capital — will help, if and when they arrive. But small steps now can help prepare the ground for entrepreneurship to bloom.

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Foreclosure notices on commercial properties in the Dallas-Fort Worth area jumped 58 percent in the first six months of 2010, Addison-based Foreclosure Listing Service Inc. said Thursday.

During that period, including foreclosures already set for June, 1,659 notices were filed on retail properties, retail buildings, office buildings, industrial spaces, apartment complexes, and commercial lands in the D-FW area. Property owners still have time to respond and avoid foreclosure.

While it’s nothing compared to the 8,000 foreclosure filings reported in one year during the late 1980s, the jump over last year has made an impact, according to Foreclosure Listing Service, which compiles foreclosure data for the region.

There are still more foreclosure postings on residential properties, said George Roddy president of Foreclosure Listing Service, but he added, “posting activity has climbed at a much steeper pace on commercial properties than on residential.”

During the first six months of 2010, foreclosure filings on buildings classified as "miscellaneous commercial properties" jumped 126 percent to 683 postings. There were in 302 last year. Meanwhile, foreclosure notices filed on commercial land jumped 72 percent, hitting 381, up from 222 postings.

Meanwhile, apartment communities saw the number of foreclosure notices filed increase 46 percent over last year. Foreclosures on office buildings increased 18 percent, while foreclosures on retail centers and buildings dropped 16 percent.

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