Timothy Ward, a deputy director at Thrift Supervision, said the action came when examiners saw deterioration in loan assets, including increasing delinquencies.
An agency spokesman called release of the cease-and-desist order routine, but First Idaho officers say the bank run was the final nail in the coffin, further weakening its capital ratio.
On April 24, Thrift Supervision appointed the FDIC as the receiver of the bank. At that time, the takeover, the bank held more than 50 percent all deposits and nearly 41 percent of all business loans in the Wood River Valley.
It was the first bank in Idaho seized by the federal government since 1987.
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Word of First Bank's seizure spread fast in the Wood River Valley, which was then in "slack time" between winter and summer tourist seasons.
"It was obvious that something serious was going down," said Marcus DeLano, a landscape architect who was working nearby when 40 agents and a local police escort entered the bank. "Idon't think discretion had anything to do with it."
According to bank officers, agents seized documents, evicted bank managers and replaced employee nametags with U.S. Bank lapel pins.
That same day, Hedrick went to the bank hoping to find some answers.
"I went down there with questions, but the doors were locked and the agents inside weren't answering," she said. "It was an eerie feeling, because you could see a bunch of suits inside the bank who looked out of place in this town -- it was something that none of us had seen before."
Business owners with First Bank lines of credit or loans were later contacted by FDICagents. Most were simply told to fend for themselves.
"They said, 'You have 60 days to find credit,' but they didn't release our credit information held by First Bank until 27 days later," said Mark Fisher, owner of Fisher Appliance in Ketchum.
The Ketchum City Council, fearing for the health of the town's commercial district, took the unusual step on April 28 of soliciting banks to extend credit to an estimated 100 business owners.
"We wanted to prevent the wheels from coming out from under the businesses," said Ketchum Mayor Randy Hall, "so we started calling other banks in the area to say, 'Hey, we really need some help here!'"
To the surprise of the borrowers, the FDICthen moved to auction First Bank's loans at a discount.
"We have an obligation to maximize the return to the creditors," said FDICspokesman David Barr. "There is really no option. Borrowers have 90 to 120 days to find a new lender before those loans are sold on the market."
Borrowers would not notice any immediate changes, if their loans are auctioned, but some may not attract a buyer because of risk factors such as payment history and low credit scores.
That leaves the FDIC with one last option:Liquidate the business and sell its assets.
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In their scramble to find new financing for the coming summer season, many business owners found little encouragement from loan officers who looked at financial statements severely weakened by a series of hits to the mountain towns in recent years.
Summer tourism was crushed by 2007's Castle Rock Fire, which virtually shut down Ketchum as it burned 17,00 acres right to the edge of town. Less than a year later, the national recession hit hard. Fewer tourists came to ski or golf. Real estate sales fell by more than 60 percent from the prior year. Traffic at the local airport fell nearly 30 percent in April, an ominous indicator of the rapid drop in visitors.
