Judge Richard Smoak has ordered federal bank regulators and the People's First board of directors to take their dispute to mediation.
The Federal Deposit Insurance Corporation, or F-D-I-C, seized the bank and sold it to Hancock Bank in December 2009.
Then last year, the F-D-I-C sued the eight former People's board members in an effort to recover some of the millions of dollars taxpayer's lost when the bank failed.
The suit specifically cited 11 risky loans directors approved for 77 million dollars even though regulators advised against them.
If they can't resolve the dispute in mediation, the case will go to trial next February.