Regulators Close Gracemont, Miami, Woodward Banks

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Oklahoma has three fewer banks following Thursday's actions by the Oklahoma Banking Commissioner and the U.S. Comptroller of the Currency.

- The Bank of the Northwest in Woodward, largest of the three banks with $17.16 million in assets at June 30, was closed at 3 p.m. Thursday by Oklahoma Banking Commissioner Wayne Osborn.

- Miami National Bank, with $10.8 million in assets at June 30, was closed by the U.S. Comptroller of the Currency.

- The First National Bank of Gracemont, with $7.15 million in assets at June 30, also was closed by the Comptroller.

The Bank of the Northwest had suffered mismanagement since a change in control of the bank in January, Osborn said.

The board of directors of the failed bank were "kind of puppets" completely controlled by the chairman and president, Tom Lucas, Osborn said. Lucas was removed by Osborn after being found reckless and unfit to participate in management of the bank, but by that time, the damage had been done, Osborn said.

The Bank of Woodward paid $151,000 to the Federal Deposit Insurance Corp., as receiver of the failed bank, to assume insured deposits. When the failed bank was closed, it had deposits of $20.1 million in 2,400 accounts, with $95,000 in 41 accounts that were more than the $100,000 insurance limit.

"Uninsured depositors and nondepositor creditors will share proportionately with the FDIC in the proceeds realized from the liquidation of the failed bank's assets," the FDIC said.

The Bank of Woodward also paid the FDIC $3.3 million for certain assets of the failed bank.

The failed bank's office will reopen Monday to allow for a smooth transition, Osborn said, but would not be reopened as a branch of the acquiring bank because the main office of the Bank of Woodward is located a few blocks away.

The failed bank had total assets of $21.9 million when it was closed, the FDIC said. At June 30, Bank of the Northwest had a ratio of primary capital to assets of 5.13 percent, and an average annual return on assets of negative 0.97 percent.

"What actually happened was about two weeks ago we received a call from another bank that said it had a customer there that had four $100,000 CD's (certificates of deposit) out of Bank of the Northwest," said Mary Beth Guard, legal counsel for the banking department.

"When those CD's had matured and the customer went to withdraw them, (the customer) was told that the bank did not have the money to repay the funds," Guard said.

The Banking Department called and verified the customer's story, and the Bank of the Northwest official said they had very little liquidity, Guard said.

Upon arriving at the bank, the department's examination crew found the bank had engaged in significant out-of-territory lending, and that overdrafts in the failed bank's books amounted to 99 percent of its capital of "slightly more than $900,000," Osborn said.

The failed bank also had been involved in a credit card program where it issued secured credit cards, so named because the customer deposits money in a savings account and is issued a card whose credit limit is equal to the savings account balance, Guard said. The program leaves the bank facing no risk and allows it to issue cards to people with poor credit.

The failed bank had applications flooding in from across the United States, Guard said, and had merchant agreements with merchants throughout the country, Osborn said. …