Newspaper article THE JOURNAL RECORD

Freedom Bank Fails, Changes Hands

Newspaper article THE JOURNAL RECORD

Freedom Bank Fails, Changes Hands

Article excerpt

FREEDOM - Nothing in Freedom suggests that its community bank should fail, Brett Smith said.

The northwest Oklahoma rural town is flush with petroleum industry land lease money to help compensate for wheat crop damages from the drought, for example. The city has a rental housing shortage for natural gas field workers. Cattle prices are high. And the Chamber of Commerce is already looking forward to the annual, weeklong rodeo when the population of about 300 explodes into the tens of thousands.

Freedom is rightfully proud of its status as one of the state's smallest towns, Smith said. Unfortunately, its size is also a key reason Freedom State Bank's deposits were absorbed by Alva State Bank & Trust just 25 miles to the east. The Freedom bank suffered from a matter of scale in which the unforeseen can quickly tilt the balance too far, whereas a larger operation has more flexibility to compensate.

"It was not that we lacked depositors," said Smith, former chief executive of Freedom State Bank. "The economy here is strong. The bank just encountered a problem. ... We were closed due to exhaustion of capital funds, which means your shareholders' equity, your undivided profits."

Smith said he could not elaborate more on the issue under federal guidelines.

As of March 31, Freedom State Bank had $22.8 million in total assets and $20.9 million in total deposits, according to Oklahoma State Banking Department officials. The bank was closed at the end of the business day Friday by the department, which then appointed the Federal Deposit Insurance Corp. as receiver. To protect depositors and the continuity of service, the FDIC entered into a purchase and assumption agreement with Alva State Bank.

Alva State paid the FDIC a premium of 1 percent to assume the deposits. Alva officials also agreed to purchase about $17. …

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