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