Newspaper article THE JOURNAL RECORD

Allied Bank Declared Insolvent

Newspaper article THE JOURNAL RECORD

Allied Bank Declared Insolvent

Article excerpt

Allied Oklahoma Bank NA of Oklahoma City was closed by federal regulators at 5 p.m. Thursday and will reopen today as a branch of Central Bank, also of Oklahoma City. It is the fourth bank to fail in Oklahoma this year.

Central agreed to assume about $59.5 million in 11,965 deposit accounts and purchased about $58.3 million of the failed bank's assets.

The Federal Deposit Insurance Corp., as receiver of Allied after it failed, paid Central $8.998 million to acquire Allied's assets.

Allied, with total assets of $59.9 million, was closed by Kevin Blakely, deputy U.S. Comptroller of the Currency, the regulator for nationally-chartered banks.

The bank had been a matter of concern to the comptroller's office since 1986, Blakely said.

Liberal lending practices by former management, inadequate oversight and lack of proper supervision by the bank's board of directors resulted in an excessive amount of problem real estate loans, Blakely's office said. Though the board hired new management, the bank couldn't overcome its problems because of a bad local economy, Blakely's office said.

"A lot of their problem loans have been converted into problem real estate assets," said Russell Lawson, president and chief executive officer of Central.

"They have already foreclosed on the bad loans and now own the real estate, and so a large measure of what we will be doing is selling real estate," Lawson said. "We think it will take some time to dispose of it."

Central's officers think they can wait out the poor conditions in the real estate market, Lawson said, "because while we're waiting to sell the real estate, this will be a profitable operation. What we will do is utilize the loyal customer base that they have," Lawson said.

Allied had been a larger bank earlier in the decade, and Lawson thinks its acquisition by Central could bring back some customers that left the bank in the intervening years.

At Dec. 31, Central had $169.5 million in assets, loans totaling $85.58 million and deposits totaling $151.2 million, according to a statement of condition published by the bank.

"It turns out that the customer base for this bank is contiguous with our customer base," Lawson said. "So its a natural extension of our market."

"From what we know of the bank at this point, our assessment is their lending function was commercially-oriented. The deposit base is consumer."

"But both lending and deposits have a consumer bent at Central," Lawson said. …

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