Security National Bank & Trust of Norman Fails / Purchased by 2 Arkansas Holding Companies

By Jan Paschal And Max Nichols | THE JOURNAL RECORD, January 9, 1987 | Go to article overview

Security National Bank & Trust of Norman Fails / Purchased by 2 Arkansas Holding Companies


Jan Paschal And Max Nichols, THE JOURNAL RECORD


The Security National Bank & Trust Co. of Norman, which was declared insolvent and closed at 5 p.m. Thursday, will reopen at 9 a.m. today under the ownership of two Arkansas-based bank holding companies, including one controlled by the family of Sam Walton, founder and chairman of Wal-Mart Stores Inc.

The Arkansas group consists of Northwest Arkansas Bancshares Inc. of Bentonville, controlled by the Waltons, and First Commercial Corp. of Little Rock, the second largest bank holding company in Arkansas, with assets of $1.2 billion. Each holding company will have a 50 percent interest in the new bank.

The group agreed to pay a premium of $811,002 to assume $174.4 million in 31,000 deposit accounts of Security National, and to pay $113.8 million for certain failed loans and other assets, it was reported by Bill Olcheski, spokesman for the Federal Deposit Insurance Corp. as receiver for the bank.

Olcheski said the FDIC advanced the holding companies $80.3 million for the new bank. The FDIC will recover a portion of its outlay to the new bank from the liquidation of assets not transferred to the new owners, he said.

Security National, which was headed by Chairman Jane M. Patten, had $204.5 million in assets when it was closed, said Olscheski. It originally was a state bank chartered in 1914, and it was converted to a national bank in 1921. It has been controlled by the Patten family since the late 1940s.

``Depositors automatically will become depositors in the new bank,'' he said. No depositors will lose any money, since it was a complete assumption and purchase.

It was the first bank failure in Oklahoma in 1987 and the third in Norman since May 29, 1986.

Security National suffered from a depressed economy, poor management supervision and lax loan collections, said Robert J. Herrmann, senior deputy comptroller of the Comptroller of the Currency. The bank was known to be involved in real estate loans, which have been a problem for Norman banks.

The Arkansas banks beat the bids submitted by two Oklahoma banks, First National Bank of McAlester and The Bank NA of McAlester.

Oklahoma's new interstate banking law, in effect since May 1986, was used to accomplish the transaction, said Mary Beth Guard, legal counsel for the Oklahoma Banking Department. Under that law, the two McAlester banks submitted bids that were declined, Guard said. They also failed to match the bid of the Arkansas banks.

The FDIC accepted the Arkansas banks' bid on the Norman bank Thursday morning, she said.

It was the second Oklahoma failed bank taken over by an Arkansas bank. On Nov. 14, 1986, the First National Bank of Temple was purchased by the Union of Arkansas Corp. of Little Rock.

Security National Bank of Norman, chartered in 1914, had become overextended with real estate lending in the past three years, it has been previously reported.

``The bank's failure came as the result of a depressed economy and poor supervision by the board of directors and management,'' Herrmann said. …

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