UPDATE: Arkansas Bank Department Closes First Southern Bank

by George Waldon  on Friday, Dec. 17, 2010 6:04 pm  

First Southern Bank of Batesville was closed Friday by the Arkansas State Bank Department before its assets were acquired by Southern Bank of Poplar Bluff, Mo.

As of Sept. 30, 2010, First Southern Bank had about $191.8 million in total assets and $155.8 million in total deposits.

The Federal Deposit Insurance Corp. was appointed as receiver and entered into a purchase and assumption agreement with Southern Bank to assume all of the deposits of the Batesville bank.

Southern Bank paid the FDIC a premium of 0.25 percent to assume all of the deposits of First Southern Bank. Southern Bank also agreed to purchase about $152.8 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

First Southern's capital base was imperiled after officials discovered several weeks ago that its investment portfolio was splattered by allegedly bogus special improvement district bond certificates associated with Kevin Lewis, a Little Rock lawyer.

Lewis, 42, controlled a trust that assembled a 53.3 percent stake in First Southern in May 2009.

The two branches of First Southern Bank will reopen during normal business hours beginning Saturday as branches of Southern Bank. Depositors of First Southern Bank will automatically become depositors of Southern Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $22.8 million. Compared to other alternatives, Southern Bank's acquisition was the least costly resolution for the FDIC's DIF.

First Southern Bank is the 156th FDIC-insured institution to fail in the nation this year, and the first in Arkansas. The last FDIC-insured institution closed in the state was ANB Financial NA of Bentonville on May 9, 2008.




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