Former Loan Officer Gets Blame for Seven-Figure Losses

by Mark Friedman  on Monday, May. 3, 2010 12:00 am  

The bank raised $4.5 million in startup capital, Menefee told Arkansas Business in 2000. One of the early investors was Turner, who along with Joyce Vaughn (relationship unknown), bought 4,000 shares for $100,000. (In his recent bankruptcy petition, Turner maintains that the shares are still worth $100,000.)

Turner, who received a bachelor's degree in management from Henderson State University at Arkadelphia in 1986, also became the bank's loan officer.

"Back in those early days, our strategy was we wanted to be viewed as a locally owned, community bank, which is what we were," Menefee said last week. "We opened the doors and the business just funneled in."

Turner's job was to bring borrowers to the bank, according to the statement issued to Arkansas Business by Trammell.

"They told me there were 'hunters' and there were 'skinners,'" Turner said in the statement. "I was to be the hunter. I was to bring borrowers through the door."

But as the number of loans grew, the organizational capacity to manage the loans didn't, Trammell said.

Still, within 16 months, Menefee said, the bank was profitable.

"We grew very rapidly," he said. The bank "probably took some loans that in hindsight we wish we hadn't. But it took awhile before they became problems."

Turner said in his statement that bank directors sat on the loan committee that approved the loans.

"More than one loan which defaulted has now been blamed on Mark Turner, rather than on the aggressive Timberland policies that approved those loans," Trammell wrote. "High risk loans of course create failed loans. The director's fingerprints are on the loan portfolio that brought down the bank."

Between 2002 and 2006, times were good at Timberland. It had a positive net income each of those five years. Its total assets swelled from $84.6 million in 2002 to $161.8 million in 2006. Then, at the end of 2007, Timberland reported a loss of $34,000 and cracks started to show even as its assets reached a high of $162.9 million.




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