Regulatory Roster Grows For Consenting Lenders

Allied Bank of Mulberry (Crawford County) joined a short list of Arkansas lenders that began working under consent agreements with regulators during the past 12 months.

Earlier this month, the $177 million-asset bank became the fifth state bank to draw special supervisory attention from federal and state officials. Allied's written agreement was preceded by ones at Decatur State Bank, First State Bank of Crossett, Chambers Bank of Danville and First State Bank of Lonoke.

Allied Bank held equity capital of nearly $18.6 million at the end of the first quarter while recording an increase in its problem loans.

Nonaccrual loans more than doubled from $2.2 million as of March 31, 2011, to $4.5 million this year.

The dreaded nonaccrual status is given to loans where principal and interest have gone unpaid for at least 90 days and collateral is inadequate to cover the loan.

The vast majority of the bank's other nonperforming loans, $2.7 million worth, are classified as past due 30-89 days.

That compares with $1.9 million a year ago. Problem loans represented about 4.8 percent of Allied's nearly $149.8 million portfolio as of March 31.

Total loans were divided among non-residential real estate loans, $59.2 million; residential real estate loans, $42.8 million; commercial and industrial loans, $36 million; and other, $10.8 million.

First-quarter profitability at Allied Bank was up, $752,000 versus $506,000 in 2011, largely thanks to the sale of a downtown Little Rock bank branch.

Net income received a big boost from the February sale of the 1022 W. Capitol Ave. facility. That $1.1 million transaction netted the company about $876,000.


Turning Red to Black

First Federal Bancshares of Arkansas Inc. posted a modest profit of $192,000 during the first quarter. The Harrison thrift lost $1.5 million during the same period a year ago.

The splash of black on the bottom line marked a welcome change from the losses that dominated its income statements the past three years.

While the Bear State investors brought stability to the company's balance sheet, the recapitalization didn't wean First Federal from its 2010 operating agreement with the Office of the Comptroller of the Currency (successor to the Office of Thrift Supervision).

The financial restructuring of the company also helped lessen its year-end loss to $8.5 million.

The red ink for 2011 would've totaled more than $19 million without the $10.5 million discount of First Federal's $16.5 million TARP-share obligations.

Bear State acquired all 16,500 shares of the company's preferred stock previously issued to the United States Department of the Treasury under the TARP Capital Purchase Program and the related warrant for $6 million cash.

The nonaccrual loan total at First Federal declined from $33.9 million at year-end to $26 million as of March 31. Nonaccrual loans represented about 7.4 percent of the company's $348.6 million loan portfolio.

During the first quarter, loans totaling $4.5 million attained nonaccrual status. That was offset by net cash payments of $4.5 million, the return to accrual status of loans of nearly $2 million, charge-offs to loan loss allowances of about $3.2 million and transfers to real estate owned of $2.8 million.