There’s a very strong likelihood the shareholders of Decatur State Bank won’t receive a penny when the proposed sale is completed with Mathias Bancshares Inc. of Springdale.
If DSB’s capital is below $4.5 million at the time of the closing, "no cash consideration will be paid at closing," MBI noted in regulatory paperwork regarding the transaction. The deal is expected to close during the third quarter, with MBI boosting the bank’s capital by $13 million.
Total equity capital at the Benton County lender fell to less than $5.4 million after the bank posted a $1 million loss during the first quarter. It marked six consecutive quarters of negative numbers for the $146.4 million-asset bank.
The biggest earnings lick came in the third quarter of 2011 when Decatur State Bank lost $7.4 million.
The bank began posting red ink in the fourth quarter of 2010 but was struggling throughout the year. Thanks to a quarterly loss of $4 million, DSB ended up losing $2.9 million during 2010.
The continued losses are fueled by a string of quarterly additions to the bank’s non-accrual loan total: $9.6 million in the first quarter of 2011, $10.6 million in the second quarter, $10 million in the third, nearly $9.8 million in the fourth quarter and more than $2.5 million during the first three months of 2012.
Mathias Bancshares owns First State Bank of Northwest Arkansas, an $81.9 million-asset concern based in Huntsville. Real estate developer Sam Mathias of Fayetteville owns his family’s namesake bank holding company.
The roots of First State Bank date back to July 1991 when the Resolution Trust Corp. was selling off pieces of First Savings of Arkansas, once the largest thrift in the state.
Mathias Bancshares purchased the
Huntsville branch of the insolvent lender, obtained an emergency bank charter from the Arkansas State Bank Department, and First State Bank was off and running.
The name was changed to First State Bank of Northwest Arkansas in 2003. A Fayetteville branch was added in 2004, and a second Huntsville location came on line last year.
Mathias intends to operate the banks as separate entities with the operations sharing the services of Larry Olson, president and chief executive of First State Bank of Northwest Arkansas since October 2010.
Olson was president of Metropolitan National Bank’s Washington County operations and left the company as senior vice president and loan review manager.
Prior to his nearly five-year stint with Metropolitan, Olson worked for six months as a consultant for First Federal Bank of Harrison. Before joining Metropolitan, he was chief credit officer at Bank of Fayetteville.
Olson will replace Mark Londagin, who was appointed president and CEO of Decatur State Bank following the retirement of Vernon Austin. Londagin also holds those titles at Grand Savings Bank of Grove, Okla., a $238 million-asset concern also owned by Peterson Holding Co.
Grand Savings Bank produced a year-end profit of $1.9 million in 2011 compared with a $3.5 million profit in 2010. The 2011 performance was stunted by an $821,000 loss in the second quarter.
The bank produced a first-quarter profit of $953,000, good for a 17.5 percent return on equity. Grand Savings operates two full-service locations with a staff of 68 in Grove and Jay, Okla.
In the unlikely event Decatur State Bank’s capital stands at $6.5 million when the deal closes, Mathias will pay $2 million to its shareholders. Debra Peterson Evans of Rogers controls at least 95 percent of the stock in Peterson Holding Co. in her role as family trustee.
The two largest stakeholders in Peterson Holding Co. are the Lloyd E. Peterson Revocable Trust 78 percent, and Dorothy Mae Peterson, 17 percent.
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