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Today’s Bank Takes On Teetering Allied

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The Allied Bank staff was still a little shell-shocked when they convened at the main office in Mulberry on Saturday, Sept. 24. The day after regulators took over the $66.3 million-asset lender, employees gathered to learn what the future held under the new ownership of Today’s Bank of Huntsville.

“I told the employees nobody ever likes to see a bank fail,” said Larry Olson, president and CEO of Today’s Bank. “It’s just a sad day regardless of the reasons.”

Losses from bad loans finally reached the tipping point where regulators intervened to stop Allied Bank from falling into insolvency. The failure was the culmination of a six-year death spiral in which Allied Bank recorded a combined loss of $18.8 million.

“This was the result of poor quality loans and bad business decisions,” State Bank Commissioner Candace Franks said in a prepared statement announcing the closing of Allied Bank.

Noncurrent loans totaled $5.1 million as of June 30, representing 12.3 percent of Allied’s still troubled loan portfolio.

The deterioration of the bank’s tier one capital to $1.3 million in the second quarter set in motion a regulator-mandated change of ownership and management.

The Allied staff was retained by Today’s Bank with the notable exception of its father-son executive team, Lex and Alex Golden of Little Rock. The Golden family held controlling ownership for 30 years.

Lex Golden held the posts of CEO, 1986-2007; chief lending officer, 2008-2012; and special assets manager since 2013. Alex Golden was named CEO in 2008 and held a variety of positions with the bank prior to that.

The clock began ticking on the Golden family’s ownership last year with their failed effort in bankruptcy court to reorganize the tattered financial affairs of Allied Bank’s parent company, Acme Holding Co.

Last summer’s court order to liquidate Acme launched an attempt to sell its biggest asset: Allied Bank.

What the bankruptcy trustee couldn’t do in a year, regulators did in two months. The Federal Deposit Insurance Corp. found a buyer to take over Allied Bank.

“It’s just a situation where we gave it everything we could but came up short,” said Ray Fulmer of Fort Smith, court-appointed receiver for Acme Holding.

“We had hoped, of course, that we could find a buyer that could yield some value. We had several interested parties, but no one willing to pay the money to make the bank viable and pay some money to the creditors.”

Details of the purchase agreement for Allied Bank remain undisclosed, but the winning bid by Today’s Bank was deemed the least expensive. The FDIC estimated the cost to its Deposit Insurance Fund would be $6.9 million.

“We feel fortunate that we were selected the winner, so we can expand into new markets,” Olson said. “I can’t say we have a strategic plan for the Little Rock market. We’re in assimilation mode right now.”

In addition to one operational leased branch location, two closed bank-owned branches in Little Rock number among Allied Bank’s nonperforming assets. The offices are part of a $9.1 million real estate portfolio dominated by property that secured loans that had gone bad.

The Allied acquisition expands Today’s footprint southward from Washington and Madison counties into Crawford, Franklin and Sebastian counties.

Capital Position

At the end of the second quarter, the tier one risk-based capital ratio at Today’s Bank stood at 19.58 percent. That strong position enabled the bank to absorb the assets of Allied Bank and remain in regulatory compliance.

Allied Bank’s risk-based capital ratio fell below 2 percent during the second quarter. That triggered a prompt corrective action order from the Federal Reserve Bank of St. Louis.

The bank’s primary federal regulator ordered the critically undercapitalized lender to improve its equity capital or sell during the next 30 days.

“That’s kind of the death knell right there,” Today’s Olson said.

The Aug. 15 order was the last in a series of regulator actions against Allied that date back more than five years.

The Goldens entered a memorandum of understanding on behalf of the bank, Acme Holding and its employee stock ownership plan with the Federal Reserve Bank in St. Louis

on March 15, 2011. The Arkansas State Bank Department issued a cease-and-desist order on Nov. 15, 2011.

Neither action was publicly announced but were revealed in filings and testimony during the Acme Holding bankruptcy.

The private memorandum of understanding with the Federal Reserve was replaced by a public written agreement on May 2, 2012.

The order addressed systemic problems with credit risk management, lending and credit administration.

Today’s Bank, Huntsville

Total Assets: $116 million
Equity Capital: $7.4 million
OREO: $1.4 million
Net Income: $1.1 million
Staff: 40
Locations: Huntsville (2), Fayetteville (2) and Springdale

  2015 2014 2013 2012 2011 2010
Total Assets $111,709 $105,154 $100,700 $91,052 $83,081 $79,992
Equity Capital $16,598 $15,671 $12,975 $12,610 $11,413 $10,926
OREO $1,015 $1,230 $3,672 $4,343 $4,353 $3,606
Net Income $1,068 $2,630 $1,109 $2,071 $871 $1,625

Allied Bank, Mulberry

Total Assets: $66.3 million
Equity Capital: $1.3 million
OREO: $9.1 million
Net Income: -$4,495
Staff: 40
Locations: Alma, Little Rock, Mansfield, Mulberry and Ozark

  2015 2014 2013 2012 2011 2010
Total Assets $79,327 $111,538 $136,853 $157,331 $174,541 $185,726
Equity Capital $5,789 $8,096 $8,898 $13,594 $16,456 $18,075
OREO $8,096 $9,709 $11,740 $7,604 $3,596 $1,473
Net Income -$2,254 -$1,024 -$4,865 -$3,470 -$1,619 $764

Dollars in thousands unless noted otherwise. All data as of June 30.
Source: Federal Deposit Insurance Corp.

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