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Troubled Decatur Bank Finds Buyer

2 min read

Mathias Bancshares Inc. of Springdale, the one-bank holding company that owns First State Bank of Northwest Arkansas, has reached an agreement to purchase troubled Decatur State Bank.

Mathias Bancshares is led by Sam Mathias.

First State Bank, chartered at Huntsville, had total assets of $82 million on Dec. 31 and had a year-over-year increase in assets of about 4.1 percent. Its 2011 net income was about $870,000.

Decatur State is one of two banks owned by Peterson Holding Co. of Decatur. Peterson Holding will retain 100 percent ownership of Grand Savings Bank of Grove, Okla.

According to a joint news release issued by Mathias Bancshares and Decatur State, a definitive agreement was reached on April 12. The transaction will be a stock purchase wherein the parties agree that Peterson Holding Co. will sell 100 percent of its stock ownership in the bank to Mathias Bancshares.

Final regulatory approval is expected sometime early in the third quarter, the release said, but no other details of the transaction were available last week.

Decatur State Bank’s equity was just under $6.5 million as of Dec. 31. The only other bank deal in Arkansas this year – the sale of profitable Bank of Rison to Fordyce Bank & Trust – is valued at exactly its book value.

Decatur State, meanwhile, lost almost $12.7 million last year. By one measure, the so-called "Texas ratio," Decatur State Bank was the shakiest bank chartered in Arkansas at the end of 2011. The ratio compares the amount of loans at risk and the amount of owned real estate with the amount a lender has on hand to cover any losses, in the form of equity capital and loan loss reserves.

Decatur State entered into a consent agreement with the Federal Deposit Insurance Corp. on Nov. 18. The order required the bank to reserve an additional $6.126 million for possible loan losses and to shore up its capital.

Decatur State had assets of about $165 million on Dec. 31, but that reflected a drop of about 20 percent since Dec. 31, 2010.

Other real estate owned – property recovered from failed mortgages – totaled $3.6 million as of Dec. 31. Total non-accrual loans, meanwhile, amounted to almost $21 million.

"While the bank does have some acknowledged asset quality challenges coming out of the last few recessionary years, we are obviously confident these problems can be remedied over the next couple years," Mathias said in the release. "A good degree of progress on these challenges has already been made over this past year.

"The bank has a good staff which we intend to keep intact to continue the efforts already set in motion to return the bank to a satisfactory and profitable condition."

First State of Northwest Arkansas, meanwhile, has boasted equity more than twice the level required by bank regulators.

Mathias Bancshares intends to retain the separate charter of Decatur State Bank and continue to operate it as such, according to the release.

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