LITTLE ROCK — Decatur State Bank, a Northwest Arkansas lender that has had some of the same leadership as failed ANB Financial of Rogers, lost about $7.5 million in the third quarter.
For the first nine months of the year, Decatur State Bank has lost $12.1 million, according to the Federal Reserve Bank of St. Louis.
ANB Financial was shut down by federal regulators in May 2008, one of the first banks in the country to collapse during and after the national recession.
Decatur State Bank is small, with about $170 million in assets and only three branches - in Decatur, Gentry and Siloam Springs.
Debra Evans and her former husband, Victor Evans, were the largest shareholders in ANB before it failed. She is also a director of Decatur State Bank. Victor Evans was a director of Decatur State Bank until leaving the board in recent years.
Decatur State Bank’s nine month loss is worse than any other bank in Arkansas’ seven metropolitan areas, according to the Federal Reserve. The next biggest loss among banks during the first threequarters in those areas was $5.4 million by Metropolitan National Bank in Little Rock, according to the Federal Reserve.
Decatur State Bank’s capital has fallen from$23.3 million in September of last year to $7 million in September this year.
Mark Londagin, president and chief executive officer of Decatur State Bank,said in an email that the bank’s third quarter “reflects the implementation of new policies and procedures designed to aggressively address problems,which new management identified.”
Londagin did not immediately respond to an email and phone call seeking clarification of that statement.
Londagin holds the same title at Grand Savings Bank in Grove, Okla. Both Decatur State Bank and Grand Savings Bank are owned by Peterson HoldingCo. of Decatur.
“These policies and procedures were felt to be necessary to reverse recent trends and to enable [Decatur State Bank]to continue to serve the banking needs of its customers,” Londagin wrote. “Management and the board of directors are confident that the results of these initiatives will provide its customers and communities with more stable and positive banking.”
The bank has not been sanctioned by federal regulators. Seventeen banks in the state have been reprimanded by federal regulators and another 21 have been sanctioned by the state Bank Department. Two banks have failed since 2008 - ANB Financial and First Southern Bank of Batesville last year.
The biggest reason for the bank’s decline is likely an examination of the bank’s books by regulators, said Randy Dennis,president of DD&F Consulting Group, a Little Rock based bank consulting firm.
“I’m sure they’ve had problems with loans,” said Dennis, who acknowledged he is not familiar with details of the bank.
Based on the financials from the third quarter, Dennis said Decatur State Bank has had to take losses on the sale of real estate.
“They are aggressively selling [real estate] and have taken some additional losses on sales,” Dennis said.
Because of its financial condition, the bank will likely be under an order from a federal regulator soon, Dennis said.
The Federal Reserve doesn’t comment about specific banks, said Suzanne Jenkins, a spokesman for the St. Louis regulator.
But it can discuss financial performances in general, Jenkins said.
In recent years, there was a rapid escalation in real estate lending in Northwest Arkansas in part because of the high growth and prosperity of the area, said Gary Corner, senior bank examiner with the Federal Reserve in St. Louis.
“What happens over time when you see that, whether it is banks or builders, [institutions] become lax in their controls,” Corner said. “Therefore the likelihood of a buildup of risks would more likely happen there than in other areas of the state. Therefore the decline has been more severe than it has been in other areas of the state.”
News, Pages 1 on 11/23/2011