DECATUR — The city of Decatur’s accounts at the Decatur State Bank are now fully bonded, Mayor Charles Linam reported to the city council on Thursday.
After former mayor Bill Montgomery brought the issue to his attention last month, Linam said he met with bank officials and found that the city’s accounts were not completely covered by bonds and Federal Deposit Insurance.
Previously only $1.45 million of the city’s $1.84 million was insured by bonds. An additional $250,000 was covered by Federal Deposit Insurance, leaving about $200,000 at risk if the bank were to close, Linam said.
The bank purchased an additional $295,000 in pledges fromMorgan Keegan in Fayetteville dedicated to the city’s accounts to bring the coverage up to a total of $2 million, Linam said.
Linam said he first considered moving some of the city’s money to another bank, but the Decatur State Bank officials were quick to work with the city for a solution.
Linam said he personally would like to support a hometown bank and did not want to give the city’s business to an out-of-town bank unless public funds were jeopardized.
“I feel a whole lot better now, knowing our money is safe,” Linam said.
Decatur State Bank’s shrinking capital and increasing losses caused it to fall under federal oversight last fall. The bank agreed to the FDIC’s consent order on Oct. 27, but the order was not publicly released until December. Consent orders are agreed to by both the FDIC and the bank. The order states the bank has consented without admitting or denyingany charges of unsafe or unsound banking practices.
In September, the bank had $18.3 million in loans seriously past due, according to the FDIC.
Private Club Permit
Council members questioned Mayor Charles Linam about his decision to rescind his objections to a private club license for Tim Witcher’s Backdoor Club and Grill.
The club received its license and opened for business earlier this month. The city council is not involved in the decision to grant or deny the permit, but the Arkansas Beverage Control Board did send a letter to Linam, Police Chief Terry Luker, Benton County Sheriff Keith Ferguson and Prosecuting Attorney Van Stone, asking if they had any objections.
Linam and Luker initially objected, but later rescinded their objections.
“What changed your mind?” asked councilwoman Kim Goble.
Linam explained that he made the decision after talking with Witcher. Linam said that Witcher guaranteed that he would carefully police his customers so there would be no drinking and driving. Linam also said that Witcher’s business is very good for Decatur andthat he had already invested $70,000 in opening the private club.
Council members questioned how Witcher could prevent someone from drinking too much alcohol, asking what would happen if someone had been drinking before they arrived at the restaurant, or drank their neighbor’s drinks as well as their own.
Luker said there has been no increase in drunk drivers and that his department has not been called to the establishment since it opened.
“Both of us are saying prayers every night that what we did was the right thing,” Linam said.
Even though Linam and Luker rescinded their objections, they were not notified about the hearing in Little Rock, as Michael Langley, director of the Arkansas Beverage Control Administration told the Eagle Observer. However, Linam said he would not have attended anyway because he had already faxed his letter to the ABC.
“The whole city had the right to send a letter to thestate and not a single citizen sent a letter of complaint,” he said.
Goble asked if people were made aware that they could send letters of complaint.
“I would have sent a letter had I known you rescinded,” she said.
Council woman Sandy Duncan also said she thought there would have been more objections if community members were made aware that they could send letters to the state.
Linam said that a story about last month’s councilmeeting, where the issue of writing letters to the state was discussed, was published in the Eagle Observer and a sign was posted at Witcher’s gas station, T-N-T Express.
Councilwoman Nan Mc-Clain commented that both Witcher and his wife had to take a two day class on how to responsibly serve alcohol as part of the permit application process.
“It all boils down to if you don’t like it, you don’t have to go down there,” said water department manager Rocky Mills.
News, Pages 1 on 02/22/2012