Regulators warn First State Bank of Altus
February 28, 2009
ALTUS — State and federal regulators have placed First State Bank of Altus under supervision for hazardous lending, inadequate Capital and earnings, and an excessive level of bad loans, according to an order made public Friday.
The Altus bank, which lost $5 million in 2008, was one of only a few Oklahoma banks that failed to turn a profit last year. On Dec. 31, the bank had more than $17 million in loans listed as nonaccrual, which means that loans are no longer gathering interest, and payment of the principal is uncertain. Also, $8.7 million in loans were more than 90 days past due.
First State Bank made major loans to Quartz Mountain Aerospace, an aircraft manufacturer that has defaulted. The Altus bank also loaned millions to an out-of-state residential development project that is mired in bankruptcy, First State Bank President Larry McLaughlin said.
Bank officers have developed a four-point plan to restore the bank's balance sheet, McLaughlin said. A pending bond issue could produce some cash for Quartz Mountain Aerospace to repay some of its debt, he said. The settlement of some litigation related to the residential development loans also could result in some recovery of loaned money, he said.
The bank is prepared to solicit Capital infusion from current bank stockholders or new investors, McLaughlin said.
"If those aren't successful with the regulators, we would look at a possible merger or sale of the bank," he said. "That certainly is not our desire.
"The bank is "on target" with regulators on its development and institution of a plan, McLaughlin said. The cease-and-desist order issued last month by the Federal Deposit Insurance Corp. and the state Banking Department contains sev....eral requirements and timelines the bank must meet.
State Banking Commissioner Mick Thompson said regulators will monitor First State Bank to ensure that bank officers "maintain the bank in a safe and sound manner."