Go to ...

News in Arkansas

Arkansas News Online

RSS Feed

November 17, 2017

Federal Reserve Orders Allied Bank to Improve Equity Capital or Sell


Allied Bank of Mulberry (Crawford County) was ordered to take action to improve its equity capital or strike a deal to sell during the next 30 days.

The Federal Reserve Bank of St. Louis issued the prompt corrective action on Aug. 15 to the “critically undercapitalized” $66.3 million-asset bank.

Bad loans have battered Allied for more than five years and eroded its tier one capital to $1.3 million as of June 30. Past regulatory actions have criticized poor loan review and credit underwriting for the bank’s problems.

Allied recorded a 1.8 percent capital ratio during the second quarter, the lowest of all financial institutions in Arkansas.

The bank lost nearly $4.5 million through the first six months of 2016. Allied has lost more than $17.7 million since 2011.

The bank’s inability to generate dividends because of its deteriorating financial condition prompted the April 2014 bankruptcy of its parent company, Acme Holding Co.

The conversion of Acme’s Chapter 11 reorganization to Chapter 7 liquidation 13 months ago put the sale of Allied Bank in play.

However, a possible sale or auction of Acme’s Allied stock under the oversight of bankruptcy trustee Ray Fulmer of Fort Smith has yet to materialize.

The family of former Allied CEO Lex Golden, controls Allied Bank and Acme.

The Little Rock family also controls Allcorp Inc. and Community State Bank of Bradley (Lafayette County). Allcorp filed Chapter 11 on July 27.

The $16.9 million-asset bank, the smallest in the state, recorded a $54,000 profit through the first six months of 2016. Though profitable, Community State Bank is unable to generate sufficient dividends to service the debt of Allcorp.

(Correction: The headline on a previous version of this story referenced the wrong bank regulator. It has been corrected.)

Allied Bank of Mulberry (Crawford County) was ordered to take action to improve its equity capital or strike a deal to sell during the next 30 days.

The Federal Reserve Bank of St. Louis issued the prompt corrective action on Aug. 15 to the “critically undercapitalized” $66.3 million-asset bank.

Bad loans have battered Allied for more than five years and eroded its tier one capital to $1.3 million as of June 30. Past regulatory actions have criticized poor loan review and credit underwriting for the bank’s problems.

Allied recorded a 1.8 percent capital ratio during the second quarter, the lowest of all financial institutions in Arkansas.

The bank lost nearly $4.5 million through the first six months of 2016. Allied has lost more than $17.7 million since 2011.

The bank’s inability to generate dividends because of its deteriorating financial condition prompted the April 2014 bankruptcy of its parent company, Acme Holding Co.

The conversion of Acme’s Chapter 11 reorganization to Chapter 7 liquidation 13 months ago put the sale of Allied Bank in play.

However, a possible sale or auction of Acme’s Allied stock under the oversight of bankruptcy trustee Ray Fulmer of Fort Smith has yet to materialize.

The family of former Allied CEO Lex Golden, controls Allied Bank and Acme.

The Little Rock family also controls Allcorp Inc. and Community State Bank of Bradley (Lafayette County). Allcorp filed Chapter 11 on July 27.

The $16.9 million-asset bank, the smallest in the state, recorded a $54,000 profit through the first six months of 2016. Though profitable, Community State Bank is unable to generate sufficient dividends to service the debt of Allcorp.

(Correction: The headline on a previous version of this story referenced the wrong bank regulator. It has been corrected.)

Source

Leave a Reply

Your email address will not be published. Required fields are marked *

More Stories From Arkansas Business