WASHINGTON — Regulators shut down $1.9 billion-asset ANB Financial on Friday, the largest bank failure of the year.
The Office of the Comptroller of the Currency closed the Bentonville, Ark.-based bank "due to unsafe and unsound practices," noting its capital, assets and earnings had substantially diminished.
The bank "is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect that the bank will become adequately capitalized without Federal assistance," the OCC said. "The bank's unsafe and unsound practices also weakened the bank's condition and seriously prejudiced the interests of the bank's depositors and the Deposit Insurance Fund."
The bank lost $59 million last year and was awash in bad loans, according to Federal Deposit Insurance Corp. data. It was the first institution with over a billion in assets to be closed since federal regulators warned of an uptick in failures stemming from the industry's credit problems.
The FDIC approved the assumption of ANB's $213 million in insured deposits by Pulaski Bank and Trust Co., a $1.3 billion thrift in Little Rock. Pulaski agreed to pay a 1.011% deposit premium and will also purchase $235.9 million of ANB's assets. ANB's $1.6 billion of brokered deposits were not included in the deal. The FDIC will pay brokers directly for the insured amount of those deposits.
ANB, the only bank subsidiary of ANB Bancshares in Rogers, held $39 million in uninsured deposits in 647 accounts. The FDIC said those customers would have access to their insured portion on Monday, and would become a creditor of the failed bank for the rest of the amount.
The failed bank's nine offices will open Monday as branches of Pulaksi.
ANB collapsed despite heightened scrutiny earlier this year by the Federal Reserve Board. In late January, the Federal Reserve Bank of St. Louis issued a sweeping order calling on the bank to establish an improved capital plan within 45 days, among several other improvements.
The bank's problems stemmed largely from an aggressive construction and development loan portfolio focusing on distressed markets in Arkansas, Idaho, Wyoming, and Utah, and funded primarily through brokered deposits. At the end of the last year, about $1.4 billion of its net loans and leases were in C&D loans, while only about $100 million were for 1-4 family mortgages, according to FDIC data.
According to published reports, the bank closed a wholesale mortgage office in Little Rock in March.
ANB became the third bank to close in 2008, but it is by far the largest. On Jan. 25, the OCC closed the $58 million-asset Douglass National Bank in Kansas City, Mo. On March 7, federal and state regulators closed the $18.7 million-asset Hume Bank, also in Missouri. ANB was the first Arkansas failure since Sinclair National Bank in Gravette was closed in September 2001.
Last September, the $2.5 billion-asset NetBank, a thrift, closed in Georgia.
The FDIC estimated that ANB's failure will cost the Deposit Insurance Fund about $214 million.
