WASHINGTON -- Federal regulators closed $30.7 million-asset Sinclair National Bank of Gravette, Ark., on Friday, and sold its insured deposits to Delta Trust & Bank in Parkdale.
The Office of the Comptroller of the Currency said the bank was critically undercapitalized, and cited it for ineffective management, poor underwriting standards, and bad internal controls. The OCC said that Sinclair National also had inadequate loan loss reserves to cover the level of substandard and doubtful loans in its portfolio. The agency said it presented the bank with a directive in August to develop an acceptable capital restoration plan and correct its safety and soundness deficiencies, but that it did not do so.
The bank failed to submit an acceptable capital restoration plan and the OCC determined that it had no reasonable prospect of obtaining adequate capital, the agency said in a press release.
Sinclair National accused the agency last year of unfairly blocking its business plan, and sued the agency for breach of contract. The suit also contended that agency personnel had made disparaging comments about minority borrowers for Sinclair Nationals subprime lending program.
The OCC denied the claims.
The Federal Deposit Insurance Corp. sold the banks $25.3 million of insured deposits to Delta Trust, which reopened Sinclairs two offices as branches on Monday. There was an estimated $386,000 in 58 deposit accounts that were uninsured. Delta Trust paid the FDIC $551,000 to purchase the insured deposits and $4.9 million of Sinclair Nationals assets.
The FDIC estimated that the collapse -- the fourth institution to fail this year -- would cost the Bank Insurance Fund $4.4 million.