A Missouri bank that survived the Civil War and made it through the Great Depression was unable to withstand the Great Recession.
A consent order issued on May 26, 2010, by the Federal Deposit Insurance Corp. required that management at Glasgow Savings Bank restore the bank to a safe and sound condition. The restoration included capital adequacy, asset quality and earnings as well as management effectiveness, liquidity and market risk sensitivity.
The order required that qualified management be put in place within 90 days, “including an appropriate number and type of senior officers with the requisite knowledge, skills, ability, and experience, giving consideration to the size and complexity of the bank, to operate the bank in a safe and sound manner, and in compliance with applicable laws and regulations.”
In addition, the Glasgow, Mo., bank was required to reclassify some of its bad assets, refrain from extending more credit to marginal borrowers and reduce loan concentration.
An Oct. 5, 2010, written agreement between the Federal Reserve Bank of Kansas City, Glasgow parent Gregg Bancshares Inc. and chief executive officer Jenny Gregg required the conservation of capital.
But the seven-employee firm apparently failed to meet the requirements of the regulatory orders.
On Friday, the Missouri Division of Finance took possession of the financial institution and closed it down.
“The demise of this bank is the result of aggressive lending decisions concentrated in out-of-territory participations,” the state said. “Many of these loans became delinquent and non-performing. Losses have been realized and are more than the bank can support. The bank has operated under close regulatory scrutiny since 2009.”
The division noted that the 160-year-old bank had no luck trying to find a buyer or raise capital, so the board of directors voted to turn the bank over to the state.
The FDIC, which was named receiver, conducted a secret bidding process and awarded the winning bid to Regional Missouri Bank. The deal calls for Regional to assume all of the failed bank’s $24 million in deposits and acquire all of its $25 million in assets including $3 million in residential loans, $3 million in commercial mortgages and $1 million in construction-and-land-development loans.
Only $0.1 million in related losses are expected for the Deposit Insurance Fund as a result of Glasgow’s failure, the 33rd so far this year.
Mortgage Daily has tracked the closing or failure of 55 mortgage-related businesses so far during 2012.
