Great Southern writes off $35M ANB Financial loss

Late last week, the Office of the Comptroller of the Currency at the U.S. Department of the Treasury closed the failing Bentonville, Ark.-based ANB Financial and the Federal Deposit Insurance Corp. was named receiver, according to an FDIC news release.

The FDIC Board of Directors moved ANB’s insured deposits to Little Rock-based Pulaski Bank and Trust Co., which will assume $212.9 million of the failed bank’s insured nonbrokered deposits for a premium of 1.011 percent and will purchase $235.9 million of assets, according to the release.

Publicly traded Great Southern (Nasdaq: GSBC) had loaned $30 million to ANB for “general corporate purposes” and $5 million in related “undersecured” loans to shareholders, Great Southern President Joe Turner said.

Turner told Springfield Business Journal yesterday that Great Southern officials were startled by the news that ANB – a business partner for more than a decade – had failed.

“We had the relationship for 11 years, and ANB was a very profitable company – strongly capitalized,” he said. “Obviously, we’re surprised and disappointed by the way it turned out.”

Great Southern shares fell $1.41 to $13.15 on Monday, and they opened at $14.05 this morning. While the charge-off is expected to significantly reduce quarterly earnings, subsequent quarters shouldn’t be affected, said Turner, who will cover the topic at today’s annual shareholders meeting at the Great Southern Operations Center, 218 S. Glenstone Ave.

“We will not make excuses,” Turner said in a script of his speech to shareholders available online at www.greatsouthernbank.com. “We made the loan with the confidence it would be paid back, and at the end of the day, it wasn’t repaid.

“I believe we did everything we reasonably could throughout this situation and planned for this eventuality. The company and bank remain well capitalized, which is of critical importance. We are moving forward and are extremely focused on the remainder of this year and beyond.”

ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits as of Jan. 31. According to the FDIC, ANB Financial had about $39.2 million in 647 deposit accounts that exceeded the federal deposit insurance limit. Those accountholders received immediate access to their insured deposits and will become creditors of the receivership for the amount of their uninsured funds, according to the release.

ANB was “undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices,” according to an OCC news release. The bank emphasized real estate development and residential construction lending primarily for projects in northwest Arkansas and Utah.

Read SBJ’s May 19 issue for more about Great Southern’s write-off and its annual shareholders meeting.