Home National Bank, Blackwell, Oklahoma Closed By OCC

July 9, 2010 – Home National Bank, Blackwell, Oklahoma, was closed today by the Office of the Comptroller of the Currency, which appointed the FDIC as receiver.

Home National Bank of Blackwell, Oklahoma with $644.5 million in assets was the week’s largest banking failure.    Home National was acquired by RCB Bank, Claremore, Oklahoma, and all 15 branches of failed Home National will reopen on Monday as branches of RCB Bank.  All deposits of Home National were acquired by RCB as well as $340.7 million of the failed bank’s assets.  No loss-share agreement was entered into on the purchase of the assets.  Home National was the nation’s 90th banking failure for 2010.

The absence of a loss-share transaction between the FDIC and RCB Bank was unusual since loss-share agreements have been used in the large majority of recent banking failures in order to attract bidders for failed banks.   The FDIC’s rationale for using loss-share agreements is that they maximize returns on failed banking assets by keeping them in the private sector.

The FDIC’s use of loss-share agreements has been criticized for provided very generous terms to the acquiring banks.   Many of the institutions that acquired failed banks from the FDIC had very limited loss exposure and sometimes reaped huge windfall profits on the failed bank purchase (see FDIC Loss-Share Guarantees Put Taxpayers At Risk and OneWest Makes Billions On Failed Bank Purchases).

In a separate transaction, the FDIC sold $260.8 million of Home National’s assets, at an undisclosed price, to Enterprise Bank & Trust, Clayton, Missouri.    The FDIC will retain the remaining $43 million of Home National’s assets for later disposition.  Home National was the first banking failure in Oklahoma this year and the loss to the FDIC Deposit Insurance Fund is estimated at $78.7 million.

Home National Bank had experienced a large number of defaults on its loan portfolio.  At March 31, 2010, Home National had $67 million in non-accruing loans and held $30 million in repossessed real estate.  Home National’s troubled asset ratio was a staggering 272% compared to the national average of 15%.  The large majority of failed banks in the recent past have had troubled asset ratios exceeding 100%.

Home National was founded in 1888 and served customers in Oklahoma, Kansas and Arizona.

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