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Christopher Menkin
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Christopher "Kit" Menkin is of editor (, an internet trade publication for the finance/leasing industry. He has 46 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on several company... More
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  • Tiny 96 Year Old Bank In Oklahoma Closed Down--- Tier 1 Risk-Based Capital Ratio Of 12.18% 0 comments
    Jul 1, 2014 1:30 PM

    The Freedom State Bank, Freedom, Oklahoma, was closed with Alva State Bank & Trust Company, Alva, Oklahoma, to assume all of the deposits. Founded January 1, 1919, the bank had five full time employees as of March 31, 2014 at its office in Freedom. Year-end 2006, the bank had seven full time employees.

    Freedom is a town in Woods County, Oklahoma, United States. As of the 2010 census, the city population was 289. Freedom State was the only bank in the surrounding area. Cargill operates a salt evaporation facility, appearing to be the largest employer, although oil and gas employment is also high.

    (The bank still has its wooden front)

    Compared to other banks in Oklahoma, The Freedom State Bank has a significantly higher percent of Farm Loans on its balance sheet, potentially indicating a specialty in that lending area.

    While employment has been good, primarily from oil and gas drilling, as well as Cargill Salt, the most telling may be the population chart from Wikipedia showing the declining population of Woods County, where Freedom is located.

    (In Millions unless otherwise noted)

    Net Equity

    2006 $1.3
    2007 $1.4
    2008 $1.5
    2009 $1.6
    2010 $1.7
    2011 $1.8
    2012 $1.8
    2013 $1.85
    3/31 $1.95


    2006 $99,000
    2007 $115,000
    2008 $100,000
    2009 $93,000
    2010 $100,000
    2011 $78,000
    2012 $78,000
    2013 $90,000
    3/31 $34,000

    While the bank equity improved each year, the bank was profitable, and charge offs loan look in order, it appears the non-current loans were in the 90 day column; and the liquidity to pay off the debt was a major factor ("too many troubled assets," was the term used by the regulators.)

    Non-Current Loans

    2006 $92,000
    2007 $76,000
    2008 $172,000
    2009 $101,000
    2010 $100,000
    2011 $78,000
    2012 $655,000
    2013 $509,000
    3/31 $426,000

    Charge Offs

    2006 -$29,000 (-$29,000 commercial & industrial loans)
    2007 -$3,000 (-$3,000 individual loans)
    2008 $7,000 ($15,000 loans to individuals, -$8,000 commercial/industrial)
    2009 -$2,000 (-$2,000 loans to individuals)
    2010 $4,000 ($8,000 loans to individuals, -$4,000 commercial/industrial)
    2011 $82,000 ($85,000 commercial/industrial, -$3,000 individuals)
    2012 $24,000 ($16,000 commercial/industrial, $8,000 individuals)
    2013 $60,000 ($44,000 loans to individuals, $16,000 commercial/industrial)
    3/31 -$15,000 (-$11,000 commercial/industrial, -$4,000 individuals)

    Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

    The Oklahoman reported: "Banking regulators ruled that Freedom State Bank was 'critically undercapitalized" and had determined that its capital position was 'rapidly deteriorating,' according to an FDIC directive released Friday.
    " 'Further, bank management has not demonstrated the ability to return the bank to a safe and sound condition,' the directive said.

    "FDIC had ordered Freedom State Bank's directors in May to either make a direct cash contribution to the bank or sell stock in the bank to shore up its capital position.

    "FDIC had ordered Freedom State Bank's directors in May to either make a direct cash contribution to the bank or sell stock in the bank to shore up its capital position"

    It should be noted the FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $5.8 million. This is also after Alva State Bank & Trust Company will pay the FDIC a premium of 1.0 percent to assume all of the deposits of The Freedom State Bank. In addition to assuming all of the deposits of the failed bank, Alva State Bank & Trust Company agreed to purchase approximately $17.7 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

    As of March 31, 2014, The Freedom State Bank had approximately $22.8 million in total assets and $20.9 million in total deposits.

    FDIC stated in their press release, "Compared to other alternatives, Alva State Bank & Trust Company's acquisition was the least costly resolution for the FDIC's DIF." *


    List of Bank Failures:

    Leasing News Bank Beat:

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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