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Poor Real Estate Loans Take St. Louis Bank Down

The four branches of Truman Bank, St. Louis, Missouri were closed with Simmons First National Bank, Pine Bluff, Arkansas, to assume all of the deposits

Formed originally June 20, 1923 and then part of the Templar Fund, Inc., August 1, 1988, there were 56 full time employees at their three St. Louis offices and one in Saint Peters. In 2006 year-end, Truman Bank had 106 full time employees at their four offices with net equity of $46.3 million, a profit of $3.1 million for the year with only $38,000 in charge offices and $3.1 million in non-current loans.

June 30, 2012 Truman Bank had Tier 1 risk-based capital ratio of 2.54%. Since 2008, the bank lost $61 million, and had gone from a high net equity year-end of $47.8 million in 2007 to $5.9 million, June 30, 2012.

Missouri's Commissioner of the Division of Finance Richard Weaver said in a statement, according to the St. Louis Post-Dispatch: "The demise of this bank is the result of aggressive, imprudent lending decisions made by prior management," the state official said in the statement. "Many of these loans were in high-risk commercial real estate and development projects that proved uncollectible."

The St. Louis Post Dispatch also reported "Truman had the highest level of bad loans of all St. Louis chartered banks, with 19 percent of its loans classified as nonperforming, according to data released by the Federal Reserve Bank of St. Louis. The average figure was 3 percent for St. Louis-based banks.

September 28, 2011 a letter reached the newspaper from a past director: "Daniel Slavin, a real estate manager, said in the letter that Richard Miller, chairman of the bank's holding company, Truman Bancorp, interfered with past and present bank presidents, crippling their ability to do their jobs so that the bank could succeed."

The FDIC year-end numbers show large land and construction charge offs, as well as other real estate, perhaps reflective of the area as the main culprit of the major losses was in the very high non-current loan column:

(In millions, unless otherwise)

Non-Current Loans
2006 $3.1
2007 $6.9
2008 $20.1
2009 $41.2
2010 $53.6
2011 $49.0
6/30 $36.4

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

Charge Offs
2006 $38,000 ($108,000 1-4 family, $32,000 construction/land, -$81,000 commercial, -$6,000 Indiv.)
2007 $1.3 ($699,000 1-4 family, $381,000 construction/land, $241,000 nonfarm/no res., $32,000 Ind.)
2008 $9.2 ($6.1 land/construction, $1.8 1-4 family, $600,000 nonfarm/nonres., $471,000 multi, $249,000 com.)
2009 $6.9 ($3.1 land/construction, $2.3 1-4 family, $613,000 nonfarm, $350,000 multi, $509,000 comm.)
2010 $10.8 ($5.7 land/construction, $1.6 1-4 family, $1.3 commercial, $1.0 nonfarm, $462,000 indiv.)
2011 $19.5 ($5.5 land/construct., $2.9 commercial, 1.9 1-4 family, $136,000 multifam, $68,000 nonfarm)
6/30 $8.1 ($4.6 land/construct.,$3.2 nonfarm/nonres., $574,000 1-4 family, -$221,000 commercial)

Net Equity
2006 $46.3
2007 $47.8
2008 $39.5
2009 $35.4
2010 $28.1
2011 $15.3
6/30 $5.9

2006 $3.1
2007 $5.5
2008 -$14.1
2009 -$13.7
2010 -$7.9
2011 -$15.8
6/30 -$9.3

As of June 30, 2012, Truman Bank had approximately $282.3 million in total assets and $245.7 million in total deposits. In addition to assuming all of the deposits of the failed bank, Simmons First National Bank agreed to purchase essentially all of the failed bank's assets.

The FDIC and Simmons First National Bank entered into a loss-share transaction on $117.8 million of Truman Bank's assets. Simmons First National Bank will share in the losses on the asset pools covered under the loss-share agreement

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $34.0 million.

List of Bank Failures:

Bank Beat:

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