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FDIC Consent Order to Main Street Bank

Thomas J. Depping
(Leasing News Archives)

The FDIC issued a Consent Order to Main Street Bank, Kingwood, Texas "...with the STIPULATION, the bank consented, without admitting or denying any charges of unsafe or unsound banking practices or violation of law or regulation, relating to management effectiveness, loan and lease review rating."

Perhaps the strong consent is the replacement of Thomas Depping as CEO, as the bank is given 90 days to find:

"A Chief Executive Officer with a demonstrated ability in managing a bank of comparable size
and with experience in upgrading a low quality loan and lease portfolio.
 a. Impliment the prvisions of this order
 b. Act to restore the Bank to a safe and sound condition; and
 c., Act as the "principal executive office" of the Bank under Texas Financial Code 33.103 and 33.106"

Leasing News reported May 24, 2010 "The latest FDIC report for Main Street Bank, Kingwood, Texas confirms the reduction in employees, from the closing of the leasing department entrance primarily into healthcare and the letting go of Executive-Vice President, Bob Fisher, CLP.

“It may not include the Studebaker-Worthington division. Employees went from 104 full-time employees March 31, 2009 to 81 full-time employees March 31, 2010, a loss of 23.

“ It was not a “few” salesmen as Main Street Bank Chairman and CEO Thomas J. Depping, founder of Sierra Cities, originally told Leasing News." He also said in a subsequent interview the president Mike Hoffman "retired" and later confessed Bob Fisher was one of the people let go.

"What the auditors saw that they didn't like could be:

"From 3/31/09 to 3/31/10 FDIC filings:
Volatile liabilities: $39.2 million to $75.3 million
  (June 30, 2010: $72.8 million)
Insider Loans: $39.2 million to $41.8 million
  (June 30, 2010: 0)
Restructured loans and leases: zero to $6 million
  (June 30, 2010: $6.1 million)

"But more than likely:

"Long Term Assets (5+ years: $69 million to $139 million
  (June 30, 2010: $133.3 million)
Average asset: year-to-date: $310 million to $445 million
  (June 30, 2010: $448.9 million)
Total Risk Capital: $284 million to $379 million."
  (Total Risk weighted assets, June 30, 2010: $356.9 million)

The June 30, 2010 FDIC filing shows 80 full time employees and a tier 1 of 12.04%. The bank had a $593,000 loss June 30,2009 but a profit of $2.6 million June 30, 2010 with non-current loans with non-current loans at $1.9 million compared to the previous year of $1.4, charge offs $2.2 million ($2.1 in commercial loans and $1.4 million in lease receivables)) compared to $1.7 million last period (lease receivables: $1.39 million. Cash was almost up $60 million from the previous period to $455.6 million. (note: cash from other institutions went from $23.1 million June 30, 2009 to $86 million June 30, 2010)

The FDIC consent agreement has stipulation such as coming up with a strategic plan within 60 days with details about asset management, quality, and a full list of requirements to be reviewed by the board and the commissioner as well as not increase any category more than 5% in the next three month period, requiring a 12% Tier 1 "after allowance for loans and lease losses," capital ratio more than 14% by March 31, 2011, with an increased capital plan to be implemented. This is a brief synopsis of the 25 page consent order which appears below:

FDIC Consent Order:

Leasing News pdf:

Copy of June 30, 2010 2nd Quarter available here
(Type in: Main Street Bank, Kingwood, Texas):

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Disclosure: no position