On May 16, 9:08 am, harryharr...@[EMAIL PROTECTED]
wrote:
> Gamble That Went Bust
> ANB's Collapse From Real-Estate Bet Is Ominous for Small, Midsize
> Lenders
> By ALEX ROTH and VALERIE BAUERLEIN
>
> Bentonville, Ark.
>
> In the Quail Ridge subdivision, for-sale signs have popped up like the
> overgrown grass choking lawns of four-bedroom and five-bedroom homes,
> costing as much as $450,000, that never should have been built.
>
> Michael Woods/Arkansas Democrat Gazette
> Was ANB a "bank on steroids"?
> "If you had a tool belt and a pickup truck, you could get a
> construction loan," says Robert W. Abercrombie, owner of Betty's Homes
> Inc., which built some of the houses in Quail Ridge but filed for
> bankruptcy protection in 2006 after sales stalled.
>
> Mr. Abercrombie's company defaulted on more than $2.5 million in loans
> from ANB Financial, a local bank known for its enthusiastic lending.
> So did another Quail Ridge home builder that borrowed from ANB. By
> Friday, an epidemic of bad real-estate loans had overwhelmed the bank,
> which was seized by federal regulators in the second-biggest federally
> insured bank failure since 2001.
>
> On Monday morning, nine ANB offices reopened as branches of Pulaski
> Bank & Trust Co., which took over some of the closed bank's assets and
> deposits. The bust is reverberating as a sign of turmoil at many small
> and medium-size banks throughout the U.S. that pinned huge hopes, and
> capital, on the housing boom.
>
> Delinquencies and charge-offs are rising at lenders that barreled into
> real-estate loans but now are feeling a double whammy of the housing
> slump and credit crunch. Regulators are bracing for more failures.
> Even banks in no danger of collapse will need years to slog through
> their lending mistakes.
>
> "People just naturally get ahead of themselves," says Daryl G. Byrd,
> president and chief executive of IberiaBank Corp., the Lafayette, La.,
> parent of Pulaski Bank. "They get caught up in the growth. They think
> it will never end."
>
> ANB was launched in 1994 by Dan Dykema, then 34 years old, who had
> been a star lender at Bank of Bentonville, now called Arvest Bank
> Group Inc.
>
> Mr. Dykema offered some of the highest interest rates in the country
> on certificates of deposit. ANB also aggressively sought deposits sold
> through securities firms. By last year, such brokered deposits had
> increased to more than 80% of the bank's total.
>
> ANB's swelling deposits were funneled into real-estate loans tied to
> the fast growth of northwestern Arkansas. New employees and
> transplants lured by Wal-Mart, suppliers such as General Mills Inc.
> and Unilever, trucking company J.B. Hunt Trans****t Services Inc. and
> other companies turned the area into a sprawl of strip malls,
> restaurants and new subdivisions carved from forests and farmland.
>
> By the end of last year, ANB had $1.3 billion of construction and land-
> development loans on its books -- and $114 million in conventional
> home mortgages, according to financial data filed with regulators. In
> contrast, Mr. Byrd says Iberia has 5.5% of its loan ****tfolio in
> construction and land development, while ANB's is more than 75%.
>
> ANB also opened loan offices in resort communities such as Jackson
> Hole, Wyoming, and St. George, Utah. "One might characterize [ANB] as
> a bank on steroids," says John R. Davis, Iberia's senior executive
> vice president.
>
> When he wasn't overseeing the lending surge as ANB's chief executive,
> Mr. Dykema dabbled in real-estate development. Do***ents indicate he
> was involved in various residential and commercial projects, though
> his exact role isn't clear. Mr. Dykema also co-owns Bentonville
> Butcher & Deli on South Walton Boulevard, according to his business
> partner. Mr. Dykema says he was told by his lawyer and the Federal
> Deposit Insurance Corp. not to comment.
>
> The strategy backfired when housing sales began cooling in 2006. Soon,
> more than a dozen local real-estate developers filed for bankruptcy
> protection. In a lawsuit filed in a Benton County, Ark., court this
> year, ANB alleged a developer called Zachary Investments had
> defaulting on at least $934,000 in loans used to build several homes
> in the Quail Ridge subdivision. In response, the developer accused ANB
> of reneging on a promise to increase its credit line.
>
> As loan losses ballooned, regulators in June ordered ANB and its
> parent company, ANB Bancshares Inc., to slow loan growth, bolster its
> capital and develop a plan to control risk.
>
> As of March 31, past-due and nonaccrual loans -- or those for which
> full repayment is in doubt -- related to construction and land
> development had surged to $732 million from $123 million six months
> earlier.
>
> The Office of the Comptroller of the Currency concluded ANB "had
> incurred and is likely to incur losses that will deplete all or
> substantially all of its capital." The failure is expected to cost the
> FDIC's deposit-insurance fund about $214 million.
>
> J. Neal Ethridge, a retired Archer-Daniels-Midland Co. manager whose
> family owns a now-worthless 5% stake in the bank, says the OCC field
> office that took over supervision of the bank last year "attacked us."
> To be sure, like most of its peers, the bank had long been regulated
> by the OCC, but there was a change in the tone of that regulation
> according to Mr. Ethridge when a new field office took over.
>
> "Those statements are not accurate," says Kevin M. Mukri, an OCC
> spokesman. "Our job is to ensure the bank is properly capitalized and
> used proper accounting procedures, and that is what we did in this
> case."
>
> Write to Valerie Bauerlein at valerie.bauerl...@[EMAIL PROTECTED]
>
> URL for this
article:http://online.wsj.com/article/SB121089798170797283.html
what did huckabee know, and when did he know it?
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