June 28--FREEDOM -- The Oklahoma State Banking Department closed the small Freedom State Bank on Friday, the only bank in this Woods County town of about 289 people.
Alva State Bank & Trust Co. has entered into a purchase agreement with the Federal Deposit Insurance Corp. to take over all deposits of the Freedom State Bank.
Founded in 1919, Freedom State Bank is on Main Street in downtown Freedom. Like many of the businesses in Freedom, the bank has an old West-style cedar wood front.
Freedom State Bank will reopen as a branch of Alva State Bank & Trust Company during its normal business hours, the FDIC said in a statement announcing the bank closure.
"We're proud to have them, but that's about all we're allowed to say," Todd Holder, cashier for Alva State Bank & Trust said Friday afternoon.
Freedom State Bank had approximately $22.8 million in total assets and $20.9 million in total deposits at the end of March.
Banking regulators recently found that Freedom State Bank was "critically under capitalized" 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.
Alva State Bank & Trust will pay the FDIC a premium of 1 percent to assume all of the deposits of Freedom State Bank. In addition to assuming all of the deposits of the failed bank, Alva State Bank & Trust agreed to purchase about $17.7 million of Freedom State Bank's assets. The FDIC will retain the remaining assets to sell later.
The FDIC estimates the Freedom State Bank failure will cost its Deposit Insurance Fund $5.8 million.
Freedom State Bank is the 12th FDIC-insured institution to fail in the United States this year, and the second in Oklahoma. The Bank of Union in El Reno failed Jan. 24.
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