Oklahoma bank fails amid claims of 'false and deceptive bank records'

Al Drago/Bloomberg

WASHINGTON — The First National Bank of Lindsay in Lindsay, Okla., was shuttered by the Office of the Comptroller of the Currency and taken over by the Federal Deposit Insurance Corp. on Friday. 

First Bank & Trust Co. in Duncan, Okla., assumed the First National Bank of Lindsay's insured deposits. The only office of the First National Bank of Lindsay will resume normal business hours as a branch of First Bank & Trust Co. on Monday. 

The OCC closed the bank "after identifying false and deceptive bank records and other information suggesting fraud that revealed depletion of the bank's capital," the agency said in a press release.

"The OCC also found that the bank was in an unsafe or unsound condition to transact business and that the bank's assets were less than its obligations to its creditors and others," the regulator said. 

The OCC is also referring the issue to the U.S. Department of Justice, "which has a wide variety of tools to hold individuals accountable for criminal acts and focuses on victims in all of its matters." 

The agency provided no further details. 

"The OCC does not comment on bank closings beyond what is available on our website," Stephanie Collins, a spokesperson for the OCC, said in a statement. 

The FDIC will make 50% of uninsured funds available to depositors on Monday, the FDIC said. That amount could increase as the FDIC sells the remaining assets of the bank. 

The failure is causing an unusually large estimated hit to the FDIC's Deposit Insurance Fund — the pot of money that banks pay into to resolve failed banks. The agency projects that the failure will cost the DIF $43 million, although that estimate could change over time as assets are sold, the FDIC said. 

The First National Bank of Lindsay previously reported assets of $107.8 million. Deposits totalled  $97.5 million, and around $7.1 million of those deposits exceeded FDIC insurance limits, the agency said. 

That amount could change as the agency receives additional information from customers, the FDIC said. 

First Bank & Trust Co. has assumed the failed bank's insured deposits for a 6.67% premium, and will buy about $20 million of its assets.

The potential hit to the DIF comes at a sensitive time for the FDIC. 

The DIF, which withstood the failure of Silicon Valley Bank and other large regional banks last year, recently stood at $129.2 billion, up $7.5 billion from the end of last year. 

That put the pot ahead of schedule — before the most recent failure — to the legally required level of  1.35% by 2026. Some large banks had to make extra payments to cover the losses from the regional banking crisis in 2023. 

This is the second bank failure of 2024. Republic First Bank — whose underwater bond troubles mirrored those at First Republic Bank and Silicon Valley Bank —  was closed by its state regulator in April. Fulton Bank in Lancaster, Pennsylvania, assumed substantially all of Republic First's $6 billion of assets and $4 billion of deposits.