Extraordinary items have provided the $329 million-asset One Bank & Trust with three quarterly respites from losses during the past 18 months.
The biggest item recently was booked by the Little Rock lender as $6.9 million in noninterest income.
The bank’s share of a settlement with the estate of its former owner and CEO, Layton “Scooter” Stuart, allowed the posting of a $5.5 million profit for the three months ending Sept. 30.
One Bank’s cut of the life insurance payout on Stuart helped boost its equity capital to $18.9 million, the highest level since a $19.9 million tally at March 31, 2013.
The challenge of restoring the bank’s fortunes now narrows down to operations.
Just when it seemed the bank’s quarterly legal fees would plunge, a new front opened.
Hunt Lawsuit
One Bank recently was sued for fraud and breach of contract by BHL Financing LLC, led by Johnelle Hunt.
The fraud and breach were allegedly perpetrated by One Bank executives during the Scooter Stuart regime and not discovered until 2012.
According to the complaint, BHL was deceived into subordinating its security interest in the bank in 2009 to allow One Bank to gain $17.3 million in TARP funding.
That federal money flowed through the bank’s parent company, OneFinancial Corp., controlled by Stuart and pledged to secure money owed to BHL.
Among the guarantees on today’s $15.2 million of BHL debt was one linked with Stuart as an officer of One Bank. The Hunt family was owed money from selling the bank to Stuart and financing his Rivercity Energy convenience store venture.
The complaint also alleges that Michael Heald, chief operating officer at One Bank, misrepresented the condition of the bank so BHL would sign off on the TARP funding agreement.
Instead of financing growth, the government funding:
- Was used to conceal serious loan problems at One Bank and pay personal expenses of Stuart.
- Added more debt, which decreased the value of the bank.
- Placed BHL in an inferior creditor position behind the U.S. Treasury.
BHL is seeking compensatory damages of greater than $10 million and punitive damages from One Bank.
BHL already holds a $14.7 million default judgment against OneFinancial, but the new suit goes after the bank separately.