Two months ago, Richard O’Brien was president and CEO of Little Rock’s Heartland Bank when he spoke about a dramatic increase in nonaccrual loans.
“We’ve had a couple commercial borrowers who are under stress,” O’Brien said during the February interview about changes at the $241 million-asset lender. “Maybe 10 percent of our loan portfolio is energy-related. When oil goes from $100 a barrel to $30, it causes problems.”
Among Heartland’s biggest and worst energy-related loans is one connected with a shale play in the New Albany formation of eastern Illinois.
The $10.5 million loan to Next Energy LLC of Denver went into default in early 2014 but didn’t hit Heartland’s balance sheet until last year.
How could Heartland make a loan that exceeded its legal lending limit? It didn’t.
Heartland started with a $5 million piece of the Next Energy loan. However, that grew to $10.5 million in 2013.
That’s when Axys Capital Income Fund LLC of Austin, Texas, assigned its $5.5 million portion of the loan to Heartland.
On the hook for the $10.5 million loan with his personal guarantee is Jack Overstreet, president of Next Energy.
Last month, O’Brien joined a procession of change at Heartland when the company announced he was stepping down as president and CEO of the bank to spend more time with his grandchildren and pursue other business interests.
Also vacated were his positions as bank director and chairman, president and CEO of Heartland’s parent company, Rock Bancshares Inc.
Judy Lawton, chief operating officer, was named president of the bank and the holding company. For now, no one holds the title of CEO at Heartland or Rock Bancshares.
Heartland Bank
As of year-end
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Noncurrent loans* | $381 | $234 | $532 | $1,436 | $1,391 | $785 | $1,869 | $2,302 | $1,080 | $36,479 |
* In thousands