Allied Bank of Mulberry was closed late Friday afternoon by state and federal regulators, and its five branches will reopen for "normal business hours" as branches of Today's Bank of Huntsville.
The action comes almost six weeks after the Federal Reserve Bank of St. Louis gave Allied 30 days to either inject equity capital into the "critically undercapitalized" bank or find a buyer. The receiver was announced jointly by the Arkansas State Bank Department and the Federal Deposit Insurance Corp.
Today's Bank entered into a purchase agreement to assume all of Allied's deposits and to purchase essentially all its assets, the regulators said. As of June 30, Allied Bank had approximately $66.3 million in total assets and $64.7 million in total deposits.
Bad loans have battered Allied for more than five years and eroded its tier one capital to $1.3 million as of June 30. Its capital ratio of 1.8 percent during the second quarter was the lowest of all financial institutions in Arkansas.
The bank lost nearly $4.5 million through the first six months of 2016. Allied has lost more than $17.7 million since 2011. The bank's inability to generate dividends prompted the April 2014 bankruptcy of its parent company, Acme Holding Co.
The bank had been under the control of bankruptcy trustee Ray Fulmer of Fort Smith. The family of former Allied CEO Lex Golden controls Allied Bank and Acme Holding.
"Customers of Allied Bank should continue to use their existing branch until they receive notice from Today's Bank that it has completed systems changes to allow other Today's Bank branches to process their accounts as well," the announcement said.
This evening and over the weekend, depositors of Allied Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
Full details are available on the FDIC website.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $6.9 million. Allied Bank is the fifth FDIC-insured institution to fail in the nation this year and the first in Arkansas since First Southern Bank at Batesville was shuttered in December 2010.
Today's Bank had been considered a possible acquirer of Allied Bank since early in the bankruptcy, which originated as a Chapter 11 reorganization.
Known as First State Bank of Northwest Arkansas until 2014, Today's Bank had assets of $116 million and equity capital of $17.4 million as of June 30. It reported net income of $1.08 million for the first half of the year, exceeding the $1.07 million it earned for the full year of 2015.
Today's Bank has five branches: two each in Huntsville and Fayetteville and one in Springdale.
Allied's office are in Mulberry, Alma, Ozark, Mansfield and Little Rock (5701 Kavanaugh Blvd.).