In the Crosshairs: Security Savings Bank
(Update 3: adds most recent call report data; updates Talley's most recent position at Security Savings; adds statement from the bank regarding OTS exam)
The Office of Thrift Supervision has set up camp in a small Kansas bank with ties to the former Bush administration, as part of an effort to examine the bank's mortgage books and accounting practices, according various sources working inside the bank and at the Office of Thrift Supervision, the bank's regulator.
The OTS began its examination of Olathe, Kan.-based Security Savings Bank, near Kansas City, last week sources said. Steve Johnson, the bank's chief banking officer, told HousingWire the exam by the OTS was regular and routine, in a statement. "The OTS generally visits and reviews financial institutions for safety and soundness as well as regulatory compliance approximately every 12 to 18 months and last commenced such an examination of Security Savings Bank as of June 2007," he said.
According to recent call reports, the bank’s assets have shrunk to $649.5 million from $827 million the year before, and it will book a third consecutive loss at $1.54 million dollars the 4th quarter of 2008. The bank is also below an OTS-mandated risk-based capital level of 11.5 percent for the third quarter in a row, according to sources who have knowledge of the bank's operations.
An OTS spokesperson said he would not comment on any ongoing reviews, citing OTS policy.
This Wednesday, Security Savings began a series of layoffs, including removing head of Treasury services Mike Talley. It's unclear what the circumstances for Talley's removal were, but the bank has seen a veritable revolving door of senior leadership in the past two years.
Security Savings chairman Don Bell has been at the center of plenty of controversy regarding the methods of his business dealings. His real estate dealings have drawn considerable scrutiny as far back as 2005. On Thursday, the Kansas City Star reported that Chicago-based GEM VP Lending LLC will sell 15 Bell-owned Value Place hotels, all of which are characterized by the lender as "above-average performing." News of a million dollar lawsuit for investor fraud against Bell by a former friend and investor Mathew Mabe broke this past fall, as well, and little has been reported on the outcome of the case in the last two months. According to the lead attorney representing Mabe, the suit has not been settled and is still ongoing.
Part of the suit against the bank's chairman involves a land deal Bell did with Carl Herbster, the pastor of Tri-City Ministries in Independence, Missouri. For years, questions have been mounting among banking staff and investors as to ties Bell may have with local Kansas Republican politicians, as well as John Ashcroft, former attorney general during the Bush administration; Herbster has close ties with Ashcroft.
Teri Buhl is an investigative journalist covering Wall Street who has written for the New York Post Sunday Business and Trader Monthly. Contact her at firstname.lastname@example.org.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
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