OKLAHOMA CITY — Former Penn Square Bank cashier Jim Pitts remembers trying to keep a calm demeanor while customers lined up in the parking lot on a hot Friday in July a few days before the bank failed in 1982.
Whispers began to circulate that the bank, located in the back of then-open-air Penn Square Mall, was about to go under. By Friday, July 2, the rumors had erupted into a full-scale run on the bank.
While deposits at the time were insured up to $100,000 by the Federal Deposit Insurance Corp., at Penn Square bank patrons didn't seem to understand or care. They wanted their money immediately.
The shopping center bank was soon out of cash on that hot July 2 and Pitts and his co-workers had a parking lot full of angry customers.
"Some people got a little rowdy," Pitts said. "I remember this little elderly woman, she got really hostile. I didn't blame her at all. She just wanted her money and she couldn't get it right then."
A few days later, federal regulators declared Penn Square Bank insolvent. Riding a wave of risky, high-interest-rate energy industry loans, the bank's assets expanded from $62 million in 1977 to $520 million in 1982, and saw its deposits grow from $29 million to more than $450 million. The bank had sold roughly $2 billion in high-risk loan participations to mostly out-of-state banks that took huge losses when Penn Square collapsed.
July 5 marks the 30th anniversary of the Penn Square Bank failure. The event marks the beginning of the oil bust of the 1980s and had a ripple effect on the local economy, and eventually sparked the failure of a handful of larger, out-of state banks.
Tom Loy, CEO and chairman of the private equity group MetaFund, was working for United Bank of Oklahoma, which failed in 1987, when Penn Square Bank went under in 1982.