The Saga of the “Century”: Defaults, Receivership and a $68 Million Bid

A series of alleged loan defaults by a New Mexico businessman and his family have drawn multiple banks into lawsuits over the past several years.

The most significant dispute involves approximately $37 million in loans from KS StateBank that were secured by controlling shares in Century Financial Services Corporation (CFSC), parent of Century Bank.

After the borrowers allegedly defaulted, a court-appointed receiver moved to sell the shares, leading Bank7 Corp. to submit a $68 million bid for roughly 71% ownership of CFSC. The outcome could determine the future ownership of Century Bank and marks the latest chapter in a long chain of troubled loans tied to the same borrowers.

JRN by Bauer 43:29

The Saga of the “Century”: Defaults, Receivership and a $68 Million Bid

This story begins in 2018 when, according to the Santa Fe New Mexican, New Mexico Bank & Trust, Albuquerque, NM (34726) extended a $4.9 million loan to a well-known New Mexico businessman and his wife. The collateral for this loan included a collection of artwork including a rare Matisse. According to the records, the borrowers made their last $250,000 payment in August 2023. That was not, however, the final amount owed. The report states the borrowers defaulted, leaving the bank on the hook for roughly $2.7 million.

According to our records, New Mexico B&T was acquired in August of 2023 (the same month as that last payment) by the then 5-Star HTLF Bank, Denver, CO (58458). New Mexico B&T was one of ten bank acquisitions by HTLF in 2022 and 2023. In this two-year period, HTLF Bank’s assets grew from less than $3 billion to over $19 billion (JRN 41:02).

Shortly after this, (February 2024), HTLF’s CEO, Bruce K. Lee announced he would retire at the end of that year. As the new lienholder of the now $2.7 million defaulted loan from New Mexico B&T, HTLF Bank attempted to collect but was unsuccessful and, reportedly, a lawsuit ensued.

Before that lawsuit made its way to the courthouse, UMB Financial Corporation Chairman and CEO Mariner Kemper seized an opportunity and approached Mr. Lee about an acquisition. The timing could not have been better for Mr. Lee or HTLF Bank. The transaction, which combined 4-Star UMB Bank N.A., Kansas City, MO (8273) and HTLF Bank, was completed in early 2025.

UMB proudly announced it had completed the largest acquisition in its 111-year history, increasing assets more than 30% and expanding its footprint from eight to 13 states. What it didn’t mention was that its nonperforming loans shot up from $27 million to over $105 million. Somewhere in that $105 million, presumably, was the $2.7 million defaulted loan that that had been kicked down the road starting at New Mexico B&T.

Another similar story involves 3-Star State Employees Credit Union (SECU), Santa Fe, NM (65513) where, SECU is reportedly trying to collect more than $10 million from 11 separate loans made between 2018 and 2024 to the same (or affiliated) borrowers. These loans were (again reportedly) secured by family trusts, pharmaceutical stocks, liquor licenses, restaurant equipment, art pieces and an automobile.

In fact, the further we dig, the more institutions we find had similar loan issues. We found reports of bank after bank filing lawsuits against the same and/or affiliated borrowers, including:

There may be others but frankly, we stopped looking. We saw the pattern, and the common denominator in all the above are the borrowers/defendants, Gerald P. Peters III and his wife, Kathleen K. Peters.

As we already mentioned, Gerald Peters is a well-known New Mexico businessman, often referred to as a “real estate mogul” and “art afficionado”. In addition, until recently, Peters was the controlling shareholder of Century Financial Services Corporation (CFSC), the holding company of 3½-Star Century Bank, Santa Fe, NM (28362).

Century Bank’s roots go all the way back to 1887 when it was established as a mutual thrift, Mutual Building and Loan Association in Santa Fe. The first major change came almost a century later when, in 1982, the name was appropriately changed to Century Federal Savings & Loan Association. In 1990, the Savings and Loan Charter was swapped out for that of a Federal Savings Bank.

Finally, in November 2007 Century Financial Services Corporation (CFSC) was established as a Bank Holding Company for the newly named Century Bank, its mutual roots barely even visible in the rearview mirror. When a mutual bank converts to stock ownership depositors no longer control the bank’s destiny. Stockholders do.

According to court documents, between 2019 and 2024, Gerald and Kathleen Peters secured two loans totaling $37 million from yet another bank, 4-Star KS StateBank, Manhattan, KS (19899). Again, they allegedly defaulted. But this time was different.

  • Instead of using real estate or art to secure the loans, the Peters used their CFSC shares as collateral.
  • The lender, KS StateBank, was not willing to renegotiate the value of the outstanding loans.
  • Attempts at refinancing the loans failed.
  • A receiver was appointed by the court (MCA Financial Group, Ltd.) to handle the sale of the shares, subject to court approval, that secured the loans. The purchaser of these shares would become the new majority shareholder of CFSC.

In its capacity as receiver, MCA has a duty to seek the best price for the shares. At a minimum, it would like to get enough to make KS StateBank whole. That means covering the loan as well as court costs and, possibly another $2 million to cover the “break-up fee”. We’ll get back to that.

MCA found a “stalking horse bidder” to get the ball rolling. On July 1st, Bank7 Corp., parent of 5-Star Bank7, Oklahoma City, OK (4147) agreed to be that “stalking horse”. A stalking horse bid is a baseline bid intended to bring out competing offers. That being the case, Bank7 may not end up with the shares in question, but has the right to match competing bids.

If better offers do not come forth during the four-week bidding period in August, Bank7 will pay $68 million (cash) to purchase the shares in receivership, which represent approximately 71% of CFSC’s outstanding shares. Bank7 would welcome Century Bank’s nine New Mexico offices into its fold and expand its own footprint from its existing Oklahoma, Texas and Kansas markets.

If the Bank7 bid wins, it says it will retain the Century Bank brand and employees. In the process, it will gain $1.22 billion in deposits and $826 million in loans, potentially at a very attractive price.

If Bank7 is not the winning bidder, the purchase agreement includes a “break-up clause” that will pay Bank7 $2 million for its efforts. In other words, it’s a win-win for Bank7.

The bidding window will close before the end of August. If no competing bids are submitted, Bank7 will purchase the shares in question in September.

The more likely scenario is that there will be competing bids, but only time will tell.

For now, we wait. But we can’t help but wonder what the other CFSC shareholders think of the situation, especially those who may have voted against the mutual-to-stock conversion in 2007.