A FINANCIAL COLLAPSE: FIRST EXCHANGE BANK CEASES OPERATIONS

All five subsidiary banks owned by First Exchange Corp., a bank holding company headquartered in Cape Girardeau, were sold Thursday, May 7, 1992, following a yearlong investigation by federal bank regulators.

The failure of the bank, considered at that time as the biggest bank failure in Missouri's history, stunned the Cape Girardeau area. The collapse resulted in:

-- Losses of millions of dollars by local investors.

-- A 53-count fraud indictment, against four former bank officials.

-- Three deaths of the bank's previous officials.

-- Loss of benefits to many employees.

Don Chilton, one of the former bank officials, and his wife, Peggy Chilton, a former corporate vice president, were found shot to death on Feb. 28, 1993, at a rented house at the Palm Desert Country Club, an upscale resort near Palm Springs, Calif.

Authorities ruled the deaths murder-suicide, calling it a "mutual suicide," in which Don Chilton shot his wife, then himself. A note sent to a lawyer at St. Louis said the Chiltons would be dead by the time the note was read.

Twenty-two months later, Bill Chilton, brother of Don Chilton, hanged himself in a federal prison at Jesup, Ga., on Dec. 19, 1994. Bill Chilton had been sentenced to 30 months in federal prison and started serving his sentence in January 1994. He hanged himself at Jesup Prison in Jesup, Ga., Dec. 19.

The fourth Exchange Bank official was an Arkansas bond salesman, Andrew Crawford of Steele who was given a 27-month prison sentence.

First Exchange Bank's board of directors first started hearing of problems in late 1990, when state and federal regulators started taking a hard look at banks. In 1991, regulators said the financial problems at First Exchange dated back to 1986.

The Missouri Division of Finance declared the Exchange Banks -- in Cape Girardeau, Jackson, Fredericktown and St. Louis -- insolvent in May 1992 and ordered all of the banks to be closed and liquidated.

Earl Manning, state commissioner of finance, recommended the Federal Deposit Insurance Corp. be appointed liquidating agent. The orders to place the banks under FDIC control were signed May 7.

The next day, the FDIC announced the sale of all five banks, which were reopened May 8 under new ownerships.

The new owners:

-- Commerce Bank of Poplar Bluff, acquired First Exchange Bank of Cape Girardeau, which listed assets of $79 million.

-- Boatmen's Bank of Cape Girardeau acquired Jackson Exchange Bank and Trust Co., which listed assets of $117 million and had branches at Fruitland and Highway 61 East in Jackson.

-- Commerce Bank of St. Francois County in Farmington acquired First Exchange Bank of Madison County in Fredericktown, which listed assets of $33 million and had branches at Marquand and at West Main in Fredericktown.

-- Magna Bank of Clayton purchased First Exchange Bank of St. Louis on Butler Hill Road. It listed assets of $52 million and had a branch on Bayless Avenue in St. Louis County.

-- First Bank, a savings bank at Clayton, purchased First Exchange Bank of North St. Louis County, which listed assets of $43 million and had branches on Riverview Drive and in Florissant.

Examinations of First Exchange Corp. revealed institutions whose capital was rapidly depleted through massive losses on loans and other assets, according to court records.

The Federal Reserve Bank of St. Louis concluded that the First Exchange Bank of St. Louis was insolvent following a Jan. 21, 1992, examination. The FDIC tentatively estimated the cost of liquidating the First Exchange Bank of St. Louis at $15 million.

At the time, the aggregate remaining capital in all of the First Exchange Banks was about half that amount. The capital account represents the shareholders' investment. The assets were much higher and included such things as investor deposits, loans, government securities, property and cash reserves.

In addition, as a group, First Exchange banks were losing about $500,000 a month from operations, according to court records.

The new acquisitions resulted in a new bank at Cape Girardeau -- Commerce Bancshares Inc., a St. Louis-headquartered, bank holding company, with more than 100 sites, including Commerce Bank of Poplar Bluff, which opened the new facility at Cape Girardeau.