Ericson State Bank in Nebraska, which struggled for a decade to overcome regulatory enforcement actions, on Friday became the first bank failure of 2020.
The Nebraska Department of Banking and Finance closed the state-chartered bank and appointed the Federal Deposit Insurance Corp. as receiver. Farmers and Merchants Bank of Milford, Neb., agreed to purchase $9.6 million of Ericson’s $100.9 million in assets and assume all of its $95.2 million in deposits, the FDIC said. The FDIC will retain the rest of the assets for disposition later.
The cost to the Deposit Insurance Fund is expected to be about $14.1 million.
Ericson’s only branch will be closed until Tuesday, when it will reopen as a branch of Farmers and Merchants. According to the FDIC, customers will still be able to access their accounts by check, ATM and debit cards. They will also be able to continue paying their loans as normal.
Since 2010, Ericson had been hit with two FDIC consent orders that cited poor management and weak capital controls. In October, the FDIC ordered the bank to hire a new CEO and at least two independent board members and to develop one- and three-year plans to get back on track.
Then in November two smaller Nebraska banks — Eagle State Bank and Tri Valley Bank — announced a three-way merger with Ericson. That deal was never completed. “Whatever they may have had in the works is now off,” a FDIC spokesperson said Friday.
The last U.S. bank to fail was the $120.6 million-asset City National Bank of New Jersey in Newark,
