The state Department of Banking and Finance closed four banks today, citing problem farm loans at each.
The Bank of Taylor was closed late this morning. It will reopen Monday as a branch of the Union Bank and Trust Co. of Lincoln, federal officials said.
Then early in the afternoon, the department closed three banks owned by Roger Voorhees of Omaha.
They were the Fairfield State Bank in Fairfield, the Scroggin and Co. Bank in Oak and the Security State Bank of Edgar.
All Federally Insured
All four banks were insured by the Federal Deposit Insurance Co., said state Banking Director Roger Beverage.
“All of these situations are related directly to agricultural loan problems,” he said.
Beverage said none of the banks had been able to arrange recapitalization.
The Taylor bank was recently taken over by the Packers State Bank and Trust Co. of Omaha, which had foreclosed on a stock loan, Beverage said.
The closings brought to seven the number of banks shut down in Nebraska this year.
Beverage said the three banks owned by Voorhees “are within about 10 miles of one another, and we knew if we closed one, it would start a run on the others and given the situation at all three banks, it was clear that this action was warranted.”
‘Inability to Recapitalize’
Besides problem farm loans, “an inability to recapitalize” led to the department’s decision to close the Taylor bank, Beverage said. “A combination of liberal lending practices of prior years and the deteriorating agricultural situation caused the failure of the bank.”
The Lincoln institution will assume about $12.2 million in 3,500 deposit accounts and pay the FDIC a purchase premium of $10,000, according to a statement from the FDIC.
Union Bank and Trust will also purchase the failed bank’s installment loans, real estate loans and some other assets for $2.7 million, the FDIC said.
The FDIC will advance $9.6 million to Union Bank and Trust to facilitate the transaction, and retain assets of the failed bank with a book value of about $11 million.