Farmers & Merchants Bank acquires failed Ericson bank
February 20, 2020
The Nebraska Department of Banking and Finance (NDBF) closed Ericson State Bank at Ericson, Neb., on Friday. NDBF had been closely monitoring the bank for some time and recently made a demand for a capital injection, which was not met.
NDBF named the Federal Deposit Insurance Corporation (FDIC) as receiver of the bank. The FDIC has entered into a purchase and assumption agreement with Farmers and Merchants Bank, Milford, Neb.. The transaction includes the assumption of all customer deposits. The sole office of Ericson State Bank, located at 427 Central Avenue, Ericson, Neb., opened for business on Tuesday, under the name, Farmers and Merchants Bank.
Farmers and Merchants Bank has branches in Superior and Lawrence.
“The failure of Ericson State Bank resulted primarily from large out-of-territory commercial loan losses and poor management practices which led to a deterioration of the bank’s capital. When the capital was not replenished, the department was left with no option but to place the insolvent institution in receivership,” said Mark Quandahl, NDBF director. Quandahl noted that the overwhelming majority of Nebraska banks are in a strong condition.
Ericson State Bank was chartered in 1959, and was a subsidiary of Wheeler County Bancshares, Inc., a one-bank holding company, located in Ericson, Nebraska, owned by Debra Poulsen and Jack Poulsen. As of Dec. 31, 2019, Ericson State Bank had total assets of approximately $100.9 million and total deposits of approximately $95.2 million.
The most recent closures of Nebraska state-chartered banks occurred Nov. 4, 2011, when Mid City Bank, Inc., Omaha, was declared insolvent, and Feb. 13, 2009, when NDBF closed Sherman County Bank, Loup City, Neb. Mid City Bank, Inc. was purchased by Premier Bank, formerly known as Purdum State Bank, Purdum, Nebraska. Sherman County Bank was purchased by Heritage Bank, headquartered in Wood River, Neb. Prior to the Loup City closing, no state-chartered bank had been closed since 1989.