Consumers can call the FDIC at 1-800-356-1848 from 9 a.m. to 6 p.m. Saturday, noon to 6 p.m. on Sunday, 8 a.m. to 8 p.m. Monday and 9 a.m. to 5 p.m. thereafter.
Mid City Bank customers will awake today as customers of Premier Bank, following Mid City Bank's collapse amid an overconcentration of troubled commercial loans.
Mid City, headquartered at 304 S. 42nd St., became the first federally insured Omaha bank to fail since 1990 and only the third since 1935, according to FDIC records. Purdum (Neb.) State Bank, owned by a member of a longtime Nebraska banking family, acquired Mid City's deposits and loans and adopted the Premier Bank name effective today.
Mid City's four branch offices will open for normal business hours Saturday under the Premier Bank name, with accounts transferred automatically and its FDIC insurance retained. Customers' existing ATM cards and checks bearing the Mid City name will continue to be honored, and the bank's website continues to function normally, said Chris Maher, new president of Premier Bank.
The new owner, Greg Stine of Omaha, is putting $15 million in capital into the bank, enough to support its existing loans and to allow for future expansion, and hopes to bring in another investor to raise that to $20 million within a year.
“We're trying to make this transition as smooth as possible,” said Maher, who has spent his 20-year banking career at Omaha State Bank and until Friday was its president. “The customers will still see the same friendly faces.”
The headquarters location, which is not normally open on Saturdays, will open at its regular time Monday morning and will be the Premier Bank headquarters.
Nebraska Banking Director John Munn, who closed the bank at 6 p.m. Friday as its office hours ended, said “poor management practices” resulted in too many large commercial real estate loans, which went bad when the value of commercial property in Omaha and Nebraska declined. The loan losses depleted the bank's capital until there was no option but to close it, he said.
This is not “the tip of an iceberg,” said Munn, adding that the “overwhelming majority” of other Nebraska banks are financially strong. “There are other banks that have ... commercial real estate loans, but the diversity of their portfolios and their capital accounts allow them to better withstand the decline in commercial real estate values.
The last Omaha bank to fail was Heritage Federal Savings Bank, a former savings and loan, in February 1990 because of loans to failed real estate projects outside the state. Occidental Nebraska Federal Savings Bank, also a former savings and loan, failed in February 1989 for similar reasons.
The latest Nebraska bank failure was TierOne Bank of Lincoln in June 2010, a collapse also blamed on bad real estate loans in other states.
Mid City's troubles had been the subject of news reports for the past two years. As it closed, it had about 8,000 accounts, with $105.5 million in deposits and $106.1 million in loans and other assets.
The failure will cost the Federal Deposit Insurance Fund, which is created by premiums paid by its member banks, not from taxes, $12.7 million. That figure typically represents administrative costs and the expense of taking over assets that the new owner didn't buy, such as unmarketable securities or real estate that had been owned by the bank.
Because the new owner is assuming all the deposits, even those with amounts above the FDIC insurance coverage limit per account will transfer to the new bank.
FDIC and Nebraska Department of Banking officials moved into the bank's offices at closing time at the end of the week, the standard time for the agency to announce bank failure. So far this year, 86 FDIC-insured banks have failed around the country.
An FDIC “closing team” will work over the next several days to verify the Omaha bank's deposits and loans, said Norma Tomlinson, an FDIC spokeswoman.
Stine, the new owner and chairman, is a member of a Nebraska banking family that formerly owned United Nebraska Banks of Grand Island.
He had been hired by Mid City in September 2010 as a consultant after longtime Mid City CEO Jim Fitl retired.
Fitl could not be reached for comment Friday. He has said he retired not because of the bank's financial condition but because of his age, 79 at the time.
Stine said he left the consulting position in July and bought the Purdum bank in August, hoping to buy Mid City Bank in a normal transaction, but that didn't work out. When banking officials moved to close Mid City, Stine said, as owner of the Purdum bank he could bid for Mid City's deposits and assets. The terms of the purchase are confidential.
Stine hired Maher and Todd Clevenger, also an Omaha State Bank officer, as executive vice president of Premier Bank.
Stine said “substantially all” of the Mid City Bank employees will remain on the job, and he hopes to expand the bank's presence in Omaha. The office in Purdum, which is in Blaine County in north-central Nebraska, will retain the Purdum name and add “a Premier Bank.”
“Omaha's a very dynamic and diverse market,” Stine said. “We're excited about being able to come to Omaha and compete.”
The bank will offer all services but will focus especially on business banking, Stine said.
With its main office next to the University of Nebraska Medical Center campus, the bank has had a niche in the medical community and will continue to grow in that area, as well as in other business lending, with 80 percent or 90 percent of its business in Douglas County.
The branches are at Dodge Street and Saddle Creek Road, 16802 Burke St., 7201 Military Ave. and 352 N. 114th St.
Stine said he first worked in banking as a child, putting stamps on letters at banks where his father, Dale, worked starting in 1950 in North Loup, Neb. After law school, Greg Stine spent 15 years at a family-owned bank in Ord, Neb., before moving to Grand Island in 1994, starting a new bank and later consolidating the family-owned banks under the United Nebraska Bank name.
He sold that bank to TierOne in 2004 and moved the next year to Omaha, where he's been retired and serving on volunteer boards.
When TierOne failed, most of the former United offices were purchased by Great Western Bank of Omaha.
In November 2009, the FDIC imposed a set of procedures intended to allow Mid City to rebuild its capital, which had dropped from $41.3 million in 2007 to $29 million at the end of 2009. But the losses continued, dropping its capital to $5.6 million at the end of 2010 and to $461,000 by this June 30. Mid City lost $32.4 million over three and a half years, according to its FDIC filings.
The bank's financial troubles had included loans on the Northern Natural Tower, 2223 Dodge St., which at one time was appraised at $19 million but later became vacant. The bank ended up owning the vacant office building for nearly a decade, finally selling this July for $2.3 million to a developer who is converting it into apartments.
Bank officers had been working on options such as cash investments by shareholders, a sale or a merger, but they did not succeed.
Contact the writer: 402-444-1080, steve.jordon@owh.com, twitter.com/buffettOWH
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