The Nebraska Department of Banking and Finance announced Friday that it closed Ericson State Bank because it was insolvent.
Mark Quandahl, director of the department, cited “large out-of-territory commercial loan losses and poor management practices which led to a deterioration of the bank’s capital” as the primary reason for the closure.
The department named the Federal Deposit Insurance Corp. as receiver of the bank. The FDIC entered into a purchase and assumption agreement with Farmers and Merchants Bank in Milford, Nebraska. The transaction includes the assumption of all customer deposits.
The sole office of Ericson State Bank, at 427 Central Ave., will be open for business Tuesday under the name Farmers and Merchants Bank.
Until then, depositors of Ericson State Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
This is the first closure of a Nebraska-chartered bank since Nov. 4, 2011, when Mid City Bank Inc. in Omaha was declared insolvent, according to a press release from the Banking Department.