Ericson State Bank of Ericson, a state-chartered bank, has agreed to a series of actions ordered by state and federal banking regulators to strengthen its management, restore capital and improve its financial position.
According to documents released Friday by the Federal Deposit Insurance Corp., on May 20 the bank consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law, to a consent order.
It requires the bank to improve its board supervision and management by hiring a consultant acceptable to the FDIC to assess the bank's board and management performance and needs, and to perform on a plan of action.
The bank also agreed to eliminate from its books within 30 days, by charge-off or collection, all assets or portions of assets classified as a loss in January FDIC examination.
Within 60 days, the bank is supposed to make a plan to reduce the bank's risk exposure in each asset in excess of $100,000 adversely classified as "Substandard" or "Doubtful" in the January examination and to develop a written plan for the reduction of all adversely classified loans.
While the ordere is in effect, the bank is forbidden from extending additional credit to any borrower who has a loan that has been, in whole or in part, charged off or adversely classified.
Meanwhile, the board is supposed to develop a written program for independent review of the Bank's loan portfolio.
By the end of May, the board was supposed to replenish the allowance for loan and lease losses for the loans charged off as a result of the most recent examination.
The order also imposed minimum capital levels
While the order is in force, the bank is forbidden from declaring or paying any dividends without the prior written approval of regulators.
The order also addresses limits on brokered deposits and other issues of management, including its earnings performance and strategic planning.
The bank has one location in Ericson. It is owned by Wheeler County Bancshares and has $47.6 million in deposits and $52.2 million in assets, according to the FDIC.
Jack Poulsen, executive vice president, had no comment.
Other banks in Nebraska operating under special regulatory supervision are:
Hastings State Bank; City Bank & Trust of Lincoln; Nebraska Bankers' Bank; Lincoln Federal Savings Bank; Thayer County Bank of Hebron; FirsTier Bank of Kimball; Mid City Bank of Omaha; and First National Bank and Trust of Syracuse.
Farmers Bank of Lincoln and DeWitt State Bank were under special supervision until they were acquired by First State Bank of Lincoln
Two banks in Nebraska have been closed since the recession began more than two years ago: Sherman County Bank and TierOne Bank.
Reach Richard Piersol at 473-7241 or at email@example.com