Agency eschews ‘in-depth loss review’ for Nebraska bank, first one closed in 2020

An “in-depth review of loss” will not be conducted over the failure of a Nebraska bank early this year that cost the federal bank savings insurance program about $14 million in losses, the agency said late last week.

In a “Failed Bank Review” for Ericson State Bank of Ericson, Neb., the Federal Deposit Insurance Corp. (FDIC) said related-entity lending by the bank did not pose substantial risk to the bank until after the agency’s 2016 examination. During the next FDIC exam in 2019, the agency said, it identified the risk, and examiners concluded that “Board and Management performance were ‘critically deficient’ and downgraded the Bank’s composite rating from a ‘2’ to a ‘4.’”

“Given the FDIC identified the risk and took action to address it in 2019, the unusual circumstances do not warrant an in-depth review of the loss, the FDIC stated.

Ericson State Bank was the first bank to fail in 2020. The state Nebraska Department of Banking and Finance closed the bank in February. At that time, the bank held $100.9 million in assets.

Failed Bank Review, Ericson State Bank

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