The Federal Deposit Insurance Corp. took over TierOne Bank, based in Lincoln, Neb., with about $2.8 billion in assets. Great Western Bank, based in Sioux Falls, S.D., agreed to acquire the assets and deposits of the failed bank. In addition, the FDIC and Great Western Bank agreed to share losses on $1.9 billion of TierOne Bank's loans and other assets.
The failure of TierOne Bank is expected to cost the deposit insurance fund $297.8 million.
Just Friday, TierOne said it had agreed to a new set of rules imposed by the federal Office of Thrift Supervision, giving it an additional six weeks to shore up its capital position. The thrift agency had said TierOne "engaged in unsafe or unsound banking practices," carrying too many bad loans on its books and lacking sufficient capital as a cushion against losses.
The bank had negative earnings in 10 of the last 11 quarters.
TierOne suffered from high concentrations of construction, land and commercial real estate loans in markets hit by the real estate bust, including California, Florida and Nevada, according to the thrift regulators.
The bank, established in 1907, had 59 branches in Nebraska, nine in Iowa and one in Kansas.
The FDIC also seized First National Bank, based in Rosedale, Miss., with $60.4 million in assets, and Arcola Homestead Savings Bank in Arcola, Ill., with about $17 million in assets.
Jefferson Bank, based in Fayette, Miss., agreed to acquire the assets and deposits of First National Bank. The FDIC and Jefferson Bank agreed to share losses on $43.5 million of the failed bank's loans and other assets.
The FDIC was unable to find a buyer for Arcola Homestead Savings Bank, and it approved the payout of the institution's insured deposits. The agency said it will mail checks to depositors for their insured funds on Monday.
The failure of First National Bank is expected to cost the deposit insurance fund $12.6 million; that of Arcola Homestead is expected to cost $3.2 million.
The closure of Arcola Homestead brought to 12 the number of bank failures this year in Illinois, a state with one of the highest concentrations of bank collapses and where the meltdown in the real estate market brought an avalanche of soured mortgage loans. California, Florida and Georgia also are high on the list of states with concentrated bank failures.