PRECEDE Lincoln, Neb.
Undated (AP) _ Federal and state banking authorities shut down six banks in three states Friday, all because of shaky loan portfolios that threatened the institutions’ viability and customers’ deposits.
Within a matter of hours, the Nebraska Department of Banking and Finance closed four banks in that state, the federal government shut down a community bank in Lockesburg, Ark., and the state shut down a bank in Lakefield, Minn.
In Nebraska, the Bank of Taylor was closed late Friday morning.
A few hours later, the state Banking Department closed three banks owned by Roger Voorhees of Omaha: Fairfield State Bank in Fairfield, Scroggin and Co. Bank in Oak and Security State Bank of Edgar.
All six banks were insured by the Federal Deposit Insurance Corp., which insures deposits up to $100,000 per customer.
In Nebraska and Minnesota, state officials laid the banks’ troubles to a high reliance on income from agricultural loans, many of which went bad due to the nation’s troubled farm economy.
Roger Beverage, Nebraska banking director, said: ″All of these situations are related directly to agricultural loan problems.″
Minnesota Commerce Commissioner Michael Hatch said 55 percent of the loans of First Trust Bank of Lakefield were agriculture-related and nearly half of the problem loans at the bank were in that category.
In Arkansas, regional FDIC director Ken Gorham said the Bank of Lockesburg was closed ″due to excessive loan losses that depleted the bank’s capital, resulting ultimately in our being appointed receiver of the bank.″
Lockesburg was being taken over by a newly chartered state bank, also to be called Bank of Lockesburg, and will begin with an infusion of $14.8 million from the FDIC’s more than $16 billion insurance fund, contributed to by all FDIC member banks nationwide.
In Minnesota, First Trust was being taken over as a branch of Fulda State Bank which took over another failed bank in February.
The FDIC will transfer First Trust’s deposits of about $20 million to Fulda, said FDIC spokesman BIll Olcheski.
In Nebraska, Bank of Taylor is to reopen Monday as a branch of Union Bank and Trust Co. of Lincoln, the FDIC said. The Lincoln bank will assume about $12.2 million in Taylor’s deposits and receive $9.6 million from the FDIC.
FDIC spokesman Alan Whitney in Washington said the agency will try to arrange a buyer or buyers for the three Vorhees banks over the weekend.
He had no financial details on the banks.
Beverage said the three Voorhees banks ″are within 10 miles of one another, and we knew if we closed one, it would start a run on the others and given the situation at all three banks, it was clear that this action was warranted.″