The Federal Deposit Insurance Corp. Friday closed seven banks in four states, the largest number of closures in one day since the agency was founded 50 years ago. All of the institutions were farm banks and all were relatively small.
Four of the banks were in Nebraska -- Bank of Taylor in Taylor, Security State Bank of Edgar, Scroggin & Co. Bank in Oak and Fairfield State Bank in Fairfield. All are owned by Roger Voorhees of Omaha, officials said.
The others are:
-Bank of lockesburg, Lockesburg, Ark., merged into a new bank also called Bank of Lockesburg.
-The Bank of Oregon, Woodburn, Ore., a mutual savings bank that has been acquircd by Alaska Pacific Bancorp. of Anchorage.
-First Trust Bank of Lakefield, Minn. Insured deposits of the Lakefield bank have been shifted to Fulda State Bank of Fulda, Minn. The Lakefield bank will operate as a branch of Fulda.
The FDIC was named receiver for all of the banks.
This brings to 43 the number of bank failures so far this year. The seven closures on one day was the largest number since the FDIC began operating on Jan. 1, 1934. The previous number was six closures last year.
Nebraska has been especially hard hit by problems in the farm sector. Since April 1984, 13 Nebraska banks have been closed, including seven this year. Before Friday, all but two of the closed banks had reopened.
'Generally speaking, all seven of these institutions are small and can be handled without any problem.' Alan Whitney, an FDIC spokesman, said in Washington. 'They all are federally insured.'
Whitney said that 'in each case the failures have involved poor management decisions and in no way reflect any systemic weakness' in farm sector banks. He said each failure would be investigated.
Commenting on the 43 failures to date this year, Whitney said it 'is no surprise to the FDIC. We're not seeing anything that was not anticipated or planned for.'
The FDIC said the Bank of Taylor will reopen Monday as a branch of Union Bank and Trust Co. of Lincoln.
'We will attempt over the weekend to accomplish transactions to merge the (other three) banks into other institutions,' Whitney said.
'If for some reason we can't merge the banks, if in one or more cases there are no bids, we will move quickly to prepare checks and pay off the failed banks' depositors up to the $100,000 limit per depositor,' he said.
The FDIC said Union Bank will assume about $12.2 million in 3,500 deposit accounts at the Taylor bank and its depositors automatically will become depositors of Union Bank subject to court approval, the FDIC said.
The FDIC said Union Bank will pay the FDIC a purchase premium of $10,000 for the Taylor bank. It also will purchase the bank's installment loans, real estate loans and certain other assets for $2.7 million.
To facilitate the transactions, the FDIC will advance $9.6 million to Union Bank and will retain assets of the Taylor bank with a book value of about $11 million.
The FDIC said its claim will have priority over non-depositor creditors and shareholders of the Taylor bank.