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State regulator closes Nebraska-based Ericson State Bank

The Nebraska Department of Banking and Finance closed Ericson State Bank on Feb. 14 and appointed the Federal Deposit Insurance Corp. as receiver.

The FDIC entered into a purchase and assumption agreement with Milford, Neb.-based Farmers and Merchants Bank to assume all of the deposits of Ericson, Neb.-based Ericson State Bank. In addition to assuming all of the deposits, Farmers and Merchants Bank agreed to purchase about $9.6 million of Ericson State Bank's assets. The FDIC will retain the remaining assets for later disposition.

As of Dec. 31, 2019, Ericson State Bank had approximately $100.9 million in total assets and $95.2 million in total deposits, according to the FDIC's news release.

The sole branch of Ericson State Bank will reopen as a branch of Farmers and Merchants Bank on Feb. 18. Depositors of Ericson State Bank will automatically become depositors of Farmers and Merchants Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $14.1 million. Compared to other alternatives, Farmers and Merchants Bank's acquisition was the least costly resolution for FDIC's deposit insurance fund.

Ericson State Bank is the first FDIC-insured institution to fail this year.