TierOne Bank of Nebraska under strict Federal Scrutiny

The regulators have refused a plan of TierOne bank of Nebraska that was submitted, to improve its accounts books. It has been ordered by the federal regulators to find buyer or investor and alternatively to merge with partnership with another entity by the close of April.

The bank has been under strict federal scrutiny by the Office of Thrift Supervision from the early part of 2009 after the bank noted four consecutive quarters of losses because of bad loans.

In a statement the bank said that it has to submit an understanding to better the position of its capital to the federal regulators before April comes to a close. The bank expects money to come in by May unless the regulators decide to stretch the deadlines.

In the last week of January Michael Falbo had been appointed the chairperson and CEO of TierOne. After talks with the regulators he resigned from the both the posts. Falbo and Gil Lundstrom, his predecessor, had resigned from the board of the bank together with three other members of the board.

The bank informed that Charles Hoskins was named as the acting chairperson of the board and James Laphen was appointed the president as well as the acting CEO. Apart from Hoskins and Laphne two others remained on the board of TierOne.

The main troubles of the bank are from bad loans that are not performing. It was made from nine offices in different others states – Arizona, Florida as well as Nevada. These offices have been shut down. The three states have high foreclosure numbers – some of the worst battered states in the country.

In the fall of 2009 the hank had planned to sell 32 of its branches out of a total of 69 to Sioux Falls. Great Western Bank assisted in raising capital. It is still not clear if the sale that was scheduled to be finalized by the first quarter of this year has been completed.

The representatives of TierOne and Great Western did not promptly reply to any queries.

In the early months of 2009 TierOne had inked an understanding with the regulators that would impose strictures on their movements. They would also be expected to keep greater capital reserve as required of thrifts of similar type.

Regulators became alarmed when TierOne reported losses amounting to $98.5 million for four running quarters starting from the end of 2007.

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