Lincoln, Neb.-based TierOne agrees to sell 32 bank branches to SD-based Great Western Bank

Neb.’s TierOne sell 32 branches to SD bank

OMAHA, Neb. — TierOne Bank’s owners announced Friday they agreed to sell 32 bank branches and related assets to Great Western Bank.

Great Western said it would pay a net premium of about $39 million for the assets it is acquiring, which include $1.1 billion in deposits, $800 million in loans and $20 million in real estate associated with the branches.

The deal should help TierOne, which is under strict scrutiny from the federal Office of Thrift Supervision, strengthen its balance sheet.

“Completion of the transaction will fortify the bank’s capital levels,” TierOne CEO Gilbert Lundstrom said. The additional capital will help TierOne address concerns about the quality of certain assets and work through the recession, he said.

Earlier this year, TierOne Corp., the Nebraska-based parent of TierOne Bank, signed an agreement with regulators that restricts certain activities and requires the bank to keep more capital on hand than is typically required for similar thrifts.

Regulators became concerned about TierOne after the bank reported four consecutive quarters of losses totaling $98.5 million from late 2007 into 2008.

TierOne’s recent troubles have primarily been related to nonperforming loans generated by nine loan offices in other states that TierOne closed last summer. Those offices were in states — including Arizona, Florida and Nevada — where foreclosure rates on subprime loans have been high.

The branch sale announced Friday includes three branches in Council Bluffs, Iowa, and 29 in Nebraska. Many were acquired by TierOne in its 2004 acquisition of United Nebraska Bank.

Great Western CEO Jeff Erickson said this deal made sense because it will give his bank 32 branches in the greater Omaha area, up from the 20 it runs now.

“This expansion opportunity fits well with our strategy and enhances our presence and demonstrates our commitment to our communities in the greater Omaha area,” Erickson said.

Great Western is based in Sioux Falls, S.D., but it is a subsidiary of National Australia Bank Ltd., which holds assets of $540 billion and has branches in Australia, New Zealand and the United Kingdom.

TierOne currently holds $3.2 billion in assets and 69 bank branches in Nebraska, Iowa and Kansas. After the deal, TierOne will have 37 branches and roughly $2 billion in assets.

On the Net:

TierOne Corp.: www.tieronebank.com

Great Western Bank: https://www.greatwesternbank.com/