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LINCOLN, Neb. (AP) — Federal regulators have settled a lawsuit against former officials of defunct TierOne Bank for $6.5 million.
A motion to dismiss the lawsuit was filed Tuesday, federal court records show. The Federal Deposit Insurance Corp. filed the lawsuit May 31 against eight former executives and board members. It sought $40 million, the Lincoln Journal Star reported (http://bit.ly/1dsXwPi ).
The FDIC accused the officials of improperly approving risky loans that contributed to the bank's failure. The officials denied any personal liability for the bank's failure, and they don't admit any wrongdoing under the terms of the settlement.
The FDIC took over TierOne on June 4, 2010, and Great Western Bank, based in Sioux Falls, S.D., acquired the assets and deposits. The FDIC said then that TierOne had too many bad loans on its books and lacked sufficient capital to cushion losses. The bank had negative earnings in 10 of the previous 11 quarters.
The bank, established in 1907, had 59 branches in Nebraska, nine in Iowa and one in Kansas. In 2002 it changed its name from First Federal Lincoln Bank to TierOne.
TierOne suffered from high concentrations of construction, land and commercial real estate loans in markets hit by the real estate bust, according to the regulators.
The lawsuit said the bank's top loan officer in Las Vegas earned bonuses for originating large loans, but never had any accountability for how those loans performed.
The FDIC said the bank extended the terms of its bad loans in ways that concealed its financial situation, and officials ignored TierOne's own loan policy rules in approving the loans.
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Information from: Lincoln Journal Star, http://www.journalstar.com
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