TierOne Corp. in Lincoln, Neb., announced Friday that it plans to shrink its assets by a quarter through a branch sale to Great Western Bank, the Sioux Falls, S.D., unit of National Australia Bank.
Great Western is to pay roughly $39 million for $1.1 billion in deposits, $800 million in loans, $20 million in real estate and 32 branches. TierOne said most of the branches being sold are those it acquired in 2004 when it bought United Nebraska Bank.
"This additional capital will strengthen our ability to continue to address selected asset quality issues and improve our capacity to manage through this challenging economic period," Gilbert G. Lundstrom, TierOne's chairman and chief executive, said in a news release.
After the sale TierOne would have $2 billion in assets and 37 branches in Iowa, Kansas and Nebraska. The deal could close by the end of the year.
At the end of the second quarter its TierOne Bank unit was in compliance with an Office of Thrift Supervision supervisory agreement that called for higher capital ratios.
However, nonperforming assets rose 85% year over year, to $275 million in the second quarter, making up 8.73% of assets. The companies did not say whether any of the loans TierOne plans to sell are nonperforming.
For Great Western the deal would mean expansion in Nebraska, particularly the Omaha market, and western Iowa.