Centennial Bank said Thursday that it plans to combine with Omaha State Bank, an institution that was under regulatory scrutiny for its financial condition and in the public spotlight for its gun-toting chief executive.
Omaha-based Centennial Bank CEO John Sorrell said he would become president and CEO of the combined bank, the name of which has not been decided. Sorrell has been Omaha State Bank's interim CEO since December.
Omaha State Bank last year agreed to reform administrative, lending and operational practices as outlined by the Federal Deposit Insurance Corp. after an examination.
The FDIC scrutiny came after a 2012 first quarter during which loans not being paid as agreed jumped to 5.2 percent of total loans from 3.6 percent a year earlier.
“Omaha State Bank has had some challenges,” Sorrell acknowledged.
He took over after former Omaha State Bank CEO Michael Dahir departed following an incident in which a bank employee said Dahir brought a gun to work, showed it around and pointed it at her. Dahir was not charged with a crime. He told investigators that he displayed the handgun only in a jovial manner.
The financial terms of the bank merger were not disclosed.
It would create a bank with nine branches and $352 million in assets that would be majority- owned by the children of Omaha businessman Walter Scott Jr., chairman emeritus of Peter Kiewit Sons' Inc. and a philanthropist, whose family controls both banks.
The combination is subject to regulatory and shareholder approval, Sorrell said.
John Munn, director of the Nebraska Department of Banking and Finance, said his agency had not received an application seeking regulatory approval for the combination, but he was aware of the plan.
Neither bank held a deposit market share in the Omaha area of more than 1 percent, according to FDIC deposit-share surveys.
As of Sept. 30, the last period for which FDIC information is available, Centennial had 2012 operating income of $641,000 and loans not being paid as agreed of 3.7 percent of total loans. For the same period, Omaha State Bank had operating income of $3.2 million and loans not being paid as agreed of 4.6 percent of loans.
Sorrell said there are no immediate plans to reduce jobs because of the prospect of duplicate positions caused by the combination. Centennial Bank employs about 40 people, Omaha State about 110, Sorrell said.
Centennial Bank operates its flagship branch and headquarters in Sarpy County, at 144th Street and Meadows Boulevard, Sorrell said. For Omaha State Bank, it's 121st Street and West Center Road.
“There is almost no overlap in our retail branches,” Sorrell said. “We are looking to grow, not shrink.”
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