Lake Maxinkuckee Its Intrigue History & Genealogy Culver, Marshall, Indiana

1984 Merger of State Exchange Bank and Farmers State Bank -



1984 - Apr - bank officials submitted a merger application to the FDIC and the Indiana Department of Financial Institutions.

1984 - Aug 15 - Bank merger rejected

    PLYMOUTH The Federal Deposit Insurance Corp. tentatively has rejected the proposed merger of State Exchange Bank of Culver and Farmers State Bank of LaPaz, bank officials announced.

    The merger is a major part of the planned reorganization of the bankrupt State Exchange Finance Co.

    However, the FDIC has agreed to accept a petition for reconsideration of the merger, the officials noted.

    "We think that with further reflection upon the benefits of our transaction with SEFCO to the creditors of SEFCO, the community, the banks and the FDIC itself, the FDIC will favorably reconsider the proposed merger," A. Lee Campbell chief executive officer of State Exchange Bank, said in a statement released today.

    "The implications of this transaction go well beyond the run-of-the-mill merger transactions," added Campbell "And we expect the State Exchange Bank as well as the other parties to the reorganization to utilize every means available to Impress this important factor upon the FDIC."

    " SEFCO owns the Farmers State Bank and has agreed to turn It over to State Exchange for about $4.8 million In cash and stock to go to creditors of the finance company.

    Without FDIC approval of the merger, it Is generally believed that the Chapter 11 reorganization and Its estimated 88 percent payback to creditors would be switched to a lower-paying Chapter 7 case and the State Exchange Bank would be closed. - South Bend Tribune


1984 Nov 7 - Upstate bank merger plan tabled by FDIC directors
    STAR STAff REPORT Culver, Ind. The controversial merger of two northern Indiana banks now depends upon the banks raising more capital and acknowledging that bank officials will not be free from liability for past actions.

    The conditions were given Monday when the Federal Insurance Deposit Corp. (FDIC) board of directors tabled the latest plan to merge the Stale Exchange Bank in Culver and the Farmers State Bank in LaPaz.

    THE MERGER is crucial to the reorganization of a bankrupt finance company which owned the Farmers Bank and was the sister company of the Exchange Bank located in this northern Indiana community of 1.600.

    The State Exchange Finance Co. (SEFCO) filed for Chapter 11 bankruptcy protection Dec.30, 1982.

    To recoup some of an estimated 26 million claimed by 791 unsecured creditors, SEFCO sought the merger of the two banks as well as other features of a complex reorganization plan.

    Some wary creditors have opposed the plan. They resent one feature which asks them to forfeit their right to sue former SEFCO officials for any wrongdoing that may have caused SEFCO's collapse.

    THEY BELIEVE mismanagement and perhaps criminal wrong doing forced SEFCO's bankruptcy. SEFCO officials blame the collapse on a failing farm economy and a "run" on the finance company.

    This week's FDIC action is the latest step in merger proponents efforts to fashion an acceptable union.

    In August, the FDIC called an original plan unpromising

    "Consummation of the proposed transaction would result in the formation of a bank with a very large volume of unsatisfactory assets, uncertain earning prospects and a very heavy volume of contingent liabilities," an FDIC statement said. SINCE THEN, bank officials have pledged to submit to FDIC performance criteria and have raised more capital.

    Also the office of U. S.Sen. Richard G. Lugar (Rind.) has intervened, saying denial of the merger could have a grave impact on Marshall County.

    Monday's decision did not specify how much additional capital the bank would need to win approval and gives no deadline.

    The acknowledgement that the FDIC "is not waiving any right to proceed against anybody or collect on any claims is pretty much a boilerplate technicality," said Donald F. Pfeiffer,fDIC supervising review examiner in Washington, D. C. Indianapolis Star


1984 - Dec 19, 1984 - LaPaz, Culver banks merge cleared
    By PAUL DODSON Tribune Staff writer

    PLYMOUTH Although it said no twice, the Federal Deposit Insurance Corp. now says it will approve the merger of State Exchange Hank of Culver and the Farmers State Bank of LaPaz,Washington office of Sen Richard Lugar, R-Ind.

    The impending approval of the two Marshall county hanks came after apersonal lobbying effort by Lugar in talks with William M Isaac, FDIC chairman

    The FIDC staff had twice recommended against the merger, Luger interceded and asked Isaac to approve the merger", said Andy Fisher, Sen Lugar's deputy. The merger is a major part of the planned reorganization of the bankrupt State Exchange Finance Co of Culver. SEFCO owns the Farmers State Bank and has agreed to turn it over to State Exchange for about $4.5 million in cash and stock to go to thie creditors of the finance company. Without FDIC approval of the merger, It Is likely that the Chapter 11 bankruptcy (reorganization) and its estimated 86 percent payback to creditors would be switched to a lower paying Chapter 7 (liquidation) case and the State Exchange Bank would be closed, "I twice interceded with the FDIC, arguing that they consider the broader economic and social consequences of denying this merger. These consequences included the potential loss of millions of dollars for many citizens in northern Indiana, the loss of the largest bank in Marsliall County and the attendant loss of confidence in the finsnvisl institutions of the locality" said Lugar in a prepared statement.

    Lugar said the details of the bank merger will be announced later by the FDIC.

    Bank officials at Culver were not available for comment. However, a spokesman said a press conference on the matter will be held Thursday

    A Lee Campbell, chief executive officer of the State Exchange Bank, had said in August, "The implications of this transaction go well beyond the run-of-the-mill merger transactions, and we expect the State Exchange Bank as well as the other parties to the reorganization to utilize every means available to impress this important factor upon the FDIC".

    In July, federal distrid court had followed creditors in confirming tlie 86 percent return of payments to credi tots proposed by SEFCO Creditors were in favor of Ha reorganization plan by a margin of more than 9 1. - South Bend Tribune


1984 - Dec 19 Merger of Banks Ok'd
    WASHINGTON (UPI) - Federal authorities have approved the controversial merger of two northern Indiana banks.

    The Federal Deposit Insurance Corp. board of directors on Monday approved the merger of the State Exchange Bank of Culver and the Farmers State Bank of LaPaz, citing increased capital and reduced contingent liabilities.

    The FDIC staff twice had recommended disapproval of the union. The new bank will be called the NorCen Bank and will have five offices.

    The new bank will be called the NorCen Bank and will have five offices. More details about the merger will be announced banks OKd tomorrow at Plymouth, Ind., officials said.

    Total resources for the State Exchange Bank are $102.7 million and for the Farmers State Bank $41.7 million, according to FDIC records.

    The merger is linked to the reorganization of the financially ailing State Exchange Finance Co. (SEFCO), which owns the Farmers Bank. SEFCO filed for Federal bankruptcy law protection from its creditors Dec.30, 1982.

    To recoup some of an estimated $26 million claimed by 791 unsecured creditors, SEFCO sought the merger of the banks among an array of reorganization measures. -Indianapolis News


1984 - Dec 19 - Bank Merger Approved
    WASHINGTON (UPI) - Federal authorities have approved the merger of two northern Indiana banks, although it is an improper marriage in the eyes of some creditors.

    The Federal Deposit Insurance Corp. board of directors approved ther-merger of the State Exchange Bank of Culver and the Farmers State Bank of LaPaz Monday, citing increased capital and reduced contingent liabilities.

    The FDIC staff had twice recommended disapproval of the union. The new bank will be called the NorCen Bank and will have five offices. More details on the merger will be announced at Plymouth Thursday, officials said.

    Donald F. Pfeiffer. FDIC supervising review examiner, said improvements in the merged bank's financial capabilities justified the approval.

    Investors have pledged an additional $850,000 to the new entity since the FDIC first denied the merger request in August, said R. Matthew Neff, State Exchange Bank's Indianapolis lawyer.

    Total resources for the State Exchange Bank are $102.7 million and for the Farmers State Bank $417 million, according to FDIC records.

    Sen. Rtchaxd Lugar, R-lwL, said in a statement Tuesday that he twice interceded with the FDIC on behalf of the merger effort, arguing FDIC should "consider carefully the broader economic and social consequences of denying this merger."

    "These consequences included the potential loss of millions of dollars for many citizens in northern Indiana, the loss of the largest bank in Marshall County and the attendant loss of confidence in the financial institutions of the localities," he said.

    The merger is linked to .the reorganization of the financially ailing State Exchange Finance Co. (SEFCO), which owns the Farmers Bank. SEFCO filed for federal bankruptcy law protection from its creditors Dec. 30, 1982.

    To recoup some of an estimated $26 million claimed by 791 unsecured creditors, SEFCO sought the merger of the banks among an array of reorganization measures.

    A minority of creditors complained the plan would deny them the right to sue former SEFCO officials.

    The SEFCO officials have insisted they did no wrong, but were victims of a failing farm economy and a "run" on their company. The first FDIC statement in August on the merger said the merged bank faced heavy liabilities pressing on uncertain assets. In November the FDIC tabled the merger request pending the banks' getting more capital.

    A federal lawsuit by more than 20 creditors was filed in South Bend last month charging fraud and mismanagement in SEFCO's collapse, and seeking at least $2.5 million from the State Exchange Bank and certain officers and directorsv That bank and SEFCO shared many officials.

    The lawsuit did not affect merger approval because it was expected, bank officials said. - Noblesville Ledger


1984 - Dec 198 - Cilver, LaPaz banks merger approved
    < By DEBORAH PINES

    The controversial merger of two northern Indiana banks has been approved by federal banking authorities.

    Citing increased capital and re duced contingent liabilities, the Fed eral Deposit Insurance Corp. (FDIC) board of directors Monday OKd the union of the State Exchange Bank of Culver, and the Farmers State Bank of LaPaz.

    THE STAFF of FDIC twice had recommended against the merger's approval.

    "There have been significant im provements in the capital structure and reduction in contingent liabilities that allowed the (FDIC) board at this point to make a judgment it could be approved." said Donald F. Pfeiffer, FDIC supervising review examiner in Washington, D C.

    Investors have pledged an additional $850,000 to the new entity since the FDIC first denied the merger request in August, said R. Matthew Neff. the State Exchange Finance Bank's Indianapolis attorney. Also, several lawsuits against the bank and bank officials have been settled and some threatened suits were never filed, Neff said.

    THE MERGER is crucial to the reorganization of a bankrupt finance company which owns the Farmers Bank and was the sister company of the State Exchange Bank in Culver. Culver is a Marshall County community 30 miles south of South Bend.

    The State Exchange Finance Co. (SEFCO) filed for Chapter 11 bank ruptcy protection Dec.30, 1982.

    To recoup some of an estimated $26 million claimed by 791 unsecured creditors, SEFCO sought the merger of the two banks as well as other features of a complex reorganization plan.

    A MINORITY of creditors has opposed the plan. They resent one feature which requires them to for felt their right to sue former SEFCO officials for any wrongdoing that may have caused SEFCO's collapse.

    They believe mismanagement and perhaps criminal wrongdoing forced SEFCO's bankruptcy.SEFCO officials blame the collapse on a failing farm economy and a "run" on the finance company. FDIC officials first denied the merger request Aug. 8. An FDIC statement said the merged bank faced "a very large volume of unsatisfactory assets, uncertain earn- ing prospects and a very heavy volume of contingent liabilities."

    IN NOVEMBER, the FDIC board tabled the merger request pending the banks' raising more capital. Also, bank officials were reminded that the FDIC or other authorities are entitled to pursue legal action for any past wrongdoing.

    A lawsuit seeking at least $2.5 million from the State Exchange Bank and certain officers and directors was filed last month in U.S. District Court in South Bend. Filed on behalf of more than 20 creditors, it charges fraud and mismanagement in SEFCO's collapse. The State Exchange Bank and SEFCO shared many officers and directors.

    THE LAWSUIT did not affect merger approval because it was expected, bank officials said.

    Meanwhile, to bolster the merger request, bank officials pledged to submit to FDIC performance criteria. Also, the office of U.S. Sen. Richard G. Lugar (Rind.) inter vened, saying denial of of the merger could have a grave impact oij Marshall County.

    "I twice interceded with the FDIC, arguing that they consider , carefully the broader economic aad social consequences of denying thiaj . merger," Lugar said in a statement Tuesday.

    "THESE CONSEQUENCES in; eluded the potential loss of millions of dollars for many citizens in northern Indiana, the loss of the largest, bank in Marshall County and the attendant loss of confidence in thd financial institutions of the local ities," Lugar said.

    Total resources for the State Exi change Bank are $102,716,000, ac cording to FDIC records. The Farmers State Bank's total assets are listed as $41,750,000.

    The merged bank will be called the NorCen Bank and will have five offices.

    More details on the merger will, be revealed Thursday in a press, conference scheduled for 3 p.m. at the Plymouth Public Library. -The Indianapolis Star


====== 1984 - Dec. 21 - 2 upstate banks to merge under FDIC guidelines
    STAR STATE REPORT

    Plymouth, Ind - A new bank to be created from the merger of two northern Indiana banks will follow certain federally mandated guide lines, bank officials announced here Thursday The NorCen Bank, formed "through a union of the State Ex change Bank in Culver and the Farmers State Bank in LaPaz. will maintain an adjusted capital ratio of at least 7 percent of total assets.

    Also, the new bank will form between 30 days and six months from Monday, when the merger was conditionally approved by the Federal Deposit Insurance Corp. (FDIC).

    Twice before, the FDIC staff had recommended against approval.

    "We are delighted that the FDIC has demonstrated its faith in us by approving the merger." A. Lee Campbell, NorCcn's president and chief executive officer, said here Thursday in announcing the bank's intentions to follow the guidelines.

    "Thanks to this action, we will be in a much stronger position to serve our existing customers and to attract new ones."

    The merger is crucial to the reorganization of the bankrupt State Exchange Finance Company (SEFCO). SEFCO owns the Farmers Bank and was the sister company of the State Exchange Bank.

    SEFCO filed for Chapter 11 bankruptcy protection Dec. 30, 1B82. Bank officials said that now SEFCO creditors may expect as much as an 86 percent payback on their uninsured investments.

    Already. SEFCO noteholders have been paid 10 cents on the dollar. An additional 40 cents on the dollar distribution is expected within a couple months of the new bank's opening

    NorCen will have offices in La Paz. Bremen. Argos.

    Culver and Plymouth. It will have more than $135 million in assets.

    The merger came nine months after bank officials submitted a merger application to the FDIC and the Indiana Department of Financial Institutions. Bank officials thanked U.S. Sen ators Richard G Lugar and Dan Quavle, both Indiana Republicans, and" U.S. Rep. - Indianapolis Star


1984 - Dec 21 - Merged banks called NorCen
    Bv JOHN Wolcox Tribune Plymouth Bureau

    PLYMOUTH - Officials of the State Exchane and Farmers State hanks Thursday announced the creation of NorCen Bank, the product of the recently approved merger of the two Mandusll County financial institullions.

    The new NorCen Bank will operate in the five Marshall County community's where the State Exchange and Farmers State thinks presently oprate

    The offtcuil merger will not occur until after Jan 18, due to Federal Department Insurance Corp stipuulations, which also include receiving K an exemption to a rule prohibiting hanks from buying the assests of an affiliate

    Bank officials, who had been working toward a solution for the bankrupt State Exchane Finance Corp. obviously were relieved with the FDICs decision. Hurschell Umbaugh, State Kxchange president said, "The conclusion reached is a benefit to everybody, and I mean everybody"

    Farmers Stale Bank President Mike Schell, who will become vice president and controller of NorCen call the merge "the best thing that could of happened. It feels terrific to have an new beginning".

    FIve conditions are to bet met under the FDICs reorganization plan, two of which Umbaugh said are most important. first, an additional $850,000 of ne capital mist be raised. Next the new bank must have a capital structure of at least seven percent of its total assets. Official said the bew bank will have assest totalling more than $125 million.

    Other requirements of the plan call for the merger to take place after 30 days, but before six months. The FIDC also reserves the right to cancel the agreement at any time. "We intend to fully meet these conditions", Umbaugh said.

    The new bank will assume the lirigation still facing SEFCO. Two major lawsuits are pending against the corporation, one in Marshall Curcuit COurt and the other in federal District Court in South Bend.

    Randy Wilson, ann attorney for State Exchange, said the suits probebly will not be changed due to the merger and that the banks attorney's intend "to vigorously defend the corportation".

    Ben Sahiro, of a Chicago-based law firm representing SEFCO, said die to a timing problem, about 500 preference suits still will be filed against former SEFCO investors.

    Shapiro explained that the suts will be dropped as long as the merger goes thrugh. Due to the statute of limitations, the suits will be viod if not filed by Dec. 20. SHapiro said if the merger would not occur, the finance company's creditors would need to seek other ways to recover their losses.

    R Mattbew Neff, legtal counsel for the State Exchanite Bank, said the new hank "will continue to negotiate closing documents for SEFCO, with plans to liquidate SEFCOat 86 percent within three years. What will be left is NorCen Bank, with assets of more than $135 million "

    SEFCO, which owns t he Farmers State Bank, agreed to turn it over to the State Exchange Bank for about $4.5 million in cash and stock to go to the creditors of the finance company

    Bank officials said no major personnel changes will ts made at any of the hank's offices, although some Job responsibilitus may change a little. Bank employees were notified of the reorganisation plan Thursday morning

    Under reorganization Bryce Burton becomes chairman of the board, Campbell becomes president and chief operating officer. Arthur L Shafer becomes executive vice president and Schell becomes vice paesident and controllor - South Bend Tribune


1985 - NorCen Bank NorCen Financial Center Emerges...