McFarland State Bank CEO aims to create 'normal' environment at former Evergreen branches

E. David Locke, chief executive of McFarland State Bank, knew his bank had done the right thing when he went to newly acquired Evergreen State Bank's main office in Stoughton last Saturday — the day after Evergeen was closed and taken over by the McFarland bank — and met a customer carrying cookies.

The customer thanked Locke for stepping in to help the struggling bank, said he was glad the owners are local, then gave the box of cookies, from Fosdal Home Bakery across the street, to Evergreen's staff.

"It was really heartening to me," said Locke. "It tells you what kind of loyalty these customers have."

Locke has been visiting McFarland State Bank's new branches in Stoughton, Sun Prairie and Janesville this week, meeting employees and customers.

"This all happened so quickly," said Locke. He was told on Wednesday the acquisition would go through just two days later, on Friday, Jan. 28.

"Our goal is to create an environment where it's business as usual," he said.

Evergreen State Bank is the fourth Wisconsin bank to be closed by regulators since 2009 and the first in the Madison area since 2003, when the First National Bank of Blanchardville failed due to fraudulent loans.

Evergreen had been under orders from the Federal Deposit Insurance Corp. since July 2009 to decrease its bad loans and develop long-term improvement plans. It was placed on the FDIC's Problem Institution List in March 2009, a spokesman disclosed this week.

State officials have been closely watching Evergreen, as well as about 40 other Wisconsin banks with formal administrative actions against them, said Michael Mach, administrator of the state Department of Financial Institution's banking division.

As for what prompts regulators to shut a bank, Mach said, "There is not one isolated threshold or trigger. There are always multiple things that work in these decisions."

Records filed with the FDIC show Evergreen's financial deterioration over the past five years, from Dec. 31, 2005, to Sept. 30, 2010:

• Non-current loans rose from $2.8 million, or 1.9 percent of all loans to $17.3 million, or 11.1 percent.

• Net income of $2.1 million became a net loss of $21.1 million.

• The total risk-based capital ratio — considered the bank's cushion in case of losses — fell from 12.1 percent, or well capitalized, to 2.5 percent, or critically undercapitalized.

About one month before Evergreen was closed, the FDIC asked for bids on its assets (primarily loans) and deposits. Eight bids were submitted by three bidders by the Jan. 18 deadline, an agency spokesman said. Names of the bidders and terms have not been released.

From a one-branch bank with 42 employees and $352 million in assets, McFarland State Bank has grown now to five branches with 100 employees and $580 million in assets.

One big change will be that former Evergreen branches will be able to lend money again and McFarland State Bank can raise its lending limit to $9 million from $7.5 million.

Stoughton Mayor Donna Olson said she thinks McFarland State Bank will be "a stabilizing force ... We're anxious to welcome them to the community and put an end to the concerns about Evergreen," she said.

The past couple of years, as problems grew, have been traumatic for Evergreen's employees and customers, Locke said. "Yet they stuck it out. They didn't give up. They hung in there," he said.

The FDIC is asking any creditors with claims against Evergreen to submit them by May 4. Information on submitting claims is available at www.fdic.gov.