On the ironic date of Friday, February 13th, the FDIC became the receiver of the failed Sherman County Bank. By the following Tuesday, Heritage Bank of Wood River assumed all of the bank's deposits. It was a dramatic end to months of building turmoil.

John Munn, Director of the Department of Banking and Finance, says the bank's failure is linked to loans the bank made to about 30 farmers for the purpose of meeting margin calls. "Anytime you enter into a futures contract like that, that contract has a value," Munn says. "If grain prices drop, then the producer is going to have to make a margin call and is going to have to put cash into that contract, and so large margin calls became necessary."

The bank's unusual state of affairs can be tracked on its Uniform Bank Performance Report from the Federal Financial Institutions Examination Council.

The data shows in the second quarter, Sherman County Bank had about $80 million in net loans and leases. In the third quarter, the number was only $83 million. But in the fourth quarter, the number spiked to more than $106 million, which was about a $23 million increase.

And when it came to net income, the first six months of 2008, the bank had earned $619,000. But between then and September 30th, the bank registered losses of about $700,000. Officials say this was evidence the bank was sinking.

We tried to talk to the former bank president of the failed Sherman County Bank about the situation, but he was unavailable. However, we did talk to the current bank president at Heritage Bank, and he says depositors have nothing to fear. "Heritage assumed all of the deposits and not just those protected by the FDIC," Loup City Heritage bank president Leo Kringle says.

But while depositors are safe, Attorney General Jon Bruning says the news is much worse for farmers caught in troubled commodities trading through investment firm Prime Trading in Loup City. "It's enough to make you sick," Bruning says. "These are generational farms that have built up this net worth, and they've been wiped out by the activities of a couple of people."

John Munn with the Nebraska Department of Banking and Finance says the Sherman County Bank situation does not reflect the condition of the state's 180 remaining state-chartered banks. He says those banks continue to earn five times the rate of the nation's banks.