Regulators Close Another U.S. Bank

The FDIC announced Friday the “Heartland Tri-State Bank was closed by the Kansas Office of the State Bank Commissioner.”

“The Federal Deposit Insurance Corporation (FDIC) was subsequently named Receiver,” the FDIC stated.

“Dream First Bank, National Association (N.A.), Syracuse, KS assumed all deposit accounts and substantially all the assets. All shares of stock were owned by the holding company, which was not involved in this transaction,” the announcement continued.

BREAKING: Heartland Tri-State Bank of Elkhart, Kansas becomes the fifth US bank to fail this year. Bank closed by regulators pic.twitter.com/7YFLCfqKJv

— Insider Paper (@TheInsiderPaper) July 28, 2023

Read the full FDIC press release:

Heartland Tri-State Bank of Elkhart, Kansas, was closed today by the Kansas Office of the State Bank Commissioner, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas, to assume all of the deposits of Heartland Tri-State Bank.

The four branches of Heartland Tri-State Bank will reopen as branches of Dream First Bank, National Association, on Monday, July 31, under normal business hours. This evening and over the weekend, depositors of Heartland Tri-State Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Depositors of Heartland Tri-State Bank will become depositors of Dream First Bank, National Association, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Heartland Tri-State Bank should continue to use their existing branch until they receive notice from Dream First Bank, National Association, that it has completed systems changes to allow its branch offices to process their accounts as well.

As of March 31, 2023, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits. In addition to assuming all of the deposits, Dream First Bank, National Association, agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Dream First Bank, National Association, are also entering into a commercial shared-loss agreement on the loans it purchased of the former Heartland Tri-State Bank. The FDIC as receiver and Dream First Bank, National Association, will share in the losses and potential recoveries on the loans covered by the shared-loss agreement, which is projected to maximize recoveries on the assets by keeping them in the private sector. The agreement is also expected to minimize disruptions for loan customers.

Customers with questions about the transaction should call the FDIC toll-free at 1-866-431-1725. The phone number will be operational this evening until 9:00 p.m. Central Time (CT); on Saturday from 9:00 a.m. to 6:00 p.m. CT; on Sunday from noon to 6:00 p.m. CT; on Monday from 8:00 a.m. to 8:00 p.m. CT; and thereafter from 9:00 a.m. to 5:00 p.m. CT. Interested parties also can visit the FDIC’s website.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $54.2 million. Compared to other alternatives, Dream First Bank, National Association’s, acquisition was the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.

Heartland Tri-State Bank is the fifth U.S. bank failure this year.

JUST IN: 🇺🇸 $139 million bank Heartland Tri-State officially closed by regulators.

The 5th US bank failure this year. pic.twitter.com/bvWJaYWlrv

— Bitcoin Magazine (@BitcoinMagazine) July 28, 2023

Cryptopolitan reports:

Heartland Tri-State Bank’s collapse marks the fifth bank collapse in the United States in 2023. US regulators seized the struggling First Republic Bank (FRB) on May 1, 2023, to stop more unrest in the banking industry. They immediately sold all their deposits and assets to the nation’s largest bank, JPMorgan Chase. Notably, the FRB collapsed despite receiving a $30 billion lifeline from 11 of the biggest banks in the nation in mid-March.

Silvergate Capital Corporation then announced plans to voluntarily liquidate itself on March 8 due to losses sustained due to the failure of cryptocurrency exchange FTX. A well-known lender to technological start-ups and venture capital firms in the San Francisco Bay Area, Silicon Valley Bank, was then shut down by US regulators two days later. On March 12, New York officials closed down the cryptocurrency-focused Signature Bank to quell a growing financial crisis brought on by the Silicon Valley Bank’s closure.

After Washington Mutual, which failed during the 2008 global financial crisis and was bought by JPMorgan, First Republic, Silicon Valley Bank, and Signature Bank are now the second, third, and fourth largest bank failures in US history, respectively. Together, the three recently defunct banks possessed $532 billion in assets, above the $526 billion (adjusted for inflation) held by the 25 defunct banks in 2008.

Numerous factors contributed to the current regional banking crisis, including high levels of uninsured deposits, regulatory rollbacks, and lax US Federal Reserve oversight. These factors have led to sharp drops in the market value of Treasury bonds and government-backed mortgage securities held by regional banks.