Another bank shut down in Minnesota

Malaysia News.Net
Friday 12th February, 2010

1st American State Bank of Minnesota, a full service community bank situated in Hancock, Minnesota, with a branch located in Benson, Minnesota, was shut down on Friday February 5 2010 by the Minnesota Department of Commerce.

The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver.

Much of 1st American's problems emanated from its purchase of mortgage loans from BankFirst, a Sioux Falls, South Dakota bank, that went bust last year. The loans, related to real estate development projects in parts of the United States well removed from Minnesota, were largely unrecoverable.

To protect 1st American depositors, the FDIC has entered into a purchase and assumption agreement with Community Development Bank, FSB, Ogema, Minnesota, to assume all of the deposits of the locally owned and controlled-1st American State Bank of Minnesota.

The two branches of 1st American are now operating as branches of Community Development Bank, FSB. Depositors of 1st American State Bank of Minnesota will automatically become depositors of Community Development Bank, FSB. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, the FDIC said in a statement released late Friday afternoon. Customers should continue to use the former 1st American State Bank of Minnesota branches until they receive notice from Community Development Bank, FSB that it has completed systems changes to allow other Community Development Bank, FSB branches to process their accounts as well.

Depositors of 1st American State Bank of Minnesota 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, the FDIC statement said.

As of December 31, 2009, 1st American State Bank of Minnesota had approximately $18.2 million in total assets and $16.3 million in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.1 million.

1st American State Bank of Minnesota is the 16th FDIC-insured institution to fail in the nation this year, and the third in Minnesota. The last FDIC-insured institution closed in the state was Marshall Bank, N.A., Hallock , January 29, 2010.

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