Minnesota banking regulators on Friday closed Hancock-based 1st American State Bank of Minnesota, marking the 16th bank failure of 2010, and the third in Minnesota.
Community Development Bank of Ogema, Minnesota, agreed to assume all of the deposits of the failed bank.
The Federal Deposit Insurance Corp [FDIC] said the two branches of 1st American State Bank will reopen on Monday as branches of Community Development Bank.
1st American had about $18.2 million in assets and $16.3 million in deposits. The failure is expected to cost the FDIC, which agreed with Community Development Bank to share losses on $11.7 million of 1st American State Bank’s loans and other assets, an estimated $3.1 million (the FDIC expects its deposit insurance fund costs to hit $100 bln over the next four years).
1st American is the 16th bank to fail in the nation this year. The last FDIC-insured institution closed in the state was Marshall Bank, N.A., Hallock , January 29, 2010.
The number of bank failures is expected to rise further in 2010. Last year 140 banks were brought down — the highest annual tally since 1992, — as a result of rising loan defaults, both residential and commercial, and the recession.