The Kansas Office of the State Bank Commissioner closed Heartland Tri-State Bank of Elkhart, Kan., and 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, of Syracuse, Kan. to assume all deposits of the bank.
The four branches of Heartland Tri-State Bank reopened as branches of Dream First Bank, National Association. Depositors of Heartland Tri-State Bank became depositors of Dream First Bank.
As of March 31, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits. In addition to assuming all the deposits, Dream First Bank, agreed to purchase essentially all of the failed bank’s assets.
The FDIC and Dream First Bank also entered into a commercial shared-loss agreement on the loans it purchased from the failed bank. Both entities will share in the losses and potential recoveries on the loans covered by the agreement, which is expected to maximize recoveries on assets by keeping them in the private sector, as well as minimize disruptions for loan customers.
The FDIC estimates a $54.2 million cost to the Deposit Insurance Fund (DIF), created by Congress in 1933 and managed by the FDIC to protect bank deposits. Compared with other alternatives, Dream First Bank’s acquisition was the least costly resolution for the DIF, according to the FDIC.