Federal regulators close Saint Stephen, Minnesota-based bank, third bank closure of 2010
January 16th, 2010 - 1:11 pm ICT by BNO NewsSAINT STEPHEN, MINNESOTA (BNO NEWS) — Federal regulators on Friday closed the St. Stephen State Bank in Saint Stephen, Minnesota, marking the third U.S. bank failure of 2010 following an economic turbulent year that saw more than one hundred U.S. banks fail.
The St. Stephen State Bank was closed by the Minnesota Department of Commerce after its regular closing time on Friday. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver following its closure, who immediately entered into a purchase and assumption agreement with the First State Bank of St. Joseph, Minnesota, to assume all of the failed bank’s deposits.
The St. Stephen State Bank was founded in 1920 by a group of farmers and business people.
Most, if not all customers, should see no or little service disruptions despite the closure of the institution. On Saturday, the two branches of the St. Stephen State Bank will reopen during their normal business hours as a branch of the First State Bank of St. Joseph.
All of the failed bank’s services, including checks, ATM and debit cards, will remain active. “Checks drawn on the bank will continue to be processed,” the FDIC said in a statement. “Loan customers should continue to make their payments as usual.”
As of September of last year, the St. Stephen State Bank had approximately $24.7 million in total assets and $23.4 million in total deposits. The First State Bank of St. Joseph did not pay the FDIC a premium to assume the deposits of the St. Stephen State Bank, the FDIC said. “In addition to assuming all of the deposits of the St. Stephen State Bank, First State Bank of St. Joseph agreed to purchase essentially all of the failed bank’s assets.”
The FDIC and the First State Bank of St. Joseph entered into a loss-share transaction on approximately $20.4 million of St. Stephen State Bank’s assets. First State Bank of St. Joseph will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.
The FDIC said it estimates that the cost to the Deposit Insurance Fund (DIF) will be $7.2 million. It said First State Bank of St. Joseph’s acquisition of the deposits was the “least costly” resolution.
Friday’s closure was not only the third U.S. bank failure of 2010 but was also Minnesota’s first bank failure since November 6, 2009. Regulators then closed the Prosperan Bank in Oakdale.
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