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Second Bank Failure of the Year: 1st Regents Bank in Minnesota

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This was another Friday with just one bank failure. 1st Regents Bank was closed by Minnesota regulators, and the FDIC entered into a purchase and assumption agreement with First Minnesota Bank to assume all of the failed bank's deposits. This was the second bank failure in the nation this year and the first in Minnesota.

The closure of 1st Regents Bank was typical with the FDIC arranging for another bank to assume all deposits. The FDIC had the following message in its Q&As:

No one lost any money on deposit as a result of the closure of this bank. All deposits, regardless of dollar amount, were transferred to First Minnesota Bank.

CD customers at 1st Regents Bank will have to wait to see what happens with the rates. The FDIC has its typical message about interest rates in its Q&As:

Interest on deposits accrued through close of business on January 18, 2013, will be paid at your same rate. 1st Regents Bank's rates will be reviewed by First Minnesota Bank and may be lowered; however, you will be notified in writing of any changes. You may withdraw funds from any transferred account, regardless of whether your interest rate changes, without early withdrawal penalty until you enter into a new deposit agreement with First Minnesota Bank.

The Minneapolis / St. Paul Business Journal has some additional details describing the problems 1st Regents Bank had that led to the failure:

The bank has lost nearly $11.15 million on bad loans since it was last profitable in 2007, according to data from the Federal Deposit Insurance Corp. The bank’s assets declined from $90.88 million at the end of 2009 to $50.21 million at the beginning of the fourth quarter.

No credit unions failed this week. So far this year there has been only one credit union failure.

Below is the summary of the today's bank failure:

2nd Bank Failure of 2013 (1st in Minnesota)

  • Closed Bank: 1st Regents Bank, Andover, MN
  • FDIC Press Release
  • Size: 1 branch, $50.2 million in assets and $49.1 million in deposits
  • Acquiring Bank: First Minnesota Bank, Minnetonka, MN
  • Possible Uninsured Deposits: all deposit accounts, including brokered deposits, have been assumed by First Minnesota Bank (FDIC Q&A)
  • Rate Changes: 1st Regents Bank's rates will be reviewed by First Minnesota Bank and may be lowered (FDIC Q&A)
  • Estimated Cost to Deposit Insurance Fund: $10.5 million
  • Enforcement Action: FDIC 3/24/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 326.75% at DepositAccounts.com (see financial rating note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Ratings at DepositAccounts.com and BauerFinancial are based on September 30, 2012. Ratings at Bankrate.com are based on June 30, 2012 data.

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