A Small Kansas Bank Is Fourth Bank To Fail In 2023


Kansas state regulators closed Heartland Tri-State Bank on Friday, July 28th. This is the fourth bank to fail in 2023. Unlike the first three failed banks, Heartland Tri-State Bank was small, with four branches and assets of $139 million. As a comparison, the first three banks that failed this year each had assets over $100 billion. Friday’s bank failure is a return to the typical bank failure that occasionally took place since the 2008 financial crisis. The large majority of the banks that failed during this time were small community banks.

Also, unlike the first three 2023 bank failures, the cause of Heartland Tri-State Bank’s failure had no apparent connection to interest rate risk and similar issues facing the banking industry today. According to the Kansas Office of the State Bank Commissioner press release, “Heartland Tri-State Bank became insolvent due to an isolated event.”

One interesting thing to note regarding this bank failure was the cost to the FDIC’s Deposit Insurance Fund (DIF). The cost is based on the shared-loss agreement on the loans. The FDIC and Dream First Bank will share in the losses. According to the FDIC press release, the cost to the DIF is estimated to be $54.2 million. This is much higher than the DIF losses of past failures of banks of similar size. For example, the DIF loss of First City Bank of Florida (which had $135 million in assets when it failed in 2020) was only $10 million.

Update 8/8/23: Information about the cause of this bank failure was reported by this American Banker article, Regulator: Failed Kansas bank 'victim of a scam':

The call report with the FDIC "contained no indicators that the bank was on the verge of failing, much less such an expensive failure given the size of the bank," said Bert Ely, a principal at bank consulting firm Ely & Co.

Impact on Depositors

One similarity with the first three bank failures is that no depositors lost money, even depositors with funds that were above the FDIC coverage limits. This is due to the purchase and assumption agreement that the FDIC arranged with the acquiring bank. The FDIC press release reads as follows:

To protect depositors, the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas, to assume all of the deposits of Heartland Tri-State Bank.

Additional details for depositors are listed in the FDIC’s Q&As:


Yes! 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 Dream First Bank.

Acquiring banks don’t always want brokered deposits, and sometimes brokered deposits are not included in the purchase and assumption agreement. As a consequence, uninsured brokered deposits are at risk of loss. That was not the case for this agreement. According to the following Q&A, brokered deposits were assumed by Dream First Bank. However, depositors will have to rely on the broker for details on accessing their funds:


All deposits have been assumed by Dream First Bank. If you are a customer who has a Heartland Tri-State Bank deposit through a broker, you must contact your broker with any questions.

One risk that depositors of failed banks face is the loss of a high CD rate. You’ll receive the original CD rate up through the date of closure, but after the closure, the acquiring bank may choose to lower the interest rate. The CD holder is free to close the CD without an early withdrawal penalty, but if interest rates have fallen, the CD holder is unlikely to find another CD with the same rate. That shouldn’t be an issue in this case since rates are still rising. The following is the FDIC Q&A that covers this issue:


Yes! Interest on deposits accrued through July 28, 2023, will be paid at your same rate. Heartland Tri-State Bank’s rates will be reviewed by Dream First Bank and you will be notified in writing of any changes. You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with Dream First Bank.

Bank Failure Reminder

A bank failure is a good reminder to make sure your deposits at other banks and credit unions are under the FDIC and NCUA limits. Even though no uninsured deposits were lost, that can’t be assumed to always be the case. If the FDIC can’t find a buyer for a bank and the bank isn’t important enough for the systemic risk exception to be approved, uninsured deposits will likely be at risk.

You can cover over $250k at one bank, but you have to be careful to ensure that you and your bank follow the FDIC rules. Also, it’s probably wise to keep your deposits below $250k at any fintech, such as Raisin, that is partnering with one or more banks. Below are some references that can help you keep your deposits insured and safe:

External references:

DepositAccounts.com references:

Related Pages: bank health ratings

  |     |   Comment #1
Dream First Bank had broker sold CD's on Fidelity last week and I am not sure if is is the same Heartland Bank but they had some on there a week or two ago
  |     |   Comment #2
This is where....Ladder and it wont matter....may not work. The bank must stay in business. lol
  |     |   Comment #3
Right...in this case, it's more like:
"Bank falls off the ladder, and now it matters"... or something like that.
  |     |   Comment #5
LMAO. Okay, my turn...

This is where....7% or bust....may not work. The banks go out of business if rates hit 7%.
  |     |   Comment #4
It's hard to see how the situation isn't going to get far worse for banks, especially the mid-sized regional banks which hold a lot of commercial real estate debt and by extension the entire banking industry.

If you look at the "Urban Doom Loop" for New York City for example, the largest city in the country, the office occupancy rate fell from 90% in 2020 to barely 50% now. And that's not the worst. Places like Philadelphia are in the low 40s, and places like Detroit and Los Angeles are in serious trouble. Companies are not renewing their leases and the value of these buildings is crumbling, tax revenue is disappearing and these cities are in a death spiral. And I don't think filling those empty office buildings with illegal aliens and paying for it with the diminishing tax revenue like some of these cities are doing now is going to do anything but make it worse. Is there any way that this can end well for the banks who hold the paper? If there is I can't see it.
  |     |   Comment #6
Yeah not like corporate greed doesn't have anything to do with these buildings remaining closed.
  |     |   Comment #7
Imagine those greedy corporations fleeing these cities and states and wanting themselves and their employees to escape the confiscatory taxes they are paying that are being used to fill the hotels, skyscrapers and streets all around them with illegal aliens and the out-of-control rampant crime that is threatening their lives and businesses on a daily basis.

The nerve!

Thank God for federalism. It may be the greatest concept that founders built into the Constitution.
  |     |   Comment #8
"... And I don't think filling those empty office buildings with illegal aliens and paying for it with the diminishing tax revenue like some of these cities are doing now is going to do anything but make it worse ..."

Well, in the immortal words of Rhett Butler (a much better economist than he's generally given credit for): “I told you once before that there were two times for making big money, one in the up-building of a country and the other in its destruction. Slow money on the up-building, fast money in the crack-up. Remember my words. Perhaps they may be of use to you some day.”

So as things go downhill, all we gotta do is figure out how to be on the right side of the right deal! After all, even during the long-drawn-out decline of Rome, the vendors of bread and circuses were doing pretty well for quite a while.
  |     |   Comment #9
50% you say?

"Before the pandemic, Manhattan’s office sector never had an average vacancy rate of more than 11% a year for decades. Now, city officials are warning that Manhattan building owners will face office vacancy rates of more than 20% for most of this decade.
NYC’s budget analysts and a growing number of CRE analysts are projecting that the office vacancy rate in Manhattan—now at a record 22.7%—will continue to languish above 20% through 2026."

I suspect this has much to do with working from home and the desire to continue it. I haven't looking into the cost of housing these asylum seekers, most of who are here to find work, but am guessing it's less than the 1 plus trillion we spend every year on the so-called defense industry. I mean how has that improved the general welfare of the majority of the country? The rise and fall of Rome was exactly analogous to what's happening today as the empire, as a way of life, got spread too thin and far.
  |     |   Comment #11
Not sure there is anything more fake than a Rupert Murdoch owned publication. But as you'll note, it says the occupancy rate "crossed the 50 percent threshold," which could mean that the vacancy rate is now at 22.7%. However, if NYC is indeed going bankrupt, more likely it's due to their corrupt mayor pandering to the police unions and landlords.
  |     |   Comment #12
The vacancy rate and the occupancy rate are two different things.

The occupancy rate is far more important.

It tells you what percentage of offices are actually being used.

The vacancy rate just tells you what percentage are being leased.

If a company moves out and their offices are empty but the lease has not expired yet that's not counted in the vacancy rate even though it's an unoccupied office.

So the vacancy rate is fake news about the office market just like the unemployment rate is fake news about the job market.

The occupancy rate is 50%. It was 90% in 2020. Those figures are correct and your figures are fake news.

The fact is that companies are fleeing blue cities and states in record numbers. No amount of fake news can cover it up. They've had it with the outrageous taxes, the rampant crime and the bankrupt policies.
  |     |   Comment #13
As usual you provide no source for your definition of vacancy rate versus occupancy rate. Per investopedia they are simply the opposite of each other. You're simply spinning the definition to fit your political agenda. Btw, your link said crossed the 50% threshold, not equalled.

We'll see how long the red states can hold onto their residents when they turn from red to red hot, as their temperatures and insurance rates continue to rise.
  |     |   Comment #14
You are incorrect. But I don't hold it against you milty. If I was reading nothing but fake news filled with fairy dust and unicorn poop I would probably be confused too.

Okay you like Investopedia? Read this article and you will understand the difference and why the real number is 50%.


"Published June 08, 2023

"In those same 10 markets in the week ending Monday, 52% of office space sat unoccupied, according to a weekly occupancy report from security firm Kastle."

"If offices across the biggest U.S. markets remain only half-occupied moving forward, it stands to reason that vacancy rates would keep rising toward that figure. After all, renters presumably wouldn't renew leases on space they're not using."
  |     |   Comment #16
The investopedia article is quite speculative as to what might happen when leases expire. Until then, the space is not vacant, i.e., it's occupied. Btw, the Kastle link shows NY Metro at 68% occupied at the height for that sample period.

Globest.com is hardly fake news. Speaking of which though, I see your guy is back cavorting with Fox. You know, that company you all disavowed after Rupert admitted under oath they're liars.
  |     |   Comment #17
I've done all I can but you are not grasping it milty. Has nothing to do with predictions about the future. It is a fact about the CURRENT level of office space occupation. Office space in NYC is only 50% occupied. If you cannot acknowledge that fact there is no point in discussing it any further. Changing the subject doesn't change the facts.
  |     |   Comment #18
You're right . . . well, except about the 50%. I guess I'm just too honest, too.
  |     |   Comment #20
Worried that Texas Capital Bank/Bask Bank maybe next with a F rating in deposit growth, a lost of more than 3 billion dollars in deposits, this is bad.
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