The national tally of insured bank failures this year ticked up to 18 over the weekend following the closure of Minnesota's Northern Star Bank.
The bank, which is Minnesota's first to close in 2014, was shuttered on Friday by the Minnesota Department of Commerce [1], which appointed FDIC [2] as receiver.
In a statement [3], the agency cited lack of capital, continuing operating losses, and a large volume of problem assets as reasons for the forced closing.
“The Department acted in the best interests of all by closing this bank and appointing the FDIC as receiver,” said department Commissioner Mike Rothman.
Before Friday's announcement [4], the bank had operated under regulatory scrutiny for some time, having received a consent order from FDIC in 2009 regarding its inadequate level of capital.
To protect Northern Star's depositors, FDIC announced a purchase and assumption agreement with BankVista, which will take over the failed bank's charter location in Mankato and its branch in St. Cloud.
In addition to assuming all of Northern Star's deposits (totaling an estimated $18.2 million), BankVista will also purchase all assets, which came to an estimated $18.8 million as of the end of September.
FDIC estimates the closing cost its Deposit Insurance Fund $5.9 million.