On July 28, the FDIC announced the closing of four-branch Heartland Tri-State Bank headquartered in the southwest Kansas town of Elkhart.
This marks the fifth bank in the U.S. to fold in 2023.
However, Kansas State Banking Commissioner David Herndon said this seizure was related to an isolated incident “apparently the victim of a huge scam” and “had nothing to do” with other recent regional bank failures.
The Heartland Tri-State Bank had $139 million in assets and $130 million in total deposits—the smallest to fail in 2023.
Herndon said in a Commission press release it was “determined that Heartland Tri-State Bank was insolvent” and that it “became insolvent due to an isolated event.”
Further details were provided in an interview with Yahoo Finance: “The bank was a victim of a scam that suddenly caused its insolvency” and “it had nothing to do with any of the reported turmoils or the closures from March of the banks in California, New York, and that sort of thing.”
The biggest bank to fail in 2023 was First Republic, which was seized in May and had $229 billion in assets, making it the second-largest bank failure in U.S. history. Two of the banks to fail this year had assets of more than $100 billion: Silicon Valley Bank and Signature Bank, which both folded in March. Also in March, Silvergate Bank shut down voluntarily.
What’s Next for Heartland Tri-State Bank Customers?
The FDIC estimates this failure will cost its Deposit Insurance Fund approximately $54.2 million as the FDIC will share future losses on loans purchased by Dream First Bank, a community bank based in Syracuse, Kan. According to the FDIC-brokered deal, Dream First assumed all of Heartland Tri-State’s deposits and will purchase “essentially all” of the failed bank’s assets.
On July 31, all four locations previously served by Heartland Tri-State Bank opened as Dream First branches.
Heartland Tri-State Bank is the second Kansas bank to fail in three years.
“Kansas banks are strong and healthy,” Herndon said. “They are well-capitalized, have strong reserves, are profitable and maintain record levels of loan reserves.”
