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The Closure of Kansas Bank Shows U.S. Banking Crisis

The Kansas Office of the State Bank Commissioner closed Heartland Tri-State Bank, and Dream First Bank acquired its assets and deposits amidst US banking crisis.

Key Points

  • On July 28, 2023, Heartland Tri-State Bank of Elkhart, Kansas was closed by the state. FDIC became the receiver.
  • Dream First Bank acquired Heartland Tri-State Bank, taking deposits and assets to help customers.
  • The four branches will reopen as Dream First Bank branches on July 31, 2023.
  • Ongoing US banking crisis with multiple failures; legislation introduced to safeguard deposits and stabilize the industry.

On July 28, 2023, the Kansas Office of the State Bank Commissioner made the decision to close Heartland Tri-State Bank of Elkhart, Kansas. As a result, the Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver for the failed bank.

This closure is just another chapter in the ongoing banking crisis in the United States, following the recent failures of First Republic, Silicon Valley Bank, and Signature Bank.

Dream First Bank Steps In

Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits as of March 31, 2023. In order to mitigate the impact of the closure on customers, Dream First Bank, National Association, located in Syracuse, Kansas, has agreed to assume all deposits and purchase essentially all assets of the failed bank.

This acquisition by Dream First Bank is estimated to cost the Deposit Insurance Fund (DIF) approximately $54.2 million, making it the least costly resolution for the DIF.

New Ownership and Continuity of Service

On July 31, 2023, the four branches of Heartland Tri-State Bank will reopen as branches of Dream First Bank. Customers can expect business to continue as usual, with access to their money and the ability to make loan payments without interruption.

The first half of 2023 has been a tumultuous period for the banking industry, witnessing multiple bank closures that have sent shockwaves through the financial sector. The collapse of Silicon Valley Bank in March 2023 triggered chaotic days within the U.S. banking system.

Following this, First Republic Bank, one of the largest bank failures in U.S. history, was acquired by JPMorgan in May 2023 after rescue efforts failed. The failure of Signature Bank further added to the turmoil, shaking up the banking industry.

Closing Thoughts

The ongoing banking crisis in the United States can be attributed to a combination of factors. Rising U.S. interest rates, with the U.S. Federal Reserve increasing its benchmark rate to 5.25% in July 2023, have played a role.

Additionally, systemic issues within the banking sector and inadequate risk management practices have been exposed, further exacerbating the situation.

In response to these revelations, lawmakers have taken action by introducing new legislation aimed at safeguarding customer deposits and stabilizing the financial system. It is hoped that these measures will help prevent future bank failures and restore confidence in the banking industry.