State banking regulators seized a small bank in Minnesota. Losses from the failure of the financial institution are expected to reach more than 20 percent of the bank’s assets.
The Minnesota Department of Commerce closed down 1st Regents Bank on Friday.
The Andover, Minn., institution was established in 2001. Around 13 people were employed by the bank at the time of its demise.
Total assets stood at $50 million as of Sept. 30, 2012, and total deposits were $49 million — leaving a razor thin equity margin between assets and liabilities.
1st Regents’ residential loan portfolio was $3 million, while commercial real estate loans totaled $12 million and construction-and-land-development holdings amounted to $5 million.
The Federal Deposit Insurance Corp., which was named receiver of the failed bank, conducted a secret bidding process. The winning bid was awarded to First Minnesota Bank, which picked up all the failed bank’s assets and deposits.
The FDIC, which issued a cease-and-desist order against 1st Regents in March 2010, expects that the failure will cost its Deposit Insurance Fund $11 million — a huge amount given 1st Regents’ asset holdings.
It was the second federally insured bank failure this year and the third mortgage-related closing tracked so far during 2012 by Mortgage Daily.
