Bank failure in Kansas leads to Dream First taking over Heartland Tri-State
The Syracuse, Kansas-based Dream First Bank has agreed to assume all deposits and essentially all assets of Heartland Tri-State Bank, as announced by the Federal Deposit Insurance Corp. (FDIC) on Friday. This move aims to minimise disruption for Heartland Tri-State Bank's customers, with its locations set to reopen under the Dream First Bank banner on Monday.
The transaction between the FDIC and Dream First Bank is part of an effort to maximise recoveries of the assets while keeping them in the private sector, according to the FDIC. The deal adds nearly $139 million in assets and $130 million in deposits to Dream First Bank's total.
Heartland Tri-State Bank's closure is expected to represent a $54.2 million cost to the Deposit Insurance Fund, according to the FDIC. This is significantly lower than the expected costs of the Signature and Silicon Valley Bank failures ($15.8 billion) and the First Republic Bank deal ($13 billion).
The Kansas Office of the State Bank Commissioner (OSBC) closed Heartland Tri-State Bank on Friday and appointed the FDIC as receiver, marking the first failure this year of a U.S. bank with less than $100 billion in assets. The OSBC stated that Heartland Tri-State Bank became insolvent due to an isolated event, based upon an ongoing review.
In 2023, Shan Hanes, the former CEO of Heartland Tri-State Bank, was implicated in embezzling $47.1 million, which led to the bank's collapse. However, Dream First Bank CEO Chris Floyd confirmed that Heartland Tri-State Bank employee jobs, deposits, and banking relationships are unaffected by the latest news. Dream First Bank staff will continue to provide exceptional customer service and be available to answer questions.
Dream First Bank and the FDIC have consented to a loss-sharing agreement on Heartland Tri-State Bank's loans. This means that the FDIC will share in the losses on a significant portion of Heartland Tri-State Bank's loans, depending on the losses that occur.
It is worth noting that the Kansas banking industry remains strong, according to the OSBC. This event does not affect the stability of Kansas banks.
Heartland CEO Shan Hanes acknowledged in May that the banking crisis "got everybody's attention" but considered it a nonevent. However, the failure of Heartland Tri-State Bank marks the fourth time in 2023 that the FDIC has stepped in to take control of a bank, following Silicon Valley Bank, Signature Bank, and First Republic Bank.
Customers of Heartland Tri-State Bank can rest assured that their deposits and banking relationships are secure, and they will continue to receive the same level of customer service from Dream First Bank. The bank's locations will reopen under the Dream First Bank banner on Monday.
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